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.

1 comment:

  1. So the F71 chart may be useful in short term with a move into 1250 for EOY ? This municipal bond fiasco leaves me a little skeptical but a run up into EOY with a MAJOR pullback the first 6 mo of 2011 does rhyme better with historical moves.