Currencies are leading Equity Markets

Posted by Don Vialoux - Timing the Market

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Technical Action Yesterday
Technical action by S&P 500 stocks was quiet yesterday despite extreme volatility. One S&P 500 stock broke resistance (Pactiv) and none broke support. The Up/Down ratio was unchanged at (242/158=) 1.53.

Technical action by TSX Composite stocks was bearish. No TSX stocks broke resistance and five stocks broke support (Celtic Exploration, Labrador Iron Ore, Major Drilling, Quebecor and Toromont). The Up/Down ratio slipped from 1.16 to (86/81=) 1.06.

Interesting Charts

Currencies are leading equity markets. Yesterday morning, the Euro fell to another 4 year low. The U.S. Dollar moved higher and equity markets quickly moved lower. Yesterday afternoon, the Euro recovered. The U.S. Dollar moved lower and equity markets recovered.

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Gold came under pressure with the recovery in the Euro.

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Nice breakout by natural gas yesterday!

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Dennis Gartman wrote an interesting article recently that explains the “viciousness of percentages”. The article was entitled, “The cost of getting even”. The article explains why liquidating an investment with a loss when losses are relatively small is am important strategy. He noted that a loss of 50% requires a gain of 100% in order to break even. He offered a table showing Percent Loss versus Percent Gain Needed to Get Back to Even. Here is the table:

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ETF Update

…..read more HERE