Reviewing 11 Global Markets Since 2009

I find it helpful every once in a while to review how the major global markets have performed over any particular time span relative to each other.  In the charts below we take a look at 11 large markets going back to the March 2009 lows, using the S&P 500 as the benchmark.  The Russell 2000 is included for two reasons.  The first simply being the humorous side of that particular market since it represents the "riskier" assets and is therefore literally a plaything for those who have the ability to goose or influence markets at will.  All cynicism aside, the performance of the Russell over the past 4 years is actually very typical of a market in which the appetite for risk is relatively high.  And of course in a realm where the central banks of the world are more than happy to accommodate their minion manipulators with free liquidity, it is perfectly understandable that the small caps would have risen more than any other since the collapse of Lehman.  It's aggravating as hell to be sure but in truth it is nothing unusual.  I have to keep reminding myself of that fact.

The second reason the R2K is included is for that very same dynamic... sans the cynicism.  Because from a strictly analytical and logical standpoint there's no secret that the Russell leads in both directions since it reflects the appetite for risk.  And of course that's just standard procedure.  So it behooves us to keep tabs on the Russell since there is absolutely no doubt that if and when the markets ever begin to suffer the consequences of a withdrawal of liquidity, that particular index will lead to the downside.   In a bear cycle The Russell should drop first and it 'will' drop the hardest (of the North American markets).  That particular topic...the analysis of the relationship between the larger caps and the small caps... is an important enough metric on its own merit that it deserves to be the focus of a study all by itself.  Although that won't happen in this post, I have been meaning to really dive into that one and hope to get to it very soon.  Just haven't gotten around to it as of yet.

That aside, we move forward with what I find to be a very interesting look at what has occurred over the past four years with 2 US markets and 9 European bourses.  Due to limitations imposed by StockCharts we can only investigate 6 different indices on any single chart.  But we get around that issue simply enough by presenting two charts.  On both of them I have included the S&P 500 as the benchmark which most of us know like the back of our hands.  As well, we'll present the Austrian market (in white) on both charts just for convenient reference since it happens to fall in the middle of the pack.  So we begin... first with the S&P 500 and the other 5 markets within the USA and Europe that have risen the most since March, 2009:

The actual percentages of change can be seen in the upper left hand corner.  Right click the chart to open in a larger version (new tab)

What is perhaps most interesting is that the Paris market ($CAC) is not even in the top three for Europe.  We don't even see it in the chart above.  That is not to suggest that France is really any worse off than any of the other European markets, but it is a bit alarming to realize that for an equities market representing an economy of that size and importance, the CAC's performance has been pretty darned anemic.  In fact it is only sitting with a net gain since the Lehman lows that place it uncomfortably between the markets of Austria and Spain.  And the IBEX of Spain is currently sitting with a net gain since March 2009 of exactly zero.   That's the 'good' news.

Portugal

The markets of Portugal, Italy and Greece are all underwater compared to 4 years ago and it would appear that if there is any inkling of a deflationary phase on the horizon, France is likely next.  Yikes!  That's scary because the French and Italian economies are not little punks by any stretch of the imagination.  Those are huge participants in the larger European theater although they might be a bit better off if they were to, well... get to work a bit more often.  Who knows, with a little honest effort they could perhaps produce something innovative and stunning like the Germans have been known to do.

So using the Austrian market (in white) on both charts as a handy reference, we move to the next graphic and take a look at the 5 lagging markets whose performance has been lesser than that of Austria.  You'll only see 4 lines on the chart below the $ATX, but in the interest of clarity I left out the Italian market since it is at exactly the same level as the PTDOW (Portugal).  For all intents and purposes if you prefer you can just read the letters P-o-r-t-u-g-a-l as spelling "Italy".  But they don't really.  They spell Portugal  :-)  How beautiful is that landscape?

Right click chart for the option to open it in a new tab and see a much larger version.

And finally just a few general thoughts on the images above.  Although I find it to be absolutely infuriating to see the Russell 2000 sitting at 210% of its value at the 2009 low, I fully understand and accept that this type of performance is actually perfectly normal in a world where liquidity is ample and banks are pigs... whether that liquidity be temporary and artificial or not.  It's just that the banking monsters use that market as a tool for their criminal advantage and at the horrible and crushing expense of all pensioners worldwide, some of whom are 'your' closest friends.

