Friday, June 1, 2012

7 Charts on Panic

I believe that the market might be set for one more push down. Investor sentiment has moved from various stages the last being panic, we started with:

Euphoria: Record US corporation earnings and the super Apple along with a Fed that wouldn't allow the markets to go down due to their printing press also known as quantitative easing.

Anxiety: Europe and Greece's problem looming in the background along with signs that the global economy was slowing down.

Fear: The fear of a default in Greece with the government failing to reach a solution. Chinese economic slowdown sending AUD/USD south along with gold.

Desperation: Turmoil in Europe, with the markets pricing in a a Greek default along with strength seen in the USD and Treasuries along with the Bund as investors look for a place to park their cash. Oil also falling like a falling knife as investors price in the global  economic slowdown on the demand for oil.

Panic: This will be the final push down that should cause capitulation among investors. I have various charts explaining the possibility of this occurring:

On currencies




On Credit


On Volatility


 On Commodities



On Equities


The charts above demonstrate the likelihood of a market low. Of course the market always has the potential to go lower, however, that shouldn't stop us from looking at what's happening along with setting scenarios at various market stages. A breach of the support levels listed above and failure to hold above them could cause things to get ugly, however I see that scenario as unlikely especially given the relative strength in Chinese equities along with the expectation that officials wont allow for such a crash to occur by intervening in Europe. That being said, the only thing we know for sure is that anything can happen.

No comments:

Post a Comment