Markets Feb 9 2010

Tues Feb 9 2010 pre-open


Markets, including gold (which we use as a reverse proxy for the underlying trend of currencies) are on a knife edge. Markets are enormously nervous. The VIX is recording very high expected volatility. Because the Euro has been so weak with the hammering on Greece and the whole PIGS chatter, it makes the USD look and act better in the moment. People forget that the whole Euro thing is very analagous to the US and the financial position of the states, especially the 7 or so led by California. While the UK in not part of the Eurozone, financial problems there are at least as difficult as in the weaker Euro states. But since its GDP is vastly larger, it would be capable of creating much more havoc if the GBP were to seriously appear in jeopardy of devaluation. So everything is relative and strength in the USD does not necessarily mean there is an expectation that the systemic problems with the US economy are about to end.



We also know that trader short positions in the Euro are massive. This means that major financial groups are actively working to bring it down, which in effect is working against the public interest. Market talking heads are very fearful of another break downwards in the market and the rest say they will 'take something off the table' on any short term bump up.



The technicals of JIN continue to look OK, which reinforces never to overlook what is happening to your specific holdings. As the French officer commanding the Old Guard is reported to have said as the Prussians entered the field at Waterloo, "Courage, my children".

The impact of indirectly positive breaking news:
Information was just released by CNBC and I now have it confirmed online from the G&M:
In a disclosure to the US SEC, China Investment Corp, its $200B sovereign wealth fund, has been quietly accumulation stakes in Canada, including Kinross Gold and Potash Corp of Saskatchewan. It has also already made about $2B on its earlier investment in Cdn gold and base metals miner Teck Resources, making it the fund's largest single equity holding. JIN responded instantly to this news, gaining 20c by 10:30am and appears to be consolidating there, just below my re-entry point.