Forex Investment and Currency Trading

The recent break below the 1,257 level looks very similar to that seen when it broke below 1,254 in Feb/March 2001 setting up for a rapid move to 1,081.

At a minimum you would need the index back over 1,265-1,270 to suggest stabilisation.

Here is the Bottom Line:

• 25 years of growth and wealth creation as the U.S.A. has become the World’s largest hedge fund has bred an “It cannot happen to us” mentality.
• The perfect storm of a housing crash, a credit crisis, tighter credit conditions, a broken transmission mechanism, slower growth, large deficits, rising unemployment, excessive consume borrowing has created a toxic mix not seen during this era of unbridled prosperity that looks extremely difficult if not impossible to get out of easily.
• On top of this the only shining light (global growth holding up the U.S. economy) is looking increasingly fragile as equity markets and property markets around the world look to be seeing the domino effect feed through. The era of cheap, easy, leveraged credit has ended with a large bump and we are likely to see these problems spread further in the months ahead.

On the basis of this it just cannot see a scenario that will lead to a sustainable Equity market rally and expect the outlook could be very concerning indeed.

The fear is that we are very close to the point where we will likely see a painful downside acceleration in this equity market fall in the coming months.