Ravello, Italy

As for what might seem to have been my 'taking a jab at' southern Europeans for being a bit on the lazy side, let me expound on why I can understand that they have that attitude... to a certain extent.  The latitudes that provide some of the very nicest climates anywhere in the world just happen to reside somewhere between the southern Canadian border (49°) and about 35° N.  And naturally, my homeland doesn't fit into that zone.  But lo and behold, in the western hemisphere the United States and the Caribbean fit the bill beautifully.  But I don't particularly want to live in the United States these days although I certainly could have enjoyed that at one time.  So one day recently, while in a dreamy mood filled with wanderlust and visions of beautiful women, I drew lines all the around the world on Google Earth at those lucious latitudes to see which other countries resided between the lines.  And sure as shootin', the entire southern part of Europe is smack in the middle of it, Spain, Portugal, France, Italy, Corsica, Sardinia, Cyprus.  And of course Greece.  Those poor folks simply had the seriously inconvenient misfortune of having been born in some of the most outstanding, relaxing, beautiful, laziness-inducing scenic climates in the entire solar system.  From that perspective I envy those people more than I can express in words.

But one thing I learned in 6th grade that I've never forgotten was Ellsworth Huntington's Theory of environmental determinism.  Today more than ever I am 100% convinced that his thesis represents a huge key to understanding the mindset we see throughout all of southern Europe.  I don't blame those people for expressing the attitude they do nor for living the lifestyle they do.  It's oh so understandable.  In a nutshell, what Mr. Huntington's theory proposes is that the colder the climate is that people are living in, the harder working those people are.  The reasons are pretty darned basic as well; first, without gorgeous warm beaches crawling with beautiful people there's not a hell of a lot else except to find something useful to do, and secondly, it's basically a matter of survival.  It really boils down to the fact that in cold climates hard work is literally 'essential' in order to just keep from freezing to death.  As a long time resident of the Great White North I can testify to the veracity of that argument.  It's even worse during winter.

Those of us who live in the more northerly climes here in the west can't walk down the road and just pick a pineapple or a mango or a banana any time we feel like it.   And they can't do that in northern Europe either.  Bananas aren't exactly in season in Canada right now and they haven't been for the past 17 million years or so.  Although interestingly enough, archaeologists did cause quite a stir a few years ago when they uncovered what was first thought to be a fossil of a banana in northern Alberta from only 10,000 years ago... which later turned out to be nothing more than a frozen penis.  No surprise there!  But in the Mediterranean.... ah yes, you can get grapes there.

Santorini, Greece

But I fear greatly for the future for Europe as well as our own.  And as much as the people of the world might finally be ready to get off their asses and get to work right about now, it might be too late.  All it would take though would be a little cooperation from the global fascist oligarchy who run ruin run every country on this blue planet.  But unfortunately they're simply too greedy to cooperate.  All it would take is that the governments

STOP SPENDING AND START LENDING in large and equal amounts

But alas... as always, greed rules.

 ----------------------   END OF ORIGINAL ARTICLE   -----------------------

Hat tip to 'westcoast' for providing a link to an excellent video series from PBS about the "Crash of '29".  Why does it seem like his timing is eerily 'right on schedule'?  Here's Part 1:

Until next time...

...........

Hindenburg Omen Settles Right Down - But Far From Relaxed

UPDATED APRIL 15, 2013 -Well folks, there's an hour to go and the NYSE has generated 88 new 52 week highs and 80 lows.  If the market generates five more lows today's going to be the day we see the first real Hindenburg Omen signal since August 2010.  Any and all other signals you may have seen reported since then have been absolutely bogus for various reasons.  The key reason being that those doing the reporting of HO signals are either not aware of the very strict rules or are interpreting them improperly.  In fact several times we have seen reports that the HO went off when the indicator wasn't even online.  It wasn't even allowed to issue a signal due to any number of violations of its own rules.  Those situations were very much like watching a television that wasn't even plugged into the wall.  Today there will be no such violations so it appears highly likely that we're going to see the first legitimate signal in over two and a half years.
If a signal is issued, I will publish a follow-up post after the market closes.


