Wednesday, September 30, 2009

ISM, SEC , EEM, China and Super Rally In The News

Yes, I can do more than chart. You see, I have this bi-polar issue where the blog gets chart heavy then news heavy, sorry bout that. It has a lot to do with time available.

The Pragmatic Capitalist has an article that you EEM investors may be interested in, TRADE OF THE DAY: BIG MONEY BETS AGAINST EMERGING MARKETS "A massive chunk of put options purchased on the emerging markets fund this afternoon flies in the face of the 1.5% rally in shares during the session to $39.20. Approximately 95,000 put options were purchased at the November 35 strike for an average premium of 73 pennies per contract." Hmmm, maybe a look at EEV would be worth it.

Barry Rithholtz at the Big Picture comes to the SEC's rescue (as far as blog persecution goes) in Giving the SEC Teeth. So how does one go about fixing the SEC? First there is the soft, almost apologetic, Barry's way...

And then there is the apparently more effective, down to earth, no apologies accepted Zero Hedge Way, More Pain For Humiliated SEC After Disclosure It Ignored Moody's Whistleblower Warnings. "As if the SEC could be humiliated any more, another piece of disclosure now highlights that Mary Schapiro's useless organization was unresponsive to whistleblower overtures by former Moody's employees attempting to warn the regulator "about Moody's weak compliance department and ratings process."" I prefer the ZH manner of addressing the issues with the most inept government subsidized regulatory unit.

Mish does a good job of covering the unexpectedly horrible PMI number this morning (did someone mention unemployment surprise today as well?). Reflections on the Unexpected Negative Surprise in Chicago Purchasing Index PMI highlights some of the rosy, green shoot bullshit reports that try to gloss over the number and then Mish delivers, "Fundamentally and technically the market is prime for a huge correction. Sentiment is extreme and the viewpoint expressed by William Dwyer above is consensus. However, it is important to keep in mind that as long as the corporate bond market stays healthy, stocks will likely have a bid. How much longer that remains is anyone's guess." Tomorrow's national ISM # and the non-manufacturing on Monday may be more fuel for the bear's fire (if you don't get your reports from Liesman on CNBS).

Bloomberg brings us U.S. Stocks Fall, S&P 500 Trims Best Two-Quarter Gain Since ’75. "“We’re in the faith part of the economic cycle,” said Ralph Shive, manager of the $1.3 billion Wasatch-1st Source Income Equity Fund, which has beaten 96 percent of competing funds over the past five years. “All of us to some degree are guessing how strong the recovery is or how long it will take. Market prices have anticipated a decent recovery at this point. At some point we need to see earnings turn.” " Look, I don't need to be messing with Ralph, but he needs to be spilling the beans. Earnings suck and will get worse IMO because they can't squeeze any more blood out of the turnip. Unemployment is getting "better" cause businesses are as lean as they can get. When you have dumped 16% of the workforce on their ass, you can't cut much more. It is only a matter of time before the reflated bullshit recoveryless recovery comes full circle.

The financial Times has a good one on China to cut back industrial expansion. "But over the past three months many government officials have begun to publicly warn that the credit binge could create overcapacity in heavy industry, which could produce a new round of bad bank loans."
Remember, they have built empty malls and bridges to nowhere to no end. LOL, and you thought our reinflation efforts were screwed up? Well, since you can not trust anything coming out of big red (much less here for that matter), I would say they are gunning for implosion #2. The only difference with them is they did not protect their banks in round one. Big trouble in little China lies ahead IMO, and that may have a direct influence on their deposits here.

I'm looking forward to the ISM numbers tomorrow and Monday. The market is topping (or has topped). When they lose the market they lose the public. When the public goes ape, it is all over. That is all that is left. I can't say when this will happen, but both you and I can see the pressure building. They are one slip or one "external" event from this collapsing in a dramatic fashion. If you have not noticed, everything is happening at such a rapid pace and there are so many balls in the air that something will be dropped and the house of cards will come crumbling down. Don't you wonder about the dollar, deflation, the lack of regulatory actions, monetization, TARP transparency, the Fed, and on and on? Tick, tick, tick....

Morning Post

And the falsified jobs number says another 254k jobs lost in September. That is just great news! Only on quarter of one million people were put out of work this MONTH. Freaking green shoot if you ask me. Bottom line, the more jobs lost the more businesses will save in their cost cutting bonanza which will lead to better earnings thru contrition and not actual production. Not a good situation for the country, but a rocking good thing for the manipulated BS markets.

American businesses are on a souped up version of P90x and taking ephedrine by the gallon right now. They will be lean mean fighting machines when this is over. The question at the end will be, what the hell do you do with all of the fat you shed? Fat is just what it is. Over 7 million fat cells our economy has shit out. Problem is that we don't simply metabolize these, they have to be dealt with and added back to the body at some point in a constructive manner. When that begins to happen, we can talk about a recovery and the end of the recession.

GDP report -schmeDP report - like 70% is government spending and that is about to end and the consumer is dead so ....

On to the charts -

I may have discovered the wave 4 triangle for C of P2. As many of you know, triangles have been forming and breakouts occurring all thru P2. This may be another. 1105 would be the target range if it were to bust out here. May need to pullback for an E touch of the lower trendline -IF this is the correct formation. See the big green triangle below.

SPX Daily Chart - Still a tough call as RSI bounces around, S Sto looks to want to bull cross and MACD hist is going up. Either it reverses half way thru the fall or the fall continues.

/ES 15m -

Below in the /ES chart you can see the wave 4 of C (or 1 of P3) channel down. See the post below for more detail about what is what. Will it hold here? If not I expect a possible return to the top light blue trendline near 1100. Notice the backtest of the pink wedge, the tail thru the top yellow channel line and the blue top P2 line above. This is massive resistance here. Below you have the light blue C wave lower tendline. It is consolidating. A break above the dark blue line buy it. A break below the light blue line, sell it. Should be that simple.

IF the blue trendline (top of P2 wedge) holds here I will be more inclined to make my primary call P3 rather than P2.

This is a really tough spot. The EOQ window dressing was completed with incredible accuracy last week. Insider selling has been rampant. Equity MF outflows have been strong. It is only a matter of time now.

I have been busy and have not had a chance to get to much news lately. I'll get a news post out later today and be a little more consistent. Sorry bout that.

GL trading.

Tuesday, September 29, 2009

/ES Now

Blue - P2 wedge
Light blue - C of P2 throw over wedge
Gray - 3 of C of P2
Yellow - 4 of C of P2

This is my primary count. Alt count is we're in 2 of 1 of P3.

GL Trading.

The bigger picture -

The biggest picture -

Morning Post (UPDATED)


Looks like the bulls may be making a charge for 5 of C or to complete c of 2 of 1 of 3. Are the dip buyers back?). I redrew the ABC channel to include the spike to 1075. Price in the /ES is there now. Careful if you are a bear here. This point, top of channel and back testing the top trendline of the P2 rising wedge should provide some resistance, but might not.

SPX daily Chart - RSI still green, but all the other indicators are showing some confusion. I hate these points in the market when the indicators all of a sudden stop their fall in the middle and wiggle around.

SPX 60m chart - Appears to be a little toppy. It can go either way here. 60m are not as significant at this time.

Bottom line is that the market is in a topping process of some sort. Any pops here should be limited in nature. Still watching the weekly chart for the final clue that the turn is in.

So, is this 4 of C zig-zag or have we begun 5 of C or 2 of 1 of 3 (putting 2 or 3 of C on the sidelines for now)? This is the conundrum. We'll be battling this call for another week I suppose so hang in there while the market sorts its self out. Now is not a time to be impatient. Let the call come to you. Don't try to force anything and keep your stops tight. I'll be watching the top trendline on the /ES and then to see if the market forms some sort of larger formation as this move matures.

