Markets at Pivot Point

Posted: August 13, 2013 in Uncategorized

Institutions until now did not fully participate to this rally. But as institutions go they have their own mandate (usually to stay within 8-12% of the index), so they are now at a pivot point…join the rally or try to bring it down.


Other times (noticeably in April 2013) they joined the rally.


This time could be different for a series of motivations


In September after the US Labor Day (2 September), Northern Hemisphere investors and traders will start come back and will be focusing on  a raft of uncertain data point


-Resuming European Parliaments with the unresolved issues of the Italian Berlusconi (head of one of the main Coalition Parties now convicted for tax fraud) and the allegation of  bribery for Spanish MP Rajoj.


US tapering (FOMC 17-18 September) and discussion about the next US Chairman in January 13 (and Summers, one of the main candidate, spells trouble for the market as he is clearly anti QE)


German Elections 22 September and just after the German High Court Challenge to the ECB Bond Buying program


Finally, in October, the US will reach again the Debt Ceiling (the famous discussion already postponed in March 13).


In all it should be a small correction in order of 10% – 20%, but, as usual, small cap will suffer more.


The Australian market as a clear support at ASX4,600 / 4,740 (and could be supported by a Liberal win) and US Market SP500 1,560/1,630.


So we could be still having a false break of SP 500: 1,710 (ASX: 5,250), but be wary.


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