It is all about anticipation and preparation.
This rally was anticipated because of the technicals. It was well documented. It was a trade and nothing more for stocks. I sold 10 minutes into trading this morning.
Now we will see if the big boys want to buy next week or sell. They will most likely be doing whatever they are doing with some serious volume.
Some commentary I received earlier this week tracks what occurred and gives you an idea of how gamed the markets were this week, because again, the moves and the drivers for them were anticipated and defined before they occurred –
8/30
“It is a long Holiday weekend coming up and many professionals will get out of town on Thursday, but it is a week full of economic reports. The liquidity will be thin, so it is a good time for the (Obama) Administration to see that a few of these reports are rigged to the upside. The key reports are obviously the initial jobless claims on Thursday and the jobs report on Friday in addition to the unemployment rate. That is preceded by an ISM report on Wednesday. Any mysterious positive turnaround in these reports this week will be b---s---.”
8/31
“Today we got one of the most “magic mystery moves” I have seen in quite some time, on essentially nonsense news coming out of Europe. The market in Europe was trading on the highs with the old “better than expected” PMI report, although it was the lowest in 7 months, and some “stronger asian growth reports”. This sent the S&P 500 futures higher, the Euro higher and US Dollar lower. The SPX futures were of course up big in Globex (Overnight Trading), and this accelerated the big gap up NYSE opening in the major indexes etc.
Today was probably the most manipulated price action I have seen in some time, and it was forced from Europe as the PPT (the Fed) might have been accelerating the SPX futures in Globex, and then held them all day in the US. What in the hell else could have flatlined the SPX all day at essentially one level, without even a hint of a pullback after the two negative days we had on Mon and Tues.
It is significant to note that the S&P 500 is in a Below-the-Line status, with the 200DEMA>50>20>8, and all the EMA`s are declining, so that is another reason why the highest probability is for the SPX to turn down again after this rally loses steam.
9/1
The jobs report tomorrow should under normal reporting disappoint expectations, but the BLS (Bureau of Labor Statistics) will overstate the Birth/Death rate adjustment to soften the blow, or even surprise to the better, which will be all it needs for the “gang” to take the futures higher. In the benchmark revision for March 2009, and published in 2010, BLS understated actual jobs loss by about 1,000,000 jobs. The BLS is doing the same thing again this year so any positive hype numbers tomorrow is just not true.
I will hang around for the jobs report tomorrow, and the opening period if it is a premium opening accelerated by the futures because of any overstated jobs report, and ready to take a partial SPX short position.”
CNBC this morning was already talking about how the threat of a “Double Dip” was over because of how great the economic numbers were this week. Judging from how on target the commentary I received this week was before each economic data release, I am still on the side that the numbers are actually terrible and that they will be revised lower, just as so many numbers have been revised lower over the last 18 months.
After the Jobs Report was issued this morning, the ECRI Leading Indicator Index was released and it hit the level it normally hits in a recession (below -10% versus today’s -10.1% reading) and the ISM (Institute of Supply Management) Non-Manufacturing Index (thing Services) was released, missing estimates in New Orders, Employment and Business Activity. Employment actually contracted for the first time since January 2010…
Here are some observations from David Rosenberg on Wednesday’s ISM Number that got the rally going –
http://www.zerohedge.com/article/rosenberg-explains-why-yesterdays-ism-was-likely-wrong-and-will-likely-be-revised-lower-soon
“Most of the regional reports were very poor in August. Either they are collectively all wrong or the ISM is.”
“ Looking at five decades worth of data, the share of the time in which we see orders, backlogs and vendor deliveries all decline in tandem, and the headline ISM index rise, is the grand total of 1%. No wonder equities rallied so much — we just witnessed a 1-in-100 event! Bring your camera.”
“Suffice it to say that in the past 30 years, with eleven observations, ISM dropped to 47x in the three months after such a decline in the orders/inventory ratio to such a low level as is the case today. That is the average, the median, and the mode. The highest ISM reading three months hence was 51.9, so if past is prescient, today's data was likely a huge headfake.”
Or more likely, today’s numbers were a flat out lie…
Friday, September 3, 2010
Sunday, August 29, 2010
Silver Leadership?
Silver (SLV) broke out of a multi-month triangle, after holding support at the uptrend line from the 2008 lows. The Junior Gold Miner Index ($HUI) is either going to break down from here or break out. I expect either move to be violent. So far, so good for the Bulls. I want to see a weak pullback at some point over the next few days that holds support.
