European and US markets surged on Friday.

European and US markets surged by around 2.5% on Friday after the Italian Senate passed a crucial austerity budget and the the Italian bond yields dropped below 7%.

Dow moved above 12,000 level again at 12,153 which is about 5% below its 2011's high of 12,810. With the rebound on Thursday and Friday, Dow has formed a contracting wedge that can breakout on either sides.

In the next few days if Dow breaks out of the wedge on the down side, then my previous wave count can still be maintained, i.e. Dow has completed its wave 2 and has started its wave 3 of major wave C.



However, if Dow breaks out on its upper sides, then it is likely that its wave 2 has not been completed yet as shown below.


Can austerity measures solve the debt problems of Greece and Italy? Ireland has put in place its austerity programme but its current unemployment rate is about 14% and the Irish bond yield is above 8%.

The austerity budget approved by the Italian Senate is going to slow down the Italian economy further, GDP will be lower and with a higher borrowing cost I don't think its debt position can be improved.


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Gong Linna - Tan Te (Perturbed)

One of my friend insisted that I must listen to this song Tan Te or Perturbed by a Chinese folk song singer Gong Linna.

忐忑-龚琳娜

No lyric, very funny but is nice to listen. This song spreads like wildfire across China early this year. I really like her facial expression.

The same song by a cute 7 years old Chinese girl.





Have a nice weekend.



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Italy 10-year bond hit 7.45%

Dow dropped 3.2%, 389 points to 11,780 at the close of Wednesday trading after the Italian bond yield surged pass the critical 7% level. With 10 year bond yield at 7.45% and 2-year at 7.29%, many economists perceive this to be economically unsustainable. With a total public debts at 2.6 trillion euros that need to roll over sometimes in the future, is there a way for the Italian to get out from this mess?

As for Dow, is this the starting of mini wave 3 of sub-wave i of wave 3 of its major wave C ?



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Galactic Alignment - Winter Solstice 2012

The Movie 2012 is rather interesting, it talked about the Earth's polar shift and the end of Mayan calendar by 2012. In the last few months, off and on I read articles related to these topics. Some articles are very technical and some have painted a rather scary picture. The following is my understanding of the Mayan Calendar and the galactic alignment on 21st December, 2012's Winter Solstice.

The Mayan Calendar

It was believed that the Mayan Calendar was constructed around 250 - 900 AD. They were highly accurate astronomers that were able to track planetary movement and cycle in the solar system and in the milky way. Based on their observation on the stars, they had developed the 'long Count Calendar' that started on 11th August 3114BC and will end 5126 years later on 21st December, 2012 Winter Solstice. The Mayans predicted an age of enlightenment when the calendar ended. It has been confirmed that on Winter Solstice 2012, a rare astronomical event occurs, Galactic alignment will take place.

For further reading on Mayan Calendar click 'Long Count Calendar'

Galactic Alignment

Our Galaxy, the Milky way

The Milky Way is 100,000 light year across and only 1,000 light year thick as shown below. The center of the Milky Way galaxy is a giant blackhole. Click Galactic Center Blackhole
for more information.



Our solar system with the solar plane, or ecliptic plane is inclined at about 60 degrees to the galactic plane.



The whole solar system that moves within the Milky Way as a single unit, takes about 220 million years to complete a single journey orbit around the center of the galaxy. As the whole solar system travels in orbit around the center of the galaxy, it also bobs up and down of the galactic plane indicated by a galactic equator as shown below.



The whole solar system moves up and down within 500 light years distance above and below the galactic plane or galactic equator. It takes 64 million year to complete a cycle. If my interpretation on what I have read is correct, on the Winter Solstice of 2012, on 21st December, the whole solar system crosses the galactic equator from above the galactic plane to below the galactic plane (a once in 32 million year event, how lucky. Will there be a polar shift ?). On that Winter Solstice, the position of the earth, the sun and the center blackhole of the milky way galaxy will be in one alignment as they cross the galactic equator. Will there be more volcanic activities and abnormal weather as we approach 21st December 2012 ?

May God Bless You. Amen.


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Roses

I Love Friday Night

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Dow - Wait for confirmation

Still unable to confirm whether the wave 2 rebound has been completed.

Looking at the wave count below, it appears that Dow has completed three mini waves (i)-(ii)-(iii) signalling the completion of wave 2.



But when I looked at the candlestick chart, at a glance there are 5 mini waves 1-2-3-4-5 to form the mini wave i. The current pullback is mini wave ii, Dow has yet to complete its wave 2.



To predict short term movement can be suicidal. Anyway, if wave 2 has yet to be completed, Dow is at the tail-end of it. just sit back, relax and wait for Dow to unfold.



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World markets crumbled

First Headline

Greek Government has proposed to put its austerity plan to a public vote. If the plan failed to go through, Greece could drop the European currency and default on its debts.

World markets crumbled on hearing the proposal by Greek Prime minister.



Asian closed with about 2% down.



French CAC40 and German DAX dropped more that 4% at this moment.



US market dropped about 2% after about 2 hours of trading. If Dow dropped more than 2% at the close, the probability is high that the wave 2 rebound has ended.


Personally I expect the Greeks to protest against any austerity measure and then continue with their happy life under the Warm Mediterranean Sun.



I have been searching for a possible cause for Dow to reach 5,000. I think finally it is still the European debt problem and a possible disintegration of the Euro to pull down the world markets.

Second Headline

MF Global Filed for Bankruptcy Protection

MF Global, a 200-year-old futures brokerage, filed for bankruptcy protection on Monday, the first to go bust in the current European debt crisis.

It owns US$6.3 billions of Italian, Spanish, Belgian, Portuguese and Irish debt. Its stock price plunged 60% last week.




George Soros on the proposed European Plan to fix its debt problems.

"Unfortunately it is not the last crisis because the fundamental issues have not been settled. It is clear that the amount of debts that Greece has accumulated and is accumulating is untenable and the country is effectively insolvent."



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