September 16, 2012

September 14, 2012: A Day to Remember

September 14, 2012: A Day to Remember


"Bull-Markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria."  - Sir John Templeton

The Fed finally announced the long-waited QE 3: An open ended program through which the Fed will purchase $40 billion worth of Mortgage Backed Securities every month until it decides that the world is right again.

Let's Get High


The stock markets were in euphoria, and the money began flowing again to the risky assets and emerging markets securities such as Indonesia.

The Jakarta Composite Stock Index shot up to its all-time high at 4257 on Friday local time. This figure is the higher than previous high at 4224 on May 2012. Within a week, the foreign investors transaction summed up around IDR 2.1 billions.

The local analysts are optimist that the JKSE will reach 4500 year end. Meanwhile, the stock markets all around the globe were showing their go-green concern.

Souce: Financial Visualization

Did Gold Reflected The Fed's Glow?

While it was true that the odds of somewhat higher gold prices (XAU) were directly related by the open-ended bond purchase plan, the very long-term numbers and performance do not bear the same result.

Dylan Grice once said that, "A 15th century gold bug who'd stored all her wealth in bullion, bequeathed it to her children and required them to do the same, would be more than a little miffed when gazing down from her celestial place of rest to see the real wealth of her lineage decline by nearly 90% over the next 500 years."

The bottom line, the holder of 1980-vintage gold has not only earned nothing from her investment but also requires $2,300/ ounce just to beak even on the invested capital. On the other hand, the peace of mind and the potential shelter that gold may provide for her in time of chaos, collapse or world-war 3 is not subtitutable.

Gold Price Forecast
Technically, we can see significantly heavy resistances on gold price. I still expect a potential reversal in the next 2 weeks.

USD Was Left Behind

With its safe-haven status, USD failed to join the party. Indeed, the all-time low on USD Index  in sight.

The .DXY, a gauge of the greenback power against its six rivals, fell to 73.735. Its lowest level since August 2008. The set up is possible to run towards its record low of 70.69 touced in March 2008.

Source: Market Watch

For more readings on the third round of quantitative easing of my pick:

Fed QE 3 Program is Short Term Thinking For Long-Term Pain

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About ArrowFX

Technically analyze the forex market mainly on USDJPY, EURUSD and GBPUSD by using market rhythm method started by Philip Nel on Forex Factory. The thread started on 2007 and still alive.
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