Financial Market Report For October 21, 2010
Stocks, Commodities, International Treasury Bonds, and the World’s Currencies manifested bearish harami in advance of a report on Greek Debt set for release Friday October 22nd, 2010.
World Stocks, ACWI, fell, 0.09%, manifesting a bearish harami candlestick. New Zealand, ENZL, fell, 0.80%, Brazil Small Caps, BRF, fell, 0.64%, the UK, EWU, fell, 0.69%, and Australia Small Caps, KROO, fell 0.89%, all mimicking falls in their corresponding currencies. For example, the bearish harami in the chart of the Brazil Small Caps, BRF, mimics the fall in the Brazilian Real , BZF, and the Brazilian Real carry trade, BZF:FXY.
Chart of BRF
Chart of BZF:FXY -- the Brazilian Real Yen Carry Trade.
European Shares, VGK, fell, 0.25%; and the Euro, FXE, fell 0.17%.
The Asia Pacific Excluding Japan, EPP, and the High Yielding Asia Pacific Excluding, DNH, manifested a bearish harami.
The 200% leveraged Emerging Markets, EET, fell 0.38%, manifesting a massively spectacular bearish lollipop hanging man candlestick, as emerging market currencies, CEW, manifested a bearish harami.
Chart of EET
Chart of CEW
The US Shares, VTI, rose 0.17%, the S&P, SPY, rose 0.22%. Nasdaq Internet, PNQI, rose, 1.8% , Retail Holders, RTH, rose 1.37%, Retail, RETL, 2.45%, Internet, HHH, 2.83%, Bank of America, BAC, fell 3.3%.
Commodities, DBC, fell 1.24%, manifesting a bearish harami candlestick. Oil, UCO, fell 3.82%, manifesting a bearish harami candlestick. Base Metals, DBB, rose 0.18%. Natural Gas, UNG, fell 3.9% to a new yearly low. Gold, GLD, fell 1.41% manifesting a bearish harami candlestick.
The World’s Government Sovereign Debt, traded by International Treasury Bonds, BWX, fell .23% manifesting a bearish harami.
The 10-to- 20 Year US Treasuries, TLT, fell 1.19%, and the Zeroes, ZROZ, fell 1.36%, both to the edge of a head and shoulders pattern. Of significant note, both rose yesterday to resistance, and fell lower today.
Bonds, BND, fell 0.08.
The world’s major currencies, DBV, fell 0.60%, and emerging market currencies, CEW, fell 0.39%.
All of the World’s Currencies with the exception of the Mexico Peso, FXM, and the Russian Ruble, XRU, manifested bearish engulfing candlesticks and fell lower. Mexico shares, EWW, rose 0.62%, as did Russia shares, XRU, 0.98%.
This Finviz Screen of the major currencies, FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, CYB, BZF, XRU , FXY , BNZ , DBV, CEW shows that ten of the major yen based carry trades weakened, with the New Zealand Dollar, BNZ, Brazilian Real, BZF, the British Pound FXB, and the Australian Dollar, FXA, falling the most in value.
The ratio of the small cap value shares, RZV, relative to the small cap growth shares, RZG, ... RZV:RZG ... rose to what I call a “saddle up, lock and load” position, that is a pull the trigger all the way back position, suggesting that that the currency-volatile small cap value shares are "fully loaded to explode massively lower"; all I can say is "get ready for some investment shock and awe".
The chart of bonds, BND, shows that the world passed through Peak Credit on October 7, 2010 when bonds topped out at 82.93 as seen in Yahoo Finance Chart of BND. And today’s fall lower of Junk Bonds, JNK, suggests that peak investment liquidity has been achieved.
The debt deflationary bear market of April 26, 2010, that commenced with the onset of the European Soveign Debt Crisis, recommenced October 19, 2010, when the World Shares, ACWI, fell to 44.20, and the S&P, SPY fell to 116.73, in response to major currencies turning lower on on October 14, 2010.
International Treasury Bonds, BWX, tuned lower on October 8, and October 18, 2010, in response to the major currencies, turning lower on October 6, and October 14, 2010,
Chart of BWX, DBV, and CEW
Chart of BWX, DBV, CEW, and FXI shows that major currencies trade lower before debt turned lower and before China turned lower
Today’s fall lower in most all of the world’s currencies, is quite bearish for both stocks and bonds; and suggests that indeed a bear market has recommenced due to the fall in major currencies, DBV, and emerging currencies, CEW.
The chart of DBV, CEW, ACWI, and EEM shows that a bear market has been underway since October 14, 2010 on lower currencies.
Also, the stocks and bonds fell lower on rising interest rates in China. David Barbosa and Christine Hauser of the NY Times reported on October 19, 2010: A surprise announcement by China’s central bank that it would raise interest rates for the first time in nearly three years jolted world financial markets, as investors worried that China, the world’s second-largest economy after the United States, could slow and crimp the global recovery.
Chart shows that carry trade investment has come out of gold, GLD, and it may not be a safe haven investment until a lower price is achieved. Ths means gold mining sharesAEM, ASA and BVN represent good short selling opportunities.
For those interested in short selling, I recommend these ETF in this Finviz Screner EWO, KBE, ITB, INP, IWM, RZV, EWD, BX, TAN, EWP, PNQI, KROO, FAA, RTH, BWX, EPOL, BRF, DNH, SKOR, PXN, BJK, and ESR ... and these ETFs in this Finviz Screener of TLT, ZROZ, TMF and UBT ... and these ETFs in thisFinviz Screener of INDL, URTY, RETL, SOXL, EET and UYG.
Disclosure: I am invested in gold bullion