Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Currencies and Bonds Indicate a Bounce May Be Near

By

While we may still be in a "sell the rips" mode on an intermediate-term basis, the short-term may bring us a tradable rally in risk assets once certain support levels are reached.

PrintPRINT

Here's a better look at where EURGBP may be headed.

The chart below gives a wider view of the EURGBP set-up. Again, notice that once the support at around 0.79444 is tested, the minimum upside (even if this is merely a larger "ABC" correction and not a new thrust higher) comes in at 0.83218 or so. To me, that's a trade worth taking!


Click to enlarge

Was the recent breakout (krona strength) a head fake?

I've been touting the merits of my newly discovered tell in the currency markets – the "franc vs. krona" indicator. Last week, the EURCHF / EURSEK spread ratio crossed above the short-term downtrend line (indicating a possible change in trend from franc strength to krona strength). That change may still be happening, but the ratio has fallen back below that trend line – which is not good, but not a deal breaker in and of itself.
There are still lower highs in place on the ratio (bearish for risk assets) but the ratio has not yet set a new lower low (hopeful for risk assets). If we see 0.13942 on this ratio violated on the downside on a closing basis, a new lower low will have been made and the signal coming from this indicator will remain a bearish one.


Click to enlarge

Treasury yields nearing critical support level.

I have put forth for a while now that I'm expecting a decent move higher in interest rates. By decent, I mean that even a corrective move in rates to the upside could take yields up to 2.031%. If the up move were to be something more than a correction, obviously the targets for rates would be much higher (2.21% to 2.321% by my current calculations). Thus far, my call has not come to fruition as the "risk off" trade has been in play for the last several weeks and the Fed is likely leaning all over rates to keep them as low as possible for as long as possible.

As long as the downside support at 1.562% to 1.573% holds up, my call for rates to rise sooner than later may come to fruition. However, a break of 1.573% will be a major shot across the bow and a break of 1.562% will be a deal breaker for this call. Pay close attention to this battle!


Click to enlarge
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE