The Dow Oct 13, 2014
Yes the Daily Bearish is at 16319. It appears we have penetrated the low of August 6th which was 16313. This warns that the correction has unfolded. Resistance will form tomorrow at 16634 followed by 16660. The 16324 area is a critical pivot point this week. We still see the primary support in the 15900 area. If the market falls again tomorrow and closes below 16319, then we could see this week form a temporary low. If we get a rally into the week of November 3rd, then the final low could form in January in which case we may be completing a cycle inversion setting the stage for an extended rally into 2017. We still need to pay close attention to this period at hand.
Dow Today
Support in the Dow today lies at 16,451. Weekly support begins at 16,170 and key support remains at 15,961. We really need a closing back ABOVE 17000 just to firm support. Otherwise, a bounce is likely with a turn back down into November.
German Debt
German debt has been the real play in Europe. The general view is the Euro will collapse and they will end up with Deutsche Marks. This does not appear to be a real trade. Nevertheless, this has driven German rates lower than the USA. We are seeing a correlation of dates for timing and this is quite strange. The ultimate trade will be to short the German 10 year against the US 10 year. Not yet – but it is shaping up.
We will be starting the blog soon on the Institutional site. We will also be offering the matrix on world debt spreads.
Putin Withdraws Troops in Eastern Ukraine
Putin orders pullback of Russian troops in Eastern Ukraine. Quite frankly, if I were Putin I would withdraw, demand the sanctions be lifted or I will invade. That would shift the burden to Obama to show that the sanctions were really for that reason and not for playing with energy for personal gain of those in the White House. It is time to shift the burden to Obama.
Conflicts of Interest – Ukraine – Russia
The share prices of fracking companies have lost more than 20 percent since June. You just cannot trust politicians for there are always some connections that are outright conflicts of interest. The American position against Russia is so aggressive and energy seems to lay at the center. The son of Vice President Joe Biden works for a Ukrainian fracking company. Two former employees of Secretary of State Kerry are active even as lobbyists for the company in Washington. It is too difficult to honestly qualify where the interests of the American people are the concern in a sea of conflicts of interest.
France Says It Alone Will Decide its Budget
The French Prime Minister Manuel Valls insists he will decide on France’s new debt budget without Brussels. These are fighting words, as they say, but they have no meaning: France is contractually obliged to meet EU criteria. Bypassing the rules is only possible with the agreement of Germany. Why anyone would even buy the Euro is baffling. The entire economic system is a total disaster. You cannot have a single currency without a single government and single debt..