Christopher Quigley's Contributions

The forward looking indications from Google, Microsoft, IBM, Intel, UPS and FedEx are negative. I think this is due to the contraction in world demand caused by European austerity. However the results from financials, banks, brokers and real estate are more positive.

Labour Day is done, the holidays are over, schools and colleges are back: game on. Expect one wild ride in the markets between now and the November US presidential election results.

Friday the 29th of June 2012 will go down as one of the most important dates in the history of the Euro currency. In the early hours of that fateful morning German resistance to a rational and comprehensive resolution to the Euro crisis was finally crushed.

Things have become so serious that President Obama has intervened and has asked British Prime Minister David Cameron to travel to Berlin today and put an ultimatum to Chancellor of Germany Angela Merkel: "act before it is too late".

It is early days in the Irish referendum count but the yes side has won. This vote brings a degree of stability to Irish finances but unfortunately it may be too little too late as it looks like the Euro project in general is in trouble and may not survive. The game has moved on and it is moving fast.

In his classic economic treatise "The Natural Economic Order", written in 1929, Silvio Gesell attempted to explain to his audience that many of the economic ills that were befalling the world at the time were not due to problems with demand and supply, as such, but with an erroneous understanding of money.

There are very few heroes in economics but for me one of the patron saints of that profession should be Nikolai Kondratiev who was shot by firing squad on the orders of Stalin in 1938. He died for what he believed was the truth. His execution was ordered because his academic work propounded that the capitalist system would not collapse as a result of the great depression of 1929.

Our world lurches from financial crisis to financial crisis yet very few academics, reporters or commentators point out the fatal flaw in current orthodox economic theory which is the central force behind these crises. The flaw relates to the general lack of purchasing power in contemporary society.

The volatility which was predicted in the last quarterly brief continues apace with the markets continuing to climb a “wall of worry” as is typical. On the basis of Dow Theory, the bull run is still in place with the Dow Transports indicating that new highs are anticipated.

Technical analysis is a tool to gain insight into market price behaviour and so enable you to more profitably judge investment entry and exit points. In essence Technical Analysis, correctly used, will motivate investment action that brings a higher probability of success than decisions made through the mechanism of pure random choice.

The above was written at the end of 2010. It is now nearly 5 months on and the crisis which brought the IMF to Ireland shows no signs of abating. As we speak the full extent of the problem has not been fully comprehended. As mentioned previously there are now in effect 7 levels to Ireland’s financial fiasco

Short term traders love volatility and I reckon they are going to get it over the next few months. The catalysts will be oil price instability, rising interest rates worldwide, dollar gyrations and higher inflation. Accordingly note that the VXX is intimating a significant breakout.

The market is at a very interesting juncture. On all my favourite indicators (A/D Line, McClennan Summation, Slow Stochastics, Fast Stochastics and MACD) the current bull run is very much overbought. Given that this highly profitable move has been in place since last September it is logical that we are due a correction, but there is no sign yet of any technical breakdown. If you are not in the market or have been stopped out from positions I would hold my powder dry for the moment as the risk/reward ratio is negative.

The scandal surrounding Ireland’s IMF/EU bailout continues to gather momentum following the collapse of Brian Cowen’s position as Taoiseach (Prime Minister) of Ireland.

Just when you thought it was safe to think things were back to normal with European banks the recent announcement regarding new banking stress tests from the mandarins in Brussels indicate that the sovereign debt crisis is far from over. The solutions to date have not comprehensively solved the core weakness of the Euro. New bank stress test will not solve the problem.

My favourite indicator of market breath, the McClennan Summation Index, is finally beginning to get to a level where it is becoming interesting. A move into negative territory, though some ways to go, will herald the probability that stocks will soon begin providing price action that brings solid technical support. This is good news particularly for those who have been out of the market since the early September bull move. In my books patience is a major key to achieving above average investment returns.

On Thursday 18th 2010 The IMF arrived in the Emerald Isle. What a sad sad day for the proud people of Ireland. Following 300 years of armed struggle the resident government have replaced English masters with the Continental variety. However the method of usurpation this time was not guns and bullets and starvation but economic and financial prowess. To the victor goes the spoils.

The market continues to power ahead with significant momentum. The Dow 30 Industrials, the Dow 20 Transports, the S & P 500 and the NASDAQ 100 all are taking wind from a new quantitative easing policy, extended Bush tax breaks and positive earnings guidance. In addition Wall Street likes the idea that Democrats and Republicans must work together and compromise following the mid-term Congressional elections.

From a Dow Theory point of view this is the situation as I see it. The market is giving very strong signals particularly on the Transports side. My key break point is 5265 to give the first indication that the new Bull Run has commenced. We are currently at 4735. Near but not quite there. My key break point on the Dow Industrials is 13566. WE are currently at 11146 some 2420 points away.

The markets in mainland Europe are going through something of a revolution particularly since the MiFID directive in 2007 from the European Commission. The purpose of this initiative was to promote competition in the financial markets throughout the Euro zone.