Asia relatively strong over night with minor falls on the key Hangseng and Shanghi indexes. Nikkei weaker but other indexes not breaking. Calm prevails at present in spite of the market watch headlines of ‘big falls’ in asia overnight.
US indexes.. I forecast 12150 early yesterday as a likely near term target for the ym (dow). We got close but the price action is still very sedate. I still suspect we might still see this within the next week or so. Imo the deadline will likely pass and a deal won’ t be agreed in time, there will be firework ‘spikes’ downward on this event, possibly the fed will be ‘forced’ to provide liquidity to the banks to stem concern in the markets (a y2k liquidity injection). The ceiling will be agreed a few days after these spikes, imo. I think this will be the ‘theater’ the political elite will need to do a deal and it will show some bargains through this process and overall liquidity and monetary easing will be increased not diminished. The price action continues to point to the cyclical bull still being well in control of events for the moment. The spikes to the south may be frightening around these debt issues but imo they will be buying points. Calling the individual gyrations of price is not worth getting into around these news events, imo. Spikes to the down side but the cyclical trend to remaining intact is the evidence thus far. The price action will show ‘genuine’ actions. We cannot pre judge this. At present there are no genuine sellers. They may come forward but the evidence suggests not thus far.
Precious metals remain very strong with yet another all time historic high for gold yesterday. Commodities in general moving down in concert with the equities. Trends intact. The dollar index off her floor but only just. Very very weak. Participants are unclear whether the debt issues and equity sell off should drive them away from the usd or toward it? Confusion reigns in fx markets at present. The AUD is a star and has broken out to new historic highs. As an aside with gold and the aud breaking out together as equity and the usd index strengthens this should be noted and be a good indicator of where this is all heading.Onwards we march.. Rich
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