Top Of the Week! What's In Store?
Futures look pretty flat to a bit down this morning.
Are we witnessing the beginning of unlinkage between the Asian markets and ours?
Possibly.
Why? Primarily because the Chinese government is now, for the first time, allowing banks to trade foreign equities.
This of course means that Chinese people can now (even if only indirectly for the moment) trade foreign equities without having to open a foreign trading account (which can be somewhat difficult given the tax and political issues with the Chinese government.)
There were plenty of "Permabulls" on the US Market who thought this was great news for the US markets.
Not so fast!
There are markets with better opportunities than ours, especially when one takes into account the potential further devaluation of the dollar! Remember, for foreign investors, our markets must be evaluated in terms of their currency - devaluation of OUR currency HURTS their total returns, perhaps precipitously.
Last night Hong Kong's index was up in a moonshot, while the Chinese Mainland was up more modestly. Our futures are flat. The first crack in the dam, and the first sign of a shift? Perhaps.
More importantly, it appears people are waiting for the housing and CPI data. A hot CPI number will not be positive at all. There is also the fact that on a technical basis the market's recent rise is deteriorating, and people have certainly noticed - whether your favorite technical indicator is internals, stochastics, MACD, Elliott Wave Theory or something else, they're all pointing to trouble just around the bend.
Now could they all be wrong? Sure. And could this be nothing more than a "dip"? Yes. But the "dip" last summer was more like a roller coaster, and last year the economy was considerably stronger.
Now add into this that energy prices are spiking once again, as Nigeria is flaring up and forcing yet more production offline.
This week will be interesting with economic indicators and OpEx playing into volatility. I would not be surprised to see some sort of whipsaw towards the end of the week as OpEx approaches - one way or the other.
Have a profitable day!
Are we witnessing the beginning of unlinkage between the Asian markets and ours?
Possibly.
Why? Primarily because the Chinese government is now, for the first time, allowing banks to trade foreign equities.
This of course means that Chinese people can now (even if only indirectly for the moment) trade foreign equities without having to open a foreign trading account (which can be somewhat difficult given the tax and political issues with the Chinese government.)
There were plenty of "Permabulls" on the US Market who thought this was great news for the US markets.
Not so fast!
There are markets with better opportunities than ours, especially when one takes into account the potential further devaluation of the dollar! Remember, for foreign investors, our markets must be evaluated in terms of their currency - devaluation of OUR currency HURTS their total returns, perhaps precipitously.
Last night Hong Kong's index was up in a moonshot, while the Chinese Mainland was up more modestly. Our futures are flat. The first crack in the dam, and the first sign of a shift? Perhaps.
More importantly, it appears people are waiting for the housing and CPI data. A hot CPI number will not be positive at all. There is also the fact that on a technical basis the market's recent rise is deteriorating, and people have certainly noticed - whether your favorite technical indicator is internals, stochastics, MACD, Elliott Wave Theory or something else, they're all pointing to trouble just around the bend.
Now could they all be wrong? Sure. And could this be nothing more than a "dip"? Yes. But the "dip" last summer was more like a roller coaster, and last year the economy was considerably stronger.
Now add into this that energy prices are spiking once again, as Nigeria is flaring up and forcing yet more production offline.
This week will be interesting with economic indicators and OpEx playing into volatility. I would not be surprised to see some sort of whipsaw towards the end of the week as OpEx approaches - one way or the other.
Have a profitable day!
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