My target range for this move up is 1080 to 1072. IF 1075 is broken we're in 5 of C and that moves the target for 3 of 5 of c to as high as 1092.

GL trading

/ES 30m chart - I just moved the channel line up for the ABC and there is a possibility that the market may stop here at the backtest of the top (heavy blue) trendline of the P2 rising wedge. If it clears this I would not want to be short.

Monday, September 28, 2009

My Dollar Chart

I don't see much more downside at this time, but they could just surprise the hell out of all of us as you hear targets in the lower 70's on the MSM. Bottom line is it looks oversold as all get out. It is at support. IMO a throw under of the E touch of the falling wedge right near the target for a 5th wave. Get real. It should be preparing for launch. Look for RSI to crack the down trend line as a key. This in combination with the VIX chart below and the SPX and you get a brew that is screaming TURN. Have your stops in place and a plan for entering the trade just in case "they" decide to play the devaluation card again.

NOTE: This is a daily chart, and I prefer the weekly charts for major turns. I'll build one and let you know if my opinion changes.

Weekly VIX Chart

Looks like a completed ABC to me. You can see the black fib that is used to measure A and C. 200ma supporting price that is having a positive divergence with SPX. All indicators dramatically oversold. One last trendline to cross.

Will it cross it or will it be rejected? If it does cross look for a 5 wave move up. If not, then this may be a 5 wave move down and we're gonna get a truncated 5th wave. Believe it or not there is still plenty of room of the VIX to fall yet and the triangle formed here could be a 4.

Afternoon Delight - /ES Update

OK, at 61.8% retracement of the fall. I barked a lot about this area this am. Let's see if I was right. Touching the probable top channel trendline I drew this am for the zig-zag 4 of 2 down (which needs to morph into a triangle). Just under the P2 top trenline. 30 and 60m are overbought or getting there.

NOTE: The daily indicators on the SPX may be turning.


Morning Post

Is 4 (or 2) or C of P2 over, or is the double zig-zag beginning here? The one constant in the /ES is the lower white trendline of the channel I have drawn identifying the ABC move off of the top. The other obvious thing is that price pretty much obeyed the rising sky blue wedge (on a daily chart) that led to the throw over of the dominant P2 wedge. See the move from top to bottom. So, is there a new, larger channel down forming now for the ABC or 1 of P3? Tough call. Will the buy the dippers show back up after taking last week off?

Looks like Stockcharts is down again this am. Go figure. Let me take yet another shot at their knee caps. They suck and are highly unreliable. I have used them for quite some time now and find them to be quite polite but lacking. Kinda like the super hot chick that has everything but fails miserably on the business side. TOS is free and has like a million more functions. If I did not have so many charts built there I'd be gone. Sure they do have a few advantages, but not worth paying for IMO.

No links to daily or 60m charts this am. LOL. Thanks to TOS, we can do it without them.

/ES 60m - As noted above, it is holding the sky blue rising wedge for now. Indicators on 60m are turning up. The clear break of the green channel down did happen after hours, so we'll have to look at an SPX chart later to confirm. Shorties need to pay close attention to that top trendline of the white ABC channel down. the top line may not be in the right place. I drew it ignoring the spike to 1075 at this time, so it may nee to be adjusted up.

/ES daily - MACD is just now getting it's confirming bear cross on, but is also running into it's lower trendline. Vol is picking up some. RSI may be a concern for the bears. S Sto is still headed south. If you notice at the top of this chart the Pink line (gap at 1104) and the white trendline marking the bear market top line. Those will be coming into play soon I think.

/ES did form a nice falling wedge (not drawn) as it broke out of the C channel down. 1059 is a good target for that wedge breakout. The fibs retracements if she is turning up here are 1055 to 1060. Those correspond nicely with the new top channel line and the top line of the blue P2 wedge. 1049 to 1052 is key resistance point for the bears. If this was 1 of 1 of P3 those numbers should be a good stopping point for 2 of 1. We may be able to tell soon if we are in P2 or P3 for sure.

GL trading this week!

Sunday, September 27, 2009

Quick Sunday Night Look At The /ES

3 (or 1) of C up and then 4 (or 2) of C corrective with fibs. Alt count is 1 of 3 down. See ya in the am.

And a look at a larger picture (kind of makes these recent moves look insignificant). See the retracement box for the larger move now? See the support line at 864 near the top of the blue box? I am predicting that will be a big point in the future. Possibly the end of 1 of 3 down.

Friday, September 25, 2009

Weekend Video 1 - ICN This Week

Informed citizen news this week.

Weekend Video Pleasure 2 - Avalance And Skiers Don't Mix

This will make your heart race I promise.

Raw video:Alaska.In this intense video, a skier with a helmet cam on gets caught in a huge avalanche, getting buried for four and a half minutes and then getting dug out.

The guy in the video was the first one to drop from their group and while not a guide (he was going tail-gunner style), had a lot of Utah and AK backcountry experience. He had a Black Diamond Avalung on More.., but as you can tell from the video while he’s talking as he’s dropping in, it wasn’t in his mouth to start. He tried to shove it in the instant of starting to get sucked down, but it didn’t stay. It was just off to the corner of his mouth he said, and he definitely got snow / ice build up as you’ll see on the second sweep of the mouth by the guide after they get to him.

So as he drops in you can also see the sluff to the skier’s right immediately start building….and that’s actually the chute that was the intended route down. For whatever reason – well pure, unadulterated powder will do it to you – he didn’t go make some strong “skier cuts” into the upper pack to do one final snow check.

Instead he just sent it. And it didnt’ take more than a few turns out on this big shoulder above this cliff band to break loose.

This was a decent sized avalanche. 1,500 feet the dude fell in a little over 20 seconds. The crown was about 1 – 1.5m. The chute that he got sucked through to the skier’s right was flanked on either side by cliff bands that were about 30m tall. He luckily didn’t break any bones and obviously didn’t hit anything on the run out.

He was only buried for 4 and a half minutes which is incredibly short. In that time, though, you can hear his breathing already accelerate. The ruffling noise back and forth is his chest rising and falling and the noise that his jacket makes. The intermittent whimpering noise you hear is him trying to swallow and get some air. Still sends chills up the back of my neck. Oh and they located him so fast because his right glove came off just before he came completely to rest and there was an excellent visual of course.

A B C Update

It ran all the way down to the lower trendline of the upper throwover wedge. This is a pretty critical point to possibly denote the end 4 (or 2) of C of 2 or the possible beginning of 2 of 1 of 3. I have been mentioning a possible zig-zag down here as well. The 60m have bottomed, but I expect them to embed and the dailys are still running south strong. I am hanging on to P2 by the skin of my teeth now. I have a few key indicator points that have not hit yet, but things look really miserable (an they will be soon).

Just something to think about coming into Monday.

T - minus 17 days to my projected 10/12 top date.

You may want to pay attention to what's going on at the G20 meetings. The world just may be changing right before your eyes and you may not even know it.

Enjoy your weekend!

Morning Post

Wow, I believe it is nut cutting time. Either we complete the ABC corrective and head back up or the top is in and P3 is upon us. If this is 4 of C, then there is still some upside left, but I think a 5 would truncate and may or may not set a new high. This is my primary call. I will hold on to the 4 of C call till the double zig-zag does not play out and the form turns in to a clear 5.

I like the idea of a little consolidation up here or one last sucker push to the top (if the last run up - or all of this run off of 667 - is not it). The other three options 1) based in the manipulation camp and a second stimulus for them to continue to funnel back door funds into the market this might be 2 of C or 4 of 3 of C and 2) 1 of 1 of P3. I have to give all of the options.

