MBO Issue 30 (Jun 2014) Euro Cluing Us In

By Lawrence


  • Review
  • Euro First Down Leg In Place
  • S&P 500 The All Important First Week Of June
  • Gold On Track For Its Previous Year Low Retest
  • Big Picture Summary



Euro compression led to breakout upside first to 1.40 my upside target. The politicos in Europe know it is bad for Europe and took some funny actions to make sure it stopped right there. An FBO against year high and 1st quarter high is deadly. Euro collapsed back down. This time, it simply sliced through previous year close and dropped to my downside target below 1.36.

S&P 500 tagged the upside target of 1900 and beyond. Contrary to what most other people believe that it was overbought somehow (which implied that they wished it to go lower), S&P 500 did what it was likely to do – going higher first.

Gold dropped lower as expected no matter how hard people tried to pop it up. It is on track to tag previous year low in the 2nd to 3rd quarter timeframe as mentioned in previous issues.

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  • smilingsynic May 31, 2014 at 9:49 pm

    Gold does not need a major crisis. Inflation will do. If we get a subtantial jump in wages, that could well do the trick. The link between rising wages and inflation is important although often overlooked in favor of overrated indicators like money supply.

    No position in gold.

    • Lawrence Chan June 1, 2014 at 8:30 am

      Understand what you mean.

      For gold to go back to a reasonable price level for which the gold miners can make money, like 1300-1400, normal inflationary environment will do.

      For gold to go 3000 and beyond like what the gold bugs say, they are wishing for something very bad to happen.

      I should have clarify this point.

  • smilingsynic May 31, 2014 at 10:02 pm

    As for the SPX, long-term, by late June it will be about 400 days since it tagged the 200 day sma (11/28/12 last time it happened). Just an observation.

    If SPX 1900-1908 area= S, then 1960-1970 in play by end of quarter (June)..

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