Sunday, August 14, 2011

Market Outlook - Long from Thursday

Consumer sentiment worsened sharply in early August, falling to the lowest level in more than three decades, even though retail sales posted the biggest gains in four months in July, separate reports on Friday showed.

Underscoring divisions at the central bank, one top policymaker on Friday said he had cut his forecast for economic growth, even as another said he saw no economic need for new monetary stimulus.

Business inventories rose slightly less than expected in June, suggesting firms remained cautious about future demand at the end of the second quarter.

Global financial upheaval was on the agenda on Friday when President Barack Obama met with top executives from the U.S. business community, the White House said.

If history is any guide, another oil-induced recession may be just around the corner, at least for the United States and some of the other developed economies.

Minneapolis Federal Reserve Bank President Narayana Kockerlakota said on Friday that he dissented from the U.S. central bank's decision this week to keep interest rates low until mid-2013 because he felt more policy easing wasn't needed.

During the trading day on Friday, there were rumors that Standard & Poor's would strip its AAA rating from the U.S.

Purposely orchestrating the downgrade after all markets had closed, it officially did so, leaving traders across the world wondering how markets would react.

U.S. stock futures opened off with losses of more than -2.5% and after a several-hour rebound.

On Friday there were  other sovereign downgrades from AAA status. There isn't much history of these events, but from the reactions in the local stock markets were not necessarily bad, especially during the next week or so.

Of course, this time is different due to the U.S.'s status, or former status anyway, so we'll just have to wait and see how things unfold in the coming days.

For what it's worth, there have been 9 other times in their 30-year history that the S&P futures dropped 5% or more in a week, slumping to at least a six-month low, then gapped down -2% or more on the open.

8 of those 9 days closed the day higher, and were also higher 3 days later. The average return from open to close was a whopping +3.1%, with the loser being -2.2% (from October 6, 2008).

Here are the dates, along with the day's return from open to close:

9/21/01: +3.5%
6/26/02: +2.4%
7/24/02: +8.5%
1/22/08: +3.3%
1/23/08: +5.4%
9/16/08: +4.1%
10/6/08: -2.2%
10/8/08: +0.3%
10/10/08: +2.3%

The crash in '87, when the futures lost -24% of their value between the open and close, just barely missed this study because the S&P hadn't closed at a six-month low the day before the crash. But it was very close, so at least worth mentioning.

Looking at the intraday pattern of some past crashes and mini-crashes, it's pretty apparent that things could get very ugly if the low set during the first hour of trading is broken later in the day.

It shouldn't be too long before traders start focusing on Tuesday's FOMC meeting and the potential for the Federal Reserve to say something different than they have been saying.

But Monday, especially the first few hours, will be dominated by traders re-positioning in a new world without a "risk-free" USA, and nobody really knows what that's going to mean. History says we should rebound in the days ahead, but history isn't much help in a situation that's basically unprecedented.

In previous short-term outlook, I had suggested: "...overall outlook for tomorrow remains bullish..." - Friday, the major indexes moved higher.

5 minutes is showing advancing  oscillator readings at session's end. Positive money flow on this chart would suggest the possibility of positive trading on Monday after the market open.  However 30 minutes charts are showing declining  reading at this moment. Taking into account the most recent bullish proprietary accumulation I would say that despite positive outlook on 5- and 15-day charts, overall sentiment is slightly in favor of Bulls.

My Position is Long , targets and other details vailable upon request.

Wednesday, August 10, 2011

New Long Position Update


I suppose the internet expression OMG is the best description for the last 2 days trading activity. So much for the efficient market theory. Volatility and confusion should be expected since we've got Tim 'It'll never happen' Geitner and Uncle Ben at the helm steering the economy and market through the shoals and shark infested Republicans waters of Washington DC. Obviously, the BULLS love the Feds announcement .. at least for today.

I think the FEDs term comittment to ZIRP for two years is as much politics as economics. They know that this next presidential election will, no doubt, be the ugliest political carnival over the last 100 years. By affixing a term, beyond the election, they've opted out of the fray in advance to prevent accusations that policy changes are politically rigged during an election.

Over in EuroLand Italy is toast, as Mr. Trichet has delivered the terms of surrender for a bailout. The austerity measures are as harsh as those for Greece and should appease the Germans who are now the only ones paying off everybodys credit card. France is the next hotspot as CDS spreads are widening and there are rumors of serious problems with their big banks. If France is forced to surrender then they should stop calling it Eurodollars and call it like it is ... German Marks. Without the strength of the German economy none of these phony bailouts would be possible. If the German economy falters then the S#%$ will really hit the fan over there!

New Swing Long Position was initiated and one of the clues was the VIX Count. Details available to anyone if interested, the only requirement is a comment on this Blog.

