Is $SPY Exhausted Yet In Uptrend? $EURUSD Just Spiked to 1.317! (Technical Update)

Here is some technical analysis for $SPY (the S&P 500 ETF) and EUR/USD. EUR/USD just pierced through October 2011 resistance and hit 1.317. The euro spiked against the dollar yesterday after the Fed (FOMC) said they anticipate "exceptionally low levels for the federal funds rate at least through late 2014." The FOMC kept the rate at 0-0.25%, and are continuing to reinvest principal payments from agency debt and agency mortgage-backed securities in agency MBS. It is interesting that EUR/USD's current uptrend line has the same exact slope as the October 2011 uptrend line. Y=mx+b algo? While the Euro is flying high, there is still a risk it could breakdown if there's a negative euro-zone catalyst, negative ECB catalyst, or expectations of a disorderly default by Greece. Simon Derrick, chief currency strategist at Bank of New York Mellon, told Bloomberg TV on 1/19/2012 that he thinks the Euro could trade down to 1.15-1.20 during the quarter. Other euro bears believe it will eventually hit parity with the dollar. For now, EUR/USD is climbing in an uptrend inside a descending channel.


EUR/USD (source: freestockcharts.com)


Something's Fishy in Tripoli - Guest Post

Guest post by Daniel J. Graeber of Oilprice.com

Something's Fishy in Tripoli

Way back in early 2011, members of the U.N. Security Council had no problem getting a resolution through that authorized military force in Libya ostensibly to protect civilians from attacks by forces loyal to strongman Moammar Gadhafi. The year before, lawmakers on both sides of the Atlantic were bickering over who did what and why in terms of the cancer-stricken Lockerbie bomber. This Scottish decision to release him, depending on which U.S. lawmaker you spoke with, was tied to a BP deal to drill for oil in Libya. Despite fractures in the new interim government in Tripoli and reports of renewed protests, a decision by the Italian government to quietly discuss trade relations suggests something isn't quite right in the way Western allies pick their fights.

Fed Sees 0% Fed Funds Rate Through 2014! (Economic Projections Table)

In today's FOMC statement, they decided to keep the federal funds rate at 0-0.25% and anticipate "exceptionally low levels for the federal funds rate at least through late 2014." ZIRP! They also "decided to continue its program to extend the average maturity of its holdings of securities as announced in September" (operation twist). Below is the full release and a table of their projections for GDP growth, PCE inflation and the unemployment rate. They lowered their GDP growth projection for 2012 and 2013 from November, lowered their unemployment rate projection, and kept PCE inflation slightly unchanged. I also embedded Bernanke's press conference.


Live Video of President Obama's 2012 State of the Union Address

I embedded the live Youtube video: "The online-only enhanced version of President Obama's third State of the Union Address features charts, stats and data that helped inform President Obama's policy decisions." You can now follow The White House on Google+.

IMF Lowers Global Growth Outlook, Europe is Epicenter (IMF Videos, 1/24/2012)

The IMF (International Monetary Fund) lowered its global growth outlook from its September projections. Europe tipping into recession is the greatest risk ("epicenter") to world growth. Read more: World Economic Outlook Update: Global Recovery Stalls, Downside Risks Intensify -IMF). In the three videos I embedded below, the IMF talked about their global growth outlook, fiscal challenges advanced economies face, and financial sector risks. Issues raised by IMF analysts have been addressed by the United Nations, Ray Dalio on Charlie Rose, Robert Prechter, David Rosenberg, and Richard Koo, on this blog (views vary): Fiscal consolidation and private sector de-leveraging by households and banks threaten global growth. The question is how governments manage it. Do they spread out the deleveraging process, or clear the debt quickly. George Soros, who manages billions and trades the macro environment, told Newsweek that he expects either a deflationary environment, or, worst-case scenario, a collapse of the financial system.

