Equity markets plunged in a matter of a couple of minutes today (Tuesday) after a "bogus" tweet was made from a hacked Associated Press Twitter account.


How will fund managers, as well as the "average investor," hedge against this new risk in the current environment where we've seen increasing incidents of cyber attacks around the world?
Those already in the market who have a stop loss set on their trades (within the ensuing price spike) will be taken out by "High-Frequency Algorithmic Trading" (and not necessarily anywhere near the price of their stop loss, but it could be much lower), and those who don't are at the mercy of market reaction to the HFT trades.
Reality bites...

The New Threat to Markets...Cyber Attacks on Social Media Accounts

The following article regarding the AP Tweet is from ZeroHedge:


The Advance GDP q/q estimate for Q1 of 2013 is forecast at 3.0%, as shown on the graph below...up from the 0.4% revised data reported for Q4 of 2012...and it is being released on Friday, April 26 at 8:30 am EST.

As you can see, the GDP numbers have been in a downtrend from January of 2010. If such a rise were to occur as forecast, it would penetrate above this trend, but would still lie within the 3-year range. It would take a higher number for the next quarterly report (for Q2) to confirm that the current downtrend has, in fact, been broken.

Friday's Advance GDP Projections and Gold

Since inflation is anticipated to have risen at such a rate as forecast, I find that 'interesting and we may see an attempt at a bounce in Gold this week. However, any rally from its lows of last week may occur on a low-volume 'dead-cat bounce' (particularly on any overnight rallies) and may not be sustainable in the near or intermediate to watch this week, particularly on Friday.
As you can see on the Weekly chart of Gold below, the next levels of major volume/price support lie at 1150 and 1000.

Friday's Advance GDP Projections and Gold ...


Source: Strawberry Blonde

Volatility, profit-taking, mayhem, and tragedy...this is how I'd summarize the events that took place in world markets, as well as on American soil, this past week. My deepest sympathies go out to those law enforcement, fire fighting, and civilian victims who died or were injured in connection with the Boston marathon bombings and the Texas fertilizer plant explosions, and to all their friends and families. My thoughts and prayers are with you...may we all find answers to these terrible tragedies, and, may all those who are responsible, be brought to justice.
This week's update will look at:

  1. Nine 1-Year Daily thumbnail chartgrids of a variety of markets around the world
  2. Nine 1-Week percentage gained/lost graphs of these markets (you can see which markets gained/lost this week, and by how much)
  3. Three Monthly charts of Lumber, Copper, and the Homebuilders ETF (XHB)
As you can see, this is a different format than I usually produce for these weekly summaries. With respect to items 1 and 2 above, I'll simply post each chartgrid, followed by its corresponding graph, without commentary. With regard to item 3, I'll provide some comments just before the three charts on those instruments.
What I will say, is that on the Item #1 charts, I would use the 50 ma (red) as a rough guide to act as the general daily trend and support indicator. When price is below that moving average, it is subject to 'bearish' influences, particularly in those instances where the 20 ma (blue) has crossed below the 50 ma. In that case, I'd look for areas of support below the 50 ma that would be formed by trendlines, prior consolidations, and a series of previous swing highs/lows, etc. From that, you can see how much further downside is available compared to potential retracement to the 1-year highs. Of course, on those charts where price is at a 1-year low, you'd have to bring up additional longer-term charts to see where you'd find potential support levels...this is not something I've done in this exercise. 
My purpose today is simply to show you, at a quick glance, where world markets are, whether they are in 'bull'  (above the 50 ma) or 'bear' (below the 50 ma) territory, if any are still making new 1-year highs, and how far others have pulled back from their highs. This shows which areas are stronger and may continue to show leadership going forward, and, if they do, we may see those areas which have weakened considerably begin to rally. Otherwise, a continued drop in the weaker issues may, finally, weigh negatively on all markets to produce a larger, more general, pullback, or even a correction.
In general, it appears that the U.S. $ and 30-Year Bonds are still considered to be the 'safe-haven' plays.

The Bank of Canada maintained its overnight interest rate at 1% today (Wednesday), cut its 2013 economic growth forecast to 1.5% from 2%, and raised its 2014 economic growth forecast to 2.8% from 2.7%.
You can watch BOC Governor Carney's subsequent press conference. I found his response to this question from a member of the press rather "curious." When asked, "What can you say about the plunge in the price of gold this week?" he responded with "It's not a market that we follow closely." (I have to give him credit for holding a straight face while gave his answer...however, Senior Deputy Governor Macklem, to his right was not quite so skilled.) He went on to say that they (BOC) were more interested in a variety of other commodities (he mentioned oil and lumber) as being more indicative and leading indicators of global growth prospects, and that one could point to the base metals in that regard.

