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Yesterday's Notable Technical Developments


It's very simple: Out of risk and into safety!

Summary of Yesterday's Notable Technical Developments

Very simple: Out of risk and into safety! It's been a recurring theme, but just in case you didn't get the message, the markets thumped you upside the head with it. Scary possibilities about financial contagions from overseas have caused global investors and traders alike to completely abandon anything that isn't 100% safe (kind of). At the moment, the safest assets seem to be those backed by printing presses and governments willing to use them. This has led to a flight from euro exposure and increased demand for the dollar and yen.

A quick scan of the major asset classes by proxy (TLT, S&P futures, DBC, and UUP) illustrates the rotation in recent days…

…while this 130-minute chart shows the trends taking shape over recent weeks and months.

This Morning

Asian markets followed the US lower to the tune of 2%-3% losses and European markets are suffering again, down 1%-2% as of 8 a.m. EST. More dollar strength overnight and early this morning versus the euro and yen has the US dollar index (DXY) higher and very near my target of 80.50. This is putting more downward pressure on gold prices (lower by 0.75% as of writing), while oil remains flat for now. The benchmark 10-year US Treasury is firmer ahead of the 8:30 a.m. employment report, yielding 3.57%. Yield support remains at 3.55% and may be put to the test today. While the employment report has the potential to be a real game-changer, one thing we can expect is more volatility today as uncertainty is the market's nemesis -- especially on a Friday!

Market internals: NYSE
(Figures are rounded)

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