Wednesday, December 8, 2010

Morning Post, SPX, S&P 500, e-mini

It appears the yield curve is coming to the bears As Ten Year Sell Off Accelerates, The Bond World Is Flat we all know a flat or inverted curve takes risk off. (also read this and this from ZH). The timing of this works well for my thoughts of the markets topping early next year. The bond vigilantes are rarely wrong. Keep an eye on this development. May force some redirection of POMO funds thus leaving the door open for the bears to gain some ground.

Nic Lenoir had a really bearish post last night on ZH as well. The Market Is Hurting For A Squirting is an unusually outspoken well charted post looking across asset classes at a very bearish scenario for the markets. Dr. Mr. Speaker is a post from Mish on his Emails sent to House Speaker John Boehner in regards to Ron Paul and the chairmanship of the Monetary Policy subcommittee. Please read this and follow the email links.

Gold and silver are getting crushed.Oils is thru but fighting with $87 resistance as it channels up. there are divergences showing up on it's daily indicators.  Tough call on where the EUR/USD pair is headed. Is there another larger leg down to come or is there a slight pop then further weakness? Same but the inverse for the dollar as it travels up busted channel support.

Economic Calendar -   Please ALWAYS check the calendar. 

POMO Schedule -  Yet another POMO day today, but have no fear cause there is still over $500B to go. (We'll most likely have POMO from now to infinity or till the systemic failure that is destined to come.) 

Shanky's Dark Side - Where I call all the intraday action and throw out tons of charts.

Pivot Points -  For what they are worth in this busted market.

All the indexes are charting different patterns. They are also all over the place as to who has set new highs or lows. Finding a leader is proving to be difficult. The minis had a nice channel going that has busted and price has fallen to 1216 support and now bounced to 1226 resistance. What happens at this level will be interesting. Will the potential head and shoulders formation play out and give the bears a breakdown to the measured 1200 level? Keep an eye on this possibility. I will note that all the HnS patters recently (especially the really big ones) have been snuffed out and have tended more to break out than break down.
SPX 5m - simple chart to show the wedge that I believe was in play. It has busted support. Now, the last time (September) we has a wedge form I lowered the support diagonal three times before the final form showed its self. In a POMO driven market you must be conscious of this possibility. Looks like a clear 5 wave move has completed and were in correction mode now. I am targeting 1207 at this time with 1200 as a second target.

The dollar ran up a bit last night and short term may want to climb a bit more. The bond markets are the nes to watch. Keep and eye for movement in the shorter durations. If they continue to climb the risk off trade come on and the markets will not like that. This could work badly for gold and silver as well (which would make JPM happy).

Lets see how this corrective plays out. Should be a 2nd wave, but in some cases it counts as a 4th wave. they both are corrective down moves. the big difference is one only has one pop left to the top and one has two pops left.

GL and have a great day!

Pelosi and Frank in a tree.