Don’t trust markets correlations. There are a lot of funds try to catch them. Commonly, public believe that investors and their decisions are rational on financials markets. I think that investors irrational but wise in making their decisions. Talking about investors this time I mean major markets operators, sometimes I call them Composite Man (CM). That’s why I do believe that each market situation is unique and that’s why I do believe that markets repeat it in their behavioral patterns. Each coin has two sides. Let me remind you movie “Indecent proposal” where John Murray, in order to get expectable result, use coin with similar sides. So, don’t forget this example when you try to find correlations among financial markets. By the way I like this movie.
10-year T note - weak up trend is still intact. However it’s not enough to change trend’s direction. I prefer to wait until supply power enters to market. The fact is that price made new high and retested historical maximum from December 2008. It is interesting whether it will have affect on a current situation. In this case I would like to pay attention to stocks markets. Last few down days tell me that some selling power entered on market and I would like to see how it is going to approach previous low from September 15 and whether it will remain in the current trading range 128-132.
USD (DXY) – ended last week at resistance level 78.8, which was actually obvious problem zone for upward price move. The next one is zone at 80.6 – 81.3 due to ½ major down wave (73-88.7) and important high at 81.3. Last few days show down reaction from noticed level. Due to the current down movie I will pay attention to levels 77.4, 77.0 and 76.
GOLD – left trading range 1700-1920 on Friday that is new daily down trend confirmation and touched support level at 1580 on Monday. However, there gold become oversold that caused some up movie from obvious support level. Next supports levels will be 1480, 1400. The fact is that gold changed trend’s direction at least temporarily and this fact has interesting affect by my opinion. I would assume that major markets operators sold some gold from their portfolios. Possible confirmation of my last assumption is a new up daily trend on dollar. Due to my last assumptions I think that it will take time to re accumulate gold for major investors in case to establish new up trend.
SnP, NASDAQ – remain in a trading range and as soon as prices will leave these zones I can establish my new expectations.