VIX went to an oversold state, reaching almost equal to March 2012’s low at 13.66. MACD and RSI hit oversold, and VIX went to our 12-16 range for “TOO Bullish” sentiment by the public.
QoQ GDP Growth for Q2 2012:
Germany – 0.3%
France – 0.0%
Italy - -0.9%
UK - -0.7%
VIX showing Public is still Too Bullish even though European GDP Numbers are flat growth and even contracting economy (3 quarters in a row). Although European GDPs beat estimates, they aren’t good enough to be said Bullish. Something really weird could happen soon.
NYAD on the other hand hits fresh new highs, but MACD and RSI showing negative divergence on the daily charts. Showing signs that anything could turnaround also soon.
Germany’s GDP expanded 0.3% , beat the 0.2% estimates, continued to get near 7000 level. We have been monitoring this level for the past 1 month or so. And still recommending to “lighten” and even “sell” when Germany approaches 7000 level, its 2 yr downtrend resistance. Next resistance is 7400 level, 4yr downtrend resistance since 2008, and I’m not expecting we could reach that level if economy is still stagnant. Currently, the RSI hit overbought levels, but MACD showing negative divergence, sign of anything could also turnaround soon.
Overall, things are really just weird, no clear good developments, but markets continue to rally and our indicators all giving a hint on the negative divergence forming. It might be safe to stay in the sidelines, and wait for good correction or better economic numbers before getting back into the market. The only good thing happening is that, US Bonds are selling off from the fresh new peaks- what’s the implication of this? 1. Public is going to risky assets. 2. Bond selloff is just a correction, and will resume soon. Let’s see in the coming weeks.
Gold is currently in a trade the range pattern. Current trade seen is from 1575 to 1625
The Larger trend shows trade the range pattern also from 1550 to 1775. Overall Pattern for gold is sideways. No clear indication yet where to go.
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