As North American markets remained closed today, European stocks got straight to work on a hope-filled rally to start off the New Year. Meanwhile the generally more sober bond and currency markets did not follow suit with Euro yields rising and the Euro falling.
As this latest update on the Euro shows us though, technically 1.30 is not really key support. 1.39 to 1.41 were much more critical and we are well below there now. This unwinding of the latest carry trade, suggests further downside for stocks, further upside for the US dollar.
Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.
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So what do technically driven low volume makets have to do with fundamentals….zip.
Most sectors breaking downtrend lines today….traders taking the bait….but ready to spit it out at any time…..logic not applicable here….just a bunch of mad punters playing with OPM….silly….really!
Manufacturing ISM Highest Since June; Expiring Business Tax Credits Explain Why; Enjoy it While You Can As US Decoupling Won’t Last
http://globaleconomicanalysis.blogspot.com/2012/01/manufacturing-ism-highest-since-june.html
Being from Europe, I would start to get worried when a number of other currencies (BRL, CAD, AUD, NZD, GBP and CHF) were holding up much better. But these seem to be weakening as well. Great opportunity to go long the USD.