Monthly Archives: November 2014

Change of Plans

We are adjusting our outlook heading into Q1 2015. From our original belief that "Things would kinda sorta work out" in 2011 to last year's "MOTS - More of the Same"; we have occupied rare space for us - optimistic and constructive. We continue to ride the ripples of a post-financial crisis Structural Trap and global capacity glut we've labeled "Too much everything.." My best call of 2014 was against the well hyped views that 1) "oil was a buy above $100 "because the economy was growing" AND 2) "The falling price of oil is 'bad'". Never underestimate the idiocy of weak economic thinking mixed with a graphic of yesterday's price action.

I was very wrong on market rates rising. The shape of the curve - flatter - bailed out the poor call on an execution basis. Being "right" for the "wrong reasons" is the last bastion of a scoundrel, however. The 5 year is on the high side of a boring 3 point range for the year ! The 10 year is $6500.00 dollars better for a contract. The long end is considerably higher in price. Last Summer, we recognized that owning bonds for any and all reasons was/would be part and parcel of the protracted period that marks a secular apex. Spurned at 15% in 1984 as "certificates of Confiscation" and adored today.

We believe BOTH equity (especially tech) and F.I. are headed for rough weather. The adjustment will come in 2 phases. The first will be the exciting market declines. The precarious situation in Europe, and the annual calls for Chinese collapse, egged on by a ratings starved media, will produce some sketchy sessions. The second, and much more difficult phase, will be the realization that outside of San Francisco real estate and some Wall St. IB activity ...it won't matter. The importance of "the Millenials" will be swapped for the demographic tidal wave of the retiring Boomers. A plethora of participants that criticized the Fed's actions as ineffective will, like Vladimir and Estragon, yammer away waiting for Janet Godot.

 

Copper Breakdown Suggests a Lower AUD/USD Rate

One of the stronger correlations (over time) between currencies and commodities is the strong Australia Dollar and Copper correlation:

11-28-14AUDHG

 

Today, copper made a significant surge lower breaking key technical support at 2.88. At minimum, copper looks set to test the 2.50 (Fibo) support:

11-28-14HGweekly

 

If you take a good look at the AUD/USD weekly chart, it looks set to test below .8000:

11-28-14AUDWeekly

 

For the last couple years I have been looking forward to getting on the long side of the AUD/USD below .8000, and it looks like this time it could actually happen. However, one has to wonder….If the Dr. (Copper) has a PHD in economics, what is this current move suggesting? Some would think that the good doctor has either failed a few classes on the way to getting the PHD or royally screwed up his/her dissertation. But with China continuing sluggish growth (relatively speaking) and global deflationary pressures mounting, perhaps we should pay a little closer attention to what the doctor is telling us.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

Follow me on Twitter @pipczar

 

Disclaimer: I am short the AUD/USD from 2+ weeks ago.

 

 

Classical Wednesday

30 minute atr

240 miute atr

daily pivots

weekly pivots

upside retracements

downside retracements

breaking out the channel

regression channels

price support and resistance
On the economic calendar:-
07:00 MBA Purchase Applications
08:30 Durable Goods Orders (Consensus -0.5% v Prior -1.3%)
          Jobless Claims (Consensus 286 K v Prior 291 K)
          Personal Income (Consensus 0.4% v Prior 0.2%)
          Consumer Spending (Consensus 0.3% v Prior -0.2%)
09:45 Chicago PMI (Consensus 63.2 v Prior 66.2)
          Bloomberg Consumer Comfort Index
09:55 Consumer Sentiment (Consensus 90.0 v Prior 89.4)
10:00 New Home Sales (Consensus 470 K v Prior 467 K)
          Pending Home Sales (0.6% v Prior 0.3%)
10:30 EIA Petroleum Status Report
11:00 3 Month Bill Announcement
          6 Month Bill Announcement
12:00 EIA Natural Gas Report
13:00 7 Year Note Auction
15:00 Farm Prices

Classical Tuesday

30 minute atr

60  minute atr

daily pivots

weekly pivots

upside retracements

downside retracements

breaking out of the range?

regression channels

price support and resistance
On the economic calendar:-
07:45 ICSC-Goldman Store Sales
08:30 GDP (Consensus 3.3% v Prior 3.5%)
          Corporate Profits
08:55 Redbook
09:00 FHFA House Price Index (Consensus 0.4% v Prior 0.5%)
          Case-Shiller HPI (Consensus 0.3% v Prior -0.1%)
10:00 Consumer Confidence (Consensus 96.5 v Prior 94.5)
          Richmond Fed Manufacturing Index (Consensus 16 v Prior 20)
          State Street Investor Confidence Index
11:30 4 week Bill Auction
          2 Year FRN Auction
13:00 5 Year Note Auction

 

Classical Monday

30 minute atr

240 minute atr

daily pivots

weekly pivots

upside retracements

downside retracements

range bound

regression channels

price support and resistance
On the economic calendar:-
08:30 Chicago Fed National Activity Index (Consensus 0.50 v Prior 0.47)
09:45 PMI Services Flash (Consensus 57.8 v Prior 57.3)
10:30 Dallas Fed Manufacturing Survey (Consensus 9.0 v Prior 10.5)
11:00 4 Week Bill Announcement
11:30 3 Month Bill Auction
          6 Month Bill Auction
13:00 2 Year Note Auction