Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Gold Sector is On a Long-term Buy Signal - 21st Nov 17
Saudi Arabia and Israeli Alliance Targets Iran - 21st Nov 17
What History Says for Gold Stocks in 2018-2019 - 21st Nov 17
US Bond Market Operation Twist by Another Name and Method? - 21st Nov 17
Learning from Money Supply of the 1980s: The Power and Irony of “MDuh” - 20th Nov 17
Trump’s Asia Strategy, Goals and Realities - 20th Nov 17
Crude Oil – General Market Link - 20th Nov 17
Bitcoin Price Blasts Through $8,000… In Zimbabwe Tops $13,500 As Mugabe Regime Crumbles - 20th Nov 17
Stock Market More Correction Ahead? - 19th Nov 17
Universal Credits Christmas Scrooge Nightmare for Weekly Pay Recipients - 18th Nov 17
Perspective on the Gold/Oil Ratio, Macro Fundamentals and a Gold Sector Bottom - 18th Nov 17
Facebook Traders: Tech Giant + Technical Analysis = Thumbs Up - 18th Nov 17
Games Betting System For NCAA Basketball Sports Betting - Know Your Betting Limits - 18th Nov 17
Universal Credit Doomsday for Tax Credits Cash ISA Savers, Here's What to Do - 18th Nov 17
Gold Mining Stocks Fundamentals Q3 2017 - 17th Nov 17
The Social Security Inflation Lag Calendar - Partial Indexing - 17th Nov 17
Mystery of Inflation and Gold - 17th Nov 17
Stock Market Ready To Pull The Rug Out From Under You! - 17th Nov 17
Crude Oil – Gold Link in November 2017 - 17th Nov 17
Play Free Online Games and Save Money Free Virtual Online Games - 17th Nov 17
Stock Market Crash Omens & Predictions: Another Day Another Lie - 16th Nov 17
Deepening Crisis In Hyper-inflationary Venezuela and Zimbabwe - 16th Nov 17
Announcing Free Trader's Workshop: Battle-Tested Tools to Boost Your Trading Confidence - 16th Nov 17
Instructions to Stop a Dispossession Home Sale and How to Purchase Astutely at Abandonment Home - 16th Nov 17
Trump’s Asia Tour: From Old Conflicts to New Prospects - 16th Nov 17
Bonds And Stocks Will Crash Together In The Next Crisis (Meanwhile, Bond Yields Are Going Up) - 16th Nov 17
A Generational Reset That Will Redistribute Wealth to the Bottom 60% Is Near - 16th Nov 17
Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - 16th Nov 17
Gold’s Long-term Analogies - 16th Nov 17
Does Stripping Streets of ALL of their Trees Impact House Prices (Sheffield Example)? - 15th Nov 17
The Trump Administration’s IP Battle Against China - 15th Nov 17
5 Ways Bitcoin can Improve its Odds of Becoming the Future of Money - 15th Nov 17
These Headlines Say Gold is Building a Base for Something Big - 15th Nov 17

Market Oracle FREE Newsletter

Traders Workshop

Stock Market Dow Theory Sell Signal in the Making

Stock-Markets / Stock Markets 2015 Jan 16, 2015 - 05:17 PM GMT

By: Christopher_Quigley

Stock-Markets

The death of the Euro as we know it.

I believe the decision yesterday by the Swiss Central Bank to end its pegged link to the Euro and change its interest rate to a negative .75% is as a seismic event in the history of European monetary integration.

Many financial journalists are commenting accordingly on many media channels that this event is one further step towards the eventual demise of the Euro.


Within hours of the Swiss move two large foreign exchange brokers; FXCM and Excel Markets went bust due to losses suffered by clients. It is expected that a number of big European hedge- fund traders will quickly follow. All eyes will now be on Swiss and European banks Friday to see if unexpected currency loses will depth-charge their already weakened balance sheets.

This is how AFP.Com described the reaction of some Swiss nationals yesterday:

"It's like Christmas all over again!" enthused Vanessa, as she joined a swelling queue outside a currency exchange office in downtown Geneva Thursday.
The 28-year-old hospital orderly was one of many across Switzerland rushing to cash in on a soaring Swiss franc.

Minutes after a shock announcement from the Swiss central bank that it was abandoning the minimum rate of 1.20 francs against the euro, the safe haven Swiss currency strengthened almost 30 percent to 0.8517 against the common European currency before easing back to 1.0421.

"I heard the news this morning. I'm so happy!" Vanessa, who refused to give her last name, told AFP outside of one of many mobbed exchange offices in Geneva.

She has reason to be ecstatic: she is one of some 280,000 people working in Switzerland but living and paying bills in eurozone countries France, Germany or Italy.

These so-called "frontaliers", or border-crossers, are the biggest winners in Thursday's Swiss franc surge, seeing their incomes jump 30 percent in the blink of an eye.

Vanessa said she was contemplating "changing all of my Swiss franc savings into euros".

Other frontaliers were also celebrating Thursday, but said they would not immediately buy large amounts of euros.

Panic buying?

"For those of us living in France and working in Switzerland, this is great!" said Doina Bancila, a 40-year-old bank employee.

"But I don't want to buy euros in a panic. I'll wait for next week or the week after to see how the situation evolves," she told AFP.

Gaelle Voisin, another resident of France, meanwhile said she had only learned about the bonanza she had in store when she turned up at the exchange office.

"I was really surprised to see all of these people here," said the 40-year-old radio presenter, adding she at first thought the crowd was waiting to buy the latest copy of Charlie Hebdo, in tribute to the 12 people killed in last week's attack on the satirical weekly's Paris office.

"I was just going to do a simple exchange, and then this. It's good for me, and for all the French people working in Switzerland," she said.

Many Swiss residents were also rubbing their hands over their booming currency, envisioning vacations abroad and perhaps buying up cheaper real estate on the other side of the border.

"This could mean we can take cheaper euro vacations ... and if you want to buy a secondary home in France, this is a good thing," 70-year-old wealth manager Charles Gutowski told AFP.

But, he added, the Swiss central bank itself will lose a fortune, since it has huge foreign currency reserves, and large Swiss companies will take a beating.

"This is going to cause a lot of trouble," he said.”

This new policy by the Swiss Central Bank makes it more likely that the European Central Bank will indeed introduce some degree of quantitative easing when it meets towards the end of January.

Renewed European currency instability is bound to have a negative effect on Euro bond rates and the last thing Euroland needs is spiraling sovereign interest rates. Such a development would put already struggling parliamentary budgets in Ireland, Portugal, France, Italy and Spain under severe pressure and could be the straw that breaks the camel’s back of continued Euro integration. The ECB will definitely prevent this happening if at all possible.

Dow Theory sell signal in the making.

The stock markets continue to weaken.

The comparison chart below of the Dow Transports and the Dow Industrials show a definite short term down-trend with lower highs and lower lows in evidence on both.

The indices are congruent so the trend is gaining momentum.

The Dow Transports have broken the previous lows of October and December of last year.

Should the Industrials do the same and break the 17069 intra-day low of mid-December we will have a Dow Theory sell signal, which will be bearish.

The McClennan Summation which is an excellent tool for identifying trend indicates that the current trend could have legs. Thus while stochastics are indicating oversold levels, in all probability if the key level mention above on the Dow Industrials is breached, the current bearishness will continue.

Chart: Dow Comparison: 3 Day.

Chart: Dow Transports Index: Daily.

Chart: Dow Industrials Index: Daily.

Chart: McClennan Summation: Daily.

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.

© 2014 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

© 2005-2017 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