The collision of global markets and social mood

Friday, January 24, 2014

From Rumblings To Rout

The rumblings finally gave way to an emerging market debt rout. Courtesy of Zero Hedge,

Turkey alone impacts $350 billion among European banks. Maybe that's why Europe is getting smacked hard today across the board.

This not all about China, by the way. Debt is a global problem. And what is being demonstrated today is that currencies from countries with a current account surplus are being sought after while those from countries with a current account deficit are being penalized. So the market, when left to its own wisdom, can and does serve a self-regulating function and rewards good behavior while making it difficult for the careless. Perhaps that's why governments seek to "manage" markets.

Futures had a rough overnight session yet are only back to a larger 38% retracement level than I was looking at last week. So the market action has proved that I was incorrect in following the smaller pattern. Larger patterns trump smaller ones.

Futures broke the January 13th low. This equates to 1815.52 on the cash S&P. In doing so, the futures have completed a textbook 5-waves down from 1844, therefore a bounce to 1828 could materialize just when people are freaking out.

1828 on the futures equates to about 1832 on the cash S&P (I only bold the cash prices).

Elsewhere, here's a headline from the Drudge Report today about Justin Bieber that may soon describe the markets as well:

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