Starting 2014 with a bang!
Since this is the 14th year of the new century, I thought I would link you to this interesting article on Bloomberg which suggests that the main theme for the century – its zeitgeist – does not start at the round number ending in 00, but rather in its 14th year.
His evidence is that 1814 was the year of the Congress of Vienna, which effectively ended years of war in Europe and heralded the longest period of peace. With peace came prosperity and living standards rocketed in the 1800s (as well as a flourishing of the arts).
Then the 20th century did not start in 1900, but with the Great War in 1914, which ushered in more wars, both hot and cold for most of the century. To many people, the Great War came suddenly with little prior warning. For the period up to 1914, the Edwardian era was filled with long lazy summers (except for hard-working peasants, that is).
So, will 2014 be a defining year for the financial world in this century? I believe it will – in a deflationary crash – and today 2 January may be the first shot across the bows to the complacent bulls, most of whom will not see it coming.
With that thought in mind, EUR/USD is down 120 pips and Dow down 100 pips, with German DAX down 200 pips and gold up almost $20 and crude oil down $2. Now that is what I call a great start to the New Year!
On Tuesday, we had the bullish overshoot towards the 1.39 level, which cleared out a lot of shorts as they were squeezed mightily. And today, we have the opposite – a hard decline taking out many sell stops of the longs. And the tell-tale is the tramline break.
Now, a decline below the 1.36 level would cement my aggressively bearish stance and would set my next main target the long-awaited 1.33 level.