Has peace broken out in Washington?
It had to happen – my tramlines pointed to a rally off the 6,320 level in the FTSE starting late Tuesday. The market embarked on a rally which was capped by the news that Obama and Republicans had cobbled together a band-aid solution to the impasse. The news followed the markets (once again)!
So, with a huge rally overnight, has the market done enough to call the end to the relief rally? After all, armageddon has only been postponed, not eliminated. Even with an agreement to raise the debt ceiling, the national debt is still zooming northwards at a rate of knots and at some stage, this has to be addressed – and it won’t be pretty.
Meanwhile, Treasuries are rallying strongly today (I am long T-Bonds) as flight to safety over the weekend is trumping any concerns about QE tapering (remember that?), or a possible credit rating downgrade.
And who knows what may occur over the weekend – a time when major news is released. Not that I am predicting anything dramatic, although that is always possible (I am not an insider). It’s just that market participants are taking avoiding action and playing safe by buying Treasuries. So am I.
Long USD/JY – My Trade for 2012
Long-term readers of my blogs will recall this was my Trade for 2012 -and what a great trade that was. I rode it from near the lows at the 78 area to near the May high at 103.
Since then, I have been biding my time until this week, when I believe a major low was put in place. This is the wave 4 of the large five waves up.
I am now looking for a large wave 5 above the 104 level.
Gold has today broken below major support at $1280:
The $1180 low is in sight! I remain short.
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