Friday, December 31, 2010

New Year 2011- Year of the Rabbit

Last Week the S&P 500 Index extended its gains this week closing at SPX 1256.77. This is a new rally closing high and new 2010 closing high. Volume continues to be low and this will be the case next week as well. The SPX is now only 1.5% below technical resistance at 1275.25. Just above is the very important resistance level at SPX 1305.32. This is the closing high from all the way back on August 11, 2008.

This week:

The S&P 500 Index - SPX finished the year with another weekly gain, though a fractional one, and new weekly closing high.

Next week will be the first week in January and watched by many as a forecaster of the coming year.
 I am not of that mind but I still watch with interest how the new year starts.

For many years the start of the new year was marked by strength in small caps. A first week rally often accurately predicted a good year ahead. However as a forecaster for the rest of the year, the first week of January has not been very accurate in recent years.

One concern as we start the new year is the current Elliott Wave count. Since the correction lows were reached back in late June, 2010, the SPX has risen in a very obvious five wave pattern. Typically when such a pattern exists, the fifth wave, which we are in now, ends with a substantial correction.

Wave analysis has its limitations as does any technical analysis that tries to forecast what will happen in the future. For example, we could have a very limited correction and then start an entirely new advance. Or we could keep advancing and in doing so create a different wave pattern.

I do not try to "guess" ahead of time what the market will do, though I do try to look ahead via wave analysis, Fibonacci support and resistance levels, and other technical analysis tools. I have never found a crystal ball that actually worked. But I am watching carefully for signs that the current wave 5 might end with a "tradable" correction.

The SPX remains above its 50-day moving average having successfully tested it twice at the correction lows. The SPX is well above its 200-day moving average. The 50-day moving average is above the 200-day average which is bullish.

The SPX still has room to move higher. The next resistance level is up at 1275.25, and it is a technical one. The next major resistance level is up at SPX 1305.32. This is the market high from back on August 11, 2008. Profit taking is sure to take a toll on stock prices assuming we reach this level in coming weeks.

A close above the 2008 highs would be hugely bullish and point to a resumption of the entire 2009 rally and considerably higher highs. The potential for an entirely new bullish five wave pattern would be quite real.

The SPX 1217.28 level should act as strong support. When it was reached back in November it resulted in a reversal and month long correction.

Monday, December 20, 2010

Market Outlook

Sunday, December 26

Santa never fails to deliver :

Short Trade developed as planned

First Target reached and filled for + 8.5 Pts

Wednesday, December 22nd, 2010

SOLD 1254.50 ESH11 - March '11 E-Mini S&P500 Futures- New Swing Position

Setup, Targets and Stop Loss  as described to subscribers

Total Lunar Eclipse tonight on Winter Solstice -- last time this happened was 465 years ago (1545), coinciding with crop failure in China

Some market observers suggest the market is running of steam even in the face of a virtual barrage of good news. Even the now finalized tax cut bill brought little further upside momentum. The market has now likely priced in an extension of the Bush-( the alcoholic )-Era tax cuts, positive retail sales, higher consumer confidence, and positive factory production data, and of course the Fed’s second round of quantitative easing 'QE2' (with the Fed performing Permanent Open Market Operations (POMOs) virtually every day, sometimes several such transactions in a single session).

Note that this will be an abbreviated trading week. The US stock market will be closed on Friday in observance of Christmas.

 Friday’s Options Expiration was uneventful and, overnight, after being down on a weak Asian showing, the ES rallied strongly to new highs in the European session. With critical support holding last week, the ES is in good shape to resume the rally as emailed to subscribers on Sunday.  The Institutional Key Numbers worked as expected last Friday and today.

 We do have one new warning, however, after review of the Fed’s weekly data release.  92% of the Fed’s $48.5 billion in Treasury purchases over the two week bank reserve period of December 2-15 was put on deposit right back with the Fed to earn interest at 0.25%.  This represents a defensive posture for the banks going into year end, and if this continues (we won’t know until the December 30 release), any correction in equities could quickly become material without the Fed’s money printing floor. 

The Federal Reserve Bank pulled off two separate POMO(permanent open market operations) operations today for a total purchase of $13 - $18 billion worth of U.S. Treasuries. This action by the central bank has helped to inflate the stock markets higher since it was announced by the Federal Reserve Bank Chairman Ben Bernanke on August 27th, 2010. It is rather obvious that the central bank wants to keep the mood very jolly into the Christmas holiday which is on December 25th, 2010. The Fed also has a double POMO operation scheduled for tomorrow. This has been the first time that the Fed has orchestrated back to back double POMO injection days since QE-2 began.

In order for the Federal Reserve Bank's quantitative easing program to work for a while it will require the U.S. consumer to spend money. At this time U.S. consumer spending accounts for 70.0 percent of the gross domestic product(GDP) in the United States. Without the American consumer spending money this inflation rally will be a complete failure. Deflation happens for a reason and it is a real warning that something is fundamentally flawed with the current system. However, instead of letting supply and demand dictate where and how the markets will trade the central banks artificially inflate the markets with low interest rates and the purchasing of Treasury bonds. This causes inflation and a wealth effect. The logic behind this method is once people feel better because they see their 401K's and retirement plans going up they will begin to spend more money and income. The Keynesian system that has been in place for so long can continue to function as it has for so many years.

The one problem with this theory is that every other central bank that has tried this method has been ultimately unsuccessful. Japan has been battling deflation since the late 1980's. In 1989, the Nikkei Index traded near the 40,000 level. Today the Japanese stock market index trades around the 10,000 level. This is nearly two decades of sideways to lower action in the second largest economy. What has saved the Japanese people has been the high savings rate and the low debt load by the Japanese citizens. This is just the opposite of the U.S. consumer who is still loaded with debt and has a very low savings rate. Enjoy the inflation rally while it lasts. Unfortunately nothing lasts forever.

My strategy remains the same as explained to subscribers.
Will resume the Intraday Price Action Reviews with Setups  as soon as more comments are added to the Blog.

Monday, December 13, 2010

Weekly View Assessment of The Trend

Back from some fine Skiing in the mountains.Long position from 1088 is now flat.Thank you to all Subscribers for your emails.

Looking at the markets:

From a technical perspective, we are in as real a bull market as it gets. The S&P 500 made a textbook bounce off of the 50 DMA support and 1,175 support level. We should get a nice run up into the end of the year.

There are some technical concerns. The percentage of NYSE stocks above their 50 DMA is at 69.64% which is below it's 50 DMA and well below percentage seen in the last bullish run. From September 9 until the recent pullback we saw numbers above 70% and usually aboe 80%. On 11/5 it was at 88%. The number of new 52 week highs is only 195 (it was 541 on 11/4). Despite the rally, the number of new lows is expanding and is at levels common during the August bottom. The rally is getting narrower as it goes higher. The Retail Sector ETF is displaying poor performance in the entire sector. This is the time of year for retailers to shine but they can't. If the retailers can't rally and the Financial Sector stops it's rally, then I think that the rally will likely end.
From a strategic and fundamental perspective there are various concerns. There are not enough concerns to outweigh the technical picture but enough to keep me from backing up the truck and contiune the long Bias. You have probably heard the endless bearish arguments on TV and the Internet so I won't re-hash it all in detail here.
One recent and popular argument is that the retail investor may be returning to the market and they will bring hundreds of billions of dollars with them. This could be the case but it is a slow process that is not important to us as traders. Last month retail investors removed only 500 million from mutual funds, the lowest in years.
Prior months saw removals of 15 billion and up from these funds. If removal of 15+ billion every month for a couple of years couldn't stop the biggest rally in history then I would count them out as a major factor, and at +/- 1 billion their impact is insignificant.