UPDATED APRIL 05, 2013 - At the close today it is becoming abundantly clear that the market has become very polarized with a few stocks trying to pull the NYSE uphill (and not enough of them at just 93) and half as many horses trying to pull it downhill.  With that many horses tugging to the downside it's pretty obvious that those pulling to the upside have one hell of a battle ahead of them.  In other words, the HO is just passing on the message that the odds of any great upside from here are pretty slim and the odds of a pullback are increasing daily.  How much of a pullback you ask?  The HO has no way of knowing that nor is its purpose to offer advice on that topic.  But what it can do is to simply show us what happened on all the previous occasions when the HO did issue a signal.  Those statistics have been available on this blog for over a year now on the tab at the top of the page entitled "So The HO Issues A Signal. What Happens Next? "

UPDATED APRIL 03, 2013 - As mentioned in yesterday's update, it wouldn't take much of a crack in the markets to get the HO sitting up in its chair with increased interest.  At the closing bell the WSJ reports 122 new 52 week highs being recorded (with 86 required today) and 48 new lows.  That number of new lows is about double what occurred yesterday and is marching toward the required 86.  The market internals are now hanging around right in the HO's wheelhouse.  This is definitely the atmosphere where a HO signal is possible.  Not necessarily "likely", but absolutely possible.  In other words, please don't necessarily "expect" a Hindenburg Omen signal tomorrow or Friday or next week, but don't be surprised if it happens either.

UPDATED APRIL 02, 2013 - Just a very short update because I imagine a lot of people are beginning to wonder if the HO is sending any messages these days.  The answer is this:  There are still too many new 52 week highs being generated although the number is still very anemic for a market that is at or near all-time highs.  That's very weak.  But on the other hand, the number of new 52 week lows is too small to trigger a signal although it is growing daily.  Any sort of sharp turnaround over the next few days or weeks would no doubt set the HO up so that it starts to really pay attention.  Right now though it's just monitoring, in the knowledge that the market is far weaker than it looks, but not weak enough to get overly alarmed about (at least from the perspective of the HO).  Stay tuned.  As well, if and when the HO does go off I will publish an article on that event on the day it happens.

UPDATED FEB. 25th, 2013 - Just a very short update to point out that as I mentioned on Friday, "... if the markets were to get another massive uplift courtesy of the Fed for whatever reason then the HO would just sit back and monitor the situation without too much concern."  I used the word "massive" and that was unnecessary.

In any case, that is exactly what we're seeing today and as a result the number of new 52 week highs is beginning to climb to more reasonable levels for a market that is so close to all-time highs.  What I found alarming last week was the suddenness with which the number of new 52 week highs plunged when the market pulled back.  In a healthy market, a relatively sharp pullback of 2% like that which we witnessed at the beginning of last week does not normally decimate the number of new 52 week highs like that.

As it stands this morning, with a snap-back rally off Thursday's low being nearly as sharp as the entire decline itself was, the number of new 52 week highs, although much higher today, are still dangerously low for a market that is so close to all-time highs.  In fact, as of this very moment they are still within the range that could theoretically set the HO off.  I do not expect that to happen over the next few days though even if the market were to finish slightly in the red today. The bottom line is that although things seem relatively calm for now, the HO has still got a bit of a buzz on indicating that the markets are not out of danger territory in the slightest.  

We'll continue to monitor the situation on a daily basis but will refrain from making needless updates to this post on an hourly basis.  So please feel free to bookmark this page and check in whenever you like.  Better yet, I've just got hooked up with Twitter and I'll twit a message to all the other twits out there when I do update this particular post.  I've been trying to install a "follow@AlbertarocksTA" button on the blog but without success so far.  However my good and helpful friend JW at TrendXplorer was kind enough to send me an email this morning with instructions on how to do that.  So hopefully I'll get that done today or tomorrow.  In the meantime if you'd like to receive a tweet when I update this post, please feel free to follow @AlbertarocksTA on Twitter.

