IIFT Daily Note with Peter Brown

Deep correction underway

Posted by:  |  Time: 8:07 am  |  Topic:  |  Comments: 2
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The market is ignoring all the QE and is in sell off mode. Bad news from China overnight is excelerating the down move. The market is focusing on the reality that the world is in deep trouble withregard to growth. The QE gave us a boost but now we are back to reality.

ON top of this Spain goes to the market to fund today. Spain has been playing a dangerous game, using the recent falls in bond yields to avoid a bailout. The market may call their bluff today. All in all this market is looking very weak and there is the possibility of further downside.

Targets are 1.2835 on the Euro.        1420/30 area for the S&P,       and 1740 for gold

Samll bounces but overall negative.

2 Comments

Peter Pipesmoker

September 20, 2012

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The problem with QE being used all the time to give a kind of “Security Rush” to Markets and Stock Markets, when underlining Economic Fundamentals are in reality very weak, is very similar to taking Cocaine in my view. The Temporary lift is initially very intense and pleasurable making all seem right in the world until as the rush begins to fade the pleasure fog lifts and darker thoughts shine through again .As things begin to stall again the jittery aftereffects make the Markets gradually twitchy on the buttons . As the Economic fundamentals alter very gradually the low begins to settle in more firmly which makes the Central Banks start hankering after a restoration of the Rush feelings . Out comes the QE Bazooka again but it doesn’t seem to produce the same rush so a few extra spoons and hype are laddled on to get the intensity of feeling again . Yet it doesn’t really work and the low sets in even faster this time requiring more intense and sizeable dosages . The Market are after a while like the boy who cried wolf, the more often it’s called the less effective the QE Bazooka becomes. This is way the EU and ECB are heading . Yours, Peter Pipesmoker.

Lawrence

September 21, 2012

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Hey Peter,

The Dollar spread seems to have corrected itself this morning. Any reason for the rise in EURO/USD to the 1.30 is mark..

Lawrence