What I want to see in a rally is an expansion of the stocks making new highs, more stocks over their 50 DMA, and growing interest in stocks that will do better in the future but are not doing so well now.

On Tuesday we get the November retail sales report and consensus is at a gain of .7%. If we get a good number then the rally should be safe. Industrial Production is on Wednesday but expectations are low and it could be considered old news so that shouldn't be a problem.

If any correction is going to take palce it will probably be before FED Day.

Monday morning trading began on a positive note as investors learned that China had refrained on the weekend from raising its benchmark interest rate to stem inflation. This inaction in regards to Chinese monetary policy sparked a rise on many Asian markets, and the US equity market followed suit early on.

No economic reports were scheduled for release today. Tomorrow, however, should see a flurry of activity: The US Senate is expected to vote on the (extension of the Bush the alcoholic) tax cuts; the US government will release PPI, core PPI, retail sales, retail sales ex-auto, and business inventories data; the Federal Reserve will make its latest decision on interest rates.

The US dollar was weak all day today. The passage of the tax cuts would accelerate US deficits even more and could lead to the US credit rating (currently AAA) being placed on negative outlook in the future.But of course the Republicans never discloused to the public this critical risk, because all they care is to satisfy their rich contituents.  While euro zone debt problems could boost the dollar against the euro, the US deficit issues could put pressure on the greenback.

With the holidays approaching, overall volume output is dwindling. Less than one billion shares were traded on the NYSE today.

Thursday, November 25, 2010

Thanksgivings Reflections and Observations

Hedge Fund Turkeys Stuffed with Search Warrants

Thanksgiving weekend started off with a Bang — and a bust — for the hedge funds, about a day after rumors began circulating that a major insider trading investigation was going to blow wide open.

Talk about a case of the Mondays. Reuters reports: “At about 10 a.m., FBI agents, including one in a sweatshirt, entered Diamondback offices and shouted into the trading room. They ordered about 60 employees to halt work immediately and herded them into a conference room for about one hour, according to one employee at the firm.”

This is all part of an ongoing investigation, and no one has admitted any wrongdoing, as expected.

But other reliable sources reports that Diamondback’s returns at times have been prenaturally and questionable too good — almost three times better than its peers’ returns.

Diamondback gained a whopping 73 percent from mid-2005 through July this year, compared with 22 percent for funds with a similar trading approach, as tracked by Chicago-based Hedge Fund Research Inc. The fund beat so-called multistrategy funds in 2006, 2007 and 2008, when it skirted losses from the credit crisis. It has lagged behind the strategy average since then.

What else is new . Risk Seeking greediness cheeting continues in Wall St.The US general public knows this is going on and will go on as long as there is greed in Wall St. This is one of the main reasons for retail investors not participating in the markets. It will continue to be a traders market only so take your money averyday and run. Buy and Hold does not work and the rich greedy cheeters manipulating the Equity Markets will continue.

  Have a safe and funfilled Thanksgiving holiday

Turkey Weekend- Wed Nov24 - Durable Goods Day - Review

Thursday Nov25 Update :

Long from 1188.25 . First Target reached at 1200.25 for  + 12pts Profits
second target never reached its destination. Out Flat at 1195.25 for another
Total GAIN : + 19 PTS Profits. Not bad for a Holiday Trade.
Targets emailed to subscribers upon request. Some of them did not trade during the Holiday

Big Picture Analysis:  The bears’ window of opportunity was shrinking today, as seasonality favored the bulls again this Wed afternoon, and especially so on Friday. 

Despite the barrage of negative headlines, last week’s lows in the ES held, and traders have bid up equity futures on a favorable Jobless Claims report this morning (despite a below consensus Durable Goods report).  That report was ignored due to the GDP revisions, as expected.

A close above 1188.00 today allows continuation that builds momentum into next week.  A close below 1177.25  would have left the window open for the bears.  With international headlines in the forefront, it’s also important to recall last year’s Dubai 30 point shakeout.  Only a close below 1157.00 would have casted serious doubt about the bulls regaining the upper hand. Bulls won this one again.

New Swing Position Initiated Intraday:  Long 1188.25

Trade SETUP :
TTT Buy Day
RSI ( 2 ) Buy Day # 3 at the Close, but intraday Long Entry
with much better fill and less risk. 80% positive and proven expectancy
of trade success. See previous posted trades.
VIX Count : Friday  Nov 13 , Number 13 Down ( bullish )
Equities reaction to Dollar Index

Other Clues as delivered by email to Subscribers. Thank you for
your comments.

Sunday, November 21, 2010

Options Exp. Friday Nov 19-Price Action Review

Yesterday,Thursday -the ES pushed above 1194 resistance on the Phili Fed report that surprised to the upside, but the market could not quite crack the 1200 level, including overnight. The move down shortly after Bernanke’s QE2 support speech at 5:15 am this morning was on news that China raised its bank reserve ratio.

The timing suggests it intends to counteract QE2 contagion with such offsetting sterilization efforts. It will be important to monitor its effect on risk markets going forward. On the Ireland front, no major developments overnight. The 1202 remains critical resistance for the Bears to defend, and they have seasonality on their side for a few more days.There is a Low Volume Gap from from 1187.50 to 1182 that will probably be filled before this market heads north to new highs. It may go lower than 1181 but it will find a lot of buyers waiting between 1180 and  1176.25.

It was a day of consolidation both overnight and during the RTH. A day where the 1201 Res area was not tested although the sup at 1193 was erased. This is somewhat bearish, therefore will  monitor 1201 as the Bulls should take that out early next week ( probably during Sunday Globex Session) if they are for real. Otherwise looking for a test of 1192.50 again and then a test of 1188 and 1182. If 1201 is penetrated the next one is 1206.

The typical pattern on options expiration day, is for a down move in the first hour with some continued weakness into the early afternoon, followed by a rally in the final hour. This does not happen every single opex day, but it’s important to take note of strong tendencies.There is another more reliable tendency for a down day after Options Exp. sometimes withing two days.

Thursday, November 18, 2010

Swing Trade from last Thursday-Final Update

Long Swing Position in the E-Mini S&P500 Futures contract , ESZ10 - December:

Final Target 1199 Peak reached ( that's me in the summit, arms extented, ready to jump ) LOL

Profits for the final target :
 + 127.25Pts or $ 6,362.50 per futures contract.
Thank you for the subscribers emails received, hope you are enjoying the profits well.
Those followers and non-subscribers , you are missing a lot.

Wednesday, November 17, 2010

Long Swing Position Update

Thursday Nov 18 Update:
Globex Pre-Open,
Third Target Reached at 1191.50
for a GAIN of  + 120 Pts

Wed Nov 17 after the close ( Globex ) Update:

Long Swing Position Second Target Hit ,
Gain :  + 114.50 Pts or $ 5,725 per futures contract
Breakout from today's NR7 and Inside Day
Today was a TTT Buy Day

Recap : Long ESZ10 at 1071.50 ( Institutional Number and Key Level )
Trade Setup : Tuesday Nov 16 RSI ( 2 ) Reading of  2
As explained on this Blog, this setup had more than 80% expectancy of success.

Concern over Communist Chinese inflation and interest rates has been roiling the commodity markets. Communist China imposed price controls on some commodities and there is talk that they will raise rates on Friday.  Europe continues to wrestle with some recalcitrant partners about the Irish situation. Talks are beginning in Dublin involving the EU and IMF; there is also talk that the UK may get involved.  CPI was soft and smells of deflation.  The core CPI rose at an annualized 0.6% rate.  Housing starts were also weak; multi family construction has collapsed in the past months.  The weekly crude inventory report was out at 9:30 AM CT. 

