Wednesday, May 29, 2013

Morning Charts 05/29/13 SPX /ES

Kinda don't know what to say this morning. It really appears the Fed's wheels are coming off the tracks, but every time that happens they seem to do the impossible, right the cart and run to higher highs. The problems are increasing in intensity and severity, but every challenge is met with some sort of MSM spin, larger check and a new algo to drive the market higher leaving the sane staring blankly thinking WTF just happened - again.

You know you are nearing the end when you start seeing stuff like EU Extends Deficit Deadlines For Most European Countries, Admits Structural Adjustment Failure, Kills AusterityThese people don't like delaying payments, well the ones to them at least. You know they will never run out of money to lend and lending makes the world go round. The problem here is that whom they've lent to will never be able to pay everything back as it is, there is no real viable collateral anymore that has not been pledged 10x over, so they are admitting thru the non-lending proxy that the game is over.

Think about it this way, your neighbor for the last millenia is a good guy. You and him have been allies in war and are good trade partners. He makes good money but has run on tough times, so you lend him some dough. His troubles persist so you lend him more. This goes on and on for several years. His home now backs six or seven loans, he rides a moped cause he had to hock his cars and he needs another shot to keep going, but his payment to you is due. Do you just keep lending to him so he can flip that payment and pay you back with your own money or do you stop lending and let him extend his payments? And there you have the EU in a nutshell.

On this side of the pond one of my fav subjects is coming front and center. The most corrupt of corrupt trades that is one of the biggest banes to this country is finally beginning to fail - student lending. Read Sallie Mae Splits In Two, Will "Firewall" Student Loan Portfolio In Standalone CompanyAh, the old good bank/bad bank scenario. Where would this great nation be without severe accounting gimmicks? They are setting up for the great default folks. It's coming.

On to the markets -

Minis 15m - 50ma is blue and the 200 is white. The white lowest support diagonal is key here. I'll be watching those three things as my keys today. Anything above 54 and she's going up, but a backtest of the 200ma and a break of the lower white diagonal would be deadly. You have to assume the Fed and PPT know this as well.

More to come below.

Have a good day.

GL and GB!

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