Best of the Week
Most Popular
1.The Greatest Stock Market Crash Of Your Life Is Just Ahead… – Warns Harry Dent - GoldCore
2.Budget 2016: Borrowing, Lifetime ISA, House Prices, Economy, Syria, Brexit and Stocks - Nadeem_Walayat
3.Gold Price Intermediate Top - Clive_Maund
4.Brussels Terror Attacks, Death of the European Union, BrExit Wake up Call - Nadeem_Walayat
5.Stock Market Maybe This Time is Different? - Tony_Caldaro
6.UK House Asking Prices Break Above £300k! Housing Market Paralysis - Nadeem_Walayat
7.A Big Reason Why Silver Price Is Set To Soar - Hubert_Moolman
8.The Financial Crisis Has Just Begun; Is The American Dream Is Over? - Chris_Vermeulen
9.Gold Stocks Spring Rally - Zeal_LLC
10.GLX, GLDX, Baby Gold Bull Market Stillborn? - Rambus_Chartology
Last 7 days
Gold Commitments of Traders and More - 1st May 16
The Magic of Gold Ratio Charts - 1st May 16
Consensus Forming: China Heading Back Into Financial Crisis - 30th Apr 16
The Next Technical Price Targets for Gold & Silver - 30th Apr 16
Stock Market Downtrend Should be Underway - 30th Apr 16
Gold And Silver – A Clarion Alarm Call For All Paper Assets - 30th Apr 16
US Economic Statistics LIES, LIES AND OMG, MORE LIES - 30th Apr 16
Stock Market Strong Elliott Wave Relationship is Developing - 29th Apr 16
Fed's Kaplan: Brexit to Factor in US June Interest Rate Decision - 29th Apr 16
Silver Miners Strong in Grim Q4 - 29th Apr 16
Is Silver a better bet than Gold in the Near Future? - 29th Apr 16
How to Use the CoT Report in Gold Investing? - 29th Apr 16
Sri Lanka is Intriguing: Areas to Consider for Value Investing - 29th Apr 16
Gold “Chart of The Decade” – Maths Suggest $10,000 Per Ounce Says Rickards - 29th Apr 16
Are We or Are We Not in a New Gold Bull Market? - 29th Apr 16
Silver: The “Five Year Plan” and the Great Leap Forward - 28th Apr 16
Michael Hudson: The Wall Street Economy Has Taken Over The Economy and Is Draining It! - 28th Apr 16
AUD/USD - Trend Reversal or Just a Bigger Pullback? - 28th Apr 16
A Gold Revaluation Could Transform Your Financial Status - Overnight - 28th Apr 16
Monetary Policies Misunderstood - 28th Apr 16
Gold Bullion vs Gold Miners - 28th Apr 16
OECD Suggests BrExit Would Cut Net Migration by 1.2 Million by 2030 - 28th Apr 16
MP Naz Shah Punished for Tweets Made During Israel's Genocide of Gaza Palestinian People - 28th Apr 16
Global Recession in 2016 and Beyond - The Obvious Evidence - 27th Apr 16
Why Gold Bugs Need to Stop Listening to The Fear Mongers and Start Thinking for a Change - 27th Apr 16
BlackRock’s Fink: Fed to Raise Interest Rates by Quarter Point ‘at Best’ - 27th Apr 16
Gold More Productive Than Cash?! - 27th Apr 16
Donald Trump Will Fire Janet Yellen and Be Trapped - 27th Apr 16
Money Saving Gardening by Propagating Roses From Cuttings - Propagating Rose Plants Over 2.5 Years - 27th Apr 16
Facebook Censors Pro Trump and Negative Hillary News - 27th Apr 16
This is the Era of the Democrats and Your Taxes are Going Up - 27th Apr 16
Long Awaited Gold Price Breakout - 26th Apr 16
Crude Oil Price Double Top or Further Rally? - 26th Apr 16
Madness in the Crimex Gold and Silver Trading Pits - 26th Apr 16
Britain's Prospects: GBP and BREXIT - MAP Wave Analysis - 26th Apr 16
CRB, Gold, Oil, Cotton, Coffee - 7 Must See Commodities Charts - 26th Apr 16
Gold Price Target is $3,000 and Silver is $75 per Ounce - 25th Apr 16
Parameters for a Stock Market Sell Signal-in-the-making - 25th Apr 16
Stock Market Dangerous Divergence - 25th Apr 16
Gold Miners Nub is the Sweat of the Sun - 24th Apr 16
US Dollar Price Forecast - 24th Apr 16
Stock Market Upside Objective Reached - 24th Apr 16
Why Leftist Greeks have more reasons than Liberals to favour Entrepreneurship and Support Entrepreneurs - 24th Apr 16
The Dow Jones is a Catalyst for Misplaced Stock Market Optimism - 24th Apr 16
Why Russia Harasses U.S. Aircraft and Ships - 24th Apr 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Catching a Falling Financial Knife

