Russell 2000 breadth has tightened into a coil. Take a look at this 60-minute chart that goes back to the beginning of the year (click to enlarge):
A similar triangle to the current one formed in early January, and had a bearish resolution. The market had a sharp drop before recovering enough for a breadth megaphone to form. And the market plunged the very next day after I posted that megaphone chart. Not bad, huh?
The R2K is poised for a big move, and the rest of the market will likely go with it. Since we are short-term overbought by many measures, I would expect a pullback. Monday morning’s gap-up was very close to being an exhaustion gap, and may yet prove to be one. However, the XLF and the IYT did not fall back into their gaps, and their leadership held the market up. But if you see those two gaps being filled, then the odds will move even more in favor of the bears.
Futures Prices
Market Last Change %
Crude Oil 78.78 -1.53 -1.91
Natural Gas 4.872 -0.041 -0.83
Corn 382.75 +11.00 +2.87
Soybeans 969.0 +14.5 +1.50
30yr Bond 116.65625 +0.28125 +0.24
10yr Note 117.187500 0.000000 0.00
NY Gold 1111.5 -1.6 -0.14
NY Silver 16.140 -0.082 -0.50
Emini S&P 1104.25 -3.25 -0.29
Emini Nasdaq 1814.25 -6.75 -0.37
Emini Dow 10347 -27 -0.26
Thanks After.
Seems like every-other day bonds are sold. Soon the interest rates will shoot to the upside as more and more loans are needed to support the budget and deficit. This will raise home interest and other rates needed to stay low to stimulate the economy.
There’s no *one* (administration) to blame: This has been an incremental achievement over the years with reckless fiscal discipline. The social security vault has been squandered. It should be gathering interest, yet it is full of I.O.U.s. Slight-of-hand tricks include: gold standard elimination; no pay-as-you-go or balanced budget requirement; artificial interest rates for home buyers; elimination of bank regulations; the Fed’s propetual interest rate changes (hard to hit a moving target); etc.
The “blame game” has begun. Washington got a couple of its scape goats with the financial crisis and Wall Street. Throw in a few other goats and Washington is off the hook.
A classis example of setting up the public and businesses for failure.
But yea, in the end, the “public” will be blamed for the mishaps and indeed will be required to pay the price.
AFTER……bail out of TLT between 90.20 and 90.40…i would like to get the dividend but will sell when it gets there
after…..TLT 89.90 is wave equality …hopefully wave c up can make it higher but dont get greedy
phil says:
February 22, 2010 at 3:45 pm
GEORGE…i didnt mean it would go down in 10 min….lol….i may rebuy on a break of 1105
GEORGE>>>>>>as above BOUGHT 1/2 position SCHX on break of 1105
I WANT to sell all SCHX on break to NEW HIGHS…or test of TOP
Phil, Gotcha…. something going on right now. Lots of activity.
Consumer confidence at 46, drops to 10-month low. (Source: CNBC-RT).
GEORGE….that first drop was obviously only wave 1 of C down…we are in 3 of c now…..bounce then more down….will add to longs on new lows if it looks like a wave 4 develops……..
GEORGE>>>UPTREND line from feb 5 and 18dsma is @1086….i am looking at that area to add longs
Phil,
Yeah, with this big of a drop, covering will commence anytime now.
Reaction move, not a trending move.
SOLD TLT @ 90.02……no sense being greedy………see 9:22 post
bias up. support 1085-1095.
More pancake action. Need another sizzler.
looks like horizontal consolidation…not covering. i like it. good trading to all.
George, haven’t forgotten about HDD, just been too busy to get it packed up for you. Soon my friend.
BOUGHT more SCHX @ spx 1094…..will add more at 1085
I SEE a completed ABC correction..could be another low coming.. it would all fit perfectly @ 1085
George
It is snowing here in texas again. If it snows 2 inches, and predictions are 1-4 inches, it will be the most snow in recorded Texas weather. Global warming, Hmmmm!
String
STRING….hope you are taking some profits on those bonds
Thanks 2thfixr. I’m glad you’re busy. Keep ya out of trouble.
Stringm,
Snow again? Mercy. That’s the kind of record I wouldn’t want.
Phil,
You’re right on que.
TNX down -1.06. Haven’t seen that in a long time.
