Debtageddon

By: Erik Swarts | Thu, Jul 28, 2011
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Debtageddon

Just like in the cinematic masterpiece that is Armageddon, the rocket (Congress) is about to land on the approaching asteroid (US debt) and blow it up (extend the debt ceiling).

Certainly our growing debt load is worrisome to say the least - but this fiscal armageddon is a relative game and there's still a few asteroids with precarious trajectories hurling towards our friends in Europe.

Judging by how the precious metals market has responded this week to whispers of resolution in the debt debate (quick pockets of weakness) gives traders some insight as to how the currency markets, and by extension the precious metals market, will likely respond once the issue is resolved.

The euro hit its 61.8% fibonacci retacement level Tuesday from the early July low and has pivoted sharply back through the descending triangle on the daily chart. Judging by the momentum oscillators it has a ways to run back towards the bottom of the formation ~ 140.

Euro Fibonacci Retracements

Euro and Silver

I believe silver (and likely gold this time around) will follow the euro sharply lower as in early May. How the euro handles the bottom of the formation will likely tell if silver's weakness is just transitory or a more serious concern. With a relatively loose formation such as this, a bearish descending triangle can quickly become a bullish descending wedge.

Stay frosty traders.

Further bias - War is Hell

 


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Erik Swarts

Author: Erik Swarts

Erik Swarts
Market Anthropology

Although I am an active trader, I have always taken a broad perspective when approaching the markets. I respect the Big Picture and attempt to place each piece of information within its appropriate context and timeframe. I have found that without this approach, there is very little understanding of ones expectations in the market and an endless potential for risk.

I am not a stock picker - but trade the broader market itself in varying timeframes. I want to know which way the prevailing wind is blowing, where the doldrums can be expected and where the shoals will likely rise. I will not claim to know which vessel is the fastest or most comfortable for passage - but I can read the charts and know the risks.

I am not a salesperson for the market and its many wares. I observe it, contextualize its moving parts - both visible and discrete - and interpret.

I practice Market Anthropology - Welcome to my notes.

Erik Swarts is not a registered investment advisor. Under no circumstances should any content be used or interpreted as a recommendation for any investment, trade or approach to the markets. Trading and investing can be hazardous to your wealth. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This is strictly for educational and informational purposes only. All opinions expressed by Mr. Swarts are subject to change without notice, and the reader should always obtain current information and perform their own due diligence before making any investment or trading decision.

Copyright © 2011-2014 Erik Swarts

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austrian-money-supply/