Yesterday, the bears made their presence known and have likely regained control for at least a week.  From a seasonality standpoint, we look to the November seasonality map from MarketSci, which suggests bears have the advantage until Monday.  We would also add there is bearish seasonality from the 2/5/7s Treasury auctions through 1:00 pm on Wednesday. 

Note, however, the strong bullish seasonality for the days just before and after US Thanksgiving, which could allow for a strong push Wednesday afternoon and Friday when most traders are absent (also recall last year’s Dubai debt shakeout).  Trading during options expiration weeks, such as the current week, typically favor mean reversion as opposed to trending (though, the exceptions tend to be extreme).

Accordingly, we will be on alert for a potential reversal rally today or tomorrow, with the maximum upside target of 1194 (around the 20 day MA and a 50% retracement).  Bulls need to reclaim 1194.50 to have a shot at new highs.  The markets are at an important juncture with respect to long term implications, and I see three potential scenarios unfolding: Available to Subscribers Only.

Tuesday-Nov-16 :Highest Volume Bearish Wide Range Day

Another High Volume Wide Range Down Day.
The Communist Chinese keep driving this Market down and the USA keeps kissing their asses while they play games with their currency manipulation.

The bulls missed their opportunity yesterday to take equities higher, and it looks like the bears took control overnight on more rumors of Communist Chinese monetary tightening and sovereign debt problems in Ireland.

These stories are nothing new, but it's important to take note when traders change their reaction to events, as is happening now. My long term bullish bias has not changed, but short term I am playing the swings and potentially intermediate term, to be determined by today's price action. Only a close over 1191.00 would change this and suggest the bulls regained short term control.

Monday, November 15, 2010

Swing Position Reached its Target before the Market collapsed

Another great trade executed and exited on time

Recap : Long @ 1092 Friday , Jan 12

Final Exit Target : 1202.50
Total points GAIN : 
110.50 Pts or $ 5,525.00 USD

Looks like 1202 Key Level did NOT Hold and the Wide Range/ Higer Volume  Theory worked as expected.

  The drop from 1224.75 will end soon. I am expecting a final swing low in the 1170-75 range

Once this low is in place a move to 1250 should start. The March 2008 low was 1253 and it occurred on the Bear Stearns failure. This combination marks that level as strong resistance above the market.

Last Friday traders wondered what happened to the Fed’s first attempt at hyper-rigging the stock market via QE2. Shockingly, despite the Fed’s massive cash infusion to the banksters, the market fell. Was this a situation where the market rallied before the actual act of outright monetization then fell when it began: buy the rumor, sell the fact?

That could very well be a portion of the reason why the market fell Friday; however, another reason is surely the increased bond spreads of indebted European nations. Next up in the EU to implode: Ireland.

Shares in Ireland's banks hit record lows and national borrowing costs reached new euro-era highs Monday as the government presented its latest plans for financial survival to the European Union's economic commissioner, who has the power to order changes.

The interest rates charged on the treasuries of Ireland, as well as fellow indebted euro-zone members Portugal and Spain, have been rising ever since German Chancellor Angela Merkel last month said she expected any future EU bailouts to come with new rules requiring bondholders to absorb some losses.

But Ireland is experiencing by far the greatest skepticism from would-be lenders, who look with horror at Ireland's projected deficit of 32 percent of GDP, a modern European record.

Bank of Ireland and Allied Irish have received billions in state aid to cover their dud loans to bankrupt construction tycoons, while Irish Life & Permanent has received no bailout help but is most exposed to Ireland's depressed market for residential property.

Traders said a widely read article in the Irish Times by University College Dublin economics Professor Morgan Kelly - known in Ireland as "Dr. Doom" because of his accurate forecasts of the death of the Celtic Tiger economy - added to the gloom.

Kelly forecast that state support for banks would cost taxpayers an extra euro30 billion beyond the euro45 billion to euro50 billion declared last month by Lenihan. He accused the government of maintaining "a dreary and mendacious charade" on the true scale of property-based losses in the pipeline.

Kelly called the current deficit-fighting push "an exercise in futility" and rated Ireland's financial fate alongside that of the Titanic. He said there was no point trying to cut billions from the budget "when the iceberg of bank losses is going to sink us anyway."

"We are no longer a sovereign nation in any meaningful sense of that term. From here on, for better or worse, we can only rely on the kindness of strangers," Kelly concluded.

As the traditional owners of Irish treasuries - chiefly banks in Britain, Germany, the United States and France - seek to dump them because of their falling value and increased perceived risk, new sellers can be attracted only by offering higher yields.

Traders say the main buyer of Irish bonds in recent weeks has been the European Central Bank.

I highlighted the portion of the article where Angela Merkel says bondholders should absorb “some” of the losses. Oh, how very nice of her! So the taxpayer in Ireland who does not deserve to get screwed, will get screwed, but to a lesser extent. Again, how very nice of her.

Who are the bondholders? They are the very people who created the mess: fraudulent banksters. And they should eat the ENTIRE loss.

A Few Trade Setups using this as Confirmation

This can be used as a reference Map but does NOT replace actual price action only as a confirmation of were the market might be heading next.

Notice how the price action today reacted to the Line In the Sand.

Saturday, November 13, 2010

A Perspective on Wide Range Days

Swing Trade Update - Monday Nov 15 ( my birth date )
Long from 1092 initiated on Friday Nov 12
Current price : 1201.50
Open Profits : + 109.50 Pts

RSI ( 2 ) Reading :  7
Prices above the 200 MA ( RSI Requirement )
Long Term Bullish Trend Line tested
Other Clues as emailed to Subscribers and qualified Followers.

James need your opinion on the last twenty posts. Thanks. Hope your doing great in Singapore.

Looks like the Range Theory goes out the window.The Market likes to prove that we are wrong sometimes, LOL

Swing position is doing great. RSI ( 2 ) Setup worked as a champ !. Current profits are now
 + 113.75 Pts.

The simple definition of a "distribution day" is a down day on higher volume than the previous day. Many investors pay attention to these days because when a number of them occur over a short period of time, it flashes a potential warning sign of a near-term top in the market.

To expand on that subject the distribution day must meet additional parameters:

1. It must be the Widest Range Day of the last 5 days
2. It must close near the Low of the Day
3. There must be an increase in Volume compared to the previous day.

Looking at the last four months, there was only three days that meet the criteria and they were all followed by lower prices.Therefore it is reasonable to assume that Friday sesssion will be followed by lower prices and will be a great opportunity to go Long.Must likely it will occur during the Sunday Globex session.

Friday Nov-12-Wide Range Bearish Day-Review

The simple definition of a "distribution day" is a down day on higher volume than the previous day. Some investors pay attention to these days because when a number of them occur over a short period of time, it flashes a potential warning sign of a near-term top in the market.
The Volume on the ES was 55% less than the previous Inside Day and is the highest volume of the last TEN Days. To keep it in proper good logical perspective, it is 16% more than Tue Nov 09  an Outside Bearish Day and 15% more than Wed Nov 03 FED Day, a very bullish Day.
Will do more research on that subject.

Friday, November 12, 2010

Swing Trade from last Friday-Update

Final target reached and filled during Globex overnight Session. The G20 was the Clue and the Catalyst for a reaction of the S&P500

Recap : SHORT from 1222.50 and 1224.50 initiated on Friday Nov 05.
Final target filled at 1193.25 ( 1193- S 2 ) for a total of + 31.25 pts. ES LIVE TRADE HOME RUN !

Premarket movers

Renewed fears out of China that Beijing could be closing in on further interest-rate hikes were pressuring U.S. stock futures.
Global markets

Stocks in Shanghai plunged 5.2%, leading a regional selloff, as investors in China rushed to lock in profits ahead of potential monetary-tightening measures from the government. The reaction reverberated in Europe, with markets in the region moving lower.

