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.

Lots of Scheduled News On and Off the Calendar

FOMC Statement Awaits on Wednesday

Although no interest rate change is expected, the accompanying statement from Bernanke and the Fed will be scrutinized for signs of Future Policy Insights. Expectations for a Rate Hike by December and insights on the Quantitative Easing policy may have market moving consequences.

Live Coverage - 1st on Forex Webinar will be broadcast on FX Street - register below.

Economic Contraction Continues

On Thursday the US GDP will be report on the current economic status. The current consensus number is expected to show -5.7% growth.

Live Coverage - 1st on Forex Webinar will be broadcast on FX Street - register below.

Euro Under Pressure?

EURGBP - 60 Min Chart Above (click to enlarge) Sports a Head and Shoulder pattern in play and grinding towards completion of the pattern target of approx 0.842

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·         US GDP Report - Thu 7:30am EST (13:00 GMT)  - Click Here to Register

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.

Japan’s Complaint Shelved - UN Show Uselessness Again 

Last week’s G20 cooperation fell apart at the United Nations on Sunday as not even a worthless declaration of outrage was made as North Korea brazenly gives the world the one finger salute - with their other finger on “the button”. When will real leadership emerge?

Overgrown Adolescents Playing With Weapons

Can we just put a “Dunce Cap” in these these guys and make them sit in the corner quietly in a comfortable room at Versailles - before we choke on the sand we have our heads buried in… Oh… maybe that’s not sand after all…

Currencies Unfazed to Financial or Military Warfare

Nothing much seems to jolt the market these days - I guess the difference between economic and military warfare is becoming marginalized as Trillions of fiat currency floods the earth - Where’s Noah?

Technical Analysis: Japanese Yen - Gives Ground

Interesting Chart Patterns At Support - Resistance

USD-YEN - Monthly Chart April 5, 2009

Triangle Pattern on MOnthly Chart Above Faces Decision Time as Price Approaches Strong Support - Resistance level of 102 - Meanwhile on the Tewo Hour Chart …

 USD-YEN - Two Hour Chart  April 5, 2009 23:00

 Inverse Head and Shoulder Faces Monthly Resistance at the 102.00 Level

 Tune in to the “1^st on Forex” Webinars on FX Street

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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.

Obama Re Affirms US Leadership The world can breathe a sigh of relief as it appears as if some sanity has prevailed and presented itself in the form of the G20 Communiqué.

Read All About The New World Order - As it is forming at the Official G20 Website http://www.g20.org/pub_communiques.aspx

Financial Markets Rejoice The equity markets soared as it learned of the success of the London Summit and Barack Obama gave a hopeful press conference that showed his leadership and “Toast Master” skills.

Central Banks Selling Gold  Disclosure that the World Bank - IMF and the Central Banks have been granted authority to sell Gold - this will allow the Central Banks to raise capital as they print more cash….and….. Artificially hold down the price of Gold by selling the reserves.

Another Week - Another Trillion - or Three!

The G20 Leaders pledged 1 Trillion Dollars to help developing countries and to support the IMF and…Meanwhile Back in Washington - Obama Budget Passes $3 Trillion Dollar Budget

FASB - Mark to Market passed but discussion is that this accounting rule change may prevent the PPIP program announced last week from getting off the ground. But that’s another story….

Meanwhile - Back at the Currency Charts 

Euro - Sterling 4 Hour Chart is setting up nice with a Head and Shoulder Pattern and …  

 The 30 Minute Chart is sporting a nice down trend channel.

 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.