forex-Eurousd

As expected, it rebounded and more upwards. More upside expected before moving further down.

Global Stocks in Bear Market, And US Is Probably Next

Global stocks officially entered a bear market this week as the benchmarkMSCI World Index fell more than 20 percent from its most recent high in May. Investors say the U.S. is next.

Darrell Gulin | Stone | Getty Images

The selloff—which pushed markets from China to Portugal into bear territory—came as fears of a Greek default escalated and economic data around the globe hinted at a worldwide recession.

“You can make an easy argument that theDow Jones Industrial Average [.DJIA 10771.48 37.65 (+0.35%) ] will play catch up by 10 percent to other developed nations,” said Dan Nathan, an options and equities trader who runs Riskreversal.com. “Sixteen of the Dow 30 get more than 25 percent of their revenues from Europe. Something has to give because if 2008 taught us anything, it is that developed economies do not de-couple.”

The Dow hit its bull market high on April 29, closing at 12,810.54. The benchmark Friday is about 17 percent off from that high after its worst week in almost two years. Read more

Art Cashin: 'Massive Rally' Expected Soon

Stocks could be in for very choppy trading on Friday following the heavy sell-off in the previous session, but get ready for a “massive rally” sometime next week, said Art Cashin, director of floor operations at UBS Financial Services.

“We look like we can be shaping up for a 'Thursday-Monday [scenario]',” Cashin told CNBC.

Based on historical trading patterns, Cashin explained that a "Thursday-Monday scenario" occurs when there’s a huge decline on Thursday, followed by volatile markets the next day and throughout the weekend into the start of the following week.

“Friday tends to be choppy—but it’s not going to be quite as bad as what you saw yesterday,” said Cashin. “And then you go into the weekend with great hopes and what often happens is they open the trapdoor on Monday, which could be if nothing comes out of Europe and you get capitulation selling.” Read more

Forex-Eurousd -oversold

went down as expected and resting on the trendline which is acting as a support line ( as per weekly chart). I expect it to rebound upward as it is in oversold position. But overall, the trend is still downward biased.

Forex-Eurousd -lacks upward force

Since Euro is unable to even touch the trendline which acts as resistance, I would expect it to move further down.

Greek Default Could Tip US Into Recession

Despite being more than 5,000 miles from Washington D.C., a default in Athens could trip up the global banking system just enough to tip the U.S. into a recession, investors and economists said.

“Due to financial trading relationships and off-balance sheet exposure to European banks, the U.S. banking system will not go unscathed,” said Michelle Meyer, a Bank of America Merrill Lynch economist, in a note to clients Friday. “If the crisis in Europe escalates, it could be the shock that pushes the U.S. economy into recession ."

While this is not the base case predicted by Bank of America [BAC 6.99 -0.24 (-3.32%) ], the firm does still prepare its clients for this possibility by laying out how the Greece crisis could quickly become a “Lehman event.” After all, a 50 percent haircut on Greek sovereign debt would mean a very manageable $60 billion, or just two percent, of total bank foreign claims for U.S. banks, according to the report. But that’s just director exposure.

There are five major ways the U.S. is connected: trading counterparty risk and derivative ownership with heavily-exposed European banks, overall market confidence, central bank funding, money-market funds and trade flows. Read more

Forex-Eurousd - Resistance at the trendline.

As expected, it rebounded from the trendline. Expect resistance from the trendline as marked with the arrow. So take profit upon hitting that trendline.

Euro Collapse Could Lead to War: Polish FinMin

A collapse of Europe’s monetary union would likely lead to a breakup of the European Union as a whole, posing significant risks to the region and even raising the possibility of war in the long term, Poland’s Finance Minister told CNBC late on Thursday.

Franck Fife | AFP | Getty Images A tramway pass in the center of Warsaw on June 8, 2011. Poland and Ukraine will co-host the 2012 European Football Championship.

"If the euro zone were to fall apart then it's hard to exclude the possibility of EU falling apart as well," Polish finance minister Jacek Rostowski said in an interview.

