Trader Alert: Stocks Are Getting Demolished, S&P 500 Futures Lose Critical Technical Level, One of The World’s Biggest Banks About To Decline “50% Again”, Key Currency (YEN) About To Suggest The “Risk Off” Trade Is At Hand
The global market sell-off is getting a whole lot worse.
The Dow is down 180 points. The Nasdaq is down 83 points, which translates to a 2.2% loss on the day.
The biggest losers today include chip companies AMD and Micron Technology, which are down 5% and 4%, respectively.
Read more: http://www.businessinsider.com/nasdaq-stocks-tanking-2013-8#ixzz2dDJfsPbD
Europe Got Crushed Today
Markets have closed in Europe, and stocks ended deep in the red.
Britain’s FTSE 100 fell 0.7%.
France’s CAC 40 fell 2.3%.
Germany’s DAX fell 2.1%.
Spain’s IBEX fell 3.1%.
Italy’s FTSE MIB fell 2.2%.
The sell-off comes as tensions rise in Syria.
Bonds Surging, Stock Futures Getting Crushed
For the first time since the most recent rally began in November, S&P 500 futures have retested (and broken below) the 100-day moving average within days of a previous break (without making new highs). It would appear the BTFD mentaliity is less exuberant with war and a tapering Fed in the background. And for those great rotators… 30Y yields are at 2 week lows…
JP Morgan, largest U.S. Bank, about to decline “50% again?”
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JP Morgan has declined 50% in value twice along line (1) since 1998.
Now this leading financial company is back at this key resistance line again, has formed a bearish rising wedge and is now looking like support of the wedge is breaking to the downside. I shared the pattern on Stocktwits last week, reflecting that JPM was sending a message investors should pay attention too, per the direction the broad markets could head!
Is this pattern only taking place in JP Morgan?
CLICK ON CHART TO ENLARGE
The above chart reflects that not only has JPM formed a bearish rising wedge and is breaking support, XLF is as well!
So Goes the Banks, So Goes the markets and Broad economy? I will let you be the judge of that.
Key currency (YEN) about to suggest the “Risk Off” trade is at hand?
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The Yen has a decent track record in helping investors construct their portfolios towards the Risk on or Risk off trade! The yen is on a 20-year support line right now (monthly basis) at (2) in the chart above.
On a daily basis the Yen has formed a pennant pattern at (3). If the Yen breaks to the upside of this pennant pattern, the message would be the “Risk Off” trade is at hand and investors should underweight their portfolios towards risk assets.
Stay tuned and keep a keen eye on the Yen’s pennant pattern…what it does from here will send a key message about portfolio construction!
China Warns US About Cutting Tapering Too Soon, Proposes BRIC Foreign Currency Fund
The focus for the entirely useless upcoming G20 meeting is fear over US tapering, capital flight, and liquidity.
Reuters reports Ahead of G20, China urges caution in Fed policy tapering.
“End of America” warning: Japan sets a shocking debt record
Be prepared for more stories like this, because they are surely coming…
Japan MOF to seek record debt-servicing costs in Fiscal Year 2014/15:
Japan’s Finance Ministry will request a record 25.3 trillion yen ($257 billion) in debt-servicing costs under its fiscal 2014/15 budget, up 13.7 percent from the amount set aside for this year, a document obtained by Reuters showed on Tuesday.
The decision, aimed at guarding against any future rise in long-term interest rates, underscores the increasing cost Japan must pay to finance its massive public debt.
The country’s debt is double the size of its $5 trillion economy and is the biggest among major industrialized nations.
Watch what happens next…
|1.||If interest rates rise to a mere 3%, it will consume 100% of all revenues|
|2.||If Japan monetizes interest payments, the Yen will collapse…|
5 Red Flags of Imminent Collapse: Be Aware of the Warning Signs
These indicators will give you anywhere from a few days to a few months of warning that things are about to change drastically.
1) Interest rates on US Treasuries go up steeply, and/or suddenly
The definition of ‘defaulting’ on it’s debt means the US Gov’t isn’t able to pay the interest on the almost $16 trillion it owes. Currently interest rates are at all-time lows – as many homeowners are enjoying by re-financing their homes at lower rates. Interest on the debt is currently the smaller of the four biggest expenses the US Gov’t has. As interest rates rise, the interest expense will get bigger – and this will be very difficult for a Gov’t that is already deficit spending way beyond its means.
You want to keep an eye on the current rates on Treasuries for two reasons:
a) Increasing rates will require a debt laden Gov’t to barrow more and will accelerate inflation and the date of collapse. This is a 6-12 month red flag. As of today, rates are slowly rising although they are still very low.
b) A sudden and sustained spike in the interest rates indicates that there are fewer buyers of US debt. Without the ability to barrow more money or rollover the existing debt the US Gov’t will have to shut down or do desperate things like stealing from retirement plans or citizens bank accounts. Get your money out of the banks or markets immediately. This is a very severe red flag indicating only weeks before major financial crisis and economic collapse.
Here are two sites for monitoring Treasury interest rates. The first is my personal favorite. http://www.bankrate.com/rates/interest-rates/treasury.aspx (shows this week, month ago, year ago on short and long-term debt)
http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=billrates (Selectable menus to see current and historical rates)
2) Price of oil goes above $120/barrel
Essentially everything on this planet depends on oil; food, transportation, heating & cooling, and basically every consumer item you can think of. The world economy cannot sustain high prices of oil without collapsing. We saw that very clearly in 2008 when the price of oil hit a high of $146/barrel in June, and by September of that year we were in a full blown financial crisis.
For the past several years, oil has been trading around the $90/barrel price. Today it is over $106. Keep an eye on this!
If the price of light sweet crude oil stays above $120/barrel then you have only a few months before a major financial crisis unfolds. The financial crisis of 2008 was ‘solved’ by atrocious US Gov’t spending of more than a trillion dollars/year. That particular solution won’t be available to use in the next crisis. Does ‘the powers that be’ have another card up their sleeve for the next financial crisis? I don’t know, but I assume the answer is “no”.
I keep an eye on crude oil prices at the Kitco.com site. Look on the left sidebar a bit lower on the page (I like to use the Kitco website as it has a good summary of other prices as gold, silver, US dollar index, etc.).:
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