What really moves financial markets?

(Posted Tuesday, Singapore time 730pm)

Do you really know? If you like to share, we love to hear your opinions. Otherwise, hear ours?

Financial markets (currencies, commodities, equities and bonds) have been very boring, moving in one certain ‘down’ direction. With the exception of the US dollar and the US Treasuries, the rest are trending southwards.

What about Gold? Gold is regarded as a safe haven in times of uncertainty. Of current, it trends along the same direction with the US dollar. However, when it reached a certain ‘boiling point’ the monetary characteristics change – it moves inversely to the US dollar. The last time the Gold characteristics change was when the USDX reached 79 thereabouts. The USDX today pierced through 80 this morning!


There's a possibility Gold will head towards US$ 1625 in the next day or two if US$ 1680 is not breached!


Updated 1107 pm. Gold price nose dived to US$ 1629. Delivered!

Hotnews!! Bernanke mentions there is ability to exit QE. As a result Gold tumbles further to US$ 1614. Gold investors risk off. Gold traders warning - do NOT but Gold. The major trend had reversed! You may consider around US$ 1500-1510 therabouts.


Updated 3am. Bernanke's delivery plunges Gold. Currently at US$ 1599. Gold may find support around US$ 1583 thereabouts!

There are many different views and tools used to speculate which direction a particular asset class moves. There are people who follow economic data, technical charts, financial ratios and herd’s mentality.

While there are so many tools, the right time is actually the appropriate time. There is no right or wrong answer as different tools are used for different times or events.

Were the following of any help for the last 3-4 months?

·         Financial ratios, PER, PB, etc

·         Technical support and resistance – supports are constantly broken

·         Economic data – recent ‘favorable’ economic data was not the focus

·         Speculation and hopes – Operation twist, Greek bailout, etc

Do you use your favorite tool most of the times? Was your tool or any of the above tools helpful at this point of time? Otherwise, I suggest you read/learn more or end up paying more school fees. Were you able to use different tool at different global cycles?

As you probably know, I use the following indicators (constantly)

·         US dollar index. The US dollar is the reserve currency and a safe haven. When seeking low yield assets, regardless of the S&P downgrade, investors seek the US dollar. While the US dollar rises, the ‘others’ move down and vice versa.

·         CBOE VIX - a measure of volatility. Confirms my speculation of carry trades

·         Commodity currencies – Seeking high yield assets

·         Commodities – measure of global growth, US dollar

·         Gold – measure of uncertainty, geopolitical events, safe haven, currency uncertainties

·         Energy, Oil – measure of global growth or demand

·         The Euro – measure of Europe debt situation currently.

·         BDI, yield curves, etc

The sum of the above, together with a few other indicators are my inter market analysis ‘tool’ to measure equities, currencies, global demand, uncertainties, cross checks each other, which again, helps me to finally decide what is ‘really’ happening to the market, which direction it would trend before coming an investment decision.

I hope to hear your views and opinions of the tools you currently use to make your investment grow or had avoided this current global crisis!

Where are markets heading? Two words – stay out. If you like to know the reason, please visit my last few 3-4 posts. There is nothing to add/update my blog as the current trend is obvious.