Sept 19. On the Ali BABA IPO….

…Gold/silver ratio is breaking out to the upside at 67.7.  Next target 70.  At the height of the crisis in late 2008, gold/silver ratio hit 84.  Silver is being whacked, now below 2013 low.

Crude oil has turned down.  The spread between Brent Dec14 and Dec15 contracts is at a new low of 1.80 (near contract has sold off much harder than deferred indicating a large drop in demand.  Copper has given up the gains of the PBoC injection news from a couple of days ago.  The five year swap spread is testing this year’s high, it is now 17 bps.  While HYG and JNK (hi yield ETF’s) had a spirited bounce in August, they have turned down thus far in September.  Some EM currencies have been weakening rapidly.  For example USD/BRL (Brazil) hit a high of 2.45 in late Jan and is now 2.375, as high as it has been since Feb.  Same story with SA Rand (ZAR).  Turkish Lira is at a six month low.  The ETF representing Emerging Markets (EEM) is testing an important level and appears poised to cascade lower.

In the US, as Alibaba IPOs, there has been a growing divergence between large cap stocks and small caps, especially over the past month.  One chart is ratio between DJIA (INDU on Bloomberg) and the Russell 2000 (RTY).

There appear to be many markets that are indicative of increased risk.  Could Alibaba mark the top?

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Gold Silver ratio over past 5 years

Gold/Silver ratio over past 5 years

Below is ten year chart of Silver

SILV 9_14

This is the calendar spread between Dec ’14 Brent and Dec’15. Curve has gone contango as nearby demand has cratered

Brent Z4Z5 spread 9_14

The emerging market ETF…..

EEM...Emergin Market ETF

Below is ratio between DowJones Industrials and Russell 2000….

INDU_RTY ratio 9_14

 

 

 

 

Posted on September 19, 2014 at 11:59 am by alexmanzara · Permalink
In: Eurodollar Options

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