Best of the Week
Most Popular
1. Trumponomics Stock Market 2018 - The Manchurian President (1/2) - Nadeem_Walayat
2.Yield Curve Inversion a Remarkably Accurate Warning Indicator For Economic & Market Peril - Dan_Amerman
3.China is Now Officially at War With the US and Japan - Graham_Summers
4.Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18 - Plunger
5.Stock Market Longer-Term Charts Show Incredible Potential - Chris_Vermeulen
6.U.S. Stock Market Cycles Update - Jim_Curry
7.Another Stock Market Drop Next Week? - Brad_Gudgeon
8.The Death of the US Real Estate Dream - Harry_Dent
9.Gold Market Signal vs. Noise - Jordan_Roy_Byrne
10.The Fonzie–Ponzi Theory of Government Debt: An Update - F_F_Wiley
Last 7 days
Why Oil Prices Fell -- Stockpiles or Price Pattern? - 18th Aug 18
Why The Uranium Price Must Go Up - 18th Aug 18
Land Rover Discovery Sport 90% Motorway Driving MPG Fuel Economy in ECO Mode - 18th Aug 18
GDX Gold Mining Stocks Q2’18 Fundamentals - 18th Aug 18
SPX Losing Gains - 17th Aug 18
What Gold Is Not - 17th Aug 18
Dollargeddon - Gold Price to Soar Above $6,000 - 16th Aug 18
Stock Market Higher Again, Correction Over? - 16th Aug 18
Up Your Forex Trading Game - 16th Aug 18
Large Caps Underperformance vs. Small Caps is Bullish for Stocks - 16th Aug 18
“The Big Grab” - Failing Pension and Retirement System - 16th Aug 18
How US Indo-Pacific Vision Forgot Asian Development - 16th Aug 18
Impulse Moves in the Currencies - 15th Aug 19
Best Merlin UK Theme Park Summer Holiday 2018 - Thorpe, Alton Towers, LegoLand or Chessington? - 15th Aug 18
The Essence of Writing an Essay that Must be Understood - 15th Aug 19
Is Solar Energy Rising From The Ashes Again? - 15th Aug 18
A Bullish Bond Argument That Hides in Plain Sight - 15th Aug 18
Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future” - 15th Aug 19
A Depressed Economy And A Silver Boom - 15th Aug 19
Moving Averages Help You Define Market Trend – Here’s How - 14th Aug 18
It's Time for A New Economic Strategy in Turkey - 14th Aug 18
Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - 14th Aug 18
Dow Stock Market Trend Forecast 2018 - Video - 13th Aug 18
Stock Market Downtrend to Continue? - 13th Aug 18
More Signs That the Stock Market Will Rally Until 2019 - 13th Aug 18
New Stock Market Correction Underway - 13th Aug 18
Talk Cold Turkey Economic Crisis - 13th Aug 18
Which UK Best Theme Park - Alton Towers vs Thorpe Park vs Lego Land vs Chessington World - 12th Aug 18
USD is Rising. What this Means for Currencies and Stocks - 12th Aug 18
Hardest US Housing Market Places to Live - Look Out Middle Class - 12th Aug 18
America’s Suburbs Are Making a Comeback - 12th Aug 18
Stock Market US Presidential Cycle, Seasonal Analysis and Economy - Video - 12th Aug 18

Market Oracle FREE Newsletter

Trading Any Market

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

© 2005-2018 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

6 Critical Money Making Rules