thank you.

Thing is, we're all watching for these long term indicators to roll over; just start with the Dow Broadening Top and work your way through them. The MACD on this quarterly is still ok though and there is a possibility, although I think low probability, that stochastics as seen here could oscillate in a tight range as they did between 1997-2001 and that's a long time to be on the sidelines. Interesting though.

may I ask what the red and black study lines are on the main chart? 

The spike in SHIBOR over the past days, to the highest levels seen since 2011,  has drawn attention back to China’s financial instability. With one bank having defaulted on a loan and rumours of others there is an emergent challenge to the government’s efforts to lean on credit growth , (now estimated at 221% of GDP). 

Rates have risen since May and customers withdrawing funds in front of the Dragon Boat Festival squeezed liquidity. The government’s attempts to slow down credit growth though, by reducing liquidity injections, has also greatly contributed. Things were worse in 2011 but when the countries 11 ^thlargest lender, Everbright Bank, had a technical default on a $980m loan repayment a couple of weeks ago which caused its creditor, the Industrial Bank to do the same, events took a worrisome turn. No need quite to panic but and it is difficult to assess if we’re being given early warning signs of bigger trouble. After all, the Chinese government themselves have enough problems trying to figure out their own shadow banking system; I mean, how many times has that 8ft length of copper pipe been re-hypothecated? It is exactly that lack of transparency that makes it difficult for the central bank, (which has plenty of reserves, $3.44tr), to themselves work out the scale and velocity of the transmission of financial stress and indeed, exactly where contagion might manifest itself.

Falling foreign capital inflows and a slowing economy are also contributing as are repayment schedules for high coupon investment products sold by banks. Any announcement of QE tapering would of course, be unhelpful .

There is comfort to be drawn in knowing that much of the stress is policy driven and we can hope they know what they’re doing and will not be overwhelmed by multiple failures if the fuse to a  chain reaction is lit. They will, after all, have to go through the cathartic cleansing of hidden debt at some point.

The real issue for investors here is “will higher rates in China and tighter liquidity impact growth and therefore commodities, commodity shares and other EM’s?”

Speaking of EM’s, Brazil looks to be having the sovereign equivalent of a teenage hissy fit. With the Real at a four year low, despite intervention, inflation is threatening and the Army has been called onto the streets to deal with protesters. The angry ones are in a lather about a very modest rise in public transport tickets, (announced at the beginning of the year), but consider the reaction when food and fuel start to spike. The Real has fallen by 5% since Bernanke indicated on May 22th that tapering may be introduced. Odd isn’t it that the Brazilian government was intervening as recently as early March because they thought the Real too high. That social unrest is rising is obvious. That it may spread even more across the globe is distinctly unnerving. The weak Rupee on Friday and its implications for 1 bn people on subsistence incomes and that has been deteriorating since.

Loose monetary policy in the West has created bubbles everywhere and coming off the financial methadone is going to hurt an awful lot of people. The Fed will be cognoscente of these issues. How much they might influence the balance between doves and hawks in respect of tapering is something I guess we’ll find out at 2:15pm today. 

The reason very few people follow Prechter is that they can't sfford the luxury of losses. Fine to read him, or any contrarian who challenges accepted thinking to help you validate your own investment process but to "follow," him is a fast route to penury. Last time I looked he was talking gold down to $600 and he currently has a target for the Dow of 400. If you think thats going to happen best you start stocking up on tinned food, candles and ammunition. His social commentary though is useful and thought provoking and he often spots social trends early. I cancelled my markets subscription quite a while ago, POMO simply invalidated it. He should stand on the sidelines with a blank sheet of paper and re enter when conditions normalise.

In Jan '09 you kindly posted a couple of charts speculating on how the year might unfold. If memory serves me correctly they were S&P weekly charts.

Are we feeling brave enough to have another stab at crystal ball gazing? Forgive me if one has already been posted and of course I know there are many, many moving parts and variables out there but it's an interesting exercise if nothing else.

Excellent executive summary; thank you.

thanks, this was useful. The dry bulk market recovery over the past few weeks has primarily been driven by strong sustained iron ore and coal demand in China, and seasonal thermal coal and grain demand, combined with port congestion that's effectively reducing vessel supply. The iron ore and coal demand in China is driven by their steel industry, and nearly all of the steel is used for internal infrastructure development. All of those factors have no bearing on container demand, which is primarily driven by strong consumer demand in Europe and the U.S. While there has been a small increase there (albeit from a low base, since trade fell off a cliff in 2008), massive oversupply problems in the container sector have prevented rates from staging any real recovery.