Another solid report from the swiss team. They acknowledge the correction has “expanded” but they stick to their bullish call that this is a correction and rotation rather than the ending of the 2009 bull market.
On the plus side the seasonals are good from here and many sectors remain constructive including many European markets.
They predict next week should see the lows of the move and that the lows of next week should represent the opportunity to enter cyclical, financial and technology related themes.
They don’t pick up on the Asian issues and the problems within the industrial and energy commodities. Real technical damage is starting to occur here which is a concern.
Read tomorrow’s summary on this Tuesday’s session of the Shanghai. It won’t make for easy reading is my analysis. We are back to the bottom of the range for the Shanghai and near the 2012 lows for copper. Oil is also not promising here. The lows since early 2010 are $80 a barrel for nymex. We are at 85 and falling. The IEA lowered demand projections again today.
Sentiment remains very bearish. Momentum has been diminishing for quite a while on this bull trend. We are over sold and due a bounce. Lets see which instruments react to this bounce to gauge where the relative strength lies next.
Precious metals remain unconvincing for now. The bounce was from a very over sold level. The inflation trade is under immense pressure here and now. Its a close run battle with the near term edge to the inflation-ists due to the oversold asset markets. That’s all we can say for now. Its worthy of note that Japan’s JGB 10 yr rate is reaching its record low once again which is not a wonderfully bullish indicator.
My own book is now long having left the hedges partially at the end of last week and on the euro indexes today. I’m naked long but with reduced leverage at around 110% balance sheet. Concerned but not overly concerned as yet. Fixed income remains in her inverse correlation to equities which is a good thing in terms of managing your risk.
Here the report.
http://www.capitalsynthesis.tech/wp-content/uploads/2012/reports/Weekly13-11.html
All the best
Rich
(6 votes, average: 5.00 out of 5)
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