Friday, August 19, 2011

Stockmarket Update 19 August 2011

Did anyone get the number of that bus that just hit us?????

(Quick update as of Thursdays close).

Another interesting day in the markets.  All was well on Wednesday night and Thursday we went down like a ton of bricks on little/no economic news of significance (other than the news that the Swiss National Bank was acquiring 200 million in a short term swap with the NY Fed):

UPDATE 1-Forex swaps with SNB total $200 million - NY Fed

Thu, Aug 18 2011

NEW YORK, Aug 18 (Reuters) - The Federal Reserve provided $200 million of liquidity to the Swiss National Bank in the latest week via its swap lines for foreign central banks, the New York Fed said on Thursday.

The SNB was the sole institution to tap the swap lines in the week ended Aug. 17, swapping the full amount.

The terms for the SNB swap were seven days at 1.08 percent.

It was the first time the SNB has tapped the swap lines since they were reopened in May, 2010, and the first time since early March that the Fed has provided liquidity to a foreign central bank. Then, the European Central Bank swapped $70 million.

The SNB has faced mounting pressure in recent weeks to rein in the rapid ascent of the Swiss franc as investors have run for safety on concerns about the global economy and Europe's debt crisis.

"The very high price of the Swiss franc is putting an enormous amount of stress on them," said Boris Schlossberg, director of currency research at GFT in New York. "They are using swap lines to obtain more dollars basically to go into the market."

The SNB has been pumping liquidity into the Swiss franc money market in a bid to reduce the appeal of franc-denominated assets and weaken the currency. The bank on Wednesday said it would boost liquidity further via foreign exchange swaps and by buying back its own debt, called SNB Bills.

The Federal Reserve has established swap arrangements with the Bank of Canada, the Bank of England, the European Central Bank, the Swiss National Bank and the Bank of Japan in an effort to respond to the re-emergence of strains in short-term funding markets in Europe. (For the full Fed report, double-click on: here) (Editing by Dan Grebler).
The question is why does the SNB need a short term swap agreement at this particular moment?  Perhaps a Swiss Bank with too much exposure on the verge of collapse?

In any case this was the excuse used by the market to sell off.  Welcome to the world of computer generated High Frequency Trading (HFT).


(CLICK ON ALL CHARTS TO ENLARGE)


SPX 15 Minute


Stunning move down on the open.  Bearish wedge spoken about previous now broken to the downside.

Appears market wants to retest 1118/1101.

Stopped out of my trading positions for a very small loss.  Now neutral awaiting a retest.


SPX Daily


Daily chart still BEARISH and on a sell signal.

Possible bullish wedge forming.  Appears price wants to test the 1119 daily closing low.  Pivot support @ 1059 looks like perhaps the ultimate target (pure speculation at this point).


SPX Weekly




Weekly chart still BEARISH and targeting 1101.

A weekly close below and the next target would be the 50% Fibonacci @ 1018 followed by the 61.8% Fib @ 935.


SPX Monthly



Monthly chart still leaning BEARISH but does not become "official" before the end of the month.  5 out of my 7 technical indicators bearish as well.  Unless we have a heck of a reversal over the next few weeks looks like the monthly will come into alignment with the weekly. 
 
Bottom Line:
 
It appears many ECAM subscribers read little-to-none of my commentary in these blog posts and merely skip to the "bottom line".
 
Just so there is no confusion, at no time have I advocated changing Provident Fund positions over the past weeks.  There have been trading opportunities for those who are swing trading/position traders and I have indicated what I have done in my own trading account.  This has nothing to do with the Provident Fund.
 
MY PROVIDENT FUND POSITIONS REMAIN UNCHANGED AND WILL REMAIN SO UNTIL THE MONTHLY CHART COMES INTO ALIGNMENT WITH THE DAILY/WEEKLY CHARTS.  


My management methodology has never changed with respect to the Provident Fund.  It is too illiquid an investment vehicle to move in and out quickly.  As such, changes are made seldom and only when there is a HIGH PROBABILITY prices have transitioned into a potential multi-month bear market.  This is only confirmed when the daily/weekly AND monthly charts are in alignment.


  Emirates Provident Fund:
As of Thursday, 18 August 2011 I remain in a strategic 50% equities/50% USD cash weighting as follows:**


-BlackRock US Dollar Cash Portfolio Fund: 50%

-Russell Global 90 Fund: 15%

-Fidelity International Fund: 10%

-BlackRock Equity Portfolio Fund: 25%


**Actual positions will change daily based upon price action and market volatility.

Legal Disclaimer: The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions. NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES. The author will reveal his current market positions and holdings but actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility. The author is not licensed as an investment advisor in the UAE and therefore cannot provide individual account advice to individuals and/or institutions.

For further information please use the following email address and I will do my best to get back to you when able.
ecamquestions@gmail.com

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