These are brutal times. Stocks are still at highs while the underlying economy is slipping away sharply. United States is slipping into a recession which they can ill afford. The country runs a debt of over 20 trillion. CBO has forecast the future deficit to be in range of $1 trillion for the next 10 years. Never before has the country seen such extended budget shortfall. Over and above that, they cannot finance the deficit easily because of the existing debt. What the US desperately needs is a stock market correction to pummel money back into bonds which is exactly what is happening. Without a stock market correction, US may default on payments on its debt.

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In Europe things are getting worse. EUROPE centric funds are seeing record outflows. Never in the last 5 years has such a large amount of capital flown out of Europe based ETF.

That is the JP Morhan BBEU ETF and shows a 452 mil outflow. Record low yields and lower expectation on company earning is spurring the flow of capital.

Increasing candle size at the top of range is a dead giveaway of a brutal correction. We believe the index is on the edge of a precipice. We think the S&P could easily easily correct 15%.

The volatility index VIX is inside tight consolidation which could breakout upwards. That will happen along with S&P cracking 2800.

The GOLD:SPX ratio is at a 3 year high. Gold could rise further if S&P falls to 2820 and lower. This is a major moment for equity market and so for GOLD.

The utilities sector ETF is often a barometer of risk aversion in the markets. The above chart shows the flow of capital seeking protection rather than return. The sentiment had turned negative even the last year and stock market simply followed suit.

Austrian Bonds

The Austrian bond chart is almost unexplainable. The 100 year trading under 1 % yield. The 30 year is nearing 0%. The fear is unmissable as money piles into long dated bonds.

Gold chart

The gold:spx ratio shows a break higher could see Gold rallying further

This chart shows the companies exposed to china exports but citibank makes the point that those wanting to short these companies may have missed the boat.

Loan growth slows

The loan to private households and firms have slowed even while the money supply is rising. ECB plans to further increase supply may fail because of the lack of desire to lend.

USDJPY

USDJPY continues to muddle under the 9 EMA and once the green line catches up with prices, we will see new lows. This is a lovely setup and often has high degree of accuracy.

CADJPY

Similar to USDJPY, CADJPY looks set to fall even more to 77.5 and lower.

There is a great churn in the markets as volatility picks up. These are golden times to trade forex with us. The QUANTO system has a rich history of trading from 2012 and has generated returns every single year in excess of 100% return.

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Source: https://quanto.live/marketoracle/europe-on-the-brink-world-on-a-edge-trading-profitably/

By Quanto

http://quanto.live

Quanto.live is a Investment Management firm with active Trading for clients including Forex, Crypto. We send our trades via trade copiers which are copied to clients trading terminals. Top notch fundamental analysis and trading analysis help our clients to generate superior returns. Reach out to us: http://quanto.live/reach-us/

© 2019 Copyright Quanto - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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