FX Futures Edge: October 4, 2013
Richard Rhodes | Oct 06, 2013 03:26AM ET
STOCKS: The world economy is muddling through. The US payroll tax increase and sequestration”are headwinds to the US economym, China is being pressured by Japan, and both the US and Chinese housing market are weakening. The eurozone remains mired in inaction, athough showing signs of growth. Quite clearly, we feel risk is being mispriced at current levels given the economic backdrop and developing pressure upon corporate revenues/margins/earnings. At some point, the market will view the central banks will be non-sequitur.
STRATEGY: The S&P 500 remains above the 160-wma long-term support level at 1382; and the standard 200-dma support level at 1595. But perhaps more importantly, the distance above the 160-wma “falied” at the +23- to +25% zone that is our “bubble-like rally” threshold. Hence, a correction of some proportion is forthcoming — perhaps -15% or more.
WORLD MARKETS ARE ON BALANCE HIGHER
THIS FRIDAY as weary market participants are sick and tired of having the US government shutdown the front and center news if you will, and of selling the various markets down on its continued closure. This morning, it is a day of protest to the upside, and markets are moving very modestly higher. Now, this “calm” could break at any time, for many traders had looked forward to the US employment situation report due out at 8:30am ET. The Labor Department has delayed it.
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