I still like 4 of C with a double ZZ and limited upside in a truncated 5 up because the market is controlled, but am beginning to believe more in P3. Other EWTers are all over the place as usual. I believe I am the only one left with any hint of bullishness. RIMM's earnings and what the DOW, TRN and NDX are doing are beginning to sway me. I really was looking for something dramatic to end P2. Might still get it from the G20. Tensions are high. Iran may end up being the key.

Daily SPX Chart - Indicators look like they got Swine Flu and will remain sick thru the weekend. Next Monday may be interesting. (Possibly a 3 of 1 of 1?)

Weekly SPX Chart - Want to see a scary picture? This sucker is primed to plummet. I am a firm believer that the RSI cross of the trendline will mark the beginning of P3 just as it almost perfectly times P2. If you will peek at the VIX at the bottom of the chart, I believe it will correct to the MA100. When it crosses the MA100 look out. On this chart I believe you will be able to count waves pretty well on the way down by looking at the SPXA50 here as well.

/ES 30m - Held the top channel line nicely overnight. Busted thru the 38% fib line this am. Has its sights set on the light blue lower trendline of the second rising wedge formation.

/ES Daily - Here you can clearly see the light blue rising wedge leading to the throwover of the dominant P2 wedge formation, the lower trendline of that wedge and The BIG BLUE line in the sand (which from now on will be referred to as only BIG BLUE). The pink line at the top is the gap in /ES. That line is there for a reason. They are like magnets to price.

/ES 5m - Just in case you do not believe in the Trendline Fairy. these things really do work. A cross of the blue line is a big deal.

I am long SDS, VXX and UUP.

I wonder how you Cramericans are feeling this am after RIMM's stellar announcement? LOL, monkey see, monkey do.

Congrats to the Cocks and The 'ol Ball Coach on a fine victory last night. I still hate you both, but I am happy for you. Biggest win in history, something like that? Taking out a #4 ranked team at home? You gotta start building a program somewhere I guess. At this pace you'll get your first SEC East championship in 2020. To the Rebels, dude, I don't care if it was the SEC on the road on Thursday night. Dude.

Thanks to all new new followers that have signed up. If you have not done so, please do thru google. I will be going .com by the end of the year!

GL trading today and have a great weekend.


Thursday, September 24, 2009


On the /ES - Some are looking at this as 1 of P3 (which I am not discounting). IMO this is 4 of C down (thus the ABC) with 5 to come. 5 of C up can truncate and thus resolve in a mass consolidation around these levels or it can run to a new high. Counting might get tough soon. I like the lower low! The only reservation I have with the ABC is lack of overall form or a larger definitive formation (triangle or wedge).

Note: No post tonight as I will be traveling to the flooded ATL for dinner.

VIX - Measured Moves?

Choppy? Predictable? Measured? Controlled?

Disclaimer - I am long VXX from 50.65.

Morning Post - P3? - Mini Rant

Deal with me this am, I have a lot to say.

Not quite Konichiwa time just yet (I'll get to the P3 discussion below - as this post grows and grows).

They will not go down without a fight. I expect the funny business to continue for another month or so and then their guns will be empty. They will be out of bullets. The destruction of your future, mine and this country's will be nearly complete. Steve reminded me of this Denninger video this morning. I believe the scenario Karl lays out has a better than 50% chance of playing out, so you need to start paying attention.

You see, the Fed and our government are like a children that habitually lie. They are so deep in a layer of lies so long and thick that they can't even discern the truth now. Or, if they can see thru to the truth, what is real is so broken that it can not be fixed anyway, so why not continue the charade to the end?

The bottom line is they screwed up. They have been screwing up for years and this mess possibly all began with the creation of the Fed many years ago (and might end with the destruction of the Fed). They fixed their buddies problems not ours. They sacrificed everything to save the banks and not the country. Now, they are in a position that they MUST lie their way out of this thing and hope like hell they don't get caught and that time allows this all to blow over.

Unfortunately the scams will not lead to recovery. They will bring CHANGE you will believe in. Financial CHANGE that has a great possibility of destroying the world as we know it today. You see, with P3, it is not a game anymore. It is not some glorious downdraft in the market we can all revel in. This is some serious shit. This is a market collapse that will wipe everything out GLOBALLY. The only viable solution I see will be to just wipe all debts off of the books, call it good and start over.

If you can't see it coming you need to wake up. I am not a fear monger doomsdayist that is hell bent on this happening. I am a person with common sense that can see the destruction in the road ahead. The numbers don't add up. The lies and manipulation and stealing and cronyism are all so rampant. But you just go on living your life in your comfy 3 bedroom home with your June Cleaver wife. Keep watching the MSM and believe what you hear. It is time to wake up. This is serious. More serious than we all may realize. I am scared as hell and you should be as well.

I am going to ramp back up the Irreverent Blog and cover some other atrocities that I see going on on the political/fascist front that you may be missing in the MSM coverage. I will also be promoting the likes of Peter Schiff and Rand Paul for election. We need CHANGE and the first place to start is to get representatives that are real world people that have a lick of sense and are not owned and run like the puppets of today. Special interest must DIE!

And another thing - Let me say this about all of the "economic" indicators reported on like housing and manufacturing that CNBS pumps on a weekly basis- THEY ARE BULLSHIT. Sure, the market reacts and you should take them into consideration short term, but as for reality, they are reporting the near term "truths" that look like recovery or a bottoming process but are not. They are a shelf where everything is pausing. IMO, housing is totally dead. It is a ghost still walking the earth. A "residual haunting" they would call it on Ghost Hunters. Manufacturing will (eventually) come back! Why? Cause with the massive wage deflation we are going to experience, the trade imbalances with other nations and the need for jobs it has to. We are no longer a credit driven nation of consumers. Time to suck it up folks. Times are a changing.

Sorry for that, on to the charts -

In a nutshell - the market might have topped, but I see this still as 4 of 3 of C or 4 of C (still a distant possibility of 2 of C and .... see below).

SPX Daily Chart - Indicators have rolled over. This fall should happen now and be a little more severe. The daily's are toast now. Why would I even consider a whipsaw? The sheeple. the dumb ass sheeple. Boy is this ever a que for them to come rushing in to the market. It never fails. Maybe they have. As I reported last night, equity mutual fund outflows are a happening and the faucet is running wide open.

For those of you that do not know about support points and retracements and have intentions of trading this fall down - PAY ATTENTION. The fall first must get thru the daily BB 20ma at 1038. that coincides with a lower trendline. It then has retracement points from the rise off of 990 at 1046, 1036 and 1025. Then the gap at 1017. Then the 50ma at 1008.

Now you start getting into larger retracements off of the bottom. The 38.2% is 999.61, 50% is 974.60 and 61.8% is 949.58. Now, I have a love affair with that 949 (actually 947) number, so be prepared for me to start harping on a reversal if (when) we get there (call it a psychic connection).

The 60m charts are not worth reporting on, but if you would like to look, HERE it is. I have one thing to say about this chart and P2. Look on the left - see the targets that have been there for quite some time? 1078 has been breached. That means in my book that P2 can mow officially be in the book. Yes, I will now say that a top CAN POSSIBLY BE IN.

/ES 60m -

You can see the A wave down form the 1 or 3 of C top in the yellow channel. You can see the B wave up in the pink wedge. Welcome to C down of 2 or 4 of C (or 1 of 1 of P3 (there, I said it)).

Targets are above under the daily section. I will be possibly looking for a back test of the B wedge but doubt it. There is no form to this mess yet, but when it happens I'll let you know. Price continues to flirt with the bull market top line (thick blue line) which is important IMO. A decisive break of this line with authoriti will get my attention.

That is enough for now. GL Trading!