EDIT:  BINGO!  And just like that, JW at TrendXplorer comes to my rescue yet again.  Thank you so much JW, your instructions were impeccable and now the 'follow' button has been installed at the top right hand corner of the blog.  Thanks again :-)


UPDATED FEB. 22ND, 2013 - For those who have decided to check in for updates, here's what is going on at the moment.   The main factor that the HO watches for is the number of new 52 week highs and lows generated in any given day on the NYSE.  The minimum number required for each is 2.8% of the total number of issues that traded that day and changed in value.  In other words, issues that are unchanged on the day are ignored.  So on each day the number of new highs and new lows required does fluctuate a bit.  But generally speaking it's usually about 85.  At this very moment that number is 84.

As of 1:30 Eastern there have been 87 new highs generated, so that condition has been met.  Just to give you a bit of perspective on that topic, in a healthy market those numbers generally end up anywhere between 250-600.  Today, even though the NYSE is very near an all-time high, only 87 new highs is nowhere near the number of new highs that the market usually produces when it is healthy.  That's what the HO is looking for.

But with the big bounce today the number of new lows only sits at 14.  Yesterday that number ended up at 42.  The same minimum percentage of new lows is required as well so in order for the HO to go off today, we'd need to see 70 more lows generated today.  And of course it would take a big sell-off here before we'd see that happen.  So even though there are plenty of stocks hanging around within 2% of their own 52 week low, it's not likely that the HO would issue a signal today.  Suffice it to say that if the markets were to get another massive uplift courtesy of the Fed for whatever reason then the HO would just sit back and monitor the situation without too much concern.  It would be prudent though to recognize that even though the HO might not issue a signal, as long as we're seeing so few new highs being generated the markets are somewhat polarized with as many horses trying to pull the wagon downhill as those pulling it uphill.  Not a healthy market environment at all.  We'll keep you posted with fairly minimal updates... just when it gets really dicey.



UPDATED FEB. 21ST, 2013 -  Just adding this update to inform readers that the number of new 52 week highs had, until Tuesday, still been very healthy.  That metric has changed in a hell of a hurry and today the numbers for new highs and lows were 62 and 42 respectively.  These are right in the range where the HO is suddenly sitting up and dusting itself off.  The best news is that this time around the HO is in no danger of going off-line any time soon due to a rule violation (regarding the 50 day MA on the NYSE).  We haven't had that luxury the last few times it got close to issuing a signal.

Keep in mind that contrary to 'any and every' report you've read in recent months, the HO has never gone off since August of 2010.  Every single report you might have read, I also read... and every single one of them was in error because in most cases the HO wasn't even on line at the time.  You can't get a signal from your television if it isn't even plugged into the wall, yet some of the other analysts who are not aware of the very strict rules apparently have the ability to watch TV when it's not plugged in.  A cool trick, but I wouldn't trust the news from a TV like that.

So stay tuned, we'll be updating this post as well as my ongoing reports at Seeking Alpha that have been running for 3 1/2 years now.

What follows below is an article I wrote last November.  We're just going to carry on with it right here on this page and supply the updates here in order to provide continuity.  So please feel free to bookmark this page and stay tuned.

UPDATED NOV. 8TH, 2012 -  Just adding this update to inform readers that the close shaves are continuing.  Repeated 'near misses' represent exactly the same type of activity we saw in the market internals just before the last HO signal events.  That shouldn't necessarily be taken to mean that "a signal is definitely coming" because that's not necessarily the case.  Needless to say though, it's certainly fair warning that regardless of whether the HO actually goes off or not, the markets are obviously on very shaky ground at the moment and are very polarized.  At the close of trading today the NYSE had generated 61 new highs and 85 new lows.  Had it produced 86 of each the HO would have issued a signal.  These types of close shaves should be viewed as being 'near misses' because the message they're delivering is still the same... the markets are on very thin ice right now.  On a side note, there was even one popular blog that 'today' reported that the HO has gone off.  It hasn't.  Right on that website, the author quotes the rules required for the HO to issue a signal and as much as I hate to be the bearer of bad news, those rules are 3 years old.  Nonetheless, that's a nice blog and the author is just another in the long list of innocent TA guys who didn't get the memo back when the rules were changed.  Nobody can blame him for that.  To his credit, he is looking at all the right things and is fully aware of the implications.  He's also probably a very nice man and to top if off, he's a Texan.  Texans and Albertans have always gotten along very well, mainly because of interactions concerning the oil business. :-)

==============  original article follows below  ==============

I'd just like to post this heads up that the Hindenburg Omen came about as close today to issuing its first signal since August of 2010 as we're ever going to see without it actually going off.