For those that have been following this Blog. There is a low risk buying opportunity today in the 1092 to 1093 zone. This is a multi year back tested RSI ( 2 ) winning trade with more than 80% expectancy of success. 1093 is Floor S2 and 1091.50 is the Key Institutional Level. The Confluence with the Daily 20 EMA at  1191.50 makes it an ideal Long Entry with the Daily Trend.

New Swing Position Today Friday Nov 12
Long ESZ10 - E-Mini S&P 500 @ 1192 ( Avg Price ) on Multiple Contracts

As the BULLSHIT G20 Meeting gets underway and the President of the great USA is
defending the Fed's actions in the G20 meeting, while the Fed makes allies with the millionares Republican congressmen behind his back and they become more powerfull enemies of the great President.

Thursday, November 11, 2010

Veterans Day Review

Today's Volume in the E-Mini ES was 28% less than yesterday.
At this time in the Globex Session price action is testing the Prev Low as the Dollar Index is breaking out above Previous High. SHORT Swing position is working as planned.

Yesterday's Overview:

It was a day of reversals. The market started weak, but gained considerable ground which allowed it to close green. However, after the bell, Cisco came out with a poor earnings report which fell well short of Wall Street's projected sales and profit targets, taking Cisco stock some 12% lower in after-hours trading (and pressuring futures readings as well). Acting as a technology sector bellwether, this poor report by the sixth-largest US technology company (by its market value) weighed on the market today.
Adding to yesterday's positive mood were some encouraging economic data releases. Initial jobless claims for the week ending November 6 were down 24,000 week-over-week, coming in at a total of 435,000 new claims (consensus estimate: 450,000 initial claims). A downward push was also seen for continuing claims: these came in at 4.30 million (prior reading: 4.39 million continuing claims).

September's US trade deficit totaled $44 billion (consensus estimate: a $44.8 billion deficit; August's reading: $46.5 billion). October's Treasury budget showed a deficit of $140.4 billion (consensus estimate; a deficit of $140 billion).

Markets were looking ahead to the G20 meeting on today and Friday to be held in South Korea. The announcement of the US Federal Reserve's second quantitative easing program has resulted in significant international criticism from China, Germany, as well as other countries. As discussed some of the fears yesterday. One major concern is the foreign exchange market, with countries fearing the US is deliberately attempting to push the US dollar lower to aid the export sector. It is anticipated that QE2 will be a major, contentious topic of discussion at the upcoming meeting.

Tuesday, November 9, 2010

Swing Trade from last Friday-Update

Short from 1222.50 Friday Nov 05 and from 1224.50 today.Now in profits : + 16.5 Pts and + 18.5 Pts.
Targets as specified and according to price action.

Wed, Nov 10 Update :
So far, the scenario laid out in my Blog Post from Sunday  is playing out pretty well
First target reached at 1202 for + 22.50Pts of Real Live Trade Profits ALL ENTRIES AND EXITS POSTED LIVE ON THE STOCKTWITS FEED

Trade Setup Today :

 Intraday 5min Bearish Engulfing Pin Bar at Key Resistance Level on Lower Volume
 US Dollar breakout above Prev High and UPCross of Prev Close at 11:10am est
 Breakdown below Key Institutional Level : 1218.50  on the Third Hour ( as submitted to Investor Group )
  Weak Internals : Financials and the Four Horseman
  MACD Bearish Divergence
  RSI ( 2 ) Reading : 100- Two Consec. Days
  Key Reversal Dates Window
  TTT -Sell Short Day : worked like a champ !
Today : Bearish Outside Day and Closed below Friday's Low as expected in Trade Plan
Will Update on this Post. Stay Tune.

Sunday, November 7, 2010

NFPayrolls Report Day -Friday Nov-05- Setups Review

The warm days of scuba diving in the tropical seas are over. Is time to head for the Snow Mountains for some skiing.

The broad market consolidated its strong gains after yesterday’s ( Thursday ) moon shot. A last minute buying spree ( Short Covering Squezze ) just lifted the Dow, which had traded much of the day in the red, to a sixth consecutive gain. The Nasdaq 100 slipped slightly. Meanwhile, the S&P 500 outperformed, gaining nearly 0.4% on a second consecutive day with relatively heavy volume (of 4.68 billion shares). The S&P 500 has now closed above its April 2010 peak; it is the last of the major indexes to do so. The volume on the E-Mini S&P was 8% less than the previous day.

Initial further upside could be limited and give way to a consolidation / modest retracement over the short-term. Broad Markets were mixed to risk adverse during the overnight session.

Similar to yesterday’s market action, today’s trading produced another surplus of proprietary bearish signature clues.  I think this could further limit upside potential in the market over the short term. I see more of a flattening out of the current rally and think that there would be only limited further upside, followed soon by a modest pullback.

Many of the US indexes struggled today, with the exception of the S&P 500. Once again, this lack of progress was attributed to the US dollar which was up today, adding 0.9%. The dollar gained on the news that the US non-farm payrolls report for October brought some unexpected strength. Nonfarm payrolls were up by 151,000 while 159,000 private payrolls were added last month (consensus estimates: an increase of 60,000 in each category). However, the unemployment rate remained at 9.6% and the labor market participation rate continued to dwindle (as more and more job seekers give up the search for employment).

The financial sector clearly outperformed today, up 2.1%. Bank stocks did well amid speculation that some of the funds from the Fed’s quantitative easing exercise could soon enable banks to raise their dividends and repurchase shares.

Among other economic data releases, September pending home sales were off 1.8% on a month-over-month comparison (consensus estimate: an increase of 2.5%). September consumer credit came in with a gain of $2.1 billion in September (consensus estimate: a decline in credit of $3.3).

The Fed’s move to a second round of quantitative easing may have boosted the market over the past two days, but it also has its critics, notably on the international stage with policy makers in emerging markets sharply criticizing the move as it could spark a wave of protectionisms and currency tensions. Germany’s Chancellor Angela Merkel has also voiced concerns. Finally, some market commentators point out that if there were a sudden resurgence in economic growth, the Fed’s QE2 program would likely become unnecessary. Good economic news would thus contribute to a potential sell-down in US equities, as the market might fear a withdrawal of stimulus money. The fact that today’s relatively positive jobs numbers did not lead to a greater market rally may be a signal of this issue, one commentator suggested.

Sunday, Globex Session UPDate :
As submitted to Investor Group:
SHORT Swing position from Friday at 1222.50 now in profit + 5.25 pts
Expecting a breakdown of Prev Low
Trade Setup :
60min - MACD Bearish Divergence
RSI ( 2 ) Reading : 100 two cons. days
VIX Count
Other clues as submitted

Saturday, November 6, 2010

The Higher it goes the stronger it will FALL

The Illusion of Wealth Continues in America

For all of those who denied the existence of a Plunge Protection Team (PPT) creating the Illusion of Wealth in WALL ST.

 It's here. It's real. And it's happening today!

Yes sir, who needs the so-called smoke-filled back rooms of PPT deals when you have the Federal Reserve Board? Who needs to continue the so-called myth of the PPT when the past TWO Chairmen of the Fed openly admit that they are rigging the so-called "free markets" of equities, bonds, and commodities.

Wikipedia says of the PPT..."Plunge Protection Team" was originally the headline for an article in The Washington Post on February 23, 1997, and has since become a colloquial term used by some mainstream publications to refer to the Working Group. Initially, the term was used to express the opinion that the Working Group was being used to prop up the markets during downturns.

Of course, all "right thinking" Americans thought that the very idea of a PPT rigging the market was flat-out unamerican and would therefore never...ever..happen. Ever! Yeah, right!

Let's cut the bullshit shall we? The Fed is rigging the market today, BIG TIME !; there is no doubt about it. There is no need for a PPT run by a president's council when the bankster's mega-banker...the Federal the real version of the PPT. They surely call it another name, but who cares; let's just call it Quantitative Easing for now.