Wednesday, September 23, 2009

Time For Another Thank You Note

I need to thank Mish for adding me to his blogroll. For those of you that have not been exposed to MISH'S Global Economic Trend Analysis, Mike Shedlock / Mish is a registered investment advisor representative for Sitka Pacific Capital Management and one hell of a blogger. Craig at Stocktock first turned me on to Mish about two years ago, and I do not think I have missed a day since. Mish was the first source of financial truth I found on the web. It blew my mind when I first started reading his posts. His posts are timely, in depth analysis with a wonderful dry sense of humor covering some pretty dicey subjects (his unemployment reports are the best). They keep you coming back, because they are real. No fluff or shady topics or analysis. I highly suggest you bookmark his sight and visit it on a regular basis.

Thanks Mish,


What A Relaxing Afternoon!

I feel great! Gonna make it a quick late post tonight. Great action this afternoon as the market told Benny and the Jets to stick it after the pop up after the announcement. I feel for those bulls that ran it up right after the statement. It is my turn to sleep well tonight and their turn to figure out what happened.

Zero Hedge had a great news day today. Tons of good stuff over there. I picked Over $7 Billion In Domestic Equity Mutual Fund Outflows In September. $2 Billion In Outflows Last Week to cover here. Simple post with a great message and chart, "ICI has released its most recent fund flow data, and while overall flows have been positive, this has been exclusively due to a ramp up in taxable and municipal fund inflows. In equities, there has not been one positive inflow since August 12. Last week saw a $2 billion outflow from domestic equity mutual funds, bringing the total for the last month to $7.1 billion. Attached are equity flows superimposed over the performance of the SPY." OK, so the market has been ramping wile the MF's have been aggressively pulling out of equities (guess there WAS something to all that insider selling going on. Look for more defections as the month comes to an end and they try to protect the QE statements.

Prag Cap has WHY DOES THE MARKET KEEP GOING UP? This is a nice step back from hearing me and the rest of the blogosphere bitch about manipulation and ramp jobs, "This is a question that confounds those on the sidelines and aggravates the bears to no end. Many attribute it to some sort of bank or government engineered conspiracy theory. Others say it is simply performance chasing by large money managers. Personally, I find the answer in the psychological."

The Market Ticker brings home Watch That Thesis! (FOMC Announcement). Don't you know Karl probably ate a hole in his chair waiting to get his hands on this one. LOL, he does a good job ripping it apart and then actually makes a trading call, "Nice shelf to get short at; take it down if we break materially over 1080. Either economic fundamentals assert themselves as deserving of these valuations or we're a solid 2,000 DOW points (and 200 SPX points) or more above where we should be. As a trade the risk:reward looks better than it has in months; you're risking ~10-20 handles on the SPX to potentially capture 200!" I agree 100% and will probably say something very similar (as I have been for a while) in the am.

Naked Capitalism (as well as ZH and now me) has Guest Post: William K. Black’s Proposal for “Systemically Dangerous Institutions”. A nice short and concise post by Professor Black on how to fix this mess, Since he has "some background" in fixing bank issues.

This is some must read juicy shit right here, ZH has Is The Fed Hiding Gold Swap Arrangements With Foreign Central Banks?. More on this will follow soon, and this emphasizes the need for Ron Paul's 1207 legislation. Folks, this is where the big boys play ball and manipulate the dollar and gold markets behind the scenes (and they say they can't predict the prices of certain assets, hell, they control EVERYTHING!).

On a side note, Mish has I Endorse Peter Schiff For Senate. I could not agree more. Peter and Rand Paul are two we need to get behind. Why am I bringing politics in here, cause we got to take the trash out and get some people in office that are not hand maidens to the ruling elite. We need some bad boys that follow their own path. You can see a recent video post I did with Peter HERE. If you have a politician that should be supported for election, send me an email and a link to their site. This election is gonna be a big deal and I want the right people promoted as much as possible.

Thanks for the views, comments and emails.

GL Trading!

Morning Post

So, do you think the Fed will have any surprises today? I don't. How about the people that say the Fed non surprise is priced in? What are the odds of CNBS calling a victory for the investor and following the marching orders of Uncle Ben further declaring the recession is over and that all is well?

I'm not gonna speculate much today cause of the Fed. All I know is that the market is and has been overbought for sometime. Of the last 29 weeks 21 have been up. Of the last 11 weeks 9 have been up. The market is up 61% since the March low (that would be cramming 6 years of average SPX returns in 7 months - so you can say that one month roughly equals one year at this pace). Of course as long as they continue to funnel funds thru the back door (and out of your pockets) into the market and as long as they continue to pummel the dollar like Wallstreetpro2 with a Louisville slugger the ramp job will continue to run.

I am looking for limited upside as the market continues to consolidate as it did in early and late August. I will be looking for the tell tale triangle to form as it has so many times before on this run up. Upside should (should) be limited given the position of the indicators and BB's on the 60m, daily and weekly charts.

/ES 10m chart - Clear wedge formation to the top of B in what I think is an ABC corrective (although weaker than most of us anticipated) for either wave 2 or 4 of C up. at this time I am not expecting a double zig-zag in this corrective, but I (again) would have thought this correction would have had some meat to it. If the wedge plays out a good target would be somewhere near the 1050 low.

The upper wedge line is good support. So is the lower trendline of the long channel up for either 1 or 3 of C. The best support is the combination of back door funds, the beaten down dollar and the cheer leading of CNBS.

GL Trading (you'll need it).

Tuesday, September 22, 2009

Frustrating As Hell, Isn't It?

Zero Hedge - Michael Pettis Extended Interview. Want to know about China being totally screwed no matter which fiscal policy it decides to take? This is a must watch. Really good.

The Market Ticker - CORRUPTION: Reverse-Insurance?! (FDIC). "In the world we live so-called "government officials" of the FDIC feel free to engage in such sham transactions, smug in the knowledge that The American Sheeple, along with their handmaidens in Congress, can be counted on to allow a blatantly-fraudulent exercise such as this to be consummated - where the banks that are beneficiaries of FDIC insurance (and whom have also issued literally billions of dollars in covered bonds on an issuance-insurance program that has no legal basis in the foundational principle of the FDIC in the first place) not only do not have to pay for the insurance coverage they enjoy, but actually get paid to have it instead. I couldn't make stories like this up if I tried." It is shit like this that makes your head spin. This story can be read on almost every link I have in my blogroll, all with equal disdain.

Mish - "Buy The Dip" Mentality Fully Entrenched. "Thus, suggestions to "Buy the Dip" based on sideline cash not only shows a lack of understanding about how markets work, they also show a lack of understanding about how extreme sentiment is among retail investors and fund managers, even as insiders (who likely know much more about business fundamentals) are selling hand over fist. Risk is not high, it is extreme." LOL, this is the shit your fund wholesalers bring into your office to sell your advisors on.

PragCap brings us “THE FUTURE WILL BE A TOTAL DISASTER” interview with Marc Faber on Yahoo Tech Ticker. At least I know I am not the only total doomsdayist on the planet.

Via The Big Picture's daily readings you get Market Talk's The Pinocchio Recovery. A delightful little post with, "Now, I see a recovery that looks like Pinocchio: it wants to be a real little boy, but it’s really just a wooden toy that moves only when somebody pulls its strings. But everywhere, we hear people talking up the recovery as if the economy is sprinting into a new bull market."

One last post about IMO the greatest deceiver of them all. Zero Hedge - Themis Trading Responds To Jim Cramer. (Cramer video here - if you can handle it.) Will someone please que John Stewart again please.

That is enough for tonight. Fraud, lies, criminal activity, and outright lawlessness rules the day. I told you they would protect the market at all costs. It is all they have left between them and total anarchy. Expect the bullshit to continue. Quit being surprised at every ramp job. They are backed into a corner and have all guns ablazin. Don't stop being outraged at the rape of our financial system, our futures and our constitution.

GL trading.