Contrary to any and all reports you may have read stating otherwise, the HO has not gone off at any time since that instance back in 2010.  A full explanation about why any previous reports that you may have read were absolutely false will be contained in a full article that will appear on this very page when the HO does issue a signal.  It's all those false claims by analysts who aren't even aware of the HO's rules that give it such a bad name.  It's the real deal, I assure you.  So please stay tuned.

Also, please be aware that this type of "near miss" occurred several times in the days leading up to the HO's signal during the week before and the "morning of" the flash crash.  Don't forget to click the tab at the top of this page if you haven't already done so and read about "So The HO Issues A Signal.  What Happens Next?" Awe to heck with it, just click this thing.

It's still possible the HO won't issue a signal at all, especially if there's some solid buying that enters the market tomorrow and thereafter.  It wouldn't take much to change these market internals dynamics for the positive but until we actually see it, rest assured that the market is extremely polarized and fragile right now.  But until the HO actually goes off, why don't you come on up north and we'll do a little surfing, Canadian style.

Surfin' Like A Boss

Please feel free to bookmark this page and check in regularly since the HO is just starting to hum again and any signal it issues at this stage is almost assuredly going to be the real deal.. 

Stay well!

If This Is A Top, Maybe We Should Think A Bit About What's Ahead

Hi again, everyone. Papa Boule here.

About every 60 to 100 years, humanity goes nuts for a decade or so. I mean paranoid hysterical looney tunes, line-em-up-and-shoot-em-in-the-head crazy.

Crack open a history book and you'll see. You won't find a single century without at least one or two decades of humanity crazily inflicting the worst atrocities imaginable on itself.

And it looks like we're part of a "lucky" generation that gets to see how those kinds of times develop and unfold. We appear to be in the beginning stages of one of those periods.

We have an economy poised to collapse -- if not now, in the near future.

We have a government that has arrogated the right to kill its own citizens (and torture and kill anyone else it wants to) without hearing or trial, and the citizens are okay with it -- scarcely a peep of protest or concern.

(If I were asked to identify one event that signals that the era of the Enlightenment is over and a new Dark Age is beginning, it would be that.)

We have an increasingly polarized and emotionally charged political landscape. And an increasingly polarized economic landscape as well.

Within ten years this country will be completely changed. And there's no guarantee whatsoever that it will be for the better. It could easily be for the worse.

How in the world do you prepare for the unknown? All I can do is share my own ideas, and how I'm preparing. There's no guarantee they'll work. They're just my best guesses.

1. There are going to be plenty of things to be upset about. I'm preparing emotionally by cultivating a habit of letting things go. If you believe in a Higher Power, now's a good time to get into practice of releasing worry and concern to Him (or Her, or whatever you believe in). Protect yourself by developing such habits, and you will be a great example, and better able to be a leader and helper for others during difficult times.

When the news gets really tumultuous and troubling, I intend at some point to just turn off the TV and close the laptop and take a break. I expect the only news I'll really be interested in or need will be the weather forecast.

2. I'm setting aside some cash. It's not a hoard, just some to cover expenses for a while. I'm talking actual cash, in no larger denominations than a twenty. No need to rehash what has been discussed many times about catastrophic deflation, and the possibility of bankrupt banks and limited access to money in bank accounts.

3. I'm thinking about job opportunities. Yes, job opportunities. People can and do make money in hard times. For example, after the crash in Argentina, the private security business boomed. Discount (but nice) clothing stores did well. Teaching classes on most any subject did well. (People had time to fill. Surprisingly, they took classes on most any subject, not just new job skill courses.) Child entertainment did well. (People tend to do nice things for their children no matter how hard the times.) People with vans started shuttle services. The point is, opportunities will be there if you are flexible and willing to try something new.

(Edit: Credit to FerFAL and his blog "Surviving in Argentina" for much of the info here.)

