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A Binary Event Is on the Horizon for All Markets
From the Buzz & Banter: Markets are likely to be far away from current prices in a very short time.
Rafael Diamond    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Pardon the interruption, with the caveat that if the world is ending, this transgression will quickly fade from memory as the post-apocalyptic survivors will have other priorities.

Below is the German DAX (INDEXDB:DAX) chart I posted two days ago on the Buzz & Banter [subscription required]. Note the quintuple support directly below. I still think it could be a tough battle for the bears, but a binary event is coming -- meaning, the market is likely to be far away from current prices in a very short time.


Click to enlarge


Shanghai copper, which continues to be at the forefront of the Chinese deleveraging scare, traded over 2 million contracts in aggregate on Wednesday (March 12) the day before over 1.5 million contracts traded as well).


Click to enlarge


Here is the updated COMEX Copper chart from Monday's post, testing the hard support level as markets often do, AND forming a potential hammer bottom.


Click to enlarge



Click to enlarge

If deleveraging (or a powerful rally) is directly ahead, there is presently no better chart than silver to illustrate the stored energy.


Click to enlarge


And a closer look.


Click to enlarge


Note that silver is retesting the two prior highs, which is holding the 200-day moving average, and the 50-day moving average comes up just below it. All the while, silver has been forming what appears to be a bull flag (descending channel) since the February high.

This reads like a massive pressure system building up, with major clues for the approaching binary event. It is difficult to imagine such a meaningful multiyear breakout in silver if deleveraging is on the menu. Alternatively, if the world is ending then silver has no business at $21 and new lows are coming.

The question I've been asking myself for several days is the followig: If China just began a major shift in monetary policy (via the currency) towards easing, why is the market "doubling down" (selling at support!), as if Chinese-driven deleveraging is now the main course? Everywhere we turn the consensus is that the policy shift was to flush out currency speculation (which I agree was somewhat excessive), and presumably now the focus is on unwinding metal rehypothecation chains.

I wrote the following passage in December 2011, the last time the yuan fell for some time:

It's in China's strategic interest to manage their slowdown, but it's also in their interest to engineer a commodity collapse. A good place to start is by stopping the currency from appreciating. Just like US house prices in 2005, all you need is for prices to stop going higher.

Could the Chinese government be the smartest guy in the room?
< Previous
  • 1
Next >
No positions in stocks mentioned.
More From Rafael Diamond
A Binary Event Is on the Horizon for All Markets
From the Buzz & Banter: Markets are likely to be far away from current prices in a very short time.
Rafael Diamond    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Pardon the interruption, with the caveat that if the world is ending, this transgression will quickly fade from memory as the post-apocalyptic survivors will have other priorities.

Below is the German DAX (INDEXDB:DAX) chart I posted two days ago on the Buzz & Banter [subscription required]. Note the quintuple support directly below. I still think it could be a tough battle for the bears, but a binary event is coming -- meaning, the market is likely to be far away from current prices in a very short time.


Click to enlarge


Shanghai copper, which continues to be at the forefront of the Chinese deleveraging scare, traded over 2 million contracts in aggregate on Wednesday (March 12) the day before over 1.5 million contracts traded as well).


Click to enlarge


Here is the updated COMEX Copper chart from Monday's post, testing the hard support level as markets often do, AND forming a potential hammer bottom.


Click to enlarge



Click to enlarge

If deleveraging (or a powerful rally) is directly ahead, there is presently no better chart than silver to illustrate the stored energy.


Click to enlarge


And a closer look.


Click to enlarge


Note that silver is retesting the two prior highs, which is holding the 200-day moving average, and the 50-day moving average comes up just below it. All the while, silver has been forming what appears to be a bull flag (descending channel) since the February high.

This reads like a massive pressure system building up, with major clues for the approaching binary event. It is difficult to imagine such a meaningful multiyear breakout in silver if deleveraging is on the menu. Alternatively, if the world is ending then silver has no business at $21 and new lows are coming.

The question I've been asking myself for several days is the followig: If China just began a major shift in monetary policy (via the currency) towards easing, why is the market "doubling down" (selling at support!), as if Chinese-driven deleveraging is now the main course? Everywhere we turn the consensus is that the policy shift was to flush out currency speculation (which I agree was somewhat excessive), and presumably now the focus is on unwinding metal rehypothecation chains.

I wrote the following passage in December 2011, the last time the yuan fell for some time:

It's in China's strategic interest to manage their slowdown, but it's also in their interest to engineer a commodity collapse. A good place to start is by stopping the currency from appreciating. Just like US house prices in 2005, all you need is for prices to stop going higher.

Could the Chinese government be the smartest guy in the room?
< Previous
  • 1
Next >
No positions in stocks mentioned.
More From Rafael Diamond
A Binary Event Is on the Horizon for All Markets
From the Buzz & Banter: Markets are likely to be far away from current prices in a very short time.
Rafael Diamond    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Pardon the interruption, with the caveat that if the world is ending, this transgression will quickly fade from memory as the post-apocalyptic survivors will have other priorities.

Below is the German DAX (INDEXDB:DAX) chart I posted two days ago on the Buzz & Banter [subscription required]. Note the quintuple support directly below. I still think it could be a tough battle for the bears, but a binary event is coming -- meaning, the market is likely to be far away from current prices in a very short time.


Click to enlarge


Shanghai copper, which continues to be at the forefront of the Chinese deleveraging scare, traded over 2 million contracts in aggregate on Wednesday (March 12) the day before over 1.5 million contracts traded as well).


Click to enlarge


Here is the updated COMEX Copper chart from Monday's post, testing the hard support level as markets often do, AND forming a potential hammer bottom.


Click to enlarge



Click to enlarge

If deleveraging (or a powerful rally) is directly ahead, there is presently no better chart than silver to illustrate the stored energy.


Click to enlarge


And a closer look.


Click to enlarge


Note that silver is retesting the two prior highs, which is holding the 200-day moving average, and the 50-day moving average comes up just below it. All the while, silver has been forming what appears to be a bull flag (descending channel) since the February high.

This reads like a massive pressure system building up, with major clues for the approaching binary event. It is difficult to imagine such a meaningful multiyear breakout in silver if deleveraging is on the menu. Alternatively, if the world is ending then silver has no business at $21 and new lows are coming.

The question I've been asking myself for several days is the followig: If China just began a major shift in monetary policy (via the currency) towards easing, why is the market "doubling down" (selling at support!), as if Chinese-driven deleveraging is now the main course? Everywhere we turn the consensus is that the policy shift was to flush out currency speculation (which I agree was somewhat excessive), and presumably now the focus is on unwinding metal rehypothecation chains.

I wrote the following passage in December 2011, the last time the yuan fell for some time:

It's in China's strategic interest to manage their slowdown, but it's also in their interest to engineer a commodity collapse. A good place to start is by stopping the currency from appreciating. Just like US house prices in 2005, all you need is for prices to stop going higher.

Could the Chinese government be the smartest guy in the room?
< Previous
  • 1
Next >
No positions in stocks mentioned.
More From Rafael Diamond
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