We Were Expecting a Potential Bottom
I wrote the following last week as I waited for the markets to try and bottom in the 1,040 or 1029 range –
“I think the computers algos have been set up to cause overshoots in signals like IBD to get people making buy and sell decisions and then the markets are reversed – causing a massive squeeze as the newly entered orders are covered and reversed.”
If you believe in a “Plunge Protection Team”, then Friday was a perfect example of what you think is market manipulation, as Intel preannounced terrible numbers and then reversed up 11% in 4 minutes, just as the S&P 500 broke critical support at 1,040 and then went vertical over the next 10 minutes.
Whatever it was, the reversal was anticipated. I have no doubt that the markets are manipulated, especially with Greenspan saying the other day that a stock market rally would do far more to stimulate the economy than any new Quantitative Easing.
The markets are retesting the key July 2010 low, with timing and now have a potential double bottom at 1,040. Resistance that now must be cleared is in the 1,069 – 1,081 area. 1,029 is support.
Expect a meaningful trend to finally be established after the summer holiday season ends next week. Then we will know if the big boys are willing to commit new funds or if they will simply pull their money off the table at what they consider to be artificially inflated prices.
“I think the computers algos have been set up to cause overshoots in signals like IBD to get people making buy and sell decisions and then the markets are reversed – causing a massive squeeze as the newly entered orders are covered and reversed.”
If you believe in a “Plunge Protection Team”, then Friday was a perfect example of what you think is market manipulation, as Intel preannounced terrible numbers and then reversed up 11% in 4 minutes, just as the S&P 500 broke critical support at 1,040 and then went vertical over the next 10 minutes.
Whatever it was, the reversal was anticipated. I have no doubt that the markets are manipulated, especially with Greenspan saying the other day that a stock market rally would do far more to stimulate the economy than any new Quantitative Easing.
The markets are retesting the key July 2010 low, with timing and now have a potential double bottom at 1,040. Resistance that now must be cleared is in the 1,069 – 1,081 area. 1,029 is support.
Expect a meaningful trend to finally be established after the summer holiday season ends next week. Then we will know if the big boys are willing to commit new funds or if they will simply pull their money off the table at what they consider to be artificially inflated prices.
Wednesday, August 25, 2010
Two-Step Symmetry
Here is how technical the markets have become.
The S&P 500 hit a high of approximately 1,130 and has so far had what is called a “two-step” pullback, where the first leg down equals the second leg down.
Leg 1 from 1130 to 1070 = 60 points
Leg 2 from 1100 to 1040 = 60 points
The first leg down retraced 50% of the rally
The second leg so far has terminated at the 76.4% retracement level
These are all key levels and patterns used by computers to make buy and sell decisions. The computers have clearly taken over the markets. I am also assuming that many of the 20-something hedge fund managers are using these same models. There are a bunch of key decisions here for stocks, Treasuries and the Euro here, so I am looking for a potential reversal.
Investors Business Daily went to “Market in Correction” last night. The old ways of making money are having a rough go lately. I think the computers algos have been set up to cause overshoots in signals like IBD to get people making buy and sell decisions and then the markets are reversed – causing a massive squeeze as the newly entered orders are covered and reversed.
This is why I continue to get incredibly technical in my communications and decision making.
The S&P 500 hit a high of approximately 1,130 and has so far had what is called a “two-step” pullback, where the first leg down equals the second leg down.
Leg 1 from 1130 to 1070 = 60 points
Leg 2 from 1100 to 1040 = 60 points
The first leg down retraced 50% of the rally
The second leg so far has terminated at the 76.4% retracement level
These are all key levels and patterns used by computers to make buy and sell decisions. The computers have clearly taken over the markets. I am also assuming that many of the 20-something hedge fund managers are using these same models. There are a bunch of key decisions here for stocks, Treasuries and the Euro here, so I am looking for a potential reversal.
Investors Business Daily went to “Market in Correction” last night. The old ways of making money are having a rough go lately. I think the computers algos have been set up to cause overshoots in signals like IBD to get people making buy and sell decisions and then the markets are reversed – causing a massive squeeze as the newly entered orders are covered and reversed.
This is why I continue to get incredibly technical in my communications and decision making.
Blessed Gridlock?
Cutting spending of any kind during a depression is a bad idea. It simply slows an already slow economy down further.