4. I'm prepared to adjust my thinking on what is a "good price," and what the value of a dollar is. For example, let's say I own some rental property, and I have a tenant who is paying $1000 a month. If money deflates and the value of a dollar increases by a factor of 10, he's going to have to take a big pay cut at his job. And I'm going to have to cut his rent. I'm prepared to recognize that though I might only collect $100 a month from him after the cut, that $100 will have the same spending power as the $1000 I previously collected. I'm also prepared to adjust for the reverse, if, after a period of deflation, we get runaway inflation.

5. I'm prepared to stay cool and avoid getting swept up in any demagoguery and ethnic blame that may flourish during really hard times, no matter who is singled out as a target. I hope others are likewise prepared, and willing to keep a level head and stay compassionate.

6. I've accumulated lots of different shades of gray clothes (not quite fifty shades, though). Now that one may strike you as odd. But here's the deal -- hard times bring rising crime. And one way to avoid being a target is to be a "gray" person who doesn't attract attention. And it seems silly, because it's so literal, but obvious -- actually dressing in muted colors like gray is a great way to be less of an attention-getter. Gray attracts less attention than black even.

And on a somewhat related note, I've read a time or two that long guns are not a good idea in periods of high crime. If crime escalates, law enforcement is going to be stressed out and on edge, and they're not going to feel real comfortable with citizens walking around with rifles and shotguns. Making the police nervous when they're already nervous is just not a good idea. Better to conceal carry a handgun, if you feel safer with a gun.

All this talk may be jumping the gun (ouch) if this isn't a top, or if another way is found to extend some more. But I'd rather think about these things in advance and be prepared in some way, even if just emotionally, than to be caught totally by surprise.

Trade safe and play nice, everyone!

Ben Replies

A month ago I begged the question "304% Per Year? Is That Sustainable Ben?"  Well who could have possibly guessed... nothing has changed.  Not a damned thing.  So one has to wonder... with yet another month's worth of water under the bridge liquidity flowing into the equities markets for no other reason than "we're not going to lend it to anybody so we might as well just blow it", how many more months will the markets rise in a straight line before Bernanke's face starts to blush with embarrassment?  Not many I'd say.  Here's a latest glimpse at the carnival of horrors that will literally see the S&P 500 at 3174 by December 31st.  Because barring any form of pullback, that's literally where it will be at the rate the market has been rising since December 31st, the eve of the Congressional Clown Show.   Needless to say, we're not going to be seeing the S&P at 3174 nor the Dow at 30,598 at year end.  But as impossible as it is to believe, that's the amount of juice the insane have been pouring into the markets since the Congressional Comedy Hour last aired.

Click here for a live and updating version

And just so that we don't get distracted and take our focus off the currency markets, here's a link to the previous post which contained a number of excellent charts supplied by DarkestKnight.  We may well move some of those charts over here in the coming days since the currencies markets seem to be holding the keys now, especially the Euro in my humble opinion.

 ======================  END OF ORIGINAL ARTICLE  ====================

And thanks to our tireless friend in Australia, we are pleased to present more of DarkestKnight's updated charts on some of the more important currency pairs in various time scales:

DarkestKnight's AUD:JPY 4 hour - right click chart for a larger version (open link in new tab)

DK's AUD:USD 4 hour - right click chart for a larger version (open link in new tab)

 

DK's EUR:USD - Daily - right click chart for a larger version (open link in new tab)

DK's EUR:USD - 4 hour - right click chart for a larger version (open link in new tab)

DK's EUR:AUD - 4 hour - right click chart for a larger version (open link in new tab)

.........

