Friday, January 18, 2013

Morning Charts 01/18/13 SPX /ES

Well, CNBS finally started the 1500 hype this morning. All is well (reality no longer exists). With The "Big Three" Banks Are Gambling With $860 Billion In Deposits you should feel safer now than ever. I mean, what's the chance of them having your deposits invested in the stock market and losing everything?

Seriously, they have their your best interests being looked out for. They You want to make the most money, right? Put it this way, your friend gives you $860 billion to hold for him and keep it safe. What's the first thing you would do? Of course you would put it all in the stock market. Especially "this" stock market. Geez, where else would you put it, UST's?

Whoaaaa Nellie! Wait a minute, back it up. They are taking your deposits and investing them, right? Well who's making the money? Your interest rates are a like historical lows right? Let's look at Morgan Stanley posts profit on surging equity trading. "Revenue from sales and trading rose 43 percent to nearly $3 billion." And who's money is it that they are trading? And whose profiting and who isn't? Welcome to finance 101 for the 21st century.

Let me clarify one thing on the deposits, whether they are your actual deposits, your deposits fractalized or rehypothecated in London or the Fed's infusion (your future tax dollars at work today) into the banks - any way it is your money they are trading to profit or LOSE. It is any wonder the Fed in conjunction with every regulatory agency and bank and investment house and exchange MUST rig the market? Then, is it any wonder why the SPX is just under 1500 with the economy where it is?

The system is rigged folks. Risk does not exist, only a zero interest rate policy forcing everything into the equity market that has a perpetual backstop guaranteeing it will not fail. And some wonder why I think the VIX is totally busted and should be at zero.

What you do need to worry about is when (not if) the system breaks and they do lose. Levered future tax revenues bet in the market is no way to manage an economic recovery. If this fails (and it will) there will be no out. They will not only have lost all current assets, but those they have pulled forward as well. This will leave an economic and financial crater that can not be paved over. This will be the financial apocalypse.

One to the markets -

Mega-opex today. 1500 is withing sight. Earnings seem to be going far better than could be imagined.

Minis 30m - The pink upper NT channel resistance off the November lows still holding its ground. 1485 remains my Mendoza number. If that gets crossed 1500 will be in the cards and right now about 1535 is as high as I'm willing to look. I'll caution bully, the higher we go, the quicker and harder you will fall. I'm astounded the market is here with the open island gap below all the way down to the 1420 level.

SPX Daily - One word, overthrow. Dig the negative divergences (over a year in certain cases). Double and triples at that. Defying the MACD histogram the way price is just ain't right. The weekly and monthly charts are confirming. The set up here is WORSE than the '99 and '07 tops. I believe this is the last bull trap run of the market recovery off the '08 crash. I don't know where it will end or how high it can go, but I will be calling a top this time.

Have a good weekend.

GL and GB!

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