Monday, October 26, 2009

The Smell Of .....

What is that smell? Does not smell quite like victory for the bears yet, but it is the 4th quarter with about 5 minutes to go. The Green team is out of time outs and clinging to a one point lead. Red team is finally moving the ball. Green team is tired and their defense is showing some weakness. The red team's time to march the ball down the field for the winning score is all but certain. The only question is do they kick a field goal or ram it down their throats and get the TD?

Understanding todays market actions you need to look at what happened with the EUR/USD. Nic Lenoir does this well and lays it out nicely in Where Are Central Banks When You Really Need Them on Zero Hedge. "In very short term trading we hit the support however of a potential sideways channel, and short term indicators are massively oversold, so we could well retrace to 1,052 in the near term. Bigger picture we have two supports at 1,025 and 986. The later is pretty much the key between retracing to 862 and making new highs past 1,100." Someone around here has been looking for 1051 if I recall.

How can you tell when trouble is brewing? Sticking with the football theme from above Mish brings us Citigroup's "Hail Mary Pass": How To Know Citigroup Is In Serious Trouble. "Perhaps what we're really seeing is a business reacting to hidden deterioration of asset bases that are not known by investors and the public due to the legitimation of bogus accounting that happened this last March, but which is known by company executives!" Now Mish, seriously, accounting fraud and insinuating that there are improprieties surrounding a balance sheet? Oh, OK, I guess in fantasy land anything is possible. If we could only get more people to believe.

Speaking of not believing, Edward Harrison posts on Naked Capitalism Why is Zero Hedge claiming the Fed is intervening in equities markets? in a rebuttal to TD's An Overview Of The Fed's Intervention In Equity Markets Via The Primary Dealer Credit Facility. On one side you have ZH and their belief (gloriously endorsed here at Shanky's blog) of Fed intervention via the PPT in the equity markets and Edward "The Party Pooper" Harrison countering with that thought being basically preposterous. I have this to say, sometimes things RIGHT IN FRONT OF YOUR FACE are the hardest to see. Sure, the "theory" can not be "proven" at this time, but come on Ed, what the heck else could it be? Opening up your mind to something that "could be" is healthy. Give it a try sometime. Come on, you can do it.

On Friday Denninger put out Possible Credit Dislocation: Be Warned. Karl says, "I have reason to suspect that the "monetary transmission mechanism" is full of rocks (again), and we are about to have another instance of what could colloquially be called "fun." (Yes, that's sarcasm.)" and then lays out several interesting points you should read regarding credit and how it may affect you.

Prag Cap reminds us that INSIDERS STILL NOT BUYING THE RALLY. "Insider selling for the latest weak spiked to $846MM while buying remained abnormally low at $14.7MM. Selling spiked almost 3 fold, but was highly impacted by $330MM in selling in CBS by Sumner Redstone. Buying, however, fell from $32MM. Of course, it is the low level of buying that is particularly alarming. Insiders continue to exhibit an unusually low level of confidence in their own companies. As valuations spike, and the jobless/revenue-less recovery continues it’s not surprising to see insiders display a high level of skepticism in the rally that is most visible through the use of their own money." There are several other very useful posts there you should check out so hit the home button.

Funniest post of the day comes from The Big Picture - What’s in a Name? If you do not know what "tea bagging" is you should. Just look it up.

Have a great evening.


  1. I have to comment Shanky, that I am disappointed no one has posted a response! Please continue all your hard work and happy late birthday! All Alan, Mahendra, Mutha all think something big is brewing? Reinhardt posted Tom Petty Free falling and PBS is showing the American 1929 crash tonight. Best regards, Rob from chesterfield. (pzy5t0)

  2. Thanks Rob. The weekly chart says it all for me. I have waited patiently for the weekly RSI to set a divergence and take out a trendline and now is the time. There is one more lower trendline, but it is a ways away. "They" still control the market though, so caution is advised. Thanks for the comment.

  3. Ditto, Shanky. Thanks. Sounds like you had fun with the kids over the weekend. I took mine canoeing and camping. That's what's really matters, huh...Ferris


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