IIFT Daily Note with Peter Brown

Serious down day yesterday.

Posted by:  |  Time: 7:21 am  |  Topic:  |  Comments: 2
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Market is now down 3.5% since this correction started last Friday. One thing for sure this is not the bottom. As we have said 5% is 1798 and

10% is 1700. These are the targets you have to have in mind. Why? Well we are just too high. market valuations due not justify because economies are just not that strong. All the cheap cash has bubbled the stock markets and we are just going through a period of re-adjustment to fundamentals. QE is ending and the supply of cheap cash is drying up.

A 10% correction looks fearful but is actually a normal market event. The world is not coming to an end, we are only taking profit.

Along with the stock correction the Dollar is getting killed. Euro at 1.3900 USD/JPy 101.50  and Gold has some bid in it.

Today trading will be Choppy/hurricane it is a Friday so the moves can be 200+ points.

Fancy some sort of bounce but will be selling into it.

Levels are S&P (JUN) 1844  1820 Wall ST (DFB) 16300  16000 is the only support DAX (JUN) 9400  9300  Euro 1.3950  1.3850 Gold 1325  1300

 

2 Comments

Noah Walsh

April 12, 2014

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Peter,
In the last few days EURUSD has gone from 13680 to 13900 while everyone is taking money off the table hence the ES and the rest of the main US indices are in a significant correction. This is not the normal yingyang. It would “normally” follow that the opposite would happen to the EURUSD in such a correction as everyone is going to cash. So why do you reckon this is the case? Is it possible that European sentiment is such that it can outpace the US selloff and consequently prop the EUR? Surely not? Or perhaps its the thought of the ECB cranking up the printing press? Is Gold being used as a cash proxy even with little or no inflation and even a high risk of deflation in the Eurozone? What am I missing here?
Thanks.
Noah.

Peter Brown

April 14, 2014

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Hi Noah.
Euro is strong because there is promised stimulus but no delivery. Also there is bond buying in the Euro zone. Some of this is a divergence out of US bonds because of interest rate worries. Euro has been strong for years and this perceived sell off has not materialized.
Expect Euro could be affected by the Ukraine situation.
Gold is attractive due to Ukraine worries.

Peter