Wednesday, August 31, 2011
SPX technicals
It is very encouraging for traders to see some order returning to market. SPX is trading nice and smooth and is responding to technicals. We pointed out over the last few sessions that 1190 - 1200 area breakout would take us to 1208, and the breach of that would take us to 1220 - 30 area. It has been reached and 1220 and 1230 were the short trigger on both days. Long above 1200 to this 1220 - 30 area with those 3 scaleouts 1208, 1220, and 1230 was the ultimate reward. Now 1230 becomes resistance. Should 1220 not hold as support, quick trip to 1208 is in order, and breach below 1208 sends us to 1200, which better hold, or we go down to 1190. Essentially that would be a round trip. But let's not get too bearish here just yet. Scaleouts and stop trailing on this short is a must.
Tuesday, August 30, 2011
Confused Fed = SPX down
SPX got sold hard @ 1220. Big money likes to sell ahead of well-publicised levels. It was helped by confused and scared Fed. These bankers are making no sense, coherent argument, or economic reason for their disarrayed actions. They dissent, only to suggest no dissent will come later. They vote with Chairman to show the united voice, even though they would like to take no such action at all. Their nervousness has the market worried that it may be too late to save US from recession, or that they do not have the right solution for the ongoing problem.
Oh well, since the Fed will guide us nowhere fast, we will trade by the holy grail of investing - charts. 1220 is a resistance, sold once and may be retested again shortly. On the second attempt, if broken, we possibly see 1230, which I say will be sold hard again. If 1220 is double top, move below 1200 will be painful and quick, just like today's late day sell-off. It is imperative to trail the stops in either direction. This confusion is to continue for a while longer...
Oh well, since the Fed will guide us nowhere fast, we will trade by the holy grail of investing - charts. 1220 is a resistance, sold once and may be retested again shortly. On the second attempt, if broken, we possibly see 1230, which I say will be sold hard again. If 1220 is double top, move below 1200 will be painful and quick, just like today's late day sell-off. It is imperative to trail the stops in either direction. This confusion is to continue for a while longer...
FOMC minutes matter NOT, after Kocherlakota and Evans
If Evans' remarks this morning were not enough to confuse the traders, Mr. Kocherlakota threw his share into the mix. He was one of three dissenters at the last FOMC meeting, where he apposed the decision to keep rates at 0% for 2 yrs. Today he said that he will not dissent again, in order to make it look like Fed speaks with one voice. But sir, why dissent in the first place? Now I want to know who else would like to dissent but will not? We will never know. FOMC minutes will not reveal that.
Is this why market started to turn around after Kocherlakota's remarks hit the wires? I am really starting to think that market is getting ready to punish the Fed with a vote of no confidence. Especially after such a public disarray. But let's wait for the circus at 2 pm. I have two scenarios, both are not pretty - sell here, or sell at 1220-30.
Is this why market started to turn around after Kocherlakota's remarks hit the wires? I am really starting to think that market is getting ready to punish the Fed with a vote of no confidence. Especially after such a public disarray. But let's wait for the circus at 2 pm. I have two scenarios, both are not pretty - sell here, or sell at 1220-30.
I have to say - this is ludicrous
Fund managers, being interviewed on TV, are all chartists now. They are freely throwing moving averages and chart patterns along with P/E calculations in the same sentence.
I find this extremely funny. I would like to hear the conversation their subordinates are having with their clients, who call to ask what to do. "Well sir/ma'am, we are waiting to retest the 1101 bottom and then we'll go to new highs, we think your money is safe with us, as you are practically unable to catch the bottom, do not sell the lows". Can someone please pull the plug on these professional liars. They were all screaming "retest of lows and then new highs" all the way down in 2008. Finally, market found lows in March of 2009. Are we at new highs now? What good did it do to devastate the portfolio with 55%+ decline?
Do me a favor and stop trusting anyone but yourself with your money. Nobody will do for you what you will do for yourself. Big guys are just as wrong as small. They make bigger mistakes. This morning Bill Gross admitted missing the big rally in bonds. But give him a credit, at least he had the guts to say it out loud.
I find this extremely funny. I would like to hear the conversation their subordinates are having with their clients, who call to ask what to do. "Well sir/ma'am, we are waiting to retest the 1101 bottom and then we'll go to new highs, we think your money is safe with us, as you are practically unable to catch the bottom, do not sell the lows". Can someone please pull the plug on these professional liars. They were all screaming "retest of lows and then new highs" all the way down in 2008. Finally, market found lows in March of 2009. Are we at new highs now? What good did it do to devastate the portfolio with 55%+ decline?
Do me a favor and stop trusting anyone but yourself with your money. Nobody will do for you what you will do for yourself. Big guys are just as wrong as small. They make bigger mistakes. This morning Bill Gross admitted missing the big rally in bonds. But give him a credit, at least he had the guts to say it out loud.
Market Update @ 10:30
It is 10:30 am edt in US, and it already seems like we have had a full day of trading. We got so much news that I have to stop for a minute and take a deep breath.