The prior Chairman, The Greenspan-Put, confirmed in late July on Meet the Press what everyone knows: namely that the primary goal of the Fed is to encourage higher stock prices: "If the stock market continues higher it will do more to stimulate the economy than any other measure we have discussed here."

Riiiight... ! the Fed is agnostic on whether the market is affected by its measures...riiiight !. Is that still true even when the CHAIRMAN says that the best thing it can do is stimulate the economy via the STOCK MARKET?

But it doesn't end there. Helicopter-Benron-Backstop Bernanke agrees with The Greenspan-Put: the only thing that matters are the equity markets. These Monetary Duo do not give a damn about your inflation, your deflation, your unemployment ( same as Wall St. ); they only care whether the banksters are happy or not.

That statement above by EZ-Al was made three months ago; however, about three days ago the new Chairman (Bernanke) said - "And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion."

The Fed’s move to a second round of quantitative easing may have boosted the market over the past two days, but it also has its critics, notably on the international stage with policy makers in emerging markets sharply criticizing the move as it could spark a wave of protectionisms and currency tensions. Germany’s Chancellor Angela Merkel has also voiced concerns.

Therefore, Logic and Common Sense ( Let's cut the BULLSHIT ) :

* The stock market is not rising because of good fundamentals. THE STOCK MARKET IS RISING BECAUSE OF THE FOMC.

* The commodity markets are not exploding because of a sudden increase in demand by itself. THE COMMODITY MARKETS ARE RISING ACROSS THE GLOBE THANKS TO THE FOMC.

* The US dollar is not collapsing by itself. THE US CURRENCY IS COLLAPSING BECAUSE OF THE FOMC.

* Gold and Silver are not skyrocketing for no reason. GOLD & SILVER ARE RISING BECAUSE OF THE OUTRIGHT MANIPULATION BY THE FOMC.

* The ENTIRE GLOBE is engaged in active currency debasement for one reason only: THE UNITED STATES FEDERAL RESERVE BANK

Please read :

It is stunning that so many people (at all levels) in this country believe that high consumption levels are paramount to a sustainable economy. The problem with this system is that even now when we are in a weak economy, which was essentially caused by our over-consumption of foreign goods and a lack of domestic investment (ie savings, production, etc.), so many are advocating policies that would only revert the country back to the old system.

Without production and investment an economy will be unable to sustain itself. In the United States, consumption accounts for 70 percent of GDP. Of this 70 percent, over half is spent on services. The U.S. spends 22 percent of consumption on real estate (a dead market) and health care (a high-cost market with low direct economic benefit). Approximately Two thirds of federal expenditures (8 percent of GDP) is spent on the defense budget; total government expenditures make up 20 percent of GDP, with state and local governments spending 12 percent. Bringing up the rear at 16 percent of GDP is private savings and investment. Just to get the ball rolling, let’s throw in the U.S. trade deficit, which reached $816 billion in 2008 (it decreased in 2009 because of the global recession) and is on pace to hit similar levels in 2010.

These numbers paint a bleak picture. As members in a service-based economy the majority of Americans are unable to produce real wealth. American jobs essentially consist of selling and transitioning the sale of foreign goods. The same companies that pay our wages are generating the profits from our consumption. Generally, this is a perfectly acceptable system and exactly the kind of system that sparked such huge growth in America’s golden era. However, the companies paying our wages now are for the most part foreign-owned or internationally financed. Essentially, what Americans are doing is passing around money that is financed and controlled by foreigners, and then using that money to buy more foreign goods. What little wealth that is created from a service economy is sent right back into the hands of foreigners.

Thursday, November 4, 2010

Day Before the N.F. Payrolls Report - Review

After an initial dip on the FOMC announcement yesterday, ES futures closed higher and, overnight, rallied through strong resistance and the Key Institutional Level, thus invalidating the Reversal Date. 
The markets responded to the Fed’s more than tripling of Treasury purchases, which will now funnel about $25 billion per week through the primary dealers and into the markets (after having been levered) beginning late next week, and continuing at least through June 2011.  This is enough to be inflationary throughout the economy and, while we were on alert for a sell-the-news reaction over the last week, it clearly did not materialize. 

Not surprisingly, the US Dollar is down, and Treasury futures were up, though 30 Year T-Bonds are noticeably lagging.  This is purely because of the preference of Fed purchases, which will concentrate in the 2-10 year tenors.  Inflation concerns will keep the 30 year yields (and mortgage rates) relatively higher, and will eventually impact the 10 Year similarly.  While 10 Year T-Notes should rally initially, a dip in the yield (inverse to price) below 2.0% (and corresponding overshoot of the December 2008 lows) would be a long term short signal in the futures. 

Going forward, the most serious impediment to the risk markets will be regarding the currency in which they are denominated.  For instance, US equities will sell off when other central banks announce programs to counter US Dollar debasement, or if the Fed starts attempting to sterilize its purchases.  There will be some violent shakeouts, but until this happens, we will be in a buy the dips environment.  Enjoy the ride while it lasts. The Claims Report was ignored as expected, thus giving more clear evidence that Wall Street never cares about the poor unemployed in Main Street.

Wednesday, November 3, 2010

FED Day Review

Thursday-Nov-04 UPDate
Last night the Asian markets gave the Fed’s QE2 plan a vote of confidence as stocks rallied and the Dollar slumped to new lows. In Europe, October Services PMI came in a bit better than expected. This added to the pressure on the USD, which in turn is adding to the tailwinds for equities and commodity prices. Round two of QE is bigger than traders were looking for. This should prove to be bullish for commodity prices. It may NOT help economic growth and it raises the odds of inflation down the road and less margins for domestic sales, which are in weak already, except for the Rich, they don't feel anything. This morning US weekly jobless claims were higher than expected, but within the recent range. Tomorrow morning we get the October employment situation report. Traders are raising the bar to estimate a rise of 60K in payrolls after a drop of 95K in September, this will give them an excuse to Sell after all this Election BULLSHIT . Next week has the quarterly refunding auctions and Veteran’s day ( poor people , they won't have a job waiting for them, thanks to the fuckups Republicans ) on Thursday.

Dec. S&P: 1208.00 is the 2010 high basis ESZ; that’s the pivot point for this morning. It looks like tomorrow will have the Sell Short day signal.
Yesterday's election results mean that they won't be getting much help from fiscal policy

The Fed will add another $600 billion to its $1.7 trillion in direct purchases so far this recovery cycle, a little more than expected yet not enough to fire up much enthusiasm. The new purchases will extend through the second quarter next year and if the jobs market doesn't pick up by then, QE3 can be expected given the Fed's promise to monitor progress and adjust the program as needed. The underlying question is whether lower rates will significantly stimulate borrowing and investment. It will probably not because of the weak Real Estate Market will continue and the odvious lack of Fiscal Stimulus that will occur after this elections.

The Dow rose 0.2 percent to 11,215 in mild reaction to the results while the dollar index fell 0.3 percent to 77.07.

Fed purchases will be centered in the middle of the yield curve, not the longer end as many had expected making for slightly lower rates on the short to middle part of the curve and a 12 basis point jump in the 30-year yield to 4.05 percent. Oil rose $1 to $85 while gold slipped slightly to just under $1,350.

Tuesday, November 2, 2010

Election Night Trade Target Reached

Long from 1182.25 - 9:31 PM Sunday Oct 31st . Final Target reached at 1196.25. If you were paying attention to Twitter , your profits: +14 pts

Let's ALL Toast to the great comeback of the BUSH years all over AGAIN, Hurraaay ! More Tax Cuts for the Rich stockholders and their Corporations so that they can continue to export US jobs overseas. Same old bullshit.What is good for WALL Street does not have to be for the Unemployed. Very smart America !