The broad market shot significantly higher today. The Russell 2000 outperformed other indexes by climbing up 6.83% while the S&P 500 gained only 4.71%. The S&P 500 saw its strongest advance since 03/23/2009 when the S&P 500 gained 7.16%. The DJI had its strongest advance since 03/23/2009. The last strongest up-move was seen on the NASDAQ 100 on 05/10/2010. The bigger daily gain was seen on the Russell 2000 on 03/23/2009 when it rallied by 8.35%. The strongest up-move was seen on the NYSE Comp. on 03/23/2009.

The S&P 500's daily volume was 6,690 million shares today, which was higher by 125% than the average daily volume sustained over the past 3 months.

In previous short-term outlook, I had suggested: "Positive money flow on this chart would suggest the possibility of positive trading tomorrow after the market open. " -

The Federal Reserve, in an unprecedented move, said on Tuesday it will keep interest rates near zero for at least two more years and is considering further action, bolstering battered stock markets.

The United States faces one-in-four odds of slipping back into recession, and a weaker economic outlook is raising the likelihood the Federal Reserve will soon do more to boost growth, a Reuters poll shows.

The chances of another U.S. recession are rising and Europe's recovery is also at risk, according to the latest Reuters poll, taken during the worst stock market selloff since the nadir of the financial crisis.

U.S. non-farm productivity fell in the second quarter as economic activity slackened, while a moderation in the pace of wage growth suggested inflation pressures will remain contained.

The stock market's recent slump is reviving bad memories for California's government and raising concerns about revenue estimates for its budget, a perennial concern in the U.S. municipal debt market.

The struggling U.S. economy is beginning to take its toll on shipping companies which should be seeing a big boost from their peak season but instead find retailers delaying decisions about how much to import.

Sunday, August 7, 2011

Exit Swing Short Position and now Long

U.S. job growth accelerated more than expected in July, tamping down fears the economy was sliding into a fresh recession and easing pressure on the Federal Reserve to provide more support for the weak economy.

The message from this week's market rout is crystal-clear: investors have lost confidence in their Republican politicians, who urgently need to do something dramatic to reduce risks to the global economy as they keep worring more about lower taxes for the 1% of the US Population than about the millions unemployed. So now that they succeded in keeping the taxes low, lets see if their wealthy contituents will generate more jobs. Isn't that what they were advocating? well lets see it ! I doubt it will happen. Notice how the Republicans interviewed in CNBC argued about keeping the taxes low for the wealthy " to stimulate the economy " before the Budget negotiations was settled.Now that they got what they wanted they are still argumenting that this Administraton is to blame for the weak economy and that " Businesses will not hire, because they are unsure of what is going to happen" ! LOL , So the rethoric argument was changed from lower taxes to blame Obama- how self serving and decieving ! The Republican establishment keeps bullshiting America and keep getting away with it !

U.S. consumer credit shot up in June by $15.53 billion, according to a Federal Reserve report on Friday that showed upper middle class consumers were willing to keep borrowing robustly in a tight job market.

State and local governments continued shedding thousands of jobs in July, part of a trend that analysts say could damage everything from trash collection to the entire U.S. economy.

A scary drop in stocks and commodities threatens to squeeze life out of an already faltering U.S. economy, with deal-making, investment in plants and equipment, and capital raising at risk of slowing down or freezing up.

Army officer Donna Bachler has NOT had a regular paycheck since she left active duty four years ago, even though she boasts the kind of skills employers vie for.

Wall Street doesn't care about these people as long as shareholders and hedge funds make money, they will always blame Obama when in fact the Republicans voted to NOT extend unemployment benefits to millions including ex military and instead voted for the decrease of taxes to Millionaire Corporations that already have billions of dollars of accumulated profits in their coffers !

 Condolences for the 22 Elite members of SEAL Team 6 that died this weekend in Afganistan. Many military service men and women are returning home to be unemployed thanks to the Republican millionaires in Congress. What a shame !

Swing Position - Long with min target of 1227 - details sent to subscribers.

15-day charts  are showing advancing indicator readings. Positive money flow on this chart would suggest the possibility of positive trading on Monday after the market open. Money flow on the 30-day charts is moving slowly up, yet it is still in the negative territory. Further money flow advance  on these charts would confirmed higher odds of positive trading on Monday.

Bullish Engulfing Bar in the 4 Hour Chart closed above the 38.2% Fib level measured from the 1264 Swing High on Aug 04.

Another Clue is the Huge Volume Surge Friday : The daily volume of the S&P 500 was 6,300 million shares. This is 122% above the last 3 months average volume. This suggests that a reversal is coming next week

Also the VIX Count is due for a Reversal this coming week

Will NOT discuss Setup and exact Entry with Stop Loss due to lack of comments in recent Blog posts.

See You at the Beach !