Best of the Week
Most Popular
1.The Brexit War! EU Fearing Collapse Set to Stoke Scottish Independence Proxy War - Nadeem_Walayat
2.London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - Nadeem_Walayat
3.The BrExit War, Game Theory Strategy for What UK Should Do to Win - Nadeem_Walayat
4.Goldman Sachs Backing A Copper Boom In 2017 - OilPrice_Com
5.Trump to Fire 50 US Cruise Missiles To Erase Syrian Chemical Attack Air Base, China Next? - Nadeem_Walayat
6.US Stock Market Consolidation Time - Rambus_Chartology
7.Stock Market Investors Stupid is as Stupid Goes - James_Quinn
8.Gold in Fed Interest Rate Hike Cycles- Zeal_LLC
9.The BrExit War - Britain Intelligence Super Power Covert War With the EU - Nadeem_Walayat
10.Marc Faber: Euro to Strengthen, Dollar to Weaken, Gold and Emerging Markets to Outperform - MoneyMetals
Last 7 days
EURUSD at a Critical Point in Wave Structure - 23rd Apr 17
Stock Market Grand Super Cycle Overview While SPX Correction Continues - 23rd Apr 17
Robert Prechter Talks About Elliott Waves and His New Book - 23rd Apr 17
Le Pen, Melenchon French Election Stock, Bond and Euro Markets Crash - 22nd Apr 17
Why You Are Not An Investor - 22nd Apr 17
Gold Price Upleg Momentum Building - 22nd Apr 17
Why Now Gold and Silver Precious Metals? - 22nd Apr 17
4 Maps That Signal Central Asia Is at Risk of War - 22nd Apr 17
5 Key Steps For A Comfortable Retirement From Former Wall Street Trader - 22nd Apr 17
Can Marine Le Pen Win? French Presidential Election Forecast 2017 - 21st Apr 17
Why Stock Market Investors May Soon Be In For A Rude Awakening - 21st Apr 17
Median US Household’s Wealth Has Declined by 40% Since 2007 - 21st Apr 17
Silver, Platinum and Palladium as Investments – Research Shows Diversification Benefit - 21st Apr 17
U.S. Stock Market and Gold, Post Tomahawks and MOAB - 21st Apr 17
An In Depth Look at the Precious Metals Complex - 20th Apr 17
The Real Story of China’s Strong First-Quarter Growth - 20th Apr 17
3 Types Of Life-Changing Crisis That Make You Wish You Had Some Gold - 20th Apr 17
The Truth is a Dangerous Thing - 20th Apr 17
2 Choke Points That Threaten Oil Trade Between Persian Gulf And East Asia - 20th Apr 17
Gold’s Next Downside Target Is Around $700… Even if It Breaks Up First - 19th Apr 17
SPX May be Completing its Corrective Pattern - 19th Apr 17
Silver Production Has “Huge Decline” In 2nd Largest Producer Peru - 19th Apr 17
Soothing East Asia's Nerves as Trump's Administration Reaffirms US Power in Asia-Pacific - 19th Apr 17
The Brexit War - Article 50 Triggered, General Election 2017 Called - Let the Games Begin! - 19th Apr 17
Plungers Big Trade - The Oil Short - 18th Apr 17
The Smart Money Is Piling Into Regenerative Medicine - 18th Apr 17
If You Invest In Stocks Now, Expect No More Than 3% Returns In The Next 20 Years - 18th Apr 17
Maps That Explain Wars In The Middle East And North Africa - 18th Apr 17
Theresa May Calls Snap BrExit UK General Election Capitalising on Crippled Labour Party - 18th Apr 17
Is US Economy at the Cusp of the Next Recession? or Maybe Worse? - 18th Apr 17
US Housing Market Mortgage Delinquency Rates Increase & 3X ETFs - 17th Apr 17
Trump US North Korea First Strike Smoke and Mirrors, China is the Real War Target! - 17th Apr 17
Now Is The Time To Invest In Canada’s Marijuana Boom - 17th Apr 17
History of the Post WWII Crude Oil Price From a Technical Perspective - 17th Apr 17
Stock Market Bounce Coming? - 17th Apr 17

Market Oracle FREE Newsletter

50+ Global Markets. Today's Top Opportunities. (April 12-20)

Euro-zone Trauma Means Stock Market Technical Weakness Continues

Stock-Markets / Stock Markets 2012 Nov 13, 2012 - 07:44 AM GMT

By: Christopher_Quigley

Stock-Markets

Best Financial Markets Analysis ArticleThe technical picture in the market continues to deteriorate. The divergence between the Dow Transports and the Dow Industrials has been resolved with both indices now adopting a bearish stance. The Dow 30, the Dow 20 and the NASDAQ are all trading below their 200 day moving averages. The S & P 500 is only 3 points above this important technical level. In addition, with regard to market breath, the 20 day moving average has crossed the 50 day moving average on the McClennan Summation and the NYSE Advance/Decline Line. I am a great believer in market breath indicators so I reckon we are on the cusp of a bear trend turning into a bear market. It is all in play as we speak but for me the deciding indicator will be the Dow Transports. As mentioned in the October brief, should this index break below the 4850 level decisively, in all probability the bear trend will have gained "legs to last".