As I write this at 10:30 am EST, most of the commodities in my list are down and Canada's TSX Index is down 103.21 from yesterday's close. Most world market indices are also down.
Continued weakness in commodities may, finally, weigh negatively on equities.

UPDATE at 4:30 pm EST - As an example of a base metal that they are likely monitoring, copper is down nearly 4% today and is currently trading at 3.1765. Contrast that with its high of 4.6495 reached in February 2011, and it's down by 32% from that level. The chart below shows that a bearish "Death Cross" has formed recently on the Weekly timeframe as price has fallen below 5-Year major price, moving average, Fibonacci, and volume support to watch going forward, along with other commodities that I've mentioned in the above referenced (and even older) posts.

BOC Maintains Interest Rate Lowers 2013 Forecast


BOC Maintains Interest Rate Lowers 2013 Forecast


BOC Maintains Interest Rate Lowers 2013 Forecast


BOC Maintains Interest Rate Lowers 2013 Forecast

(Excerpt from BOC press release)

BOC Maintains Interest Rate Lowers 2013 Forecast


BOC Maintains Interest Rate Lowers 2013 Forecast

World Market Index Source:

BOC Maintains Interest Rate Lowers 2013 Forecast

Source: Strawberry Blonde

ES Channel...Will It or Won't It? ...

Source: Strawberry Blonde

I'd have to say that continuing weak economic data had not been priced into either commodities or equities, as evidenced by today's (Monday's) drop, so far.
No doubt, any large players who were long Gold and other commodities will be forced to dump their equity holdings to cover losses.
Most world indices are deep in negative territory today.

More Weak Economic Data Commodities/Equities Decline


More Weak Economic Data Commodities/Equities Decline

The following Weekly charts of Gold and Silver show that the next major volume support levels, as depicted in their Volume Profiles along the right side of each chart, are:

  • 1360ish for Gold. and 
  • 18.00ish for Silver


Gold, Silver, the Commodities Index, and Gold vs. US $

This Reuters article appeared today (Saturday). I've flagged (green and red) what I thought to be important aspects of the article.

  • It seems that an EU banking union is not on the front burner, as it first requires a change to the EU treaty.
  • Also, note the red flag around Mr. Shaeuble's last remarks...this strikes me as a plain warning for bank depositors
  • Plus his second-last remarks would seem to indicate that other countries may, indeed, face a fate similar to that imposed on Cyprus.

This week's update will look at:

  • 6 Major Indices
  • 9 Major Sectors
  • Commodities, Homebuilders, USD, & USB vs. Major Indices vs. Major Sectors

6 Major Indices

As shown on the Weekly charts and the percentage gained/lost graph below of the Major Indices, the largest gains this past week were made in the Nasdaq 100, followed by the S&P 500, Russell 2000, Dow 30, Dow Transports, and Dow Utilities. All are still running in overbought territory on the weekly Stochastics indicator. The S&P 500 finally reached an all-time high and closing high (along with the Dow 30).
Money Flow for April Week 2


Money Flow for April Week 2

9 Major Sectors

As shown on the Weekly charts and the percentage gained/lost graph below of the Major Sectors, the largest gains made this week were in Cyclicals, followed by Health Care, Consumer Staples, Financials, Technology, Industrials, Utilities, Materials, and Energy, as buyers added more 'risk.' All are still running in overbought territory on the weekly Stochastics indicator. 
Money Flow for April Week 2


Money Flow for April Week 2

Commodities, Homebuilders, USD, & USB vs. Major Indices vs. Major Sectors

This week I'm looking at a comparison of percentage gained/lost of a variety of commodities, the Homebuilders Sector, the US $, 30-Year Bonds vs. the Major Indices vs. the Major Sectors.

Data released today (Thursday) shows that import and export prices are still in an overall downtrend from 2009, as shown below.
Data sources: here and here

Import/Export Prices Still in Downtrend


Import/Export Prices Still in Downtrend

This downtrend is still in place in spite of the Fed's massive money-printing efforts to reflate prices to those seen leading up to the 2008 financial crisis. The world-wide slowdown in demand has created this downtrend, in spite of the sharp divergence in trend in the stock markets, as shown on the Weekly chart of the SPX below.
This chart definitely does not reflect the reality of this slow-down, as the equity markets seem to be operating solely under the influence of Central Banks around the world, and not on, what used to be, the laws of market supply and demand...they have simply morphed into a 'tool' used by Central Bankers.

In the meantime, the US National Debt continues to accelerate unabated. Read more...

More Articles...

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