Big Action On the Currency Front - DarkestKnight Adds Considerable Vision

UPDATED FEB. 10, 2013

This article was first published last Wednesday, Feb. 6.  Since that time it has been updated with the addition of a series of fabulous currencies charts put together by contributor Darkestknight.  Considering that he actually trades currencies while I don't, he therefore has a considerably better focus on them and a better handle on them than I do.  This update happened quite by accident.  Darkestknight had simply offered a set of 3 or 4 links to some of his charts in the comments section.  Those charts were so good that I felt they deserved to be highlighted in the article itself... so I simply amended the article to display them more readily.  Once DK saw that I had done that, he stepped up to the plate and offered even more charts that tied the whole set together.  What is evolving here is a masterful set of currencies charts that I think deserve a whole lot more attention than simply being buried in links in a comments section of a blog.  Whether the counts are right or wrong is irrelevant... we all understand that all markets are dynamic and constantly evolving.  Fortunately DarkestKnight is very nimble with his counts, quick to recognize a meaningful turn of events and is very honest about making a fast change if he sees need to amend his counts.  Personally, I love this set of charts and am more than happy to highlight great work like this.  Therefore, this article is being republished with the addition of at least seven of DK's contributions. It may possibly be amended even further.

The original article began with this:

The action in the currency markets has been taking a major league turn as of late.  There has been a lot of action on so many fronts recently but really, all that action has been in pretty much every currency in the world 'except' the American dollar.  The only exception would be the Canadian currency since it is extremely tightly linked to the American dollar... approximately equally as much as it is correlated to the health of the American economy itself.  Those two currencies also represent the ties between the two biggest trading blocks in the world and as such, it is critically important that that particular pair remain stable and that they be prevented from wandering too far from each other.

As a result, very close attention is paid to managing that pair and for that reason I have always maintained that investors who look at the USD:CAD pair for guidance on the equities markets are barking up the wrong tree.  Only when there are extreme stresses in the American economy will the Loonie start to wander off as the Canadian economy begins to suffer as well.  On the other hand, if the American dollar begins to tank relative to "real goods" like gold, the Canadian dollar will soar since the value of the majority of the commodities coming out of Canada would soar in value as well... regardless of demand for them.  If they're rising in value, they're rising in value.

At present, the key currencies in the limelight other than the Euro (which fluctuates for entirely different reasons) have been the Yen and the Australian dollar.  Without trying to predict the direction of the key currency pairs (the Aussie:Yen and the USD:Yen), let's take a look at the general story in the daily chart below which shows all 3... the USD, Yen and Aussie, along with the S&P.  Speaking in general terms, the annotations discuss what's going on:

Click here for a live and updating version

====     AT THIS POINT DARKESTKNIGHT'S CONTRIBUTIONS BEGAN TO POUR IN   ====

DarkestKnight is one of a group of Australians who seem to have a real good grasp on wave counting.  If I recall correctly I think he said he's British born, living in Australia.  Another Aussie with talents like this is 'mars', another good guy and his haunt of preference is over on Pretzel's site.  But we have the luxury of having DK drop in here from time to time with some great contributions.  In any case, I don't know why Aussies seem to be so good at being able to see (and demonstrate) EW patterns and counts as clearly as they do, but I suspect it has something to do with the fact that in the land down under they must be looking at their charts upside down.  Then they flip 'em over so we in the north can understand them.  In any case, DarkestKnight has posted links in the comments section below [referring to the original article] to some really good charts.  I'm going to insert some of them here for reference.

UPDATE: Once DK noticed that we were highlighting some of his charts here (I hadn't asked his permission but since he's been a friend of yours truly for quite a while and a friend of this blog since its inception I didn't think he'd mind), he suggested that we should probably start off with his weekly chart that would help put the others into proper context.  So we've arranged the charts so they flow from longest to shortest in duration.  And thanks DK for submitting more charts after seeing that I had posted your first 4 offerings.  It's become a pretty impressive full kit now.  With credit to DK and with thanks from this entire community, here are his excellent contributions:

HINT: Left click on any chart to open the 'lightbox' feature of Blogger and you can then toggle between all charts on a post.  That capability works really well with DK's four seven charts below: 

DK's overall opinion about the path of the AUD:JPY pair is based on the first chart, which is a monthly that only goes back to 1980.  It seems that to get data any earlier than that might be a bit of a challenge.  Even StockCharts only offers data going back to that same date.  So without benefit of a longer term view, and working with only the most recent 22 years worth of data... he begins:

AUD:JPY Monthly - as you can see here, StockCharts' records also only go back to 1990