"The EU has been one of the two great pillars of European peace and security of the past 60 years," he said.

"Therefore the danger in a longer-time horizon, in 10-20 years, in the absence of one of the key elements of our security system and one of the key elements of our political system, which ensures we deal with problems in this peaceful, democratic way we've developed, the risk of all sorts of authoritarian political movements, and therefore even war, in the long horizon, rises,” he said.

On Friday, Treasury Secretary Timothy Geithner will join EU finance ministers at a meeting in Poland, which holds the rotating EU presidency, to urge them to take decisive action in response to the euro zone debt crisis. Read more

Eurousd supported by trendline.

Euro broke through the trendline and now sitting on another weekly trendline. Expect a rebound from this trendline.

Dow Could Crash to 3,000 in 2013: Author

he recent gyrations in global stock markets are just the beginning, says U.S.-based economist and author Harry Dent, who believes the Dow will fall below 10,000 in the near term before crashing to around 3,000 in 2013.

"I think the stock crash started in late April. This is just the first wave down...I think the crash really starts some time in early 2012," said the Founder and CEO of economic research company HS Dent and author of upcoming book "The Great Crash Ahead".

He pointed to the selloff during the last global financial crisis, when the Dow

[.DJI 10978.78 -13.35 (-0.12%) ] lost around 8,000 points in the period between October 2007 and early 2009.

Dent basis his bearish predictions squarely on the changing spending habits of global consumers.

"Baby boomers around the world, and all the developed countries — Europe, North America, Australia — they have peaked in their spending cycles...they've been driving up real estates prices and stock prices and the economy for decades, and now they're going to be saving and not borrowing," Dent said.

Accentuating the problem is the deleveraging of U.S. private debt, which has doubled to $42 trillion from $20 trillion in the last eight years, according to Dent, and is now valued at three times the size of the nation’s public debt.

"That debt is deleveraging, and that's actually causing deflationary trends. It won't matter how much stimulus the government throws at the system, because baby boomers with their already huge debt burdens will not want to borrow money and spend more,” said Dent. Read more

Forex-Eurousd - sitting on trendline

Euro sitting on trendline and at the base of the horizontal channel. For those going for sideway trading might be ok to buy with stop loss to cut when break trendline after certain points, but for those who are risk adverse, just while for it to break the trendline.

A Market Bear Since June, This Pro Says It’s Time to Buy

Standard and Poor's global equity strategist, Alec Young has been bearish on stock markets since June this year, but like many other market commentators, he’s turned bullish in recent days.

Rose | Mueller | Stock4B | Getty Images

"A lot of (the) bad news has been priced in as a result of the pretty dramatic volatility that we've seen around the world in the last couple of months," Young told CNBC on Thursday. "You can't be a bear forever. I think we were a little ahead of the curve with our caution in June, it's worked extremely well."

It’s time, he says, for investors to rebalance their portfolios with a tilt towards equities, particularly after the global sell-off in August.

“In light of the declines, we are starting to see value and a lot of the allocations for our clients - whether it's emerging market equities, Asian equities, U.S. equities, Europe,” he said.

Major indices like the S&P 500 [.SPX 1200.21 1.59 (+0.13%) ], Britain's FTSE 100 [.FTSE 5331.49 12.90 (+0.24%) ] and Japan's Nikkei [.N225 8793.12 29.71 (+0.34%) ] have shed around 10 percent over the past three months.

"We think the risk-reward equation has improved for global equities," Young added, referring to the increasingly attractive price-to-earning ratios (P/E) of major markets. The FTSE 100, for example, now trades at a one-year P/E of 10.4; the S&P 500 at 13 and the Nikkei at 14.5. That's lower than the 12 times earnings the FTSE was trading at in June, and 15 times earnings for both the S&P and Nikkei. Read more

Dow Rebound Likely, Could Reach 12,400: Charts

What will the U.S. market recovery look like? We don't know exactly, but the history of chart behavior suggests several patterns we should look for, and it involves an alphabet soup of L, V and W shape rebound patterns.