It all started in Europe (of course). S&P says double dip is in order in Europe. Haha, are we going to listen to them this time? These are the same guys who downgraded US debt.
Then BOI came out and said that growth in Italy is going to be below 1% for 2011 and 2012. Bummer! Who would have thunk? This was followed by a very poorly received Italian bond auction. Can you folks imagine what would be the outcome had ECB not been buying their bonds for the last few weeks?
Then US was awaken at 8:05 am by central bank earthquake from Evans. This gentleman must be the most dovish person walking the planet earth. He said that employment numbers point to recession. Chomping at the bit, he plain out wants to do QE3 yesterday. He denies anything to do with commodity inflation, and as the matter of fact, wants Fed to target inflation @ 3%. Say what??? Gold is up $40 now.
If this was not enough, @ 10 am we got the worst consumer confidence survey in two years.
Do you want to end the day here? Or take a break until 2 pm, when FOMC minutes will be released??
Watch SPX @ 1208. We breach decisively, we fly up to 1220. We get rejected, and especially if close below 1200, we dive. 1190 support is important in that scenario.
It all started in Europe (of course). S&P says double dip is in order in Europe. Haha, are we going to listen to them this time? These are the same guys who downgraded US debt.
Then BOI came out and said that growth in Italy is going to be below 1% for 2011 and 2012. Bummer! Who would have thunk? This was followed by a very poorly received Italian bond auction. Can you folks imagine what would be the outcome had ECB not been buying their bonds for the last few weeks?
Then US was awaken at 8:05 am by central bank earthquake from Evans. This gentleman must be the most dovish person walking the planet earth. He said that employment numbers point to recession. Chomping at the bit, he plain out wants to do QE3 yesterday. He denies anything to do with commodity inflation, and as the matter of fact, wants Fed to target inflation @ 3%. Say what??? Gold is up $40 now.
If this was not enough, @ 10 am we got the worst consumer confidence survey in two years.
Do you want to end the day here? Or take a break until 2 pm, when FOMC minutes will be released??
Watch SPX @ 1208. We breach decisively, we fly up to 1220. We get rejected, and especially if close below 1200, we dive. 1190 support is important in that scenario.
Monday, August 29, 2011
SPX update follow-up
Like I said earlier today, no need to fight the rally. Staying long to 1208 and scaling out on the way there is prudent. This said, leaving a runner to see if 1208 possible breach takes on some serious stops and becomes a bigger run with help of new technical breakout longs to 1220-30 area, could be the ultimate reward.
After that, I think that big money is waiting to reload their shorts there @ 1220-30 area. Provided we get rejected there, we will start a new leg down. I still see a lower low on SPX, below 1101. That will become the low for 2011. Possible target is 1070.
After that, I think that big money is waiting to reload their shorts there @ 1220-30 area. Provided we get rejected there, we will start a new leg down. I still see a lower low on SPX, below 1101. That will become the low for 2011. Possible target is 1070.
Quick SPX Update
It does not matter that volume is low, or that half the traders are not on the trading floor at NYSE, price is king, it wants to test resistance at 1208 on SPX, for whatever the reasons are. It may double top there, but one should not stand in the way. If double top comes, there will be plenty of time to join the trade on the way down. For now either you are long or out.
Sunday, August 28, 2011
Market Thoughts for Week of Aug 29
First of all, I hope that all of my fellow traders on US East Coast are safe after the monster hurricane.
I would like to begin my outlook for next week by expressing my deep dissatisfaction with two of the most influential central bankers on planet. I am not a blind basher, constant critic, or central bank hater. I am a trader with simple view of economics. These two gentlemen were at the helm when hell broke loose in 2008, and I should say absolutely missed what was developing for years right under their noses. They are the ones who then pushed the "panic" button while they were totally unprepared to deal with collapse of the financial system. Obviously, printing their way out of the problem was not the solution, and has now created even bigger problem with govt debt. Now they are sounding all academic and informative about the steps their respective governments need to take to get out of that debt and restore the growth, while they are telling us they have yet more tools left in their tool box. Shame on you gentlemen! Your tool box is full of Monopoly money. You just change the color of the paper and add another 0 at the end.
This brings me to next week's outlook.
On Monday Trichet is in Brussels to explain what mess Europe is in. Yet another one of useless meetings is going to take place while there is absolutely no solution to utter and unmitigated calamity. With DAX trading in bear market territory, it is just a matter of time before the "market solution" brings confused European central bankers and politicians to the eventual decision to recapitalize their insolvent banks. They are definitely running out of that time fast.
Dear traders, please read Madame Lagarde's speech at Jackson Hole. Somehow I think it becomes Europe's Bible for the next year or so.
On Tuesday it will be a total circus moment when FOMC minutes are released. Hold on to your chairs, so you do not fall off of them, when you read ludicrous explanation why only after a few short months since Chairman's press conference, where he stated that easy monetary policy may be reversed in two meetings, we now get 0% rates for 2 years. I know I will be keeping my hands away from my computer so I do not press "sell" button ten times over. Remember my comment about dissatisfaction? This is the most confused Fed I have ever seen.