UNG - The Pent Up MEGA Post

Confusion reigns down on the Nat Gas sector. Buy, sell, stay away, you'll make a fortune, buy the producers, buy the commodity, the bottom is in, supply is down, demand is going to grow, Nat gas is going to $2; what the hell? Below are a few posts that I liked from around the web. (Notice the prominent words Volatile and Speculative)

Forbes - 9/21 - Natural Gas Still Too Volatile. "Natural gas prices have recently become lighter than air, as the commodity finally gets some love after a year-long slide. Yet even though it has gained traction, our team of investment advisors is cautious about the fuel, unconvinced demand is set to take off." There you have a more definitive call. - 9/21 - Speculating on Natural Gas. After moving from $2.50 to $3.77 per BTU last week the pressure is back on the price of natural gas. The rally is based on speculation that prices will continue to rise as inventories fall. Therein lies the issue. Supply has dropped the last two weeks, but not enough to push prices significantly higher. If I were an investor (oh yea, I am) I would take my profit off the table and see how this plays out. The instability in the natural gas contracts has been evident as the downside pressure has controlled the trend. Sounds just like the same thing I have been saying. I like the folks at Greenfaucet and suggest you take a peek at their site while you are there.

Seeking Alpha - ETF Stats for UNG Gives a nice list of SA authors that cover Nat Gas and is worth bookmarking for when you need some good posts on the subject.

BOTTOM LINE is you need to check out EIA's Natural Gas Weekly Update (I added a link in my blogroll). They have the definitive release on Nat Gas pricing and information. You get it from the horses mouth (not the other way around). Very detailed information from the government on the pricing of Nat Gas and the economies surrounding pricing. I'd highly recommend you visit this site for an update before you invest.

EIA provides a monthly Short-Term Energy Outlook. The next update is October 6th. Did you know this, "Despite low relative prices for much of the year, industrial natural gas consumption declined by 12 percent in the first 6 months of 2009 compared with the same period last year. EIA expects this year-over-year consumption decline will continue through the second half of the year for industrial users, although the trend will be less pronounced." How about this, "EIA expects natural gas consumption will increase slightly in the commercial and industrial sectors in 2010 as a result of improved economic conditions and low prices. Consumption remains relatively flat in the residential and electric power sectors next year. The anticipated addition of new coal-fired generating capacity and rising natural gas prices limits the potential for significant increases beyond the forecast 2009 level in natural gas consumption by electric generators."

In other words, don't be looking for some massive recovery in the price of Nat Gas this year or next. This report can give you some reliable information regarding the outlook for crude, nat gas and coal. I will be making it a must read and will notify you of its release here.

I have no hope for any significant rise in UNG till the over supply under demand issue straightens its self out. Sure, as futures roll thru there may be sentimental pops, but the EAI reports say no demand for a year or two until the economy recovers. I expect a long drawn out bottom at these levels for some time.

Given that UNG is still trading at a significant premium to NAV ( Sept 21 - 10.57 NAV and UNG close 11.25, 6.43% which is narrowing) since the supply demand issue is not (nor will it be for some time) worked out, and the general (and expected to be worsening) economic conditions, I fully expect the lows to be tested again.

OK, that all being said let's look at a chart and apply some TA to the situation. 30 and 60m indicators are falling. The daily indicators are topping out. Weekly indicators are mixed. The run off of the capitualive bottom has reached the retracement zone above the 50% fib retracement line. UNG left several gaps on the way up. Price has broken the uptrend line. UNG is forming a possible bull flag at this time. As for the form of the climb, I do not like an ABC. I prefer a 1,2 or a 5 wave count. If a 1,2 I expect a pullback to the 10.45 to 10.10 range. If this is a 5 wave move and 5=1 and gap support holds here the target range should be near 13.18.

30m UNG chart (may be better viewed here and other UNG charts also)

Nat Gas - Oil Spread chart - (Better viewed here). Nat Gas drove up to test it's LT lower trendline and put a spike thru it. Oil is leveling out. Please visit the older Zero Hedge link in the chart for more information of the spread of NG to OIL. This will correct, I believe oil will do most of the correcting downwards. I believe this monthly chart of Nat Gas shows the bottom is in (or should I say it won't get any worse than it already has).

GL trading.

Support Central

Morning Post

Tough call this morning. The channel on the /ES was broken pre-market. The levitation continues. My Market top on 10/12 call is possibly in tact. I'm guessing the mutual funds eventually get one more push to print some really nice QE statements, then all bets are off.

As I have been saying that channel down was part of a 2 or 4 of either 1 or 3 of C Not sure since I am questioning where B actually is. Time will be the only real difference as the two possibilities for B are only 14 points apart in price. Looks like the move off of 991 SPX was a 3 the more I look at it.

Daily SPX Chart - My conundrum is that the channel down possibly completing the 2 or 4 has broken up, but the daily indicators are rolling over, the daily SPX price is at the top of the wedge and the upper BB's are providing some resistance. Are the daily indicators gonna whipsaw and remain embedded? That would make for a nice set up to start P3 in a week or two. MACD hist is trending down RSI is over 70 and looks to want to fall. S Sto got the bear cross going on. ADX falling. CPC very bullish but does not have a divergence yet.

60m SPX Chart - 60m indicators are falling but showing signs of a reversal before bottoming out. There is still room for them to fall and embed.

/ES 60m - You can clearly see the yellow channel down from the 1071 top that some are questioning as the "top". The dark blue line is the top of the P2 rising wedge. Notice these 60m indicators are overbought and appear to be turning south.

Here is a longer view of the /ES 60m wave 1 or 3 channel and the 2 or 4 correction.

I'm gonna go against the manipulators and my better judgment and call for a larger corrective here or more consolidation with limited upside. The Two rising wedges ending and the position of the indicators scream NEAR TERM top and a larger corrective is coming. Now this has happened several times, and several times we all have been wrong. I just don't thing the corrective is big enough yet and might take one more leg down to play out. I'll be looking for the all too familiar triangle to form for the final push to the top. At this time I'm still tentatively short in SDS UUP and VXX with 5% stops in each. If the market should show any strength, I will be exiting shorts quickly and waiting patiently for more downside.

Is the top in? I do not think so. The Fed still has ink and paper. We still have GS running the show. There are green shoots everywhere. The dollar is staying nice and devalued. Regulation is rampant. All of that combined says slightly more upside. I'm on record looking for an external event to set the market on its path to righteousness. More talk about a war to end the recession/depression is perculating. Middle East tensions, oil, China, Russia, Israel - Swine Flu - something is brewing. Dan put up a nice chart on this (SPX 300 anyone?).

P3 should announce it presence loudly. Don't worry about missing the top. It is not that big a deal. You'll be able to get out and have PLENTY of time to play the short side ride. I will refrain from playing any upside from here since SPX is above the rising wedge. Extreme caution right now should be exercised as IMO is is dangerous for both sides up here. This depression is far from over. Welcome to the new Japan.

Koniciwa Bitches!

GL trading.

Monday, September 21, 2009

A Quick Look At The Weekly VIX

This is the big boy, not daily or 60m. This is a weekly chart of the VIX. Price is running along in a positive divergence to SPX since July with the 200ma acting as support now. The indicators are all oversold, have been embedded and are showing divergences to price. When the RSI crosses the 15ma it should be all over IMO.

Is this going to be "the" breakout? Hard to tell with possibly two head fakes already in the books. I think a dead cat bounce has been completed and a double bottom is possibly set. Some (including me) have had other trendlines that possibly show a breakout and back test of the top wedge line. If the move down was an ABC the target for C=A was missed by .10 by my calcs. BB's getting pretty narrow indicating increased volatility again.

