Big Week – and Volatility Ahead – CIT Chapter 11?

by Jerry Furst – Sr Analyst  - Investors Education Network.com  

Last Week the  VIX closed over 30 spiking to an intraday high of over 31 on Friday with the DOW dropping 250 points and the S&P 500 dropping over 30 points and the S&P 500 breaking trend line support.

Looking at chart patterns is often called an art and a science. Eventually technical traders will build up a photographic memory of patterns and quickly recognize similarities.  I present to you an example.

The Daily charts of the Euro and the Weekly chart of the VIX  (S&P 500 Volatility Index) may give technical traders time to pause over the next two images I show.  

Chart Pattern Similarities - Euro and Vix - Sr Analyst - Jerry Furst - IEN - Click to Enlarge

Image 1 Above – On the Left – EURO – Daily Chart of March 18, 2009

The Past May Help Us Determine The FutureSimilar Patterns  - Note the Triangle – Failing Head and Shoulders and Trend Line Break which is practically identical to the current Weekly chart of the VIX as of October 30, 2009 – on the Right

Euro-USD Daily - October 30, 2009 - Shows Failed Head and Shoulder Pattern

Image 2 – Euro-USD Daily - October 30, 2009 – Shows the Failed Head and Shoulder completed – extending above and Beyond the Head and Shoulder Pattern. If this pattern is to be repeated on the VIX – Look Out Below!

Lots of News Scheduled as VIX Picks Up

Currency traders may want to consider shifting to tactics and strategies that work best in high volatility markets. Correlations between the equity markets and Forex may fluctuate if fundamentals get in the way.

Last weeks move up in the VIX and triple digit losses on the DOW are looming large over an extended equity market. (Click here to register and tune  into my webinar  on FX Street at 12 Noon Eastern (GMT -5)

Wow – What a Week Ahead Coming Up!

Monday: – Watch the Asian Markets into the US Open. us Data Includes Home Sales  - ISM and Construction Spending.

Tuesday: GBP: PMI , and US Consumer Confidence

Wednesday: – FOMC announcement - leading into Fridays NFP Employment Report

Thursday: BOE and ECB Central Bank Announcements – watch for signs of policy change statements. US Weekly Jobless claims and Fed Balance Sheet data. (click here to register and tune into my webinar on FX Street starting at 1:30pm Eastern (GMT -5)

Friday: NFP-Non Farm Payroll – US Trade and Consumer Credit Data

Traders Be Aware This Sunday – CIT Chapter 11?

CIT Group is reportedly ready to file a “prepackaged bankruptcy plan”. Sources indicate this may occur as early as this Sunday Nov 1. If Chapter 11 is filed – it would qualify as the 5^th largest bankruptcy filing ever ($71 Billion in Assets) in the US.

CNBC’s David Faber broke the news on Friday afternoon Oct 30, and he speculated that preferred shareholders are likely to be “wiped out”. These “preferred Shareholders include the US Taxpayer that had injected $2.3 Billion.

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Jerry Furst  is an active trader, educator, and Founder of Investors Education Network (IEN), He is a Mentor and Trading Coach to Select Clients  Click Here for a Free Self Evaluation Survey.

By Jerry Furst - Sr Analyst - Investors Education Network

 Euro Poised For Breakout?

The Daily Chart of the EUR-USD (above) shows the Euro breaking resistance of a trend chanell

While the 4 Hour Chart of the EUR-USD (above) shows an Inverse Head and Shoulder

This is confirmed with the Inverse Correlated USD-CHF (above) with a Head and Shoulder

Both 4 Hour charts show a strong Support and Resistance lines .

 The Week Ahead

The long awaited results of the so called “Stress Test” of US banks has been delayed. Speculation is that the original results were “sugar coated” for the government view and the requirements for some banks to raise more capital and could roil the markets.

