Monday, March 25, 2013

Connecting the Dots - 03/25/2013

With a week remaining on the clock in March Madness, the SPX currently sits above its long-term meridian. 
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Below is a comparative chart of the current SPX through Friday's close, contrasted with the initial route the market drove from ~ the 1485 to 1555 interchanges back in the summer of 2007. Close enough for government work - which some might say seems about right.  
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Last week, the silver:gold/SPX performance model continued to blow-out, exhibiting the second widest (weekly) inversion spread since the construct began with the start of the secular bear market in equities in March 2000. This comes in right behind the week preceding the Lehman Brothers bankruptcy. 
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We feel it is entirely too early to judge the kinetic impacts to the markets, despite the 11th hour deal in Cyprus last night that took the two most obvious threats off the table; namely, a disorderly exit from the euro and the sacrament of banking trust - losses to insured depositors. 
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All eyes remain on the Shanghai Composite Index to see if it continues to roll-over - or rekindles the trend higher as the breakout leg of the 1982 SPX comparative did. Should the uptrend reestablish itself, we would consider it a major positive proxy for the balance of growth X-Europe and primarily driven and smoothed by US demand and Chinese stimulus. 
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We consider the primary motivational difference in recent trend between the two typically closely correlated commodity currencies of the Australian and Canadian dollars - to be China's perceived stabilization. Should China begin to roll, we would expect the Aussie to play catch-up to the Loonie on the downside and vice versa should China's uptrend firm.    
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*  All stock chart data originally sourced and courtesy of www.stockcharts.com 
*  Subsequent overlays and renderings completed by Market Anthropology