Euro Falls, USD Rises, Risk Sell-off and Equities Are Deep In The Red

April 4th, 2012
in Gary's blogging, midday post

It seems Mr. market decided to fool us again by opening the markets lower after making a faux pass up later in Tuesday session as reported yesterday afternoon. After studying the 'tea-leaves' today, I find this is a minor correction and another push to the recent highs is more than possible, it is likely to happen. Actually, it was the 'Five-Fingered-Financiers' working the midnight shift that crafted this decline as there is really no sound financial reason for the markets to fluctuate like this.

Because of this volatility and an uncertain near future, I will remain sitting on my hands resisting going long. Having said that, I would still retain my Class A Corporate bonds, rock solid dividend stocks and lighten up on any under performers to build up a cash reserve. There is every reason to believe we are near a top of sorts and caution is warranted. The time to abandon your portfolio depends greatly on your own personal situation and a talk with your financial adviser is probably advisable about this time.

Follow up:

I can't believe the amount of talk going on about no QE3 as if it were a given and everyone is disappointed somehow. The 'smart' money already knew about the QE wasn't coming and is working now to remove any money left from the 'shepols' who have recently gone long. Any long investors left are actively being gathered in for the slaughter starting in may.

If there was going to be any more QE, it wouldn't happen until June at the soonest as I reported earlier in the year. Believe me, a QE3 is still on the Fed's table of tricks as the “Doves” think of new ways to increase the Nations debt. And because this is an election year the current Administration isn't going to let the November elections being swayed by a 'down' market.


It’s pretty sad that Wall St. is so addicted to the Fed’s easy money policy that any hint of the punch bowl being taken away is reason to run for the hills. “


A not so good Spanish bond auction also generated some negative sentiment, overshadowing a report from payroll processor Automatic Data Processing (ADP) showing continued job growth in the U.S. private sector of a 3,000 more than expected. Putting the number into perceptive, that is ONLY 60 people per state. I wouldn't get all that exited either particularly when the numbers are being fudged by slick government statisticians.


Spain's IBEX index has slipped 0.64pc today, slumping to a four-month low of 7,778.1 on the back of that unsuccessful bond auction and services data that points to a eurozone recession. Spain itself saw an increase in its services PMI, but the sector is still contracting. “


The USD ISM Non-Manufacturing Composite (MAR) was down to 56 below the 56.8 expected furthering the markets weakness on moderate volume. Dip buying has been occurring all during the morning but selling has outweighed the green. Oil, gold and the Euro all fell while the USD climbed to new highs. By noon, the markets, including precious metals and the FX, took a breather melting slightly higher.

The Russell 2000 is the index to watch as it has to lead if the large caps are to continue rising. It did gap down to 816 from yesterday's close of 834 seriously dashing any doubts of the large caps rising above their highs today. Quite a drop over 1% and lead the way down percentage wise of the major large cap indexes.

Rick Ackerman writes exactly what I am thinking and reminds once again what Pierpont Morgan had to say in that he that he was content with taking his profit in the middle , “I made a fortune getting out too soon”. Good advise unless you like playing 'musical chairs' being blindfolded and not knowing how many chairs are left.

Think You Can Outrun a Global Flash Crash?

It was while under the influence of LSD that a childhood friend of ours decided to end a promising career as a commodity trader. We mention this because market-watching has become all-too-abstracted for us lately as well.

Ponder the whys and wherefores of the stock market for too long and you begin to believe that investors are being led, one rally at a time, to the slaughterhouse.  . . . . Europe’s bailout, for one, is a hoax that can only end badly for us all. And the torrent of lies that have kept the U.S. out of statistical recession are so egregious that a bust of 1929 proportions could occur literally overnight and at any time.

As we know, the mindless herd can have epiphanies just like individuals. Except that they are called panics. And yet, stocks continue to ratchet higher .. . . . .described this yesterday as musical chairs . . .

[the market] has been hard-wired to panic at ten-thousand times the speed of humans. And it therefore will, eventually.

Any trader or investor who is counting on beating HAL to the exit, or on a do-over once The Powers That Be have sorted things out, richly deserves to reap the whirlwind.


Guaranteed we will see this market move up again before the week ends, which is tomorrow to close a couple of gaps made this morning.

Written by Gary

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