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Euro at Cycle lows - Bullish Patterns weakening but “still” intact

Wednesday 12-14-2011


Dr. John L. Faessel


Commentary and Insights


Quote of the day

“The political class looted the future to bribe the present, confident that tomorrow could be endlessly postponed.”



VIX ticks 4.5 month “pattern” lows at 23.27 – Hmmmmm...


Bullish Patterns weakening but “still” intact


Euro at Cycle lows, now below 1.30


The cost of insuring against default of Europe sovereign debt near a record


Yesterday, after an out-of-the-box gap up the market peeled back to close at new pullback lows. Volume rose to just below average. Gold fell about 2%, while crude oil rose about 2%.


While it’s a platitude, but it’s that “tax-selling” time of year and “down” stocks seem to draw more selling regardless. That is, until investors buying value trumps the selling, and that ought to be soon.


Bullish patterns still hold as Europe teeters. All eyes remain focused on Germany to save what certainly looks like an untenable situation. Germany/Andrea Merkel wants the World Bank (think USA) to fix the mess. It galls the Germans to bail out those southern Euro countries that have spent and spent and spent themselves into effective bankruptcy. To date, little has been accomplished as far as implementing "austerity" measures, yet the blather goes on and on and on. Every day the kerfuffle of the Euro currency increases in intensity awaiting convulsion and electric shock therapy. Will the surgeons cut away the infected parts? And how will it affect the markets? Each day is a wonder...


Yet, The Federal Reserve said on Tuesday that "the (US) economy has been expanding moderately, notwithstanding some apparent slowing in global growth."


The Economic Cycle Research Institute just reiterated its prediction for a U.S. recession.


Asia Watch:

Goldman Sachs' (NYSE:GS) strategists believe China looks better positioned than India for the year ahead. China's GDP is projected to grow 8.6% next year, compared with 7.2% for India. China inflation is expected to average 3.1%, versus 5% in India.


The Markets Drivers > EuroLand Bond Yields

Italy 10-year (gross) bond yield – 6.67% off from 7.26% on 11-24

Spanish 10-year (generic) bond yield – 5.56% - off from 6.7% on 11/24


Ruling the MARKET - Again: “From a technical perspective the key declining Tops line resistance at (SPX) 1266ish that comes off last July's top tick will be the overriding wall of resistance.”

Correspondingly the lower trend line off “the” lows of 10/4 and 11/28 is at (SPX) 1186.



The (SPX) closed on Monday at 1225.73


Short term price support in the S&P 500 (SPX) is at 1221

Channel support is at 1219

50-day moving average support is at 1224

Key Trendline support off low of consolidation that began in early August is at 1180

 (SPX) support at the August 8th lows is at 1101.

Support at the October 4th lows is at 1074.


Short term price resistance is at S&P 500 (SPX) 1245 - Then at 1250

Channel resistance is at 1248

The 200-day moving average resistance is at 1262.

Key Trendline resistance of consolidation that began in early August is at 1266

Price resistance at the top- tick(s) of the near four month old consolidation is at 1277 then at1292.


Tuesday’s key indicators and metrics:


·                 McClellan Oscillator is Neutral @ minus 109      

·                 VIX – 25.41

·                 Euro – 1.3038

·                 US Dollar Index – 80.29

·                 3-month $ LIBOR at 0.555

·                 Swiss Franc – 1.0574

·                 Gold (COMEX) $1663.1

·                 Japanese Yen 12823

·                 The Treasury 10-year yield 1.96%

·                 Crude oil (NYMEX) $100.14

·                 CBOE Put / Call Volume Ratio – 1.17

·                 Aussie Dollar – 1.0018

·                 Copper – 3.4415

·                 Silver (COMEX) 31.260

·                 Brent Crude $109.18

·                 Canadian Dollar – 0.9687


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You tube of Ronnie Hillman “The Second Coming” (of Marshal Faulk) came in 3rd in the nation in rushing (was hurt (ankle) for 2 games too and carried just a few times)


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