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Zaitech Without Borders

The following is part of Pivotal Events that was published for our subscribers April 21, 2016.


 

Signs of The Times

"Luxury NYC Real Estate Market is Rapidly Evaporating."

- Zero Hedge, April 12.

"Energy XXI Files for Chapter XI"

- Seeking Alpha, April 14.

"Fitch Warns Italian Banks 'Continuously being called upon to support government's efforts to prop up weaker banks'."

- Financial Times, April 13.

"Wells Fargo Ups Reserves for Energy Loans"

- Financial Times, April 14.

"Energy Junk Bonds in Demand as Oil Jumps"

- Financial Times, April 14.

"Pessimistic on Defaults: International Association of Credit Portfolio Managers survey outlook index fell in March to 56.2 -- the worst since June 2009."

- Bloomberg, April 14.

"Defaults Hit Highest Level Since '09 Bust"

- USA Today, April 18.

 


Perspective

There seems to be bad news in the Headlines Department and good news from the Financial Department. The former is indicating contraction, which could be the main theme and the latter seems to be a seasonal move, which could have limited duration.

In the late 1980s, the Tokyo market perfected "Zaitech" which was the name for financial engineering. The financial contraction normal to the Tokyo Bubble that blew out at the end of 1989 has prevailed despite bold attempts to end it.


Stock Markets

The sensational season continues, well, sensational.

And with blatant assistance from the Fed, "Zaitech" thrives in the financial markets.

As the song from the 1960s goes, "When will they ever learn?".

In the meantime, the stock market has been registering technical excess. As determined in January, around March was a target for a high and a few weeks of pause has set up another run to glory.

Using the NYA, the rally carried to the 200-Day ma on March 14th and the index declined with it until last Thursday. It is well above it now, which is constructive. How long will it remain constructive?

As the saying goes, analysts have found it difficult to quantify effervescence.

Technical measures have been strong enough to effect change. But it looks like excess over more time is needed to conclude that everyone is in or squeezed. As that happens, effervescence will have been quantified.

Initially, ending action could show up as late-in-the-day buying in volume quits. Our main benchmark has been to have a lower-low that the week before.


Currencies

The DX dropped down to 93.62 on April 11, with the Daily RSI at 30. This is the third visit to that oversold level, which is similar to the pattern that launched the rally that began at 93 in October.

Yesterday, the DX stair-stepped up during the 390 New York minutes of the trading day. This tested Tuesday's low at 93.9 and closed at 94.50. There is resistance at the 95 level and getting above would be constructive.

We have been looking for the dollar to bottom. A rising dollar would again be confounding to the establishment.

The Canadian dollar has had an outstanding rally. From an exhausted low at 68.20 in January, it has stair-stepped up to 79. On the Weekly RSI, it is the most overbought since 2012. Also there is a band of resistance at the 79 level.


Precious Metals

Again because of outstanding dynamics, the Precious Metals Sector has been covered by the ChartWorks and a couple of "Specials".

Mid-cap golds (GDXJ) soared from 16.87 in January to 35.83 yesterday. This is up to 78 on the Weekly RST, which is higher than reached in 2011.

A significant correction has been earned.


VIX has the Makings of an Upside Reversal from a Divergent Low

S&P500 Daily Chart

 


Link to April 22, 2016 Bob Hoye interview on TalkDigitalNetwork.com: https://www.youtube.com/watch?v=j-rRevEXEd0&feature=youtu.be
Listen to the Bob Hoye Podcast every Friday afternoon at TalkDigitalNetwork.com

 

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