The bulls looked like they were about to turn the tide on Tuesday until they got slammed down in the last ten minutes of trading. I would expect the negativity of the close to carry over to the morning, just as it has to the futures so far tonight, but the market is tough to call here. Tuesday could have been the beginning of a reversal, or it could have been a consolidation of the downtrend. The XLF looked good, but there is nothing “reversal looking” about the IWM’s candlestick on the daily chart.
Of course, the fate of the market will be decided by the FOMC announcement at 2:15pm. Interpreting this event is very easy: the market wants the Fed to keep pouring freshly-printed dollars upon it. If the Fed pulls back on any of its crazy schemes, or hints that they might do so in the future, then the market will commit suicide. The market knows that it is being inflated; it knows that it is a stuffed shirt.
The Fed’s leak to the Wall Street Journal said that there would be no tightening of any kind. However, it is possible that Bernanke will hint at a tiny tightening in the future, and the market won’t like that. The market has probably plunged this week because the Fed said that it would discuss “exit strategies” at the meeting. So, you can imagine what would happen if an actual exit strategy reared its ugly head.
The fall might have something to do with the Fed’s recent liquidity drain…
Denninger was all over it – it appears that this is something worth watching.
Last Tuesday’s comment:
http://market-ticker.denninger.net/archives/1126-THURSDAY-Watch-Bernanke.html
Follow up comment on Monday:
http://market-ticker.denninger.net/archives/2009/06/22.html
Bernake also has inflation to consider with these low rates. Could be a bubble brewing there?
George. The Keynesians look at CPI. No (significant) rate hike or exit strategy before that turns north. Watch what they do, not what they say.
In the meantime, their focus is on saving the banks.
Enjoy the casino.
Great post Matt.
sold small spx position from 900 for a small profit…now watching shape of this rally
larry..george….they wish they could generate inflation…they cant..if they could gold would be 2000 per oz
Larry,
If you lived here in the U.S., you would
quickly discover that the CPI is one of
the biggest cooked numbers that the
U.S. Govt. puts out. We have had the
fastest gasoline price increase in history
…but the U.S. Govt. tells us that it costs
less to live today. Don’t worry Larry, the
U.S. public will vote the same crooks back
into office.
Have a great day.
Paula
Running into double tops/bottoms some here. Either cautious traders or weak resistance.
Yes, high inflation would solve a lot of problems for the Fed.
matt…yesterdays dollar smash hurt the bull case but did not kill it…even new low in dxy would look like 5 down and lead to a rally…trendless bouncing looks like 4th wave action…wait and watch here too
Phil, let’s see. I’m betting they will succeed. Don’t forget the other countries on this planet. Good trading folks.
george…high inflation of cpi will create a lot of problems for treasury..their debt service costs will soar
AAUK up more than 6% this morning. I got lucky with the buyout offer after buying it on Friday. Sometimes it’s better to be lucky than to be smart;)
Phil,
Dollar is hovering around a crucial point at 79.50. What happens this afternoon will decide what side it will move to. The action this morning, though, should be a tell.
phil,
That’s what I call the proverbial “rock and hard place” for the Fed. and country.
Charlie,
Did you take the SSO 9/36/15 signal? I did and will let the 5min take me out.
Is the rule for Fed-Speak that the market will reverse from the direction before the meeting?
looking to sell 1/2 of gld bought @ lower bb mon at 90.40
george…remember…the fed is not the treasury ..they are private bankers looking out for their own buddies at goldman etc
We’ve just moved above the 50% retrace of Monday’s move on the SPY. I will be adding some puts here. Didn’t add at the 38.2% retrace as I was away.
marty …i wish it were that easy…but once the dollar shakes out in a few days or weeks we will have the answer to many markets.
sold gld @ 91.99
phil:
Yep, those inflation expectations are important. Btw, anyone seen that @#$@^%$# BATMAN!
gld falling 18dsma @ 93..hope to dump rest near that level
nice trade there phill..
BTW.. fill on July 89 PUTS 1.72
hey ….mkb….u been tlt ing?
charlie…thanks
phil:
No, not trading now. I guess I should be quiet then. Does this period feel like the eye of the hurricane to you too?
