To crash or not to crash?
  • May 18, 2017 06:18 am
  • by Bill Cara

At 6:00am ET today, equity prices in Europe and UK continue to sink as they did earlier in Asia and Australia, now down some -1.5%. The selling is pretty much across the board.

Support-resistance levels of one’s holdings must be reviewed.

A few thoughts come to mind.

1. Will the central banks step in to protect the slide in the USD that is pushing their currencies higher, pressuring their exports and summer in-bound tourism? Will they protect their investments in the Big Five (Apple, Alphabet/Google, Amazon, Microsoft, and Facebook) — the very stocks that have propelled the US market to record-setting highs — or do they stand back and watch the crash? So, these five stocks and the USD currency pairs with the Yen, GBP and Euro are the items we need to be focused on today.

2. Should central banks decide that a soft landing (some time in the next year or two) is preferable to the hard landing that the US political crisis may be sparking this week, then I believe they will be pumping liquidity into Humongous Bank & Broker today and for the balance of the week, which will serve to hold HB&B stock prices flat in the days ahead.

3. Another thought occurred as well, which would be pure conjecture on my part. Do these central bankers pull the plug on their senseless algorithms for a while and instead instruct their human traders to stem the capital outflow from markets? If there is a crash, will they be forced to open up to investigators about their all-powerful algorithms that I have been saying are destroying capital markets integrity?

4. Finally, how high can the Gold price rise if there becomes a currency war that renders all paper money weaker against hard assets? The June 2017 Gold futures price (1261) is up to the upper band of technical resistance. Will it zip +80-100 to test the Summer 2016 highs?

Another interesting session today to say the least.

I’m thinking that S&P 500 futures will hold the line for a while today, and Gold will not move up through its important upper band of resistance.

Just sayin’ … and watchin’.

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