STRING…i am buying TBT like crazy here to hedge my bonds
WANT to take partial profits @ 1098
Phil
I don’t have enough to worry about hedging. I might pick up some TBF, but I don’t like the 2 and 3 power inverses. I think the short term down trend has a way to go yet. Maybe a bounce up to test the 36MA on the 60, and give it up again. I am always waiting on the sure thing. It just never comes. LOL
String
SSO trying to set up for a counter.
Stringm,
It’s a sure thing that there is no sure thing.
Phil
OK, I had bought 20 ten year bonds the other day. Partly just to figure out how. I can buy online, but I could not figure out how to get a quote to sell. I broke down and called TD and found out how to do it online. You have to place an oder to get a bid. Once you get a bid you accept or reject it. I made a whopping 100 bucks, so I sold them. I needed the practice.
String
STRING….good work….now you can graduate to more volatile bonds like the 30….more risk but more reward
George
As we talked the other day about the pivotal point, today when SSO breached the 36MA on the 60m, I bought SDS. Now I feel certain that there will be a bounce to back test the 21PMA or the 21PMA on the 60m. It looks good on the daily to just hold, but I don’t want to give up profits. So do I take the sure thing here or let it ride?
String
Phil
I had 5 other 10 years that I bouht in Dec. I was paid interest on. I sold them too just for more practice. Didn’t fare as well on them. The interest covered all the bond loss and I still got some change. How often do coupons pay interest. I have gathered from looking at my statements that they pay in relation to the maturity date. The maturity date on the last 5 was 2/15/2017. I received the interest on 2/16.
String
TOOK PROFITS near 1098
STRING you get interest payments every 6 mos..2/15 and 8/15
Phil
Thanks, I bet Bill Gross wouldn’t sleep tonight if he knew how much I was learning about bonds.
String
If we take out today’s low, then the action since 1112 on the 19th is hard to make into a wave 4 of the C wave because that should have ended on the 5 waves down starting late yesterday into today. Instead, it would favor a bearish motive structure from 1112.
Stringm, I’d take the sure profits. You can allways re-enter.
Matt,
Good call for today’s action.
http://www.businessinsider.com/mass-layoffs-jump-in-january-after-four-straight-months-of-decline-2010-2
The ratings agency Fitch has downgraded Greece’s four biggest banks in just the latest bad news for the troubled country.
Fitch also pointed to a negative outlook for the now BBB rated banks.
As a result of the downgrade, Greece’s debt spread against the 10 year German Bund widened to 333 bps, according to tweets from Zero Hedge.
Thanks George. The Vix chart from Saturday worked well this time also.
George
I sold SDS right before your post. It still is a mental thing if it opens higher in the morning knowing you sold cheaper and you are buying it back. However I still think there will be a chance to sell short SPY again when price is above the 9MA, but the 9MA and the 21MA are going down. If there isn’t I still do have these profits from today, and all this Bond knowledge Phil has imparted!
String
Stringm,
I never, ever, worry about profits left on the table. There’s always another cycle coming; another wave to surf.
You did the right thing with respect to scalping. It would be more harmful letting those profits get away than missing some. You got the meat of the move and that’s what counts.
Good job on your trades!
http://theimpatienttrader.blogspot.com/2010/02/market-analysis-and-possible-scenario.html
a video about the new movie coming out
http://dealbreaker.com/2010/02/shia-labeouf-turned-20000-into.php
The FDIC released the Q4 Quarterly Banking Profile today. The FDIC listed 702 banks with $403 billion in assets as “problem” banks in Q4, up from 552 banks with $346 billion in assets in Q3, and 252 and $159.4 billion in assets in Q4 2008.
Note: Not all problem banks will fail – and not all failures will be from the problem bank list – but this shows the problem is significant and still growing.
The Unofficial Problem Bank List shows 617 problem banks – and will continue to increase as more formal actions (or hints of pending actions) are released.
http://www.calculatedriskblog.com/2010/02/fdic-q4-banking-profile-702-problem.html
Nice problem banking link, thx K
anytime Sam,
I try posting links but life is getting busier!
http://www.ritholtz.com/blog/2010/02/headline-of-the-day-lending-falls-at-epic-pace/
this might be gold!!!!!!!!!!!!!!!!!!!!
http://www.tradersnarrative.com/the-golden-cross-trading-methodology-3656.html
K,
Good links.
Speaking of golden crosses, check out the US Dollar: the 50 DMA crossed up on the 200 MA. More upside to come?
here is the USD with the 250 10 cross
http://stockcharts.com/h-sc/ui?s=uup&p=D&yr=3&mn=0&dy=0&id=p19639305649