George Stein on Yorba Media today at 2:30, yorbamedia.com
June 19, 2013 Leave a Comment
Eurocurrency – Despite the short-covering scramble over the last two weeks, Euro
remains below trendline on the weekly charts. A nice Head and Shoulder pattern
nearing completion on the daily chart suggests a test of 1.1850 as a target. This
would put Euro at or through support on the weekly chart centered around 1.2100 and
produce targets closer to par. Limited upside as long as the 1.3550 area holds this
rally. 150 point of upside risk, 3400 points of downside potential as a long term
short.
S&P 500 – Note the 50 day and 200 day moving averages I have placed on the daily
chart. Note the distance on the daily chart from the recent 1685 top and current
trading levels down to the 200 day moving average is the greatest upside gap on the
charts over the last 5 years, leaving plenty of room for a correction in price or
time or both. A close below the 50 day MA, now around 1610 should usher in a test of
the 200 day MA. Horizontal support lies around 1555, the current 200 DMA is around
1500 and rising. Current rally on the daily appears to be the culmination of the c
wave of b, implying c down now. Fibo retrace was in the 1651.65 area.
T Bonds – reprinting the monthly T-Bond chart from last week’s appearance by our
president, Todd Butterfield, where he talked about the apparent head and shoulders
pattern on the daily chart. Resistance to the upside appears to be in the 145 area
while real support is on the trend-line in the low to mid 120s. So a short on any
strength here gives us a risk/reward ratio of approximately 5-1. S-T activity can go
either way, but intermediate to longer term, we expect rates to rise regardless of
the Fed. JGB yields have more than doubled in the last several months despite
aggressive JGB bond buying at the MOF. Chinese 7-day repo rates have surged over
the past several weeks. In the short term, we have the forces of government
manipulation, inflation and deflation fighting back and forth; in the end, it will
resolve to the loss of market confidence in buying and holding government paper.
regards,
George L Stein
VP, Trading & Technology,
The BlackBay Group of Companies
1-800-992-4630