US econodata will dominate the rest of the week. Housing, consumer confidence, ADP, factory orders, Chicago PMI, ISM Mfg PMI, and weekly claims, will all be a precursor to the most important event of the week - NFP. I have to tell you a scary dream I am having - NFP went negative in August. Please hit me on the head so I wake up and do not have this nightmare. By the way, anything less than 50K will be considered in the same manner as negative. This said, market may interpret this development as a positive (can you imagine?) due to expectation of another "glorious" stimulus package from US govt, which may be announced in September, starting with Obama's speech right after Labor Day. Market has done funnier things before...
Good luck next week!
I would like to begin my outlook for next week by expressing my deep dissatisfaction with two of the most influential central bankers on planet. I am not a blind basher, constant critic, or central bank hater. I am a trader with simple view of economics. These two gentlemen were at the helm when hell broke loose in 2008, and I should say absolutely missed what was developing for years right under their noses. They are the ones who then pushed the "panic" button while they were totally unprepared to deal with collapse of the financial system. Obviously, printing their way out of the problem was not the solution, and has now created even bigger problem with govt debt. Now they are sounding all academic and informative about the steps their respective governments need to take to get out of that debt and restore the growth, while they are telling us they have yet more tools left in their tool box. Shame on you gentlemen! Your tool box is full of Monopoly money. You just change the color of the paper and add another 0 at the end.
This brings me to next week's outlook.
On Monday Trichet is in Brussels to explain what mess Europe is in. Yet another one of useless meetings is going to take place while there is absolutely no solution to utter and unmitigated calamity. With DAX trading in bear market territory, it is just a matter of time before the "market solution" brings confused European central bankers and politicians to the eventual decision to recapitalize their insolvent banks. They are definitely running out of that time fast.
Dear traders, please read Madame Lagarde's speech at Jackson Hole. Somehow I think it becomes Europe's Bible for the next year or so.
On Tuesday it will be a total circus moment when FOMC minutes are released. Hold on to your chairs, so you do not fall off of them, when you read ludicrous explanation why only after a few short months since Chairman's press conference, where he stated that easy monetary policy may be reversed in two meetings, we now get 0% rates for 2 years. I know I will be keeping my hands away from my computer so I do not press "sell" button ten times over. Remember my comment about dissatisfaction? This is the most confused Fed I have ever seen.
US econodata will dominate the rest of the week. Housing, consumer confidence, ADP, factory orders, Chicago PMI, ISM Mfg PMI, and weekly claims, will all be a precursor to the most important event of the week - NFP. I have to tell you a scary dream I am having - NFP went negative in August. Please hit me on the head so I wake up and do not have this nightmare. By the way, anything less than 50K will be considered in the same manner as negative. This said, market may interpret this development as a positive (can you imagine?) due to expectation of another "glorious" stimulus package from US govt, which may be announced in September, starting with Obama's speech right after Labor Day. Market has done funnier things before...
Good luck next week!
Saturday, August 27, 2011
Trichet, Lagarde speeches: tales of two bankers
Trichet refuses to budge on rates. He said that he will not let unconventional measures interfere with monetary policy. Would be nice if he hinted he knows what exactly to do. If he does, why has he not done it yet? He said that ECB would react to market crash. Oh, so they have not crashed yet?
LaGarde plain out sounded a warning. She said that world economies have entered a difficult phase. She is very worried that central banks and sovereign governments are behind the curve in their response to the alarming developments on debt and growth. I wonder if Trichet was hiding under his chair while she said that.
LaGarde plain out sounded a warning. She said that world economies have entered a difficult phase. She is very worried that central banks and sovereign governments are behind the curve in their response to the alarming developments on debt and growth. I wonder if Trichet was hiding under his chair while she said that.
Friday, August 26, 2011
Bernanke and Merkel to Trichet: Ball is in your court
As Trichet's speech is coming up tomorrow, he got no helping hand from Merkel and Bernanke today.
Bernanke said: clean up your mess. And Merkel said: we are being blackmailed by markets.
LOL, Frau Merkel, markets do not blackmail, they predict. Markets see a total calamity coming up in your neck of the woods. DAX is down due to your inability to govern the union of deeply indebted nations. If you want you can continue to ignore.
Somehow I think Trichet will buckle under the pressure tomorrow. He does not want to leave the legacy of ailing Eurozone economy due to high rates. We will get a dovish speech tomorrow. Trichet will cut the rates before he ends his term.
Bernanke said: clean up your mess. And Merkel said: we are being blackmailed by markets.
LOL, Frau Merkel, markets do not blackmail, they predict. Markets see a total calamity coming up in your neck of the woods. DAX is down due to your inability to govern the union of deeply indebted nations. If you want you can continue to ignore.
Somehow I think Trichet will buckle under the pressure tomorrow. He does not want to leave the legacy of ailing Eurozone economy due to high rates. We will get a dovish speech tomorrow. Trichet will cut the rates before he ends his term.