 Tuesday, Fed Chairman Ben Bernanke testifies to the Joint Economic Committee of Congress with his outlook on the US and the “Bizzaro” World Economy

 Thursday has the ECB and BoE with Interest rate and Quantitative Easing policy and other “unconventional methods” to combat the

 Friday has US Non Farm Payroll and Canada Unemployment Data

Tune in to the 1st on Forex - Week Ahead  Webinar - Click Here

Jerry Furst  is an active trader, educator, and Founder of Investors Education Network (IEN), He is a Mentor and Trading Coach to Select Clients  Click Here for a Free Self Evaluation Survey.

By Jerry Furst - Sr Analyst “1st on Forex”

at Investors Education Network.com

Mid Week Review

As we await Interest Rates from the ECB and the UK.

The fools on the hill continue to entertain us with their multi-trillion dollar show…

The Cast of Characters:

The President, The Fed Chairman, the Treasury Secretary, the Prime Minister of the UK, and Jimmy Rodgers!

So far this week has shown…

An amazing Soap opera of intrigue as the President of the United States suggested that it might be a good time to start buying into the stock market for “the long term”.

Tuesday Fed Chairman Ben Bernanke took the hot seat for Senate testimony and amongst some of the things he said was….

“There was Failure of oversight….”

Looming Commercial Real Estate Crisis

AIG’s Financial Product Division was separate from their New York State Insurance company…. (However they both seem to be on the same ship….)

Rewarding the Three major credit agencies, despite their lack of any credible ratings - seemed to be ok with the Fed chairman

Bernanke Dodged the question

When asked, “Should banks, using taxpayer money to bail them out, charge those same taxpayers in excess of 20% interest on credit cards?” He bailed out of an answer…

When the question of Nationalization came up - his answer was that he did not think it would be necessary - but was prepared…(that means to me- it will and basically has already happened)

A pointed question of “Do you think there are any “outer limits” as to how much money you are prepared and able to provide to bail out banks - received a vague ” there is a limit…  (just how many trillion$ is still To Be Determined)

Meanwhile - over at the White House….

UK Prime Minster Brown was not treated to formal flags and podiums… but a strange oval office press conference was had…

Key points :

The G20 meeting next month in London “must clean up the banking system” and the Prim Minister mentioned that the possibility of a “Global New Deal” is quite possible in the next few months….

Does that imply that all citizens of the earth will become equally miserable?

“The Challenges are Global”

“We need a Green Recovery”

“Regulatory System Needs Global Reform”

US Treasury Secretary Timmy Gee…

Was being lobbed soft balls in his testimony -  the most important thing I heard was that the Senate leader notified the panel that the Treasury Secretary was prepared to go behind closed doors and answer questions (away from the television cameras)  Thanks for your public service guys…  

Meanwhile - Commodity Jimmy Rodgers Over in Singapore…

Interviewed live on MSNBC Wednesday Evening by Larry Kudlow

He said he was “Mind Boggled” at how the US government is imploding and being run by…. well let’s just say he did not have nice things to say about the Treasury Secretary or Fed Chairman….

Highlights and Quotes by the ex-patriot….

• - Mainly watching the markets….
• - Supply of Commodities is declining
• - Fundamentals for Commodities “Getting Better”
• - He will be exiting the US Dollar sometime in 2009 or 2010
• - In the last 2 months “the only market I’ve bought has been China”

So there you have a mid week run down - as the world awaits the Bank of England and the ECB to lower rates on Thursday - the limplications may not have any effect as we get closer to the April Fools gathering of the G20.

 But you must admit - living in this time- let alone trading through this time is as Visa would say… “priceless”…..

 Stay Tuned… It just might get more interesting as the Governments are coming to the rescue of us all!  Makes me feel quite comfortable…

 Jerry Furst  is an active trader, educator, and Founder of Investors Education Network (IEN), He is a Mentor and Trading Coach to Select Clients  Click Here for a Free Self Evaluation Survey. 

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