Today's Election Day rally was catalyzed primarily by US dollar weakness, market observers suggest. The greenback relinquished 0.7% today in face of a strengthening euro which gained ground following strong eurozone manufacturing data. Giving further impetus for equity market traders to take their cues from US dollar swings was the fact that there were no US economic data releases scheduled for today.

Apart from bringing clarity in regards to the election results, tomorrow will also bring a very crucial Fed meeting which is widely thought to result in further quantitative easing, as discussed here several times over the past few weeks. At this point, the market has likely priced in that QE2 will happen; the discussion are to what extent the market has already priced in a given size / scope of QE2, a minimum of $500 billion according to some economists. The market may further have priced in that Democrats will lose the House; in fact, prediction service Intrade suggests a 95% probability of this occurring. While some observers suggest a political change in Washington will bring fundamental improvements ( very doubfull due to the bad performance of the last Republican Congress ), others suggest the anticipatory rally seen since early September is / was nothing more than a liquidity event manipulated and generated by the Fed for the benefit of the Banksters.

Today's anemic overall volume output reflected uncertainty. Less than a billion shares were traded on the NYSE today. It is apparent that many traders / investors would like to see the outcome of both the elections and the Fed meeting before placing bets. Looking a little further ahead, on Friday, the US government is scheduled to release its monthly jobs report data ( not really important to Wall Street ), another crucial piece of the evolving economic puzzle.

Sunday, October 31, 2010

Anatomy of a BAD Sloppy Trade

This is very common illustration of what is going on on the Web these days.

This particular " Day Trading Educator " shows an example of his entry skills and crearly it does NOT measure up to high standards or good trading.

Not going to mention the name of the site but it is odvious that the poor trading skills does NOT justify the subscription price.

And please, don't come back to tell me that his was not the final target, IT DOESN'T MATTER , it is still a BAD , SLOPPY ENTRY ! NO precision whatsoever.

This critique- evaluation is done in good faith for those that are new to the day trading phenomenon.

Sunday, October 31st Halloween Trade:
Breakout Entry : Long 1182.25

Tuesday , November 02 Update :

Long from 1182.25 on Sunday night : 
Target reached at 1196.25 , + 14 Pts profits = $ 700 per contract

Saturday, October 30, 2010

Holloween Friday - GDP Report Day 10-29

GDP came in at consensus and, while the number will likely be revised downward in subsequent months, bulls have seized the opportunity to rally off the overnight lows near 1172. 

Continuing Thursday's seasonality discussion, Bespoke Investment Group released a study yesterday that filled in the missing hole for mid-term election day Tuesday, finding bullish seasonality for the day. 

With the first-of-November on Monday and FOMC on Wednesday, there is a solid block of bullish seasonality from Monday through Wednesday afternoon. 

While on alert for a risk selloff on diminished QE expectations, the sell-the-news moment may be after the announcement itself.  Some have noted deteriorating market internals.  This does make the markets susceptible to a selloff; however, these conditions can be reversed with a trend day up, especially one with a breakaway gap, which I would look for possibly on Monday. Note that a break in the ES below critical 1164-67 support makes new highs in the coming week unlikely.

Friday, October 29, 2010

America’s Jobs Losses

America’s Jobs Losses are Permanent

The claim that jobs offshoring by US corporations increases domestic employment in the US is one of the greatest hoaxes ever perpetrated. As was demonstrated in a syndicated column and again in this book, How The Economy Was Lost (2010).

 Mr. Slaughter reached his erroneous conclusion by counting the growth in multinational jobs in the U.S. without adjusting the data to reflect the acquisition of existing firms by multinationals and for existing firms turning themselves into multinationals by establishing foreign operations for the first time.

There was no new multinational employment in the U.S. Existing employment simply moved into the multinational category from a change in the status of firms to multinational

If Mr. Slaughter (or Cohen) had consulted the Bureau of Labor Statistics nonfarm payroll jobs data, he would have been unable to locate the 5.5 million jobs that were allegedly created. It was reported for about a decade the details of new jobs creation in the U.S. as revealed by the BLS data, as has Washington economist Charles McMillion. Over the last decade, the net new jobs created in the U.S. have nothing to do with multinational corporations. The jobs consist of low paying, no benefits , temporary , waitresses and bartenders, health care and social services (largely ambulatory health care), retail clerks, and while the bubble lasted, construction.

These are not the high-tech, high-paying jobs that the “New Economy” promised, and they are not jobs that can be associated with global corporations. Moreover, these domestic service jobs are themselves scarce !

But facts have nothing to do with it. Did Mr Slaughter, Cohen, the Chamber, and the Wall Street Journal ever wonder how it was possible to have simultaneously millions of new good-paying middle class jobs and virtually the worst income inequality in the developed world with all income gains accruing to the mega-rich?

In mid-October Treasury Secretary and Goldman Sachs puppet Tim Geithner gave a speech in California in the backyard, or former backyard, of 60 Minutes’ Silicon Valley dispossessed upper middle class interviewees in which Geithner said that the solution is to “educate more engineers.”

We already have more engineers than we have jobs for them. In a recent poll a Philadelphia marketing and research firm, Twentysomething, found that 85% of recent college graduates planned to move back home with parents. Even if members of the “boomeranger generation” find jobs, the jobs don’t pay enough to support an independent existence.In 2002 in the city of Melbourne, Florida, the well known High tech JDSU Corp. used to employed many fiber optics communications Enginneers that were suddenly laid-off due to the company closing and opening up in Beijing, Communist China.

The financial media ( CNBC ) is useless. Reporters repeat the lie for the benefit of their republican viewers that the unemployment rate is 9.6%. This is a specially concocted unemployment rate that does not count most of the unemployed. The government’s own more inclusive rate stands at 17%. Statistician John Williams, who counts unemployment the way it is supposed to be counted, finds the unemployment rate to be 22%

The financial press turns bad news into good news. Recently a monthly gain of 64,000 new private sector jobs was hyped, jobs that were more than offset by the loss in government jobs. Moreover, it takes around 150,000 new jobs each month to keep pace with labor force growth. In other words, 100,000 new jobs each month would be a 50,000 jobs deficit.

The idiocy of the financial press is demonstrated by the following two headlines which appeared on October 19 : “Dollar Index Appreciates as Geithner Supports Currency Strength” , “Geithner Weak Dollar Seen as U.S. Recovery Route”

To keep eyes off of the loss of jobs to offshoring, policymakers and their minions in the financial press blame US unemployment on alleged currency manipulation by Communist China and on the financial crisis. The financial crisis itself is blamed by ignorant Republicans on low income Americans who took out mortgages that they could not afford.

In other words, the problem is Communist China and the greedy American poor who tried to live above their means. With this being the American mindset, you can see why nothing can be done to save the economy

No government will admit its mistakes, especially when it can blame foreigners. Communist China is being made the scapegoat for American failure. An entire industry has grown up that points its finger at Communist China and away from 20 years of corporate offshoring of US jobs and 9 years of expensive and pointless US wars to protect Israel,s interests.

“Currency manipulation” is the charge. However, the purpose of the Communist Chinese peg to the US dollar is not currency manipulation. When the Communist Chinese government decided to take its broken communist economy into a market economy, the government understood that it needed foreign confidence in its currency, while keeping the communist ideology and government control of free speech and other basic freedoms. It achieved that by pegging its currency to the dollar, signaling that Communist China’s money was as sound as the US dollar. At that time, Communist China, of course, could not credibly give its currency a higher dollar value.The US foreign policies double standards allow the Communist Chinese to get away with manipulating their currency.They are not less communist than North Korea or Cuba, yet the US ignores the lack of democracy and human rights in Communist China

As time has passed, the irresponsible and foolish policies of the US have eroded the dollar’s value, and as the Communist Chinese currency is pegged to the dollar, its value has moved down with the dollar. The Communist Chinese have not manipulated the peg in order to make their currency less valuable.Althoug it is possible coming from those communist pigs.

