I ... Today, October 13, 2010, the longer out US Treasuries, the Zeroes, ZROZ, the 20-30 Year US Government Bonds, TLT, and Dollar, $USD, tumbled, as gold, GLD, stocks, VT, and Junk Bonds, JNK, moved strongly higher.
World stocks, ACWI, 1.2%, Europe, VGK, 1.5%, Mexico, EWW, 1.4%, Brazil, EWP, 1.8%, China, FXI, 2.4%, India, INP, 2.1%, S&P, SPY, 0.8%, Emerging Markets, EEM 1.8%, and Small Caps, SAA, 2.9%, moved higher on rising currencies: the South African Rand, SZR, 1.1%, New Zealand Dollar, BNZ, 0.8%, Canadian Dollar, FXC, 0.6%, Brazilian Real, BZF, 0.9%, Australian Dollar, FXA, 0.4% and Emerging Market Currencies, CEW,0.6%.
Wealth took flight away from US Sovereign Debt, US Banks, Mortgage Finance, Semiconductors, and Japan. It may be that the fall in bank shares today is due to unknown earnings reports as well as fright over the mortgage foreclosure imbroglio.
II ... The currency sensitive, Small Cap Pure Value Shares, RZV, 1.6 %, and 200% ETF Small Cap Shares, SAA, 2.9%, rose, on the rise in Developed Market Currencies, DBV, 0.5%, and the Emerging Market Currencies, CEW, 06.%.
III ... Emerging markets rose strongly.
Emerging Markets, EEM, 1.8%
Emerging Market Small Cap Dividend stocks, DGS, 1.5%
Emerging Market Bonds, EMB, 0.4%
Emerging Markets Metal And Mining Titans, EMT, 1.4%
Emerging Market Financials, EMFN, 1.4%
Emerging Markets Small Caps, EWX, 1.5%
Chart of EWX,EEM,EMFN,EMT
IV ... Speculative assets soared.
Copper Mining, CU, 3.8%
BHP Billiton, BHP, 2.2%, jumped higher to resistance at 82.00
Nordic 30, GXF, 3.0%
India, INP, 2.1%, may have formed an evening star, it will take several days of trading to confirm.
Spain, EWP, 1.9%
Energy Service Providers, OIH, 2.1%
Halliburton, HAL, 2.3%
Industrial Metal Equities, CRBI, 2.5%
Small Cap Energy, XLES, 2.5%
Solar, TAN, 2.4%
Ireland, EIRL, 1.5%
Austria, EWO, 1.1%
V ... Small Cap Stocks, SAA, rose strongly, 2.9%.
Small Cap Leaders, XGC, 3.2%
China Small Caps, HAO, 2.2%.
Korean Small Caps, SKOR, 3.3%
Canadian Small Caps, CNDA, 2.8% .
Brazil Small Caps, BRF, 2.8% .
Australian Small Caps, KROO, 1.3%
Latin America Small Caps, LATM, 2.3%
Small Cap Consumer Discretionary, XLYS, 1.1%
Russell 2000, IWM, 1.5%
Chart of XGC, ACWI, EEM
Chart of BRF, LATM, KROO, HAO, CNDA, SKOR, IWM, XLYS
VI ... Industrials rose strongly
China Industrials, CHII, 3.8%
Industrial Metal Equities, CRBI, 2.5%
Industrials, XLI, 1.6%
Dow Jones Industrials, DIA ,0.7%
Chart of CHII, XLI, DIA
VII. ... Singapore, EWS, Hong Kong, EWH, and the Leading Frontier Market, FRN, countries rose strongly.
Peru, EPU, 2.9%
Thailand, THD, 1.6%
Turkey, TUR, 0.9%
Malaysia, EWM, 1.0%
VIII .... Non agricultural commodities rose; agricultural commodities fell only slightly.
Gold, GLD, 1.6%; junior gold mining stocks, GDXJ, 3.3%
Silver, SLV, 2.8%
Oil, UCO, 2.2%
Oil, USO, 1.4%
Tin, JJT, 1.7%
Timber, CUT, 1.0%
Agricultural Commodities, DBA, -0.6%
Agricultural Commodities, RJA, -0.3%
Food Commodities, FUD, -0.7%
IX. Laggards of the day included
Japan, EWJ, +0.2%
Retail, RTH, -0.1%; Manifested a bearish harami candlestick; Macy’s, M, fell 2.5% lower manifesting a bearish engulfing candlestick. Children’s Place, PLCE, fell 3.5% and manifested a bearish candlestick at the top of an ascending wedge.
Banks, KBE, -0.7%
Semiconductors, SMH, -1.4%
Intel, INTC, -2.7%; Manifested a massive bearish engulfing candlestick.
Mortgage Finance, KME, -2.2%
X .... Bonds, BND, rose 0.16%; Bonds are trading below their October 7, 2010 high at 82.93.
