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.
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.
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.
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