December Stock Market Brief, Avalanche of European Debt 2013

Stock-Markets / Stock Markets 2012 Dec 12, 2012 - 04:50 AM GMT

By: Christopher_Quigley

Stock-Markets

A market giving mixed signals:
The stock market had been basically playing a waiting game since the American presidential election with a tug of war going on between buyers and sellers but now the momentum is definitely moving with the bulls. By all accounts this rally should remain, notwithstanding any shock from Congress and the fiscal negotiators from the Whitehouse. The sooner these budget issues are put to bed the better. Either way, fiscal cliff or no fiscal cliff, the end result will be the same.  There has to be some budget cuts and some raising of taxes (the ratings of the American dollar demand it) so I really do wish they would get on with the job of work at hand and cool the dramatics.


The action demanded by American and European budgetary arithmetic is deflationary
all-round yet the market is still positive. Thus while there is no fundamental reason for bullish price action one cannot fight the market. It remains to be seen whether the rally is sustainable.

The Dow Transports held at the crucial 4900 level after the election results and if the 5350 level is broken to the upside it will be a very bullish technical signal. It will mean this important leading index has pierced up out of a 12 month trading range. This range formed a "line" in Dow parlance. The longer the duration of the "line" the more technically important any breakout.

The strength of both the Dow Transports and the Dow Industrials is surprising to me given that quite a few stocks are below their 200 daily moving averages (DMA), in addition significant DMA have become points of resistance rather than support for many equities. These technical characteristics are indicative of a bear market so it remains to be seen whether this bull really has legs. To show what I mean here are a few examples: BIDU, BBBY, MSFT, DLTR and DG.

Baidu Inc.: Daily



Bed Bath & Beyond Inc.: Daily

Microsoft Inc.: Daily

Dollar Tree Inc: Daily

Dollar General Corp.: Daily


An avalanche of European debt rolling over in 2013:
"One European issue you don't hear about a lot is the massive amount of debt, both public and private, that will roll over (i.e. need to be refinanced) in the next few years. In 2013 nearly $1.2 trillion of European government bonds will need to be refinanced. A few weeks ago, in a CNBC interview, CEO of money management giant Blackrock Larry Fink, hinted that his firm's clients, typically large institutions, had very little interest in buying those bonds — especially those issued by downtrodden  European Union members such as Spain and Italy. Worse still is the mountain of debt refinancing European companies will need. About $4.2 trillion worth of corporate bonds will mature through 2016, according to Standard and Poor's ratings services. In 2012  alone roughly a half trillion came due. But the real tidal wave rolls over the next two years, with $1.03 trillion for 2013 and $1.28 trillion in 2014. If these numbers aren't scary enough, then consider financial companies (i.e. banks) owe about 78% of this debt. These companies are the primary sources of liquidity to keep the commercial gears of the EU greased. If investors are hesitant to buy European sovereign debt, then the mere idea of buying European corporate debt — especially for financial companies — would send them running for the hills."

From the above report by the Jutia Group the new European Stability Mechanism (ESM) is going to have a very busy year in 2013. The ink is barely dry on recent plans when it is now apparent that the agreed 500 billion Euro targeted to be "raised" will not be sufficient to meet requirements particularly as it looks increasingly likely that Italy will go into "default" like Spain, Portugal, Greece and Ireland.

Any indication that the 27 Euroland countries are going to drag their feet in this regard will more than likely throw the Euro into its biggest crisis yet. The reason for this growing disillusion is that it is rumored the fund will need to "grow" to at least 2 trillion Euros to adequately deal with the Italian problem. It is thought in certain circles that this debt level may be substantial enough to now make the German political establishment finally consider throwing in the towel on the disaster that has become the Euro. I personally don't think they will walk but if France goes the way of Italy that is another issue. I do not think Germany could maintain its premier sovereign debt status in such an eventuality. I think then and only then will the writing be on the wall for the Euro.

Charts: Courtesy of StochCharts.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