The weekly dollar index chart shows several interesting patterns. On balance, the bias is towards renewed dollar strength. » Read More
Six weeks ago US Federal Reserve Chairman, Ben Bernanke, put markets on notice that changes were coming. It was a gentle hint to reform their own houses, or have reforms been forced upon them. When speaking in Georgia, Bernanke chose to address the topic of clearing. It was an early warning that changes were coming. The most obvious of these would be adjustments to the level of margins.
Macbeth says “We have scotched the snake, but not killed it” and the same can be applied to the death of Osama bin Laden. This is a psychological victory. Its not of the same order as the removal of a head of state who has executive control of an organized military.
Sometimes it more useful to recognize relationships rather than attempt to explain them. The performance of the KOSPI is a case in point. There are two aspects of behavior, which point the way to wider profits in the ASEAN region. Just why these behaviors occur, and why the relationships have been established is a difficult question to answer.
The Australian Dollar is a story of remarkable strength – almost death defying strength. The move above parity with the US dollar is severely damaging Australia’s export competitiveness. Moves above $1.05 are causing serious pain that is not offset by the rise in commodity prices.
The more cynical observers are suggesting it was no surprise that the Australian Government rejected a takeover of the Australian Stock Exchange from an Asian stock exchange. The rejection was also clear for many months on the chart of the ASX. The ASX chart in November 2010 showed this deal would fail.
The world environment has a crisis in Japan and a crisis in the Middle East. In this situation, it is common for many investors and traders to buy more gold This has not happened. The price of gold on the COMEX gold chart has fallen from $1440/oz to near $1420/oz.
The pattern of retreat and reversal with the euro-dollar follows similar patterns in equity markets. Similar patterns are more fully developed and this suggests a continuation of the current uptrend towards $1.49. This trajectory is inhibited by several factors.
Fear ripples easily through financial markets, quickly rolling over fact and turning into ill-informed speculation. A downside of wide-spread instant news coverage – and internet coverage from mobile phones – is that a false rumor or an ill-informed opinion is spread just as quickly as intelligent and informed analysis. Unfortunately viewers are not always equipped with the skills needed to separate fact from fiction. Its one of the reasons they turn to CNBC.
The Japanese earthquake, tsunami and nuclear plant problems have inflicted a massive human toll. The effects will continue in the Japanese market for months and years to come. At the time of the Kobe earthquake in 1995 the Nikkei was in a much strong position than it was in 2011, prior to the current earthquake.
Which is better – gold or silver? Often consigned as an industrial metal with limited value, silver has outshined gold in the past 18 months. Between July 2010 and January 2011 the COMEX silver futures price rose by 72 percent from $18.00 to $31.00. Silver outperformed gold by more than three times and it continues to do so.
Daryl Guppy is an independent technical analyst who appears frequently on CNBC Asia.