The Trifecta of the Nasdaq, Copper and Shanghai Show Stock Market Fractures

Oakville, ON, Canada – – Global equity markets are now affected by the unwinding of the “carry trade” as they are by macro economic and political issues. In fact, they are somewhat intertwined in a push-pull relationship between the two forces. As we released in late December (CMI Release 13 DEC 09) the break of the downtrend of the US dollar against the basket of global currencies - the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc – foreshadowed a change in the future of global stock market risk assumptions.

CMI Chart – Press Release 13 DEC 09
(Chart removed - please contact us for a hard copy)

The same chart today…..
(Chart removed - please contact us for a hard copy)

As will be noticed, though we are at short-term levels that are “overbought”, the uptrend in the US dollar against the global basket is clear. Over bought conditions may dissipate quickly with only a few upside days in equities.

Moreover, further evidence is being observed that the bounce from the lows (March 9, 2009) may have already set the high-water mark for prices. The “trifecta” of Copper, the Nasdaq and the Shanghai led markets higher by bottoming first in late fall of 2008 and with the exception of the Nasdaq did not come close to the final trough in March 2009. The Shanghai, now down 28% since its peak in July suggests a pause or retracement of the up move in equities from that trough.


Robert “Hap” Sneddon, Portfolio Manager, CastleMoore


For more information or interviews, please contact Matthew Bergin (905) 847-1955 or matthew@castlemoore.com CastleMoore is a Canadian-based global asset allocator specialising in progressive discretionary portfolio management that blends technical and macro fundamental methodologies to manage client portfolios. CastleMoore Inc. Buy, hold and know when to sell.