2012/2013 growth projections (full chart at IMF)
"In an update to its World Economic Outlook (WEO), the IMF said that the euro area would fall into a mild recession in 2012 after the euro area crisis entered a “perilous new phase” toward the end of last year, affecting other parts of the world including the United States, emerging markets, and developing countries.

Overall, activity in the advanced economies is now projected to expand by just 1.2 percent in 2012—a downward revision of ¾ percentage points relative to the forecast last September—picking up to a still tepid 1.9 percent the next year. The global growth outlook for this year is 3.3 percent."

See a chart of the IMF's downside scenario (% deviation from WEO baseline) for World and Euro area GDP growth at Zero Hedge.

George Soros: Deflation is Best-Case Scenario, Collapse of Financial System is Worst-Case Scenario

Famed macro trader/hedge fund manager, George Soros, was interviewed by Newsweek and issued a warning for the developed world.

Image Source: NorwayUN
"“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”"

Read more at the TheDailyBeast. What are Soros' thoughts on Central Banks printing money?

Jon Stewart on Newt Gingrich (Daily Show Clip)

This was an interesting clip on the Daily Show (h/t Zero Hedge via Daily Crux).

Links: Greece Debt, Portugal, Japan, Treasuries, S&P 500, Natural Gas (1/24/2012)

Eurozone finance ministers reject Greek debt offer - (Telegraph)

Euro zone ministers reject private bondholders' Greece offer - (Reuters)

EU Seeks Bondholder Concessions on Greece (Bloomberg)

Timely Greek lessons on the eurozone crisis (by George Provopoulos, Bank of Greece) - (Financial Times)

Fears Mount That Portugal Will Need a Second Bailout - (WSJ)

Bids for Portugal REN with 30-50 pct premiums-sources (Reuters)

Goldman Tells Clients To Short US 10 Year Treasurys (Zero Hedge)

10 Good And Bad Things About The Economy And Rosenberg On Whether This Isn't Still Just A Modern Day Depression (Zero Hedge)

Credit Suisse: 11 Reasons We'll See S&P 1,400 This Year (PragCap)

EU May Be Preparing for Greek Default, Bank of New York Mellon Strategist Simon Derrick Says (Bloomberg Video)

Hussman: Recession risk remains very high (HussmanFunds)

Watch The Republican Debate Live Here (NBC)

Tonight's NBC Republican debate is in Tampa, Florida and moderated by Brian Williams. Ron Paul, Mitt Romney, Newt Gingrich and Rick Santorum are left. Watch it live below. Photo source: NBC.




Tom DeMark: S&P is Close to a Top, Bullish on DAX, Bearish on Bunds (Charts)

Tom DeMark, creator of the DeMark Indicators (used to time market exhaustion), was on BloombergTV last Friday and made a call that the S&P 500 would top out between 1,338-1,342 this week (specifically on Tuesday). It closed on Friday at 1,315. Watch the interview after the jump for more details. The chart definitely looks like it's getting exhausted after this nice rally. On December 5, DeMark predicted that the S&P would hit 1330-1345 when it was trading at 1,258. He thought it would hit by Christmas, so he was a month off. The downtrend from the 2007 peak and 2011 high hits around 1,330 today.




He is also bullish on the German stock market (Frankfurt DAX) and bearish on German bunds (government bonds). I charted out the DAX and German Bund ETN (BUNL) below. Actually, BUNT (3x German Bund ETN) looks interesting as well. German bund yields are available at Bloomberg.com (10-year German bund yield). Interesting. So, are DeMark's indicators predicting that a "hard Greek default" will be averted? Or is his call for the short-term.

Greece can't make a €14 billion bond payment on March 20, so it is trying to cut a deal with private creditors to swap into new Greek debt at a loss so it can get bailout money from the European Union and IMF. Read the articles below for more information. There's a meeting today with finance ministers and an important EU summit on January 30. Wow, EUR/USD is up 0.83% at 1.30. Something is up, at least in the short-term.