First, we've got a gap down after the vicious selloff in the final 2 hours on Friday down to the day's lows. That is definitely a change of character from the Friday selloff, Monday gap up that we've gotten used to.
Second, the market is still going down even with the dollar going down. A weak dollar doesn't hold up the market anymore.
Third, China is killing the US. Not by keeping their currency lower. It is because they are jacking up the price of commodities with their insane 5 year projects replete with bridges to nowhere, roads to nowhere, ghost towns, and high speed rail that no one can afford. They are rationing coal to keep the price down, they don't want to bid against themselves! We have Brent oil at $115/barrel with no employment growth. Imagine if there is a halfway decent economy in the US. Oil goes to $150/barrel in a straight shot even with Libya back online. That kills any recovery.
On the positive side, we have sentiment getting bearish but with fundamentals like this, you need to see big oversold readings to get good entries.
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6 comments:
1.5 billion people in China must be fake too
Commodities are up on QE2 past 9 months. China is cutting spending banning 2nd home ownership and raising rates. Bernanke is the genocidal inflation overlord
China had 10%+ GDP growth in 2008 during the bank crisis while crude oil fell 80%. US is the lynchpin always has been.
The market character has changed, used to be weak opens followed by 15-30 mins of further weakness then grind up all day since Sept 10, now we have weak open Friday, feeble rally and close near lows... time to pulls horns in... it looks like we need a trip to the 200d
China is hoarding copper and building up their crude oil SPR. The inflation is rampant and the Chinese are raising rates way too slowly considering there is a real estate bubble. QE2 is part of the problem for high commodity prices, but China is the one driving the demand, not speculators. Speculators can never alter the price of commodities over the long run.
I'd have to disagree. As I stated above, crude oil and many industrial commodities fell 60-80% in 2008 when China GDP clocked in at 10%+ (it's slower now). Commodities trade more off expectations on US dollar policy ie QE.
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