Emerging Market Bonds, EMB, 0.48%
Junk Bonds, JNK, +0.50%. The strong rise in junk bonds to 40.39 suggests that peak liquidity may have been achieved today on the rise of the emerging currencies, CEW, to 23.32 and major currencies, DBV to 23.46
15 + Year TIPS, LTPZ, +0.92%
TIPS, TIP, +0.60%
Corporate Bonds, LQD, -0.05%
Longer Maturity Corporate Bonds, BLV, -0.18%
XI. The US Dollar and the longer out US Treasuries fell strongly.
The US Dollar, $USD, -0.36% ... US Dollar Zig-Zag chart shows a bottom may be forming in the US Dollar, $USD.
Inverse USD/JPY ETF, JYN, 72.18
Zeroes, ZROZ, -1.37%. Fell massively from a head and shoulders pattern.
20-30 Year US Government Debt, TLT, -0.18%; These also fell from a supportinve H & S pattern.
Intermediate US Treasuries, IEF, unchanged
Mortgage Backed Bond, MBB, +0.05%
Short Term US Treasuries, SHY, +0.01%
Municipal Bonds, MUB, manifested the lollipop hanging man candlestick and fell lower.
The interest Rate on the US 30 Year Government Bond, $TYX, jumped higher in its second day of breakout. The interest rate on the US Ten Year Note, $TNX, broke out.
The 30:10 US Sovereign Debt Yield Curve, $TYX:$TNX, steepened parabolically to manifest a hammer candlestick at the top of its ascending wedge.
XII ... Real estate stocks and ETFs, all appear topped out: BLK ... BPO ... STD ... PSR .. FIO,
XIII ... Peak Wealth may have been achieved today. Twelve reasons why a stock market and a bond market turn lower is imminent:
1) Monies are flowing into speculative assets, like Junk Bonds, JNK, Chinese Real Estate, TAO, Nanotechnology, PXN, Television Broadcasting, LCAPA, and commodities, DBC.
2) The 30-10 US Sovereign yield curve continues to resist flattening.
3) The Interest Rate on the US Ten Year Note, $TNX, broke out.
4) The interest Rate on the US 30 Year Government Bond, $TYX, jumped higher in its second day of breakout.
5) The Euro, FXE, has hit resistance and appears stalled out from rising higher, due to the strength of the Yen, FXY. A stagnant EUR/JPY, seen in the chart of FXE:FXY, suggests that the currency traders are now going to go short the euro yen carry trade, which will cause a massive world wide stock sell off.
6) the high level of Yen, FXY, above 120, is not conducive with a rising stock market.
7) the small caps, SAA, rose vigorously today; this is something that occurs immediately to stock market turns lower.
8) Exxon Mobil, XOM, reached a pivot point at 65.
9) Tax Managed Buy Write Opportunities, ETW, fell lower today; suggesting that market insiders are aware that returns can no longer be achieved by invested long.
10) Airlines, FAA, blasting awesomely higher.
11) The level of the Russell 2000, IWM, relative to banks, KBE, IWM:KBE, is at a ten month high.
12) The ratio of the Small Cap Value shares, RZV, relative to Small Cap Growth shares, RZV, RZV:RZG, has turned down, suggesting that currencies are going to fall lower causing disinvestment from stocks.
XIV ... Jijo Jacob in International Business Times reports In order to prevent unwanted strengthening of their currencies, Emerging Asia sets up controls to curb capital inflows.
Thailand announced on Tuesday that it will impose a 15 percent withholding tax on interest and capital gains made by foreign investors on Thai bonds, accentuating the emerging economies' drive to put in place regulatory controls to curb capital inflows that contribute to a surge in currencies.
A persistent low interest rate regime in the developed world is pushing global investors to tap into the high-yielding markets, leading to currency worries in most of emerging Asia.
Export-dependent economies like Japan, China and Brazil have been in a race to rein in their currencies of late as huge amounts of money flowed from anemic western economies to their systems. China has maintained a tight leash on the yuan to ensure their export competitiveness, while Japan intervened in the markets to stem the yen's gains. Brazil last week raised a tax on foreign portfolio inflows into bonds and some other financial instruments to 4 percent to contain the rise of its real currency.
Traders believe South Korea has intervened repeatedly in the currency markets to rein in the won. In the Philippines, government officials have said the rise of the peso is a matter of concern.
Analysts say the afflicted Asian countries are addressing the problem in three ways.
In countries like South Korea, Australia, the Philippines and Indonesia policy rate hikes are either being scaled-back or delayed. "Less monetary tightening in Asia will help to contain interest rate differentials, thereby reducing the incentive for capital inflows," say the analysts.
Secondly, currency market intervention has increased and foreign reserves are going up, providing the countries a cover against further shocks in the financial system.
The third route, the analysts say, is the imposition of capital controls.
"For now the restrictions are mild and targeted toward speculative inflows. This will probably stay the focus. Draconian measures were introduced in Thailand in late 2006 but these are widely-recognized across Asia as having been a disaster."
Disclosure: I am invested in gold bullion