A case for a Top in the Euro – Bonds forshadowing an “87” Crash

Posted by Jack Crooks - Black Swan Capital LLC

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Allen[Woody]: That’s quite a lovely Jackson Pollock, isn’t it?
Woman: Yes, it is.
Allen: What does it say to you?
Woman: It restates the negativeness of the universe. The hideous lonely emptiness of existence.
Nothingness. The predicament of man forced to live in a barren, godless eternity like a tiny flame flickering in an immense void with nothing but waste, horror, and degradation, forming a useless, bleak straitjacket in a black, absurd cosmos.
Allen: What are you doing Saturday night?
Woman: Committing suicide.
Allen: What about Friday night?

FX Trading – Euro Uht Oh!

Soaring unemployment in Europe, with still huge banking exposure, rising political tensions, fiscal concerns among the PIGS, a little country called Latvia that may be the canary in the coal mine for its Eastern European neighbors so similarly afflicted and a Russian finance minister reaffirming his commitment to the US dollar and what do you get?  Maybe a top in the euro!


In the chart above, John Ross noticed a potential head and shoulders pattern shaping up in the euro – USD pair.  He said to me this morning, “It looks like the euro is making a beeline for the neckline.”  And he may be right.  

Jack Crooks
Black Swan Capital LLC

This morning we are including a special contribution from Yves Lamoureux, investment analyst for Blackmont Capital, head office in Toronto Canada.  Yves is comparing bond price action today to 1987, the year we had a very nasty accident in the stock market:

[Note: Yves sent this analysis to us last Thursday, June 12th]

Bonds and 1987…what do they have in common? 

I always suggest, to be a good student of financial history it certainly helps in not making the same mistake over. It also prepares you for the next outcome you may face.  Fresh from recent trips in New York and Paris and the slowdown effects are taking roots. I will suggest that each episodes of green shoots going forward will fizzle as quickly as it began.  This will undermine our bull-casino-style markets Investors better be prepared with a good dose of Gravol (motion sickness pill) in the eventual roller coaster ride.

The following graphs are not the same but clearly similar. They both depict the way
bonds have dropped both in 1987 and 2009.

…go HERE and scroll down to the the graphs and read the author’s compelling case.

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