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What To Expect Next For The US Dollar, Euro, Stocks & Bonds
With global stock markets continuing to struggle, top Citi analyst Tom Fitzpatrick puts KWN readers ahead of the curve on stocks, the US dollar, euro, bonds & more. Fitzpatrick, a 28 year veteran and top analyst at Citibank, which has $1.3 trillion in assets, sent KWN some extremely powerful charts and notes. Below were his comments with five key charts:
Tom Fitzpatrick latest report:
Nearly all levels we were watching at the end of last week have given way, suggesting further market turmoil ahead.
Europe: The key support level on Spanish 2's versus 10's at 150 bps has been breached with Spanish 2-Year yields making multi-year highs. Expect the curve to now test 60 basis points. The last time this happened was in early Nov 2011 when we also saw other major markets turn for the worse. EUR/USD for example fell some 600 points that month. The support level on EURUSD is at 1.1876 (2010 low) and then the channel base at 1.1650.
Major Fixed Income: US 10 and 30-Year yields have made lower lows. The comparison we make on US 10-year is with the 1993 price action (background being savings and loans crisis, housing downturn and economic recession) and that overlay suggests an acceleration to the downside in terms of yields. The medium term target is unchanged at 1.15%-1.20%.
US 30-Year yields have breached 2.50% and a close below would confirm the break. Expect an eventual test of the 2.00% area.
The daily chart above shows the USD Index making higher highs for this trend and the channel top comes in at 85.40 which is the next resistance levels. Beyond that the major highs from late 2008, early 2009 and June 2010 are at 88.46 to 89.62.
Equities: Triple momentum divergence seems likely to be completed on the S&P 500 and Dow Industrials
suggesting losses ahead. We also posted a bearish daily reversal on the German DAX on Friday. The European Banks Index has made all-time lows and the next support is the trend across the lows/channel base just below 60, which is more than 18% below current levels:
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
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Eric King
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
July 25, 2012
