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Tuesday, 26 June 2012

Crude Oil vs Natural Gas

Since the April highs oil prices dropped by about 30%; Henry Hub natural gas prices on the other side gained more than 30%. There's not much correlation between those two energy products left lately.

It's getting interesting if we compare the pure prices by energy units measured in joule:

1 Barrel Brent Oil          -> around 5.86 Gigajoule    -> USD 93    -> 15.87 USD/Gigajoule
1 MMBTU Henry Hub  -> around 1.055 Gigajoule  -> USD 2.75 -> 2.61 USD/Gigajoule

That means Oil is more than 6 (!!!) times more expensive than Natural Gas in terms of energy. Sure, oil will always be more expensive than natural gas but in the long term I'd expect this huge gap to decrease.

Wednesday, 20 June 2012

SP500 - short term bearish

In the short term I see more downside risk. 1320ish would be my first target...Off for a nice Germany trip now - stay tuned! :)
Additionally, a lot of patterns are completed or close to completion like in the VIX chart and especially in the FX market. I wouldn't be surprised if the USD is slowly picking up speed again...although it is a crappy currency as well, no doubt.

Tuesday, 12 June 2012

USD Index vs EUR/USD

a few thoughts on the USD index. According to wiki the current setup of the USD index looks as follows:
It is a weighted geometric mean of the dollar's value compared only with
- Euro (EUR), 57.6% weight
- Japanese yen (JPY) 13.6% weight
-  Pound sterling (GBP), 11.9% weight
-  Canadian dollar (CAD), 9.1% weight
-  Swedish krona (SEK), 4.2% weight and
-  Swiss franc (CHF) 3.6% weight

CHF is basically tied to the EUR and GBP is highly correlated to the EUR. That means that more than 70% of the index is driven by highly Euro crisis related currencies. That's why the index is an almost perfect mirror of the EUR/USD exchange rate. 
Right now it's kind of tough to predict any targets for the EUR/USD based on a technical setup. But for the USD index my next target is still around 87. That's a 5% increase. Assuming that this move is only triggered by the 70% Euro crisis related currencies this results in about a 7% decrease of these currencies compared to the USD. Based on a current 1.25 EUR/USD exchange rate this means the EUR/USD would soon trade at around 1.16.
That wouldn't be good for stock markets...however, in the long run good for Europe...

Wednesday, 6 June 2012

Gold - several reasons to stick to it

There are several reasons why I stick to my gold related long positions...for now:
- sentiment was VERY bearish lately
- gold usually bottoms before bonds peak (i expect bonds to peak soon if they haven't yet)
- the last two candles in the monthly XAU chart look really bullish to me. Let's see how the June candle ends...
- fundamental reasons: QE3 might be on the way, central banks might keep on buying, gold might be considered as one of the safer investments soon (next to USD and treasuries or particularly once USD and treasuries peak or once aforementioned are not considered safe any more)

Sunday, 3 June 2012

USDJPY - reaching interesting levels again

JPY is one of the very few currencies which clearly outperformed the USD in the past 5 months. Additionally it slowly reaches a big support level (see weekly chart below) where we've seen the latest Japanese central bank intervention (76.3ish). Will it happen again?

It might offer a good long opportunity soon. However, get out if the support level breaks.

Saturday, 2 June 2012

USD and Gold both up - is it gonna happen again?

Gold nominated in USD is usually highly negatively correlated to the USD (obviously 100% negatively correlated assuming that either only USD or only gold is changing). However, in times of big concerns this correlation turns positive, as both currencies are considered 'safe' investments. These times were last seen in Feb/Mar 2009 (financial crisis) and as shown below in the beginning of 2010 when the Euro crisis began. In the past 2.5 weeks we saw a similar picture. Is it gonna go on like this?
An important factor definitely will be the decision on QE3 as it would put pressure on the USD (if it comes) which would further support gold going up...