No one knows which way the market will move (except on POMO days and every afternoon around 3:30). There is no reason the VIX can not continue to flat line like the dead meaningless index it has become. There is a chance that this is the 4th wave of 5, but 5 would have to truncate given price levels. This could also be a 1,2 move as well. I prefer the ABC mentioned above. Given the current state of the other chart I have been presenting, it looks like a storm is brewing to me.

I am long VXX from 50.65 since last week with a 5% stop.

Chart Better Viewed HERE.

Afternoon Delight - The New /ES Channel (DOWN)

Read 'em and weep. I like series of lower highs and lower lows. The thick blue line is the rising wedge top line.

Morning Post

I trust everyone had a good weekend and is ready for some downward action in the market. I about lost my lunch when I saw the /ES over the weekend. A nice ramp up to 1071 combined with a few manipulation posts from ZH made me want to beat the dogs (I did not of course - and you never should either). Fortunately all the ramp jobs did was complete the triangle (target 1047).

I believe we are in either 1 or 3 of C up in the SPX. There is only a difference of around 14 points in the counts, so it is not that big a difference. That said, this is either the beginning of 2 or 4 of 1 or 3 of C. IMO this is some sort of 3 down right now. Correctives will usually cover 38% minimally, so the fibs for this fall 1043, 1033 1023 with the gap at 1018 re some good numbers to look at. If this fall should break 991 low and super support area, we have to begin to look at different counts all together. (Note: that statement could be a early warning that I think there might be a bunch of upside to come, but the jury is still deliberating that one.)

The most important thing to point out in the chart below is that over the weekend price broke back into the larger dominant blue rising wedge formation. Some will call a top and that was a throw over of the wedge and that the top is in. Possible, yes, reality, no.

SPX Daily Chart - Pretty clear the MACD histogram is leveling off, S Sto has a bull cross and is embeding and RSI may have topped out with a nice divergence to price all which lead to a daily indicator top. Those lead to more meaningful pullbacks. At this time I like the 1043 to 1033 range and would expect price to form some sort of triangle that would be characteristic of a 2 or 4 wave.

The VIX has completed the dead cat bounce and is consolidating just under the dominant down trend line. I believe the VIX will get a good pop here possibly to get above the 30 number. CPC has apparently bottomed (again). TRAN has reached its upper bear market trendline and is reversing. COMP has breached the upper bear market trendline, but it is at the upper wedge line. INDU at resistance. All around things appear to be possibly beginning some sort of topping process.

Let's all wish Little Shanky a happy 9th birthday today!

GL trading.

Friday, September 18, 2009

Weekend Video Pleasure With ICN News

Gonna change it up a little and stick with a business vid. This one is worth seeing. You see, real honest news reporting is hard to come by these days given that the government controls everything but the internet (give them time - they'll get to us soon enough). CNBS's viewership is plummeting and maybe they can take a lesson from Informed Citizen News (ICN). this tiny little YouTube based reporting agency get's it right with statements like this, "Growing GDP is not hard when you are printing money. Just look at Zimbabwe." Good honest reporting. You'll love this one.

You see, this is ICN report is worth watching and actually reports the truth. If CNBS were to report on real issues like these opposed to the piles of green shoot shit they feed us daily, CNBS might just pull their ass out of the gutter. That is highly unlikely to happen though as the government's number one financial propaganda machine's parent is stuck to the government tit and can't report the truth without throwing mama under the bus. The disservice they are doing to their ever declining viewership can not be overstated. Please turn them off. I suggest Bloomberg radio, Zero Hedge, the market ticker and any of the blogs in my blogroll as viable alternatives.

If you would like to subscribe to ICN's channel on YouTube, the link is here. I did.

Have a great weekend!

Morning Post - Broad Overview Of The Market

EOM is coming. Opex Friday, so some of the games will end today. Maybe the 58% run up in the market will decide to take a breather as well. Valuation - shmaluation. For those of you that don't know, the charts below show why most believe this P2 market correction is coming to an end. For those that do know, sorry, but I have had several emails requesting this overview.

/ES Daily 2 years - Let's step back and look at the big picture. What we see is the larger channel down (gray) and the current wedge (blue) approaching the top line of the channel (bear market top line). You also see the gap in the /es at 1104 to 1109 (pink line). The 50% to 61.8% fib retracements for the fall are the sky blue box from 1127 to 1235. So where the blue rising wedge meets upper channel resistance (bear market top line) and there is a unfilled gap in the neighborhood you get a very likely point for a reversal. Adding to the formation of the price you can plainly see the daily indicators are overbought with the MACD about to crack the uptrend line (yellow). Volume is also beginning to show signs of life.

/ES - The wedge - The blue rising wedge marks the move up off of the bottom. You can clearly see the process of narrowing price movement as it consolidates in the end. Here you can see the gap/top trendline juncture around September 24th thru the 29th. This coincides nicely with my call for the EOM statement prints then a possible fall.

/ES 60m - The wedges in the wedge - There are now three wedges. The larger blue, the intermediate light blue and the one now being formed by the lower yellow line that is possibly breaking down. I did not think the upper blue wedge line would be breached. I believe this is a throw over of the top lune of that wedge. Price now faces support form this trendline and might need a push to get back thru.

SPX Daily chart - Still in a battle with the upper trendline and bollinger band. The daily S Sto gave a sell signal late yesterday. RSI may have peaked (and will set a nice long divergence if it does). MACD histogram has lost some steam. Retracement levels for the fall are 1043, 1033 and 1023. Strong support area in the 990 range. I am not mentioning the fibs for the larger fall cause there is no reason to discuss anything below the support area at this time.

Have a great weekend. I'll be throwing a birthday parts for my soon to be 9 year old son and getting whipped by a bunch of kids in a nerf gun war tonight. Enjoy some football (nice to watch Ga. Tech get whipped last night by the thugs from Miami - note to Techies, the new offensive system will never win you an ACC championship - NEVER!). I'll update as many charts as possible this weekend and possibly get to the posts on Gold, Oil, Dollar and Nat gas that I have been meaning to get to.

GL trading.

Thursday, September 17, 2009

Was The Market Down Today?

Not sure if reality is setting in or not, but sure is nice to know that a red number is possible.

Nic Lenoir of ICAP has a guest post on Zero Hedge tonight that is worth a look - How Crazy Can It Get?. Nic covers some interesting points regarding QE and the government backstop of the markets and how the potential for this run up to continue is still a reality. "However as always one must remain cautious because these days capital markets are a mere reflection of government action... as long as government remains unchallenged." We all have a good idea that without QE and stimulus and some creative accounting this market would be toast. With the money in the coffers running out, will the second stimuli come and thus provide the fuel to keep the rally going at which point might just bring in some real sideline money afraid to miss the run? Of course this is the worst thing that could happen LT, but is well worth pointing out to us permabears.

I'll follow that piece up with Mish's Rally in 6th Inning or Top of the 12th? where he expands on Riholtz's comments in Rally May Only Be in 6th or 7th Inning, Ritholtz Says. Read Mish's post as it has many good links and covers both sides. His conclusion, "The key take away from this is that economic fundamentals are very poor, yet no one knows what inning we are really in. The key word in the concept the Rally May Only Be in 6th or 7th Inning, is "May". I spoke with Barry Ritholtz this morning. He also agrees it's also possible this rally is in the top of the 12th, overtime. No one knows for sure. For nimble traders, the difference is moot. For those in buy and hold rather than rental mode, the difference is huge. Please manage your risk accordingly."

Denninger points out a lot of good stuff. One topic I like the best is the false consumption created by the stimulus packages pulling forward purchases thus leaving a black hole in the future. Oops: "Pulled Forward" Demand Really IS False! "All this faux "demand" being generated by the so-called "stimulus" is just doing more damage to the economy - damage that is accruing and will come to the surface with devastating effect."

