Living Inside a Broken Clock: Tuesday, Mar. 16, 2010

by gmak

China has decided to be the kettle and let the USA be the pot, in an extraordinary show of hypocritical hubris, by saying that the USA ‘that the US shouldn’t be seeking to “develop its own economy” by forcing other countries to strengthen their currencies.’  Meanwhile, there is growing noise in the blogosphere that the USA is preparing to attack Iran – based partially on the transfer of some ordinance, and the escape of imagination.

Greece has been in the news so much, that the daily gyrations of will she or won’t she seem to no longer affect the EUR. But the FED isn’t going to worry about inflation as they decide to exit monetary policy. There is still some ink and paper left to smother taxpayers and their descendants in future debt owed to Wall Street who add nothing to the economy except high prices in NY and the Hamptons.

I’ll repeat: Lehman. Ernst & Young. Repo 105. Fuld. Geithner. Prostate tickle in prison orange.

Welcome to the broken clock.

EQUITY

Everyone is taking their book, and even in the absence of blow off volume it sure looks like distribution is going on.  If this is the case, then any gap up today will NOT likely get closed.

Yetserday, the daily SPX bar was a ’45’ in gmak-speak. This means that the open was in the 60% – 80% (of the HOD – LOD length) segment, and the close was in the 80% – 100% segment. Our little sample of data since 1982 suggested that a higher close than open was the biggest probability.

Today, it is the inverse. A ’45’ bar says that 50% of the time the open will be in a higher segment than the close; 41% of the time the close will be in a higher segment than the open, and 9% of the time they will be in the same segment.

Today will be the 11th day that SPX will be completely above the 55DMA. I have already spouted reams about the implications of this little tango in Sunday night’s post here: https://evilspeculator.com/?p=14880 . Here are the probabilities from that post: ” the odds are 4% / 40% =  10% that SPX will go below the 55DMA in the next week. The odds are  90% that SPX will stay above the 55DMA for longer. Please note that this does not necessarily mean the SPX will go up. It could go sideways and the 55DMA could come up to meet it, crossing from below.”

I am confused by why anyone bets money on being able to pick a top. Isn’t it easier to swim with the current, keep the stops moving up, and let the market take you out for a profit when the trend changes? It’s easier to take a bus going in the right direction than it is to hop on one at random and hope that it turns around to go the way you want.

Developed Asia was rd except for Oz, Thailand, and Singapore. Developing Asia was green except for Malaysia and Indonesia. Sure looks like a rotation into the riskier trade.  ‘Unexpectedly’, the DAX has gapped up to test the highs from yesterday. I read on SoH that some short-term analysis suggests that, today, the gap will not close. They were referring to the SPX, but I suspect that it applies to the DAX as well. Breadth is strong and every sector is green. Does anyone really want to bet against this intraday?

Overnight, ES was flat but still riding the wave from the SPX ramp into the close yesterday. It moved up off of technical support once Europe opened (which is presently 4AM EDT – Thanks Jane. I hope you’re putting that extra after work hour to good use.<thumbsup>). ESM0 Pivots:

• R2: 1152 = I see technical resistance below at 1150.50 and 1150, courtesy of TD. This might be a stretch for a Tuesday in an OPEX week.
• R1: 1149.50 = ES looks like it’s going to test this before the open.
• Neutral: 1143: This was the roof yesterday befor the ramp into the close. It’s been support and resistance over the last two weeks. I would suggest that it will continue to play a role only so long as 1150 is not seen as “conquered”.
• S1: 1139.50 = This level was the launch for yesterday’s ramp into the close. I unexpectedly keep hearing the word “unexpected” applied to this ramp. Doesn’t it happen most days, until everyone expects it – and then it doesn’t (now that’s unexpected!).
• S2: 1133 = Sad and lonely. WIll now have to wait at last 2 – 3weeks before seeing that tart SPX again.

FX

All i”m going to say is “Look at the roundness of that bottom” on the EUR. It’s a classic that indicates a move about ot occur in the other direction. IF the EUR does ever get up to 1.45, then we will be looking at one big cup, and waiting for the handle formation to complete it. You want strength of conviction? I rode EUR from 1.3755 down to 1.3640 on the dump yesterday, and back up to above 1.3700 today, instead of jumping off in despair near the lows.

http://www.uploadgeek.com/share-3457_4B9F6237.html

The CAD keeps flirting with parity. I’ll remind anyone who wants to short the CAD, that below the 1.0155 level is a good place to stop-loss the trade.

NEWS

China and the USA. Greece and the EU. The blogosphere and Iran. Obama and health care. The FED and liquidity.

DATA

Import Prices. Housing starts. Building permits – all at 8:30 EDT (bleh!).

FOMC rate decision at 14:15 EDT! I’ll probably let the market take me out of my EUR long by then.

Cheers.