The MasterCharts: December 2010
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Friday, December 17, 2010

Market timing - European Financial Risk Breaks Out- Sell signal?

 Market timing - European Financial Risk Breaks Out- Sell signal?

CONCLUSION: As our mark Steele points out below, European corporate financial risk is breaking out...this was a SELL signal last spring. Yet this time so far, there has been a definite lack of contagion. The elastic band is being tested.....

Relative Strength Filter
December 17, 2010
Research Comment
Mark Steele
(416) 359-4641
Assoc: Tiberiu Stoichita/Rahul Muralidhar
European Financial Risk Breaks Out
CLICK HERE for a printer friendly version of this report including research disclosures.

Figure 1: European Financial (Markit) and European Prime Broker (our .PrimeEU) Financial Default Risk; FTSE Global Banks

Source: BMO Capital Markets, Bloomberg, Thomson, Markit

· This morning, European corporate financial default risk breaks to the upside – Figure 1.

o This was a sell signal in the spring.

o This was a sell signal in November.

o This is a caution signal now.

§ What is different?

· If you carve out the too-interconnected-to-fail European prime brokers (our .PrimeEU index), and overlay this on the European Financial default risk chart, you see a definite lack of contagion.

o The core is solid.

o The caution, of course, comes as we assume that if overall European financial default risk continues to rise, then there will be a moment when the elastic band connecting the two (Figure 1 top) will force the too-interconnected-to-fail institutions into the fray.

§ Today, we get off with just a caution, but a big caution.

Sunday, December 12, 2010

Gold Market Forecasting and the Magnetic Power of the $2,298 Target Price

Gold Market Forecasting and the Magnetic Power of the $2,298 Target Price-- Posted Sunday, 12 December 2010
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By David Knox Barker

The Long Wave Dynamics approach to Fibonacci drill-down price grids in any market index such as the S&P 500 and European S&P 100 generates extraordinary actionable market intelligence for investors and traders. Creation of the drill-down Fibonacci grid approach to market analysis is the result of decades of market cycle research and studying the market timing of a number of cycle masters. The goal was a formula timing plan for buying low and selling high based on cycles that works for both investors and traders.

Fibonacci Dynamic Web methods demonstrate how every Fibonacci price grid is driven by three ranges, 1) Solitude 0%-38.2%, 2) Normal 38.2%-61.8%, and 3) the Frenzy range of 61.8%-100% of any Fibonacci price grid. Prices often turn exactly on the golden and inverse golden targets in the Fibonacci price grids.

Working with major indexes such as the S&P 500, the 1982 intraday low and the 2007 intraday high provide the perfect Level 1 grid range to begin the Fibonacci grid drill-down process. Other major markets do not offer as much history, but they provide enough for a solid Level 1 price grid. However, the gold market has been making all time highs on a regular basis, so a clear Level 1 price high is not available.

This is where things get interesting in terms of very recent gold market price action. In order to generate a Level 1 price high to begin the Fibonacci grid drill-down process, you have to use a past major move as a key move in a full grid move that remains in the future. Yes, what I am suggesting is that you must look into the future and see an important top in the price of gold.