Naked Capitalism brings us Quelle Surprise! Regulators Starting to Worry Re Bank Commercial Real Estate Exposuresby Yves Smith. "The Fed is poking its nose into the portfolios of some banks, oddly taking great care to say these are NOT stress tests (is that meant to say they are not bogus and actually involve people who might know a tad about the underlying assets?)" Interesting, you mean someone has possibly decided to take the issue seriously? I won't hold my breath.

That is enough for tonight. Why am I presenting the possibilities of further upside? Well, I have bet on the manipulators up till now. Although the charts are nearing the ending patterns all over the place. P/E ratios are ridiculous. Overbought scenarios exist in almost every market. What am I trying to say, well Nic's article in ZH brought me back to reality and reminded me that as long as the government is in control with GS at the helm, they will do whatever the hell they please.

I want to pass along a hearty CONGRATULATIONS to TD and the team at Zero Hedge for their key (IMO) role in SEC Votes Unanimously To Ban Flash Trading, Seek Public Comment. The power of a small group of intelligent people, a few Bloomies and the internet. I guess Tom Brokaw is in total disbelief.

GL trading.

Afternoon Delight - Video Post

As I keep pounding the table. All must watch videos. No fluff (but some Huff) here. Enjoy!

Peter Schiff: Americans must prepare for deepening unemployment, inflation and possible breadlines. If you you could hear me speak - this video would spill out of my mouth.

A little Celente doom and gloom salt to go with Peter's pepper. "It is not a recovery. It is a cover up." Revolution anyone?

Congressman Paul and Countess Huffington discuss the failures of Keynesian economics, the true cause of the financial crisis, and the need to end the Fed

Today Is Constitution Day

September 17 is Constitution Day. On this day in 1787, the Constitution was signed by the delegates to the Constitutional Convention. Celebrate by reading your Constitution today. You need to understand the constitution and the RIGHTS it gives you as a citizen. These rights are slowly being stripped away piece by piece. The Constitution and your rights need to be protected now more than ever.

You can read it here

This is a great link to learn more interesting things about your constitution.

Morning Post

OPEX week continues to baffle. I hate 'em. Bull mode persists. What I thought was a rollover channel has morphed into a rising wedge. Wave C of the corrective is killing the bears that are getting more impatient every day. This has happened from every top since 750 on the SPX. Disbelief and agony are reflected all over the place as the bulls enjoy their moment in the sun.

We are either in 1 of C or 3 of C as I have been saying. I did not think the market could break the trendlines above yesterday, but was proven wrong. The bush hogs have come thru and cleared the path, with the only question being is this 1 or 3 of C. My targets for my 60m chart continue to be 1078 for 61.8 of A and 1126 for 100% of A. That should be the range (barring the count is right).

Missing the run and investors wanting to pile in has been a talked about a lot these past two weeks. That is normal for a topping scenario. I was disappointed when the upper wedge-lines for all but the DOW were cracked yesterday. Sorry, did not think that would happen. I shorted with SDS at 1060 SPX when it hit the trendline and SDS also touched it's (now former) all time low at 40.38.

Daily SPX chart - You can see the large blue rising wedge. The fibs for a fall are 1038, 1029 and 1020. A massive support area persists around 990. WHAT IS KEY HERE is that price has blown thru the upper BB. While this does not predict an imminent fall, it certainly hints at either severe bullishness (if we are in a 3 - soon to be 4 of 3 of C) or a topping (possibly ending 1 of C). The Daily indicators suggest we have room to run, but not much.

60m SPX chart - You see the targets mentioned above on the left that have been there for over a month now. The only thing that is new is as of yesterday morning, before the open, I am now questioning where B actually is. The indicators (which on the 60m don't really mean crap anymore) all show the uptrend as nearing a top and overbought conditions.

WEEKLY SPX chart - Now let me bring the Weekly into play. Look at one thing - the RSI. When the RSI crosses the red line (barring some sort of embedment) the top will be in. The weekly indicators are embedded for goodness sakes. I guess the P/E ratio reflects this, hugh?

/ESU9 10m - Open interest is DOA. The yellow channel that we followed for a week finally broke down and then the rally hit. That has me leaning to this being a 3 of a 3 with a 4 and 5 to come. I was amazed when the upper trendline was breached (esp after I finally entered a short trade). Throw over top anyone? Any one? Bueller? Bueller? That is what I am hoping for. The gray line is the upper wedge line. The red line is the 50% line of the larger channel off of 667.

/ESU9 30m - Here you can see the two channels that have dominated trade for the past two weeks.

I am going to work out a new format for the morning post that gives a bit more data so be looking for that. I would appreciate suggestions from you as how to improve the Morning Post, so please email or leave in the comment box.

GL Trading!

Wednesday, September 16, 2009

Don't Buy Into The Hype

I'm gonna keep on pounding the table. It WILL get ugly. IMO uglier than any of us are imagining. When Humpty Dumpty falls off of the wall, I'm willing to bet there will be nothing resembling 'ol Humpty when and if it is able to be put back together again.

One of the coolest posts I have seen this year comes from Zero Hedge. A little elbow grease and computer savvy and they produced Thousands Of Rusting Ship Hulls Are A Fitting Tribute To The Speculative Market Bubble. Care to see how many idle ships there are out there? Want to see the rotting carcass of global trade? The further you go into the article the more astounded you will become.

Since were talking shipping, why not take a look at the BDI. PragCap has IS THE SHIPPING INDUSTRY FORESHADOWING GLOBAL ECONOMIC WEAKNESS?. Well, after looking at the ZH article I would suspect "no shit" would be your initial thought. "The recent weakness in the Baltic Dry Index isn’t simply an anomaly. This excellent report out of ICAP details the very serious hurdles that the shipping industry and the global economy face going forward:". For those of you on the DRYS rocket ride, I'd keep an eye on the rear view mirror.

The Big Picture has Bank Lending Continues to Slip. A nice lending summary that shows just how afraid the banks are to let go of anything right now and that they are actually tightening their grasp (ya think they know what's really happening?). "It was just yesterday that Tim Geithner was lying that banks are constantly increasing lending to consumers. Well, yet another lie refuted. Banks, and not just any banks, but those receiving government bail outs and subsidies, continued constricting lending in July, with total average loan balance outstanding declining by $54 billion from $4,295 billion to $4,241 billion, a 1.3% decline, following a 1.1% decline in June." I guess I should not that this was in ZH and Naked Cap as well. Not sure where it originated.

Calculated Risk brings us Jobs, Jobs, Jobs. A nice little summary exposing the brutal employment environment and just how devastating it will continue to be here and abroad. "Unless government programs for the unemployed are refined, there is a danger that high jobless rates will persist beyond 2010 in advanced economies, the Organization for Economic Cooperation and Development warned on Wednesday."

Naked Capitalism has Financial Reform: Not happening but the need is clear. "Steve Keen, an Australian economist whose theories are heavily influenced by Hyman Minsky, has a cogent analysis of the true structural deficits in the current economic model that I think bears repeating here. He warns that we are trying to kick the can down the road and this will lead to an even larger bust." Don;t let Obama blow smoke up your ass about the reform BS he's preaching. We all know he and the rest of Washington A) bow to the big banks like he does to Arab leaders and B) any chance of real reform in this environment is impossible cause any sort of reform would lead to the immediate collapse due to the the accounting fraud and valuation methods used to sustain this mess.

While we are on reform, the shit may be about to hit the fan. Ron Paul (the man who should be president IMO) is kicking some regulatory ass and working towards getting his HR 1207 bill passed. Zero Hedge brings us Senate Support For "Audit The Fed" At 25 Co-Sponsors. "With HR 1207 passage now guaranteed in the House, it is time to focus attention on the Senate. As of last count, there were 25 co-sponsors for Sen. Bernie Sanders' S 604 Bill: "The Federal Reserve Sunshine Act of 2009."Below is the list of the 25 who have so far voiced with two third of the American people. As of now, there are still 75 who are siding on behalf of Wall Street." you have to ask yourself, just who are the senators that do not support this bill? Do they have your best interest at heart or theirs?