Many reckon that the "fiscal cliff" will be quickly sorted and that the positive trend in the American economy will resume. I am not so sure. This was no "ordinary" election. The Republican Party, following the "tea party revolution", is not the "normal" Republican Party. The issue is no longer simply economic. It has become one of identity and meaning, thus the party has become "evangelical". Previously a democratic president could always rely on doing a deal with some breakaway republicans to swing a mandate. Not so today. Any republican that breaks ranks will be seen as a total traitor to a higher cause and banished. This was why there was no fiscal breakthrough last year. The same dynamic will make it even more difficult to negotiate a resolution this second time around.

The closer the economy gets to the cut-off date the more volatile the situation is going to become and I read in the technicals that the market sees a difficult time ahead. I hope I am wrong and that the Transport Index holds.

Dow Industrials: Daily


Dow Transports: Daily


NASDAQ: Daily


S & P 500; Daily


European Trauma:
The European saga with regard to austerity continues apace making one wonder what American and Chinese politicians think of the sham that is Eurozone "financial management".

Spiegel Online: 11th. Nov.
"The disbursement of the next loan tranche to Greece will be significantly delayed, German Finance Minister Wolfgang Scheuble confirmed.

"At the moment I do not see how we can come to a decision on Greece and with Greece at the end of next week, it would be too early," Scaeuble told an economics forum in Hamburg. “We are not out of the woods with Greece yet,” he said, according to news agency Reuters.

Last week, the German minister had said that the troika still has plenty of unanswered questions on Greece and that its work is far from over. According to Reuters, Schauble added that for a large majority of eurozone countries a debt restructuring for Greece is not legally possible.

EU Economic and Monetary Affairs Commissioner Olli Rehn also stressed on Thursday last that there remained a few more steps to take before the Eurogroup makes its final decision on Greece. “There is no denying that it [Greece's debt] is increasingly unsustainable without further measures”, Rehn told reporters in Brussels.

Earlier in the week, in an interview with Reuters, Rehn had said that the IMF, EC and ECB troika were working with the Greek government to find a way to cut the debt to a more sustainable level.

"It is important to look at ways and means to reduce the debt burden of Greece. We are currently doing this together with the IMF and the Greek government and it may be a combination of factors related to the length of maturities and level of interest rates of official loans," Rehn said.

"However, no haircuts of official loans are on the agenda and they are not necessary," Rehn added."

Greece needs a reprieve in the next few days else its public employee and bond interest cheques will start to bounce. The European Commission will do anything to keep Greece in the Euro and is thus in favor of granting her longer repayment terms and debt write-off. Yet Germany refuses to publicly consider a new bailout. The IMF is also on the side of maintaining original terms. Somebody will have to square all this by the end of the week. It's my guess that Germany and the IMF will be brought to heel, as the formal bankruptcy of Greece would lead to its immediate departure from the Euro and this cannot be contemplated. There is nothing like the abyss to open folk's minds and wallets.

Meanwhile in Spain the austerity measures continue to tear the social fabric apart. 400,000 homes are in foreclosure with no end in sight. Prime Minister Mariano Rajoy held emergency meeting with banks yesterday to try to implore them to become more lenient with borrowers. This initiative was forced on him following widespread outrage when Amaia Egana, a 53 year old woman from the Barcalda district, committed public suicide when banks tried to force her from her property.

In the Catalonia region of North Eastern Spain things have become so bad that there is now a growing movement to secede from the Spanish state. Regional president Arthur Mas, who favors secession and wants to hold a referendum, is expected to be re-elected November 25th. King Carlos had stated that secession could lead to the total breakup of Spain and a collapse of the Catalonian economy. He has vowed to prevent it. The Catalonian populace, in the majority, wants to withdraw from the Spanish state but remain in the Euro. The European Commission has gone on the record saying that this would not be possible.

In France, Great Britain and Italy authorities are getting tough with large American public corporations that use strident tax avoidance measures to mitigate taxes. The representatives of entities such as Google, Amazon, Ebay and Starbucks have retorted that what they do is totally legal and within the remit of current international tax treaties between the US and the Eurozone. One British parliamentarian who was interviewing these corporate executives in London yesterday went on the record saying; "yes your actions may be legal but they are not moral".

I reckon that as austerity measures continue to bite across Euroland we will see more and more attacks on favorable tax avoidance measures. This trend can only adversely affect the profitability of international corporations operating throughout Europe, bringing with it more uncertainty, instability and risk to corporate financial planning and assessment.

Charts: Courtesy Of StockCharts.com

By Christopher M. Quigley

B.Sc., M.M.I.I. Grad., M.A.
http://www.wealthbuilder.ie

Mr. Quigley was born in 1958 in Dublin, Ireland. He holds a Bachelor Degree in Accounting and Management from Trinity College Dublin and is a graduate of the Marketing Institute of Ireland. He commenced investing in the stock market in 1989 in Belmont, California where he lived for 6 years. He has developed the Wealthbuilder investment and trading course over the last two decades as a result of research, study and experience. This system marries fundamental analysis with technical analysis and focuses on momentum, value and pension strategies.

Since 2007 Mr. Quigley has written over 80 articles which have been published on popular web   sites based in California, New York, London and Dublin.

Mr. Quigley is now lives in Dublin, Ireland and Tampa Bay, Florida.

© 2012 Copyright Christopher M. Quigley - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Christopher M. Quigley Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife