Mario Cavolo

Consider noting the EURO's rally to the 1.26 level against the USD could be considered to have met technical resistance, not to mention the fundamentals are still a disaster. At the same time, the USD has been consolidating without showing any serious relative weakness. So we could see this play start moving with the EURO resuming its decline and the USD continuing back into its uptrend. MarketClub's latest video focuses on the currency market, specifically on the USD, clearly identifying the consolidation and technical retracement to important Fibonacci points, check it out.

USD Consolidating For Next Move Up?

Those in charge and rich get to make the rules to benefit themselves. No more so than the debacle that U.S. banking elitists have wrought upon the American people and the global economy. Enough has been written on it, the whys and wherefores, the impotent, greedy politicians and much more. Here at the end of the financial reform bill, we see they will change as little as possible, preserve as much of their ability to continue their ways which quite simply and quite obviously has their duty to the good of their country and to the good of the world far down their list of values and priorities.

"After the dust settles, and they've crossed all the Ts, there's probably not going to be much difference in how the banking industry looks — that's the long and short of it," said Raymond Stewart, chief investment officer of Rasara Strategies, which specializes in investing in the financial sector.

Moreover, the legislation leaves largely untouched some of the biggest concerns about the financial industry that grew out of the mortgage meltdown and the resulting credit crisis. These include worries that banks have grown so powerful that they are "too big to fail," and that Wall Street's pay system — built on the annual bonus — has made short-term trading profits the primary focus.

In the U.S. the pronouncements of how Chinese citizens should "fear" their government grow weaker by the day when it is the 100 million or so middle class American citizens who sit in their homes waiting in fear with bated breath for the next piece of bad news to be fousted upon them by their government and banking elite.

In contrast, the daily life of the Chinese gets better and better to a degree unprecedented in modern history; their careers, their opportunities, the amazing infrastructure rebuilding of their cities. Here inside China, there is more prosperity, cash, opportunity and entrepreneurial freedom than ever. Yes it is far from perfect, but who is responsible for this state of affairs? As in the United States, the government is responsible. Those who know me know I am not political; I am not anti-U.S. or pro- China. I am anti bad choices that destroy and take. I am pro good choices which enable productivity, opportunity and meaning. Indeed I can easily be accused of being an idealist and I won't change in that regard. When I gain I would like it to be that those around me or even unknown and elsewhere gain too. Human history has shown us over and over the nature of man whereby for the most part this is apparently too much to ask and too much to expect of this life.

Too often I think about the inescapable reality that for at least 70% of the world's population, their daily life is not much more than a frustrating, painful struggle just to get by, if not much worse. And why is this so? Because this is the nature of life? Not at all. It is because of the series of choices made by those in power. For many of us, there is a defense, a response available to help elevate our own situation. It is to become intelligent on the matters of investing, trading and economics. It is to understand, for example, that in fact if you do happen to have EURO $10,000, that it should be in a multi-currency account and that for the past year that money should have been stored in USD, not EURO. If so, your money would now be worth 20% more, instead of just the 1% interest the bank offers. If you converted that money back to EURO now you would have 12,000 instead of 10,000. And this result is your substantial low risk benefit simply because you became more intelligent about the basics of money, investing, assets in today's world. This is information for the common man to know and benefit from. It is not information reserved for Wharton MBA's and Wall Street traders.

Link to the financial reform article at the LA Times

World markets are getting more and more volatile, financially and socially, with the China/HK indexes continuing to lead the way down toward the bottom of the ocean where we find a massive ecological disaster and to the bottom of the sovereign savings account where we find zero cash and mounting trillions in printed IOU's that will in history never be paid back...pray tell what the future holds is a continuation of steadily and ultimately radical transformation in the socio-economic landscape worldwide?

Indexes worldwide including the Australian, HK and others are down a further 2-3% with the Shanghai and Shenzhen indexes down over 5% for the day. Meanwhile Europe has opened soft with the Euro hitting a new four year low; the U.S. markets are threatening a bounce, short squeeze rally...any rally would still be regarded as opportunity to add to short positions...any pullback in gold toward 1220 would be regarded as opportunity to add to long positions in gold. However, consider the extreme volatility which will most likely continue to create exaggerated swings and test your nerves. Good luck...Cheers, Mario

Well no one can argue that the weakness finally shown in the market this morning should be there, but its a ridiculous statement knowing how much manipulation is going on...the last hour of the day could bring us another miracle "huh what?" rally...

Meanwhile, I've spent more time than usual this past two weeks studying and combing through expert analysis on both sides of the equation...I will heartily agree with analysts who say that for the next few weeks/months, gold is toast.....down down down, a worn story, then certainly back up to new highs as our global crisis is certainly not getting any better any time soon...

From my China perch, I continue to INSIST it will snow in hell before the Chinese govt revalues the rmb, laughing every time I read another space-wasting headline on the subject....

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I slept fitfully last night as I had been watching the U.S. markets til 3am ignore the strong dollar and the rest of reality with its ridiculous short-squeeze rally in stocks, gold and oil....ahh, what a few hours of sleep will do sometimes folks as I woke up this morning to find the EURO has plunged through key support in the 1.355-1.358 range down into the 134's, Gold once again whipped back down the $20 it had gained before my head hit the pillow, and much more seriously, the Fed has raised the discount rate .25% on emergency loans; this action much following China's general trend to start tightening and stabilizing monetary policy....last week's Treasury auction was close to being a failure when you take a closer look at it with the simple message from the sensible folks on planet earth who are now starting to demand higher yields on all manner of debt including sovereign debt...Taleb said it last week "everyone should be short treasuries"...he meant rising yields, rising yields will be demanded....rising rates on yields are coming and that is exactly what will bring continued upward pressure to the USD and downward/sideways pressure on stocks, gold, oil...lots of conflicting supply/demand info out there on oil, me thinks the trader/speculators who want oil to go up in price are the ones most full of baloney, but that doesn't mean they still won't drive the price up!

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GOLD UPDATE: Yesterday gold gave us a pretty clear answer to the question as it broke out to the upside of its chart wedge formation. A strong move but more bad news or a resumption of the USD uptrend could stall the rally once again...Cheers, M There is no substitute for the daily hours and hours of studying, researching and watching the markets. While it is analytical, you also develop a feel for it that's hard to explain, "get in the groove" so to speak. That's just when the market will make a fool of you. With those caveats in mind, if you are long stocks right now, you're basically out of your mind. WHY would you be long stocks right now? The markets are correcting downward lead by the China/HK markets because valuations after this past year's rise are too high relative to overall economic health. As you may know, the stock markets anticipate the economic situation by around six months. In other words, if the stock market is rising for a few months as it did last year, it is doing so anticipating, we could say hoping, that the economic fundamentals will follow over the course of the next six months or so. The other rule to remember is that the stock markets and other asset classes like commodities & gold will generally go up when interest rates go down. Simple.

If you want to understand the markets, you must look at and understand the correlations between the asset classes - global stocks (Euro, U.S., China/HK/Japan), gold, oil, and currencies. If you only watch one or two of these such as stocks, you are at a big disadvantage and will lack an understanding of what is driving market direction and sentiment. How can you possibly understand stock and gold movements if you don't understand the connection to the currency EUR/USD and AUD/JPY movements? Beyond that, there are the agricultural commodities to consider.

Next Page - A Look at Global Stock Markets
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Here's another one of Adam Hewison's excellent videos reviewing the latest price action in the gold market. Don't miss it.
What's Next For Gold?
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