Several factors help shape the pattern. First, is what I suspect will be some form of a further quantitative easing (QE3), be it direct financial stimulus or a further debasement of the U.S. dollar which will help export industries.

Counter this against continued high U.S. unemployment rate of around 9 percent, unmanageable budget deficits and credit downgrades.

When the head-and-shoulder uptrend reversal pattern ends there is no set outcome. The downtrend may continue, or a consolidation pattern may develop. It's the nature of the consolidation pattern that points the way to the future trend development.

The Dow, for one, is in the early stages of consolidation.

Dow Weekly Chart

There are five potential consolidation rebound patterns and most of them are bullish. This includes the V- and W-shaped rebounds from support and also the inverted head-and-shoulder pattern. These are low probability because of their directional bias.

The rebound patterns that include a margin for a bearish fall are the most valid recovery patterns in the current market condition. This is the L-shaped recovery pattern shown in the chart. The trading band consolidation is a sideways movement in a trading band defined by support and resistance levels. Often the volatility within the band remains high, although the exceptional current volatility is unusual.

The breakout, when it comes, is rapid because it's in response to a major change in conditions. This might include a policy announcement such as QE3. The breakout target is calculated by measuring the width of the trading band. This can be an upside or downside breakout. Often these targets are associated with historical support or resistance levels. Once the target is achieved the trend often continues. Read more

Euro's Future—When Will Rioting Start?

On the future of the euro, and when the serious rioting might start.

I read dozens of articles and analyst reports each week; the most interesting piece I saw this week was an interview in the German newsmagazine Spiegel with economic historian Hans-Joachim Voth.

Voth has examined the history of 28 European countries over the last 90 years. His conclusion:

1) "Austerity and anarchy are closely linked"

2) "Savings [budget cuts] amounting to just one percentage point of GDP are accompanied by social unrest. And when they reach two or three percentage points, it massively increases."

The cuts being asked in Greece — and likely Italy — far exceed two to three percentage points. The debate on the Italian austerity budget begins in Parliament next week.

Nor are they likely to be implemented: "There's no reason to believe that the scale of reforms currently needed to move things forward economically is politically feasible."

On the future of the euro: he gives the euro another five years, but says it is Germany that should quit the euro, not Greece:

"It would be much easier for Germany than for Greece because it's always the banks that are the problem in such cases. The second the country that is about to have a soft currency steps out of the euro network, all of its citizens are going to plunder their accounts and ask for their money in cash. Then the banking sector is broke."

The main problem: countries can no longer devalue their currency: Read more

Eurousd - Still sideway

Market still going sideway. So still stay out and wait.

Dead Cross' Triggered

Are large-cap stocks about to nosedive?

The "Dead Cross"—a bearish technical indicator that occurs when a market's 50-day moving average crosses below its 200-day moving average—was triggered at the end of trading for large-cap stocks on Tuesday, according to Dow Jones Indexes. The Dead Cross is sometimes known as the "Death Cross."

As a result, Dow Jones says the stock allocation for its Dow Jones Golden Crossover U.S. Large-Cap Total Stock Market Index will "gradually decrease" within the next five days to 25 percent from 100 percent.

David Krein, senior director, product development and analytics of Dow Jones Indexes, says that this condition has occurred once or twice a year over the past decade, sometimes more, sometimes not at all. With regard to large-cap equities, the "Dead Cross" means that a downward trend in the market has begun or is about to begin.

"This is the only index that tracks this occurrence," he says. "The index is making the decision that investors would have had to make themselves." The indicator is a warning, says Krein that investors in large-cap equities "should begin exiting from the market" and move into less-risky assets.

A dramatic example of the "Dead Cross" occurred following the market peak in 2007 through the market trough in 2009.

In this case, investors who've tracked this technical indicator would have cut their losses by more than half and would have fully recovered losses by November 2009. Read more