Sell in May – a repeat of 2010?

Regular readers may remember that each morning I peruse my bearish sounding “Crashlist” before starting the day trading the Australian equity markets. This list comprises the major currencies crosses, indices, gold, 10 year US T-Note and the US Dollar Index.

A well deserved dip in “risk” markets across the world has been transpiring for most of this week, although it seems the Aussie market is getting the brunt of it. But after waking up this morning and checking out the numbers (the daily Links section on MacroBusiness is gold for Antipodean investors and traders) my “Mayday” signals are about to go up.

H&H has outlined the major falls with his global macro analysis here, so I’m just going to add my technical charts, with some comparisons to the May “flash-crash” of 2010 for comparison. The similarities are eerie and there is reason to get excited.

AUD/USD

AUD plummets in May 2010

May 2011 - AUD plummets - almost 5 cents in less than a week

Gold (USD)

Gold tapers in May 2010, until QE2 kicks in August

this is child theme caption shortcode

US 10 Year Treasury Notes (TNX)

this is child theme caption shortcode

May 2011 - double top in yields and its risk off again

And the reason this is all happening?

Oh say can you see - the US Dollar is back

I hope you’ve all switched your super portfolios to fixed interest or cash (you should have by now!) because its a bumpy ride until QE3 or EU raises rates.

Postscript: The Avid Chartist has some more technical charts here

Comments

  1. Deus Forex Machina

    Prince…you beat me to it. This is a really important topic for people to get their head around. We are in a ranging market not a buy and hold and so many people have been acting as if things have gone back to normal even as the fingers of instability grow.

    my guess is that we have a bit of a rerun

  2. IMHO, it will be really interesting to see how precious metals (as an alternative currency safe-haven) perform realtive to/against other commodities and assets…for me, it is a gauge of sentiment.

    Eg. i know everything got hammered last night, but gold seems to have dropped less than other things; even platinum seems to have a degree of resilience here. Mind you, silver is still getting battered, thought i do sense a bottom forming (heard rumours that the Asians and Indians might be buying up big in this dip, as consumers/commoners seek to alleviate/hedge their domestic inflation problems…)…reason enough for a floor on precious metals?? food for thought.

    Here’s an example article:

    “Gold imports set to soar in India and China on falling prices” (from: http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=126422&sn=Detail&pid=110649)

    Prince (and Bullion Baron, if you’re reading?), it would be great if you guys could explore, somewhat, that notion of relative precious metal performance (ie. do they drop as much, form a bottom as quickly?) against other assets, as the flight to the USD continues…?

  3. Guys, no need to worry. The spin media said the 2010 May dip was due to a ‘fat finger’. I reckon he or she is no longer there ’cause they would’ve gotten the bullet.

  4. After last years ‘Fat Finger’ crash ,I wrote..
    That’s why it’s A for Aim and F for fire at the Pentagons key board ,not
    Aim ,Shoot…save me writing anything new.
    JR