In the first six months of the year, the raw data has shown that several central banks have been selling US government bonds in an attempt to support their currencies against the dollar. This has come in part at the request of the United States, exactly as took place back in 1985 at the Plaza Accord. The United States has a strikingly different view as to currency value. You even hear Trump calling China a currency manipulator because they have seen a declining currency. He does not view that this has been a global trend. Nonetheless, European central banks see a weak current as a weakness politically and thus want a high valued currency.

Therefore, our capital flow analysis has clearly shown that the central banks have been selling US Treasuries in an attempt to support their currencies. Nonetheless, this is has not reversed the trend.

QUESTION: All energy says spike low on monthly global market watch. Now we had a correction from 52 to $39 so that qualifies but we also had a rally from 39 to 47 so does it still qualify? If Socrates uses the last data point 47 it would not be a spike low  but if it accesses the low for the month its correct. So which One?

ANSWER: The Global Market Watch is purely a pattern recognition model. It is by no means perfect because the computer is still learning for we have introduced ETFs and global stocks. Therefore, it is still registering new patterns as it collects pattern development around the world. There are wilder patterns for example in agriculture compared to bonds or stocks with respect to the percentage movement. Nonetheless, keep in mind it is looking at this extremely dynamically with respect to the last entry weekly to yearly. That means it looks at the ENTIRE range and assumes at that close what would the pattern be if that had completed that unit of time. So a weekly will assume the week if complete each day as the week moves forward. The same is true with monthly to yearly. However, it is the full range and not just the last closing price that determines the pattern. Also, introducing global stocks has implicitly introduced within any price currency. A market will typically rise to offset the decline of a currency so that real value tends to remain unless it is perceived to be a political risk to the entire country, then sell everything.

This model does not use the last data point alone. It uses the FULL range of the current session. So it knows it made a low but a “spike low” is short lived and tends to be a trust type move. A “spike low” is different from a “temp low” or “reaction low” inasmuch as the latter two are part of a trend.

In the case of Crude Oil, it made a high in June so a “knee jerk” is just one unit of time and “spike” is short and quick but more than just one time unit.” Both types of moves are trust types meaning sharp and swift. These are no normal action of like a bear market finally making its low. Both the “knee jerk” and the “spike low” can be followed by a resumption of the trend in motion or a retest of the previous high or low. That retest would be the reaction. Often the “knee jerk” and “spike” events may also involve the slingshot type of movement.