European Austerity
http://uk.reuters.com/article/idUKTRE67M4OM20100823
Moody’s is telling us that fiscal tightening actually harms the long term economic outlook for European economies.
Ireland
http://www.zerohedge.com/article/europe-prepares-bloodbath-open-after-ireland-lowered-sp-aa-aa-outlook-negative
Ireland had its credit rating cut by S&P because it had to put another $20-something billion of new capital into propping up its insolvent banks. Now 10% of Ireland’s GDP is going to picking up the cost of its banking system.
US Tax Increases
There is no way that increasing taxes here will help the economy. By definition, it will slow down growth.
Post-Election Gridlock
If the Republicans do as expected and gain control of the House and more than 40 seats in the Senate, then they will slow down government spending. This too will hurt the economy and push us closer to Hoover 2.0
Borrow from Tomorrow
The old system is broken. When you are forced to argue that you need to worsen your current finances in order to not worsen your economic outlook, you start to realize that the system fueled by debt needs debt to keep from collapsing.
There is no good outcome. The goal is simply to protect purchasing power from a falling Dollar and future Inflation.
European Austerity
http://uk.reuters.com/article/idUKTRE67M4OM20100823
Moody’s is telling us that fiscal tightening actually harms the long term economic outlook for European economies.
Ireland
http://www.zerohedge.com/article/europe-prepares-bloodbath-open-after-ireland-lowered-sp-aa-aa-outlook-negative
Ireland had its credit rating cut by S&P because it had to put another $20-something billion of new capital into propping up its insolvent banks. Now 10% of Ireland’s GDP is going to picking up the cost of its banking system.
US Tax Increases
There is no way that increasing taxes here will help the economy. By definition, it will slow down growth.
Post-Election Gridlock
If the Republicans do as expected and gain control of the House and more than 40 seats in the Senate, then they will slow down government spending. This too will hurt the economy and push us closer to Hoover 2.0
Borrow from Tomorrow
The old system is broken. When you are forced to argue that you need to worsen your current finances in order to not worsen your economic outlook, you start to realize that the system fueled by debt needs debt to keep from collapsing.
There is no good outcome. The goal is simply to protect purchasing power from a falling Dollar and future Inflation.
Tuesday, August 24, 2010
Real Estate Made Simple
These three charts from Econompicdata tell the story of housing –
Falling yields over the past 30 years…
Have lowered monthly mortgage payments…
This has inflated housing prices…
If you think about what Quantitative Easing is, it is simply the Government buying Bonds to keep Interest Rates low. This props up housing prices. I thought the goal of the Government was to make housing “affordable” to all Americans. But it is clear that artificially forcing Interest Rates lower makes housing prices more expensive.
I almost forgot this great testimony from Kansas City Fed President Thomas Hoenig from the other day -
http://www.businessinsider.com/fed-president-hoenig-the-deleveraging-of-this-country-has-to-take-place-2010-8
"If the American people are looking for the housing market to be their investment opportunity, I think they're making a mistake."
"The facts are, we have an excess supply. And we created that by providing financing and leverage that was almost nonsense. So, now we have to adjust from that. Housing may eventually start to rise again as other assets across the country begin to rise again. But it is not something that I think that the American Consumer should be speculating on, in terms of their investments."
Holy ****! Did he really say that "(HOUSING) IS NOT SOMETHING THAT I THINK THE AMERICAN CONSUMER SHOULD BE SPECULATING ON"!?!? The President of a US Federal Reserve Bank?!?!
Does anybody still want to buy a house for investing purposes?
Falling yields over the past 30 years…
Have lowered monthly mortgage payments…
This has inflated housing prices…
If you think about what Quantitative Easing is, it is simply the Government buying Bonds to keep Interest Rates low. This props up housing prices. I thought the goal of the Government was to make housing “affordable” to all Americans. But it is clear that artificially forcing Interest Rates lower makes housing prices more expensive.
I almost forgot this great testimony from Kansas City Fed President Thomas Hoenig from the other day -
http://www.businessinsider.com/fed-president-hoenig-the-deleveraging-of-this-country-has-to-take-place-2010-8
"If the American people are looking for the housing market to be their investment opportunity, I think they're making a mistake."
"The facts are, we have an excess supply. And we created that by providing financing and leverage that was almost nonsense. So, now we have to adjust from that. Housing may eventually start to rise again as other assets across the country begin to rise again. But it is not something that I think that the American Consumer should be speculating on, in terms of their investments."
