Global markets continue their Southward journey

Global markets peaked end April 2011. With my article date May 4^th on Profit taking, my initial speculation was profit taking. Following which, I suspected there was unwinding of carry trade in my article dated May 5^th on Further profit taking accelerates unwinding of carry trades.  My speculation was based on my theory, published May 11^th on Without news on QE 2.5, QE2 coming to an end accelerates unwinding of carry trades

A wise man once said, ‘There’s always a market tomorrow!’. Therefore, I find it reasonable to trade and invest when, where the situation is in our favor. This is explained on May 18^th on Investing (or Trading) is like going to WAR. However, as financial markets lack the optimism to go higher, I tried to find a reason by digging up the events, leading to the end of QE2 as published on May 19^th with Global Financial Crisis, QE1, QE2, Inflation, Higher interest rates. What’s next?

US equity markets closed lower last Friday. Asian markets closed in a ‘sea of red’! Europe markets do not fare better.

At point of writing, May 23^rd 5:30pm,

Currencies against the US dollar

·         Euro - is at 1.3996 from ( high of 1.49) – Greece issues;

·         Oz and kiwi – 1.0534 and 0.7885 respectively – global investors take less risk

Commodities

·         Crude Oil – 97.42 from 114 – lower global demand

·         Gold – 1,510 (safe haven on Greece issues).

Last but not least, the US dollar index is currently at 76.38 (2011 low is at 72.86 approximately). In addition,

·         Global economic data last week was not optimistic.

·         Neither are the Head and Shoulders on most daily charts in technical.

·         Inflation risk is met with respective monetary policies.

These are the current situation. The situation does not look favorable since early May. I hope your financial consultant had provided their ‘point of view’ and strategy.

My ‘Generals’ are not thought to speculate nor bargain hunting. In the Chinese Art of War, they will find a suitable climate, a suitable terrain and a suitable time. And unless there are more optimistic indicators, they would delay the War as long as possible. Meanwhile, the search for optimism and favorable terrain continues.

The market does not close today. There’s always a market tomorrow!