Phil,
Aiy, you’re right, but it’s decent action from what I can make out–and big selling has not stepped in. On the other hand, the market failed to rally yesterday after Monday’s sell-off. So it’s a draw… Yes, the dollar in the next few days/weeks will play a major role in it all, as it will decide capital flows… Hence TLT…
Having been in two fairly significant hurricanes – Floyd & Fran I actually know what it is like.
But one thing to keep in mind here, folks, is that Asia has been fairly strong. My TSM, and Taiwan in general is quite strong… stronger than I expected…
I’m betting this run-up will lead to a nice sell-off before Fed-Speak. After that, ????.
GS showing a lot of strength. It is stronger than most charts I’ve seen punching through it’s 36 MA on the hourly. Is it a sign of things to come?
Or it could just be that the ECB has been lending record cash to their banking system… I suspect that has had a hand in levitating things as well….
George,
The intermediate term SPX trend is still
up.
Paula
tick warned of rally http://lh4.ggpht.com/_APmrYvpA45s/SkGNanAotPI/AAAAAAAADlk/9HjTN4BMleI/s1600-h/CumTICK%5B2%5D.png
see frances hit my house http://www4.ncsu.edu/~nwsfo/storage/cases/20040908/
Macroman has a theory on the EUR/USD trade–a buy program coming out of the middle-east. The whole post is worth reading, actually:
http://macro-man.blogspot.com/
paula,
Thanks. I imagine it is difficult for the intermediate trend to turn down once it gets momentum.
key to all markets ..outcome not decided yet http://lh3.ggpht.com/_APmrYvpA45s/SkGNbxHeQzI/AAAAAAAADl0/xEse-L3IUgg/s1600-h/UUPDaily%5B2%5D.png
BBT nearing double top on 5&15min.
gold/dollar http://blog.fallondpicks.com/uploaded_images/GOLDJun24-742375.png
George,
In order for the intermediate term SPX
trend to turn down it needed to test
879 and fail. Instead of doing that on
the move down, it made a higher low.
The big question is was the move to
956 a false breakout or not. If it was
we need to focus on the retest of
930.
Have a great day.
Paula
downtrend line from spx 956 peak sits near 912 now
Can’t you all imagine the market churning between 900-1000 for the next few months? I can.
It would pull in a lot of bulls. The question is, what would it do to bears?
marty,
NeoWave says that the 2009 top is in. But
a lot of “experts” are calling for the SPX
to hit 1000. Time will tell who is right.
The Swiss CB is trying to dump the Franc. They couldn’t let ECB and FED race to the bottom without them.
Yerk, what’s going on?
that’s a great observation there Phil!!
I was expecting this rally to peak around 911-912 which happens to also be approx 61.8 fib retrace from the Monday drop.
BTW.. never really understood this, but isn’t the SPX and the SPY supposed to be in synch in terms of % change? Why is the SPY up more than the SPX right now in terms of %? Off as much as 0.2%
charlie…thanks….http://4.bp.blogspot.com/_TwUS3GyHKsQ/Sj_zZdMhGtI/AAAAAAAAA8Q/apzfNow5gfI/s1600-h/dd.png
http://4.bp.blogspot.com/_TwUS3GyHKsQ/Sj_zZdMhGtI/AAAAAAAAA8Q/apzfNow5gfI/s1600-h/dd.png
Paula,
I was shooting from the hip there, so apologies if I implied more than that. It wasn’t a technical call. Still, I can imagine it breaking the top. Lipstick is lipstick, and it’s no accident that it’s a multi-billion dollar market.
if above is the case we are going down hard soon… above 927 voids this smash
Paula,
I don’t trade the market as certainties. I try to imagine what kinds of unlikely scenarios can develop and then create ballpark probabilities. It’s a thought experiment that has served me well. Right now, everyone is calling for a fall. So I think: well, it’s hard for the market to rally that much more, say to 1100, so what if it just churns for a while. The reflation trade is over, but the deflation trade hasn’t won yet. I think people will be betting on both sides. Strong action in the Treasuries yesterday… fyi… There’s no reason that the market can’t stay pretty fuzzy for a long time. Good for short trades, but danger lurks at the slightly larger pivots…
marty,
No apologies needed. Our wave expert has
been wrong for 6 straight weeks.
marty,
A good post.
Thanks. I’m a relative amateur, so coming from you and yours, I’ll graciously accept the complement.
Okay, off to the gym. GLtoA!
marty,
We’re still green, Stay green and grow.