During 2006,while working undercover in Communist China, the exchange rate was a little more than 8 yuan to the dollar. Today it is 6.6 yuan to the dollar–a 17.5% revaluation of the yuan.

The US government blames the US trade deficit with Communist China on an undervalued Chinese currency. However, the Chinese currency has risen 17.5% against the dollar since 2006, but the US trade deficit with Communist China has not declined.

The major cause of the US trade deficit with Communist China is “globalism” or the practice, enforced by Wall Street and Wal-Mart, of US corporations offshoring their production for US markets to Communist China in order to improve the bottom line by lowering labor costs. Most of the tariffs that the congressional idiots want to put on “Chinese” imports would, therefore, fall on the offshored production of US corporations. When these American brand goods, such as Apple computers, are brought to US markets, they enter the US as imports. Thus, the tariffs will be applied to US corporate offshored output as well as to the exports of Chinese companies to the US.

The correct conclusion is that the US trade deficit with Communist China is the result of “globalism” or jobs offshoring, not Chinese currency manipulation.

An important point always overlooked is that the US is dependent on Communist China for many manufactured products including high technology products that are no longer produced in the US. Revaluation of the Chinese currency would raise the dollar price of these products in the US. The greater the revaluation, the greater the price rise. The impact on already declining US living standards would be dramatic.

When US policymakers argue that the solution to America’s problems is a stronger Chinese currency, they are yet again putting the burden of adjustment on the out-of-work, indebted, and foreclosed American population.
The United States lost six million jobs, indebted itself to Communist China by $ 1.4 Trillion, and received in return a host of consumer goods, many of which are toxic and very poor quality and now reside in landfills across the country.

Thursday, October 28, 2010

Day Before GDP Report - Thursday 10-28

The bears looked like they were gaining the upper hand early yesterday; however, the bulls staged a late afternoon reversal and continued pushing overnight, such that the ES is testing critical resistance.  As key Institutional Level is just above at 1188.50, it would take a close above to target much higher. The potential for another leg up exists if this area is breached, so shorts need to defend it early.

 However, with the big US election next week and an FOMC meeting that will likely determine market action over the next six months, rumors are driving the markets and institutions are hedging.  Such an environment favors whipsaw and mean reversion rather than trend following. 

For what it’s worth, seasonality is still slightly bearish with Treasury supply today, but ends with the 7 Year auction at 1:00 pm.  The first month of November (Monday) has strongly bullish seasonality, as does the Tuesday close into Wednesday’s FOMC announcement at 2:15 pm.  Also keep in mind that preliminary GDP estimates (such as tomorrow’s at 8:30 am) are usually overly optimistic, being revised in subsequent months. 

Putting it all together, the shorts still have their window of opportunity to start a down leg, but a defense of 1188.50 and close below yesterday’s settlement of 1178.75 keeps them alive.There is a strong possibility that today's low will be tested during after close Globex Session.

Wednesday, October 27, 2010

Durable Goods Report Day-Review

The selloff overnight in the ES was initially sparked by disinflationary news out of Australia, lessening the chances for another rate hike. The dollar broked out above the previous high. However, there is another largely unnoticed story that deserves attention.  The current rally that began September 1 has largely been based on liquidity expectations vis-a-vis the Fed’s much vaunted QE2 program expected to be announced next Wednesday.  Expectations have likely become overdone, however, and overnight, the WSJ confirmed that the Fed’s plan will likely come in on the low end of estimates–around $500 billion.  Accordingly, there is a sell-the-news risk between now and next Wednesday.

The S&P 500  paired earlier losses and closed down 0.3 per cent after dropping more than 1 per cent earlier in the session.

Marginally supportive third-quarter results struggled to counteract the negative influence of a strengthening buck, but as the dollar’s rise faltered slightly, shares pared their losses.

A weak underlying reading for September US durable goods orders further weighed on sentiment, and better-than-expected new homes sales for last month provided little support.

The dollar’s new-found rigidity may be the result of short-covering as those who have been selling the currency take profits. But it may also reflect a reduction in the amount of quantitative easing that is expected to be revealed by the Fed in a week’s time

The Wall Street Journal said the Fed’s QE2 would see about $200bn of Treasury purchases, spread over several months, much less than the $500bn to $1,000bn Wall Street was hoping for.

This is important because many investors believed it was the promise of QE2 that was the main reason for the dollar’s stumble and the S&P 500’s concomitant 13 per cent advance since the start of September

Traders may also have been getting more wary about the political fallout from the Fed’s mooted move. Cheap money from the US was being increasingly blamed by trade partners for distorting the global financial system.

The amount of dollars being issued by the US is “out of control” and this is leading to an “attack” of imported inflation, Communist China’s commerce minister was reported as saying on Tuesday

An International Energy Agency official told an oil conference in Singapore that QE2 may lead to a commodities price surge that “could derail [economic] recovery”.

US bulls may like it, but clearly not everyone is enamoured of the QE2. And is it possible that such comments could be influencing Mr Bernanke to go easy? Probably not, as he is under pressure from the Republicans to keep the money supply going.

Tuesday, October 26, 2010

Overnight Trade develops according to trade plan

Final Institutional Level at 1174.25 also happens to be a Volume Composite level ( Which I don't use, NOT reliable ) reached and filled for a total of
+ 45.50 Pts Profits on multiple contracts - HOME RUN !

To be continued after market close....

Now that the G20 bullshit summit is out of the way, traders will be hoping that the global session’s early reticence was not caused by caution ahead of the Federal Reserve’s meeting on monetary policy, at which the market expects the launch of fresh round of quantitative easing.

Hopes for QE2 have been weakening the dollar, which in turn has helped a move into riskier assets. The dollar’s recent stabilisation – its index has closed within 76.5 and 78.5 for the past 17 trading days – may be a sign that either investors are having doubts about the extent of QE2, or they feel it is now baked into the market.

But the Fed’s decision is not until next Wednesday, and if investors sit on their hands until, then it may make for several dull trading days.

Thankfully, there is plenty of macro- and microeconomic data for traders to get stuck into before then. Bulls will be hoping they will see an improvement in US economic numbers, culminating in Friday’s advance reading for third-quarter GDP

Saturday, October 23, 2010

Inside Day and NR9 on Low Volume-Friday

Monday, 10-25

SOLD 1188 ( Intraday ) posted on Twitter

Setup :
Failure to Penetrate Globex High 1193, making a Double Top
Dollar Index Recovery after new Low
VIX Count
First Target :
Tuesday, 10-26 - 07.47am est

filled at 1179.25 for + 8.75 Pts

Five Hours of sideways low volume 3.25 pts sideways range.This is got to be a record in the history of the Day Session E-Mini S&P 500 Futures contract

Short Swing position is on. No need to worry, got enough winners behind me.

Sunday 10-24 Update:
Swing position Stop Loss filled. Breakout Trade  (separate Day-Trading Account )
as described in Twitter was a winner for a combined Net Gain : + 9 Pts profits

Will get away from the markets this weekend.The ocean is calling for a weekend of Scuba Diving in the blue tropical oceans.

" And the seas will grant each man new hope "...

While listening to " You Only Live Twice " , longing for adventure...

Volume production on the major indexes was anemic today, particularly in the context of the recent heightened volume output. On the S&P 500, a mere 2.79 billion shares were traded.