I'll end on a Denninger rant - WARNING: Deflationary Collapse Dead Ahead. "The fact of the matter is that you have been lied to for the last decade about our economic state, and if we do not divert from the road we are on our economy, our monetary system and our government WILL COLLAPSE." I can't agree more.

Look for the Morning Post in the am. This C wave is for real and kicking the bear's asses. The top is coming, it is only a matter of time before something (like regulation, China, Israel, Iraq etc..) steals it away from them. They are buying time now with our future, but sadly the results will not matter. Kind of sad they did not just let it bust in '08.

GL trading.

The End Should Be Near

Updated Daily Indicator Chart. This thing will spew all over its self sooner than later. Look, the manipulators can continue the run up, but from here to China everyone knows that the accounting shenanigans and falsified economic numbers (like reporting unemployment as less than 10% when it is really over 16%) are driving a bullshit rally that will fail eventually. Aren't you tired of this yet? I sure am.

Now, let me clarify this. I'm not calling this as the end of P2 here (yet). Remember I have been begging for a descent correction to reset the lower trendline and then one final pop to the top. IMO a blow off top to take out the upper trendline is unlikely.

Chart viewed better HERE.

Morning Post - It's Wedging (Whatever That Means)

Someone get out the defibrillator. The /ESU9 needs life support. On zero volume in the /ESU9 keeps acting like the little train the could as it climbs the wall of worry to higher highs despite very few investors being present.

Daily SPX chart - Poking a tail thru the upper channel line. Trading (once again) near the upper BB. S Sto possibly about to bear cross or at least topping (embed is possible). RSI still moving up, but not with authority.

60m SPX chart - Topped out again with nice divergences all over the place.

The question, is SPX in a 1 of C or 3 of C or a simple channel topping out the rising wedge of the run? If this is 1 of C we're at some good resistance points. If 3 of C then 1050 to 1089 is the target range. Based on the upper BB and trendlines and the height of the indicators this run is ending or will end very soon. Fibs for the pull back (at this time - I'm tired of raising fibs again) 1031, 1024 and 1016 (at the gap).

/ESU9 - Not sure who's buying it up, but based on volume there are no sellers. It has been obvious that when volume spikes it is sellers coming in. They are out there, but getting them to participate is another thing. The top hot pink trendline is the wedge top line. That SHOULD NOT BE BROKEN! I'm not saying it can't be as it only represents a position near the 50% line of the larger channel. The hot pink wedge is worth about 20 points if it is to crack. The light blue trendlines are a possible new channel that IMO shows the market is possibly rolling over. Look at the open interest line on the LT /ESU9 chart. Mind boggling.

Given the 60m indicators topping (again) and the position of the daily indicators I'd have to say that upside is possible but limited. I'll vote for a flat to down day today and go against the manipulators and HAL 9000.

Note - I received a record number of emails yesterday asking about the top of P2 and is it in. IMO it is not in. If you look at the daily /ES chart below, you can see the larger wedge that is what I hope is the final formation of this rise. When the lower light blue channel line breaks, we can talk about P2 being confirmed, but not till then.

/ESU9 - 15m chart

/ESU9 - 60m chart

/ESU9 - Daily chart (Funny but we're all fretting over that little pink blob in the upper right corner.)

Tuesday, September 15, 2009

Hurricane Katrina - Revisited

Despite the markets actions the economic picture continues to paint a picture that looks like the Cat 5 hurricane is looming off shore. As each approaching band sweeps across the landscape another home is wiped out, another job is lost and all while the undertow slowly erodes what's left of the financial foundation of this country.

Sadly we did not have an early warning system set up for this catastrophe. Apparently all the buoys in the world could not see this storm coming. You see, the transponders had all been turned off allowing this storm to approach quietly, unsuspectingly. We all were punch drunk in the Fed's casino and at 4:35am when they shut down the credit window we were all SOL. We were not ready when the credit levies failed.

Then just as FEMA horribly mismanaged Katrina, the Fed, Treasury and current administration have screwed this recovery up as well. Instead of pulling the people from their flooded houses and getting them safe, they have taken all disaster relief to the TBTF's and left us to wade in the carnage, sewage and filth of crisis.

We have been left for dead while the city and the big businesses get saved first. We're stuck at the Super Dome and can't get out. All the bridges are out. There are no life lines and apparently communication to the government has been cut off. President Nagin (I mean Obama -sorry for that horrible unintentional reference) is more concerned about other things right now than helping the people of the country. The media coverage is focused on everything but the struggling individuals left to survive in more than adverse conditions. Pay no attention to the millions of unemployed swimming in the feces laden pool of debt that the TBTF's were allowed to create.

Recovery will be swift. We will rebuild. We have funds to get you back on your feet. Jobs will be created and all will be restored to normal. Meanwhile report to your local credit councilor and turn in your firearms. We're here to help.

Sadly we got screwed again. Only this time the country is being laid to waste and not just New Orleans. The levies are being rebuilt (bubble re inflation) and they will protect us from all future storms. Really, now? You will be able to return to your homes. Really, now? New Orleans will return to the once great city it once was. Really, now? Residents of New Orleans, your lives will return to normal soon.

Really, now?

Morning Post

OK, I hate head fakes. Can't stand 'em. I thought the breakdown yesterday would be a near term top, but blew it. I also thought the back test of the channel and a strike of the 50% line of the larger channel would have been significant, but it was not either. Stockcharts being down did not help my cause. I did leave myself a few outs on the call as I noted the daily indicators we're not primed for a turn and that we could be in what I think is either a 4 or 5 of C up or on the other hand this could be just the ending of 1 of 3 of C up as well (at this time I prefer the 1 of C ending count). I just hate being wrong. Note: the early August triangle target of 1051 has been met now (see 60m SPX chart).

We might be forming a new channel on the /ES as it might be rolling over. My target range has been entered as 1050 on the SPX was topped. Still roughly a month to go till my top date and some room left to get to 1121.

No stockcharts today as those lame suckers were down all day yesterday. The daily RSI tried to turn yesterday where I thought it would, but turned slightly positive in the afternoon. MACD got a confirming bull cross and the histogram is bulging like some kid watching Megan Fox. S Sto is topping and can embed, but I still do not think it will. ADX buy line has turned south finally. The upper trendline on the SPX chart is being tested again. I hate to say that there is another way to draw the channel, but I am not going there. 60m ADX put in a perfect head fake yesterday. Volume is still disappointing.

I'm of the opinion this is some sort of blow off top to end 3 of C. Up over 6% in the last week on ZERO fundamentals and the surrounding economic environment has to give something back soon. The breakdown of the channel IMO says the market is putting in a near term top. The SPX appears to be possibly wedging with this being a C touch. This can be seen on my 60m SPX chart and the longer term /ES chart below. What I think could possibly happen is one more move to the lower trendline of the /ES channel and one last blow off top in early October. That is my dream scenario.

/ESU9 chart below shows the breakdown and back test of the yellow channel we have been following. What is now in the picture is the dark blue trendline that is the upper trendline of the larger wedge near 1060 (the original GS target for the market top). The sky blue channel is just a thought right now, but shows the potential rollover happening. Maybe I was just a day or so early with my call of a pullback. We'll see.

Fibs below are 1027, 1020 and 1013. Support areas include 1035 to 1025. Lower bb on the 60m is 1035. 1026 is the 50ma on the 60m.

I plan on doing an update on Oil, Gold, UNG and the dollar today in a post for each.

GL trading.

Daily /ESU9 - You can see the larger wedge formation where price is nearing the top blue trendline. What I really want you to look at is the VOLUME.