Holy ****! Did he really say that "(HOUSING) IS NOT SOMETHING THAT I THINK THE AMERICAN CONSUMER SHOULD BE SPECULATING ON"!?!? The President of a US Federal Reserve Bank?!?!
Does anybody still want to buy a house for investing purposes?
Gap Down Open With Reversal?
There is a lot going on in the daily chart for the SPX Futures (ES U0-D) (I started to use the Futures charts because so much significant price activity is taking place while the US markets are closed and that is having an adverse effect on the accuracy of the cash charts).
All you need to look at on the chart is the cluster of key dates on 8/5 and the key price zone at about 1,130, which gave you time and price for the 1,130 high. There is now a cluster of dates in the 8/24 – 8/26 zone, so I am looking for a potential reversal this week in stocks. You can also see that there is support in the 1,055 – 1,040 range. A trade below 1,050 would trigger the potential reversal pattern (low so far this morning is 1,051.50).
I would expect any rally to only be a bounce into Labor Day, but anything can happen, so I am on alert.
The flip side to when you see a bunch of dates all clustered together is that sometimes they lead to big, fast moves in the direction of the current trend, which would mean a big selloff in stocks, so you can’t just blindly buy and expect prices to go higher out of this zone. You have to also manage your risk.
US Treasuries (ZB U0-D) have taken out three resistance levels and are now at a point where a pullback would not be a surprise. Here are the support levels I will be looking at. A pullback in Treasuries would by definition fuel a reallocation into stocks.
Gold (GC Z0-D) has had a nice rally over the past few weeks. There were key dates last week and the key resistance was 1,239.18. Critical support was 1,218.70, with today’s low so far at 1,211.7
I will update this chart today with new support levels.
Again, potential support and resistance levels get breeched all the time. That is why there is more to this than picking a level and hoping that it holds. My goal it to show you how I think and what I see and not tell you what to do.
The uptrend in the Euro (6E U0-D) is broken. This is not good for Commodities and Commodity stocks. I will be looking for a potential low later this week. This morning’s low for the Euro is 125.88
Crude Oil (CL Y0-D) has broken key support at about $73.5 and now has me looking for a total breakdown. I have been saying for weeks that a break of $70 would signal a new recession. That now seems like the most probable scenario after a potential bounce. I am interested in Oil and Energy Stocks if Crude gets into the $66 range (or worse?).
I am looking for the opening weakness to take prices to emotional extremes and then will be looking for potential reversal patterns at key levels.
All you need to look at on the chart is the cluster of key dates on 8/5 and the key price zone at about 1,130, which gave you time and price for the 1,130 high. There is now a cluster of dates in the 8/24 – 8/26 zone, so I am looking for a potential reversal this week in stocks. You can also see that there is support in the 1,055 – 1,040 range. A trade below 1,050 would trigger the potential reversal pattern (low so far this morning is 1,051.50).
I would expect any rally to only be a bounce into Labor Day, but anything can happen, so I am on alert.
The flip side to when you see a bunch of dates all clustered together is that sometimes they lead to big, fast moves in the direction of the current trend, which would mean a big selloff in stocks, so you can’t just blindly buy and expect prices to go higher out of this zone. You have to also manage your risk.
US Treasuries (ZB U0-D) have taken out three resistance levels and are now at a point where a pullback would not be a surprise. Here are the support levels I will be looking at. A pullback in Treasuries would by definition fuel a reallocation into stocks.
Gold (GC Z0-D) has had a nice rally over the past few weeks. There were key dates last week and the key resistance was 1,239.18. Critical support was 1,218.70, with today’s low so far at 1,211.7
I will update this chart today with new support levels.
Again, potential support and resistance levels get breeched all the time. That is why there is more to this than picking a level and hoping that it holds. My goal it to show you how I think and what I see and not tell you what to do.
The uptrend in the Euro (6E U0-D) is broken. This is not good for Commodities and Commodity stocks. I will be looking for a potential low later this week. This morning’s low for the Euro is 125.88
Crude Oil (CL Y0-D) has broken key support at about $73.5 and now has me looking for a total breakdown. I have been saying for weeks that a break of $70 would signal a new recession. That now seems like the most probable scenario after a potential bounce. I am interested in Oil and Energy Stocks if Crude gets into the $66 range (or worse?).
I am looking for the opening weakness to take prices to emotional extremes and then will be looking for potential reversal patterns at key levels.
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