80% of all stocks in DOW trades above their 50 Moving Average... this has indicated crust in the past.
(Click on chart to enlarge)
and the Bull/Bear in same risk.....
The past week action must have been disappointing for the bulls:
- The G-20 was MAJOR SUCCESS --- right ?
- FASB - will help the banks--- right?
- Breaking 825.00 was key -- right ?
- Banks are back - right ?
On the other hand I note, as yesterday, that Switzerland going into DEFLATION is the worst news at all in this cycle - the mere idea that Europe/G-20 will face the Japanese disease is simply scary.
People forget DEFLATION will make credit even less available - as in an environment of DEFLATION the "real price" of lending goes up as deflation increases your debt burden- hence the low leverage of Japanese corporates.
Deflation is a tax on borrowing money, and the present model of VALUATION needs to be ditched as "free cash flow" analysis no longer works - this will make companies with debt even less worth and it will "contain" an expansion of successfull business' as their REAL COST of funding expansion is rising.
Even Greenspan & Trichet, the two people most in denial in this major crisis, realise if the end game becomes DEFLATION its over - and we will see 400 in S&P.... So... monitor Switzerland fight against deflation - if their policy tool becomes competitive devaluation it will merely export the problem......
All in all it the above indicators have made me slightly negative again, and I have initiated short S&P and DOW Futures.....as midday yesterday..... also still short EURUSD & Gold... while I took minor loss on the EURCHF..... I also reentered long EURSEK.....
Safe trading,
Steen