Get ripe and die.
paula,
I like that green thing. In my day, they said “stay warm”.
Larry, funny you’re asking me today. I’m on vacation – and the place does not have internet access although I thought it would… Some days a visit to an internet cafe, but not much time to follow things. Like paula’s post @11:08am. As long as the IT trend is not broken, a new high is a possibility. Clearing above 915 with the higher low would be bullish, not clearing it makes a reversal of the IT trend likely. Bulls are running out of time if they do not act these days.
The newsflow on the surface is getting better (2nd derivatives and bottoming out) but the newsflow underneath is getting worse.
George,
I like the “stay warm.” Have a bet with Mom
on market reaction to FED. Am betting on a
move up. FED will make themselves look good.
Paula
SPY 5min at 36MA support. Or will the selloff continue ahead of the Fed? 2:15pm should bring some volatility.
Looks like the market got stopped at the 61.8 retrace level or around the 911 mark.
I expect the market to pancake until the FOMC mins.
Bob Chapman of Global Research always
makes interesting reading. In his latest
article he claims that U.S. embassies
around the world are being told to sell
dollars and stockpile local currency. Get
ready for a bank holiday late August early
Sept. Bob has been right in the past…but
very hard to believe him this time.
Larry,
We track every penny we spend. It costs us
close to 7% more this year than last. That
number may go up when we get the property
tax bill July 1st.
Cooking economic numbers may give short
term gain, but almost always ends up in
long term pain.
Paula,
I have to go with your mom on that Bernake bet. Your logic is sound about the Fed’s rose-colored speak. It’s the trader logic that may the spoiler (buy the rumor, sell the news; walls of worry and all that).
Where’s K when we need him?
paula…your inflation talk convinced me to sell some 30 yr bonds…. trade resulted in 125% annualized gain….should help paying off some of that inflation lol
phil:
Now that’s a way to mop up some $ now isn’t it! Something tells me you won’t contribute much to CPI.
paula…also if you win the bet with your mom my bonds probably sink ..best to sell first ask questions later…
mkb….i still think there is one more low coming in bonds and one more high in stocks but we will see…plus i didnt want to sell my tlt..i want that dividend lol
Phil,
Congrats on your trade.
paula…thanks….
SPY 15min in another one of those wedgies. Looks more of an upside wedgie though. Paula may pull this one out.
Is anyone watching Bernake?
Market seems to be selling a bit after the announcement.
Spoke too soon.
Market seems just as confused now as it did before the Fed announcement.
HELOOOOOOOOOOOOO I leave market 1 day and you guys can’t hold the bear fort down?
Charlie, LOL
K,
Are you there yet?
Thanks, Bernake… you made my day. Ya gotta luv that guy. Group hug.
Today ain’t over yet until that bell rings. A big rebound here would be nice.
A number of overpriced solars are turning downwards on the hourly as resistance from the 36 MA held. JASO, CSIQ to name a few. Shorting these is high risk, but also high reward…
Market seems to have finally picked a direction…
SPY resting on its 15min 36MA… Humpty-Dumpty or spring board?
BBT gap filled.
charlie…..bullish engulfing candle so far on daily uup….dollar bull…another whipsaw
yup am here. not the destination town but enough for now
that’s better there i helped you all out the past 15 mins i logged on
yes.. kiss and hugs to Big Ben.. such a eloquent guy.. so many nice ways to say that the economy is screwed so we will keep doing everything we are doing to help it recover.
the SPY 89 JULY PUTS I bought earlier are already up over 20%!
Charlie, WOW…. 20%, go, dude.
I got the 87 puts from yesterday… hmm
Thanks for the info Phil.. Dollar bull = bear for stocks right?
Let’s just hope I’m smart enough to cash in if this market begins to reverse upwards.
Charlie:
I think you’ll have time – they’ve got Batman on the run. LOL
Gaps filled.
K,
You may get there with your puts… kinda ‘iffy’ right now.
Correction, SKF gap not filled yet.
George,
Have to wait until EOD…right now Mom
will have enough money to take me out.
it’s ok george,
those glasses of wine are keeping me happy for now
charlie… dollar up ……..everything else down….ie deflationary vortex..
of note …buffett and bernanke both believe deflation is conquered…
charlie….especially interesting is buffet had his head handed to him for not recognizing deflationary vortex phase 1 last year….will he repeat his mistake??