US equity indexes traded on very low volume (a mere 770 million shares were traded on the NYSE, representing a one-month low) but on balance managed to drift higher, with the Nasdaq 100 up solidly and the S&P 500 up very modestly. Notably, intraday ranges were very narrow today (e.g., the S&P 500 traded within a 3-point range for several hours today), with market observers suggesting traders are waiting for a catalyst to drive the market either higher, or into a pullback. As noted above, the major indexes are now up on seven of the last eight weeks, and the broad market has risen some 11% over the past two months.

US market participants may be waiting to see what results emerge from a G-20 meeting of finance ministers and central banks to be held in Korea. Trade policy and currency manipulation will be key topics, for instance 'currency wars', where countries worldwide are currently attempting to depress their own currencies in an attempt to boost exports.

In key earnings releases, Baidu and Amazon both surged to record highs today following better-than-expected earnings. As well, American Express, Honeywell, Schlumberger, and Verizon also did well on the earnings scene. All in all, a third of S&P 500 companies have reported earnings thus far, and close to three quarters of these appear to have beaten analysts’ expectations.

 Looking at where the S&P is relative to its 55 DMA,  every time the market has gotten to above 5% its trailing average, it has always entered a period of consolidation ( at least modest selling). Furthermore, compared to the recent trend extreme of 7% above 55 DMA, the market moved meaningfully above one just one occasion in the past: in January 2009... just before the crash to the decade lows of 666 on the S&P occurred.

Notable Quotes :

The eye sees only what the mind is prepared to comprehend.

Henri Bergson
(French Philosopher, 1927 Nobel Prize in Literature, 1859-1941

Friday, October 22, 2010

Market Outlook

I believe that the broad market’s short-term prospects for further and sustainable gains are fairly limited. I would expect to see flat to modestly lower levels on the major indexes over the short-term. Looking to sell tomorrow on a low risk entry.

A volatile session saw the broad market advance by as much as one percent, then retreat, then advance again modestly, thus closing green. Intraday, equities reached a new five-month high. Market observers suggest that early gains were catalyzed by a weaker US dollar but later gains did not stick due to an advance in the dollar.

More earnings were released today, but the recent wave of better-than-expected results did not appear to be exciting investors as much as in recent days. Notably today, Dow component Caterpillar reported better-than-expected earnings, but the stock was sold down. Eli Lilly and UPS also reported strong earnings but also sold off on the news. Gaining on their earnings releases were eBay and McDonald's – but even these stocks closed near their session lows today.

The US government reported the latest jobless claims data today, showing a decline of 23,000 claims week-over-week to a total of 452,000 claims (consensus estimate: 455,000 initial claims).

Meanwhile, the Philadelphia Fed Index hit a level of 1.0 in October (consensus estimate: a reading of 1.5). Finally, September Leading Indicators were up 0.3%, matching consensus estimates.

Some market observers are warning that investors may once again be becoming too complacent and fearless, often a warning sign for equities, although such sentiment readings by themselves are not good market timing tools (as such conditions can prevail for some time before the market shows an adverse reaction). Case in point, the most recent survey by the American Association of Individual Investors shows the degree of bullishness at a reading of 49.6% and bearishness at a mere 25.2%. At the April 2010 top for equities, these readings were 48.5% bullish and 29.7% bearish. Likewise, the VIX Index (also known as the market’s fear gauge) is currently also indicating low fear levels coupled with high investor complacency.

Tuesday, October 19, 2010

Swing Trades Update

The BULL is in its last leg, ready to FALL.

New Swing Position initiated on the last hour of the Monday Day Session :

 SOLD 1180.25 on a Bearish Engulfing Signal ( 5min ) failure to penetrate 1182. STOP Loss : 1181.25 , moved to 1178
Open profits now : + 8.75 pts per contract.

Tuesday, October 19 Update :

Open profits now : + 22.50 pts   HOME RUN !

Those followers that read the Clue Statement posted on this Blog on Sunday 10-17 knew what was going to happen today Monday.That is exactly what happened


TTT Sell Short day
 MACD Bearish Divergence
 Day after Options Expiration
 Important Market Turning Date
 RSI ( 2 ) Reading :  97
Other : Dollar Index

A solid rise in bank stocks - which were recently beaten down over accusations that foreclosure issues had been handled poorly - catalyzed a modest advance on the broad market (on unimpressive volume of less than one billion shares on the NYSE).

As well, Citigroup posted better -than-expected earnings although revenue came in light. Still, Citigroup stock put in its best single-session percentage gain since April. According to Citigroup, fewer of its customers defaulted on loans, bringing a potential improvement of the bank's balance sheet. Citigroup's strength boosted the KBW Bank Index by three percent (last week, it lost 4.5%). Overall, the financial sector outperformed other S&P 500 sectors, rising 2.3% today.
In economic data, September industrial production was down 0.2% while capacity utilization came in just under 75%. Meanwhile, homebuilders remain pessimistic about the US housing market, s indicated by the National Association of Home Builders' monthly index rising only slightly to a reading of 16. While this is the index's first increase in five months, the index is well below 50, which is the dividing line between positive and negative sentiment. We have to go back to April 2006 to see the last reading above 50

In notable earnings news, IBM, whose stock has been rising relentlessly since early September, reported a 12% rise in net income and raised its profit forecast for the rest of this year. Wall Street tech darling Apple, now the second-most profitable US technology company (after Microsoft) took a hit in after-hours trading today, declining some six percent in spite of strong earnings. Both Apple and IBM thus experienced a sell-the-news reaction to their earnings reports; some market observers feel these two stocks have been 'priced for perfection'; others see the (rare) pullback as buying opportunities.

Sunday, October 17, 2010

Opt.Exp Friday Price Action Review

A number of earnings high-profile reports, a speech by Fed Chairman Bernanke, and some economic data all conspired to drive the Nasdaq 100 significantly higher, the S&P 500 slightly up, but the Dow down today. Volume was heavy, likely mostly attributable to today's options expiration session ' some 1.4 billion shares exchanged hands on the NYSE. Bernanke suggested this morning that quantitative easing is likely. Interestingly, the US dollar failed to decline on this news and closed the day up 0.6% instead.

Google shares surged today after last night's strong earnings surprise. Google stock saw its strongest single-session gain in over a year and settled at a nine-month high. Given that Google represents 4% of the Nasdaq Composite's market weight, today's outperformance of the tech sector is not surprising. Seagate Technology also contributed to the Nasdaq's strength today as the company announced it is interested in going private.

In contrast to the tech sector's upswing, both the Dow and the financial sector failed to participate in the broad market rally today. The financial sector was off close to two percent and the KBW Bank Index even decline by 2.4%. Banks have been underperforming lately and this has some market observers worried about the broad market's prospects. The Dow lost some ground today after strong selling was seen on General Electric with investors disappointed about the company's modest revenues. GE stock saw its worst single-session slide in roughly five months.

A slew of economic data was released today: September retail sales were up 0.6% (consensus estimate: a rise of 0.4%), Excluding auto sales, retail sales were up 0.4%. In September, consumer prices rose 0.1% whereas core prices remained unchanged month-over-month (consensus estimate: a rise of 0.2% overall and an increase of 0.1% monthly in core prices). An improvement was seen on the New York Empire Manufacturing Index for October (this month's reading: 15.73; September's value: 4.10; consensus estimate for October: 5.75). The University of Michigan reported its preliminary Consumer Sentiment reading for October; it came in at 67.9 (prior month's value: 68.2; consensus estimate for October: 68.5). Finally, August business inventories were up 0.6% (consensus estimate: a rise of 0.5%).

Monday is a High probability important market turning day

Globex Sunday October 17 6:57pm est : SOLD 1173.25

Monday October 18 - 04:10am Globex Session :
Target filled at Institutional Level 1165 for + 6.25 pts profits ( emailed to subscribers )