Tuesday, September 6, 2011

Market Update Sep 6

We take a day off and world markets go to hell in a handbasket. So we get to play catch-up today. I do not like the fact that SPX is spending some time below 1150 (should have held that short). It has to get back above and hold this trendline we are backtesting, and close above 1150 today. If not, a quick retest of 1120 is in order for tomorrow. And I thought it would hold 1170, wrong.
I still expect 100 point rally from here into FOMC and Q3 earnings. Although, smaller brothers, DJT and SOX, are flashing a warning sign of much slower economy ahead, again. Their signal is obvious, powerful, and worrisome. I am a short-term stock market bull due to oversold conditions, asset allocation rebalancing, and expected liquidity infusion by G7 and CBs. This said, deteriorating technical picture will change my view rather quickly. I still see a tough road ahead in the long term. All we are doing currently is retracing wave 1, uptrending inside the bear flag channel, and resetting oversold weekly MACD and Stoch.

SNB shook the FX world at 4 am edt. I have never seen a 1000 pip hourly candle. The decision to peg to deteriorating currency is as surprising as the fact that they took so long to do this. More importantly, BOJ is ecstatic about the development because they are deciding on rates tonight, and will be helped by CHF plunge. Watch for some JPY fireworks close to midnight. (Note to self: try some Swiss cheese with sushi)

My EUR/USD call to 1.40 was met. I am not sure what one does here, but holding to the entire short position in euro would definitely not be it, imho.
All of this weakness in other currencies is helping my DXY rally call (patting myself on the back selfishly).

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