The collision of global markets and social mood

Tuesday, May 21, 2013


The yen is starting to feel like the Loonie. Last night, economic minister Akira Amari backtracked on his previous statements regarding further yen weakness. Evidently the red phone called and the voice was angry.

Rather than attempt to deduce the yen's moves from the mouths of politicians, the charts are much clearer. The monthly 61.8% retracement still looks as if it's a magnet for price at 105.579.

Gold has been a bit loonie since Friday, too. Friday is the thinnest day of trading in the gold market, and when it appeared that gold would not confirm the new low in silver, I bought some GLD calls. As usual when using options, I was a bit early. The position was down as much as 45%. Yesterday I noticed it was down 34% then what seemed minutes later, it was UP 34%. I immediately closed it out. Early, of course. Left money on the table, but booked a nice profit in what was starting to look like an ill-fated trade.

I don't like the way gold looks at the moment: it's too vulnerable to new lows, and didn't bounce high enough yesterday to interest me. I may play with some further OTM calls as a flyer, or get long GLD against puts.

There was a lot of red in Asia last night (Nikkei was green of course), and there is a lot of green in Europe too. Many markets look temporarily unsure of further progress, and charts seem like they'd look better with some backing and filling. It feels that suddenly the whole world is in limbo before the FMOC meeting tomorrow as well as tomorrow's release of the Fed minutes.

The S&P looks primed for a trend line at 1660, maybe after a morning bounce. It got above the 1672.08 upper target but closed beneath it. However, my attention is now focused on this chart and its target: 1778.56 -- a 1:1 Fibonacci extension of the move from the 666.79 lows to the 1370.58 highs of 2011.

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