Two important charts below. The SPX and the DAX index. Note how the SPX managed to touch the 200 day average briefly on this last run. At the same time, the SPX index has developed another dynamic formation, that could easily take this lower. Compare to the other “top”. The DAX is trapped in the negative trend, and a breach of the support levels, slightly lower, will cause another “flashy” move to the downside. With lack of volume, all moves will be magnified by the HFT. These guys are not closing the books because Christmas is coming up…
Markets have traded rather boring so far today. After the sharp sell off in US trading last night, Europe tried rallying, but the move is fading. Spanish auctions just came out, with rather high yields…Contagion is spreading, and it is only a matter of time before the Spanish 10 year breaks above the 7% level. Italy is trading at 7.1%… Equities markets have been trading in an increasingly tioghter range over the last month. Let’s see if we break that big dynamics? Charts below.
US stocks turned sharply lower in late-day trading after a report warned of eurozone risks to US banks, with European Central Bank attempts to prop up the Spanish and Italian bond markets failing to stem investor fears over sovereign debts, http://ftalphaville.ft.com/thecut/2011/11/16/750921/bank-fears-hit-us-financial-stocks/
The exiled chief abbot of a monastery that has become the flashpoint of sustained Tibetan unrest has appealed to the Chinese government to end a repression campaign seen as the source of an unprecedented string of self-immolations by monks from the area, http://ftalphaville.ft.com/thecut/2011/11/16/750881/abbot-urges-china-to-help-stop-self-immolations/
Mario Monti will serve as both prime minister and finance minister in Italy’s caretaker government of technocrats that was sworn in on Wednesday, the FT reports. The new cabinet also includes Corrado Passera, http://ftalphaville.ft.com/thecut/2011/11/16/750841/italy-forms-cabinet-of-technocrats/
While we are all fixated on the EUR apparently the market is telling us to be more focused on the AUD. Last night the market showed its hand when a big fall in both currencies on no news caused a sharp move lower in the ES (SPX Futures).
Today the EUR although weak was not the driver of the late afternoon selloff. Instead a sharp move lower in the AUD seems to have triggered selling in the futures.
As I have been posting numerous times the divergence between both currencies and the ES are big so expect further currency weakness to be magnified in moves within equities. As a reference point, here is where the AUD currently stands. A very weak chart for sure.