DarkestKnight's AUD:JPY Weekly - Click here for a larger version

DarkestKnight's AUD:JPY Daily - click here for a larger version

DarkestKnight's USD:JPY 4 hour - click here for a larger version

AUD:USD CHARTS BELOW THIS POINT

(British pound at the bottom)

DarkestKnight's AUD:USD Weekly - click here for a larger version

DarkestKnight's AUD:USD Daily - Possible mutated H&S - click here for a larger version

DarkestKnight's AUD:USD 4 hour - click here for a larger version

AUD:USD - 30 Min - Click here for a larger version

DarkestKnight's British Pound:USD 4 hour - click here for a larger version

While you're perusing DarkestKnight's great charts, please feel free to select the beverage of your choice.  Not in the mood for a brew right now?  Maybe this ad from Australia will change your mind.  Turn your speakers up, the music is great in this one.

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Big Action Evolving On the Currency Front

The action in the currency markets has been taking a major league turn as of late.  There has been a lot of action on so many fronts recently but really, all that action has been in pretty much every currency in the world 'except' the American dollar.  The only exception would be the Canadian currency since it is extremely tightly linked to the American dollar... approximately equally as much as it is correlated to the health of the American economy itself.  Those two currencies also represent the ties between the two biggest trading blocks in the world and as such, it is critically important that that particular pair remain stable and that they be prevented from wandering too far from each other.

As a result, very close attention is paid to managing that pair and for that reason I have always maintained that investors who look at the USD:CAD pair for guidance on the equities markets are barking up the wrong tree.  Only when there are extreme stresses in the American economy will the Loonie start to wander off as the Canadian economy begins to suffer as well.  On the other hand, if the American dollar begins to tank relative to "real goods" like gold, the Canadian dollar will soar since the value of the majority of the commodities coming out of Canada would soar in value as well... regardless of demand for them.  If they're rising in value, they're rising in value.

At present, the key currencies in the limelight other than the Euro (which fluctuates for entirely different reasons) have been the Yen and the Australian dollar.  Without trying to predict the direction of the key currency pairs (the Aussie:Yen and the USD:Yen), let's take a look at the general story in the daily chart below which shows all 3... the USD, Yen and Aussie, along with the S&P.  Speaking in general terms, the annotations discuss what's going on:

Click here for a live and updating version

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DarkestKnight is one of a group of Australians who seem to have a real good grasp on wave counting.  If I recall correctly I think he said he's British born, living in Australia.  Another Aussie with talents like this is 'mars', another good guy and his haunt of preference is over on Pretzel's site.  But we have the luxury of having DK drop in here from time to time with some great contributions.  In any case, I don't know why Aussies seem to be so good at being able to see (and demonstrate) EW patterns and counts as clearly as they do, but I suspect it has something to do with the fact that in the land down under they must be looking at their charts upside down.  Then they flip 'em over so we in the north can understand them.  In any case, DarkestKnight has posted links in the comments section below to some really good charts.  I'm going to insert some of them here for reference.

UPDATE: Once DK noticed that we were highlighting some of his charts here (I hadn't asked his permission but since he's been a friend of yours truly for quite a while and a friend of this blog since its inception I didn't think he'd mind), he suggested that we should probably start off with his weekly chart that would help put the others into proper context.  So we've arranged the charts so they flow from longest to shortest in duration.  And thanks DK for submitting more charts after seeing that I had posted your first 4 offerings.  It's become a pretty impressive full kit now.  With credit to DK and with thanks from this entire community, here are his excellent contributions:

HINT: Left click on any chart to open the 'lightbox' feature of Blogger and you can then toggle between all charts on a post.  That capability works really well with DK's four seven charts below: 

DarkestKnight's AUD:JPY Weekly - Click here for a larger version

DarkestKnight's AUD:JPY Daily - click here for a larger version

DarkestKnight's USD:JPY 4 hour - click here for a larger version

AUD:USD CHARTS BELOW THIS POINT

(British pound at the bottom)

DarkestKnight's AUD:USD Weekly - click here for a larger version

DarkestKnight's AUD:USD Daily - Possible mutated H&S - click here for a larger version

DarkestKnight's AUD:USD 4 hour - click here for a larger version

DarkestKnight's British Pound:USD 4 hour - click here for a larger version

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