Are We There Yet?
Are We There Yet?
by gmak
The Treasury Reserve account is down to $9 billion, from $108 billion at the start of the year, and $92 billion at the end of March. Meanwhile, look at Tickerforum.net and check out some scary graphs showing a one week rocket of debt. What caused this? And, where did the money go? Meanwhile, money is pouring into consumer discretionary stocks. What does GS know?
I really wonder if Ben and Timmay sleep well at night and believe that they are doing the right thing, or if they hear the ticking of time, the tinny sound of a can coming to rest on an asphalt path, the sound of a broken clock tolling the end? Do they hear the tell-tale heart, or just the Raven croaking “Nevermore”.
By the time Greece goes into default, I think that the market will be so relieved that there will be parabolic thrusts everywhere. IMO, anyone showing any type of political flair early in life should be given a knitting needle lobotomy to spare civilization these types of Keystone Cop extravaganzas.
I know that there is something wrong. You know that there is something wrong. The whole world knows that Greece is a zombie without a head and just waiting to fall over or crumble into dust, or whatever it is that re-dead zombies do.
I wrote yesterday that there as a higher probability that CLOSE <= OPEN. This didn’t happen. as SPX closed up. I think that all the signs are present for a correction. Locusts? Check. Rivers of blood? Check. Plague? Check. Doom, despair, and darkness? Check. Sound of four horses? Check. The last time I felt this way, the party went on for months after – and I don’t believe that this time will be any different.
AM UPDATE:
Asia was red, except Indonesia. Europe is red (except Spain). The DAX opened down and hasn’t looked back. It still looks like support from the last couple of weeks at 6220 / 30 is holding for now. We have a reversal in leaders from the previous days with Financials, Utilities, and Consumer Discretionary in the RED, among others. Green Breadth is strong (100%) in Consumer Staples, Telecom, and Infotech. Healthcare is at 75% in the green.
On the Data side, NFIB small business optimism was at 86.8 vs 89.2 expected and 88 previous. That frozen grin is slipping. At 8:30 we have the Trade Balance and the Import Price Index. The trade balance is importance because it indicates whether the USD in the hands of foreign CBs is increasing (good for Treasury issue) or decreasing (bad for Treasury sales).
In the news, Greece has a great auction of short-term bills but the EUR still sold off as finally these bozos are realizing that none of it makes any difference given the amounts of debt that have to be rolled over – and over – and over.
My paranoid delusion is that there will be a correction, but that correction will be used to bring in bigger-money shorts and then rip their faces off in order to do distribution. I think that this will resemble the correction from the summer of 2009. Enough sites on the blogosphere are suddenly talking about it, and many have hi-lighted the VIX situation. Too many voices all at once always seems rehearsed to me. But that’s why I call it a paranoid delusion – because I’ve gotten so used to looking for crawly things under rocks as a protective mechanism, that I see them everywhere.
The following is for subscribers, but it has been turned on so that everyone can see what I am writing about – for today. Enjoy, or not. Comments and feedback are always welcome.
Friday’s bar was a ’15’. Monday’s was a ’12’. Relatively speaking, there is a high probability that today the CLOSE > OPEN.
One more day has passed above the 55-day SMA. After tomorrow, the odds shift to staying up above the SMA for a while. That doesn’t mean that SPX can’t correct or slide, just that it will stay above that 55-day SMA for a few more weeks. This suggests that a waterfall isn’t likely in the next while – but still possible.
SPX is just over 6% above the 55-day SMA. Since 1961, it has been this far way or more only 12% of the time. SPX has a steeper slope than the 55-day SMA – which suggests going up. Here are the stats:
Distance from 55-day SMA Probability
<=5% 87.7%
5% < / <= 7% 7.9%
7% < / <= 10% 3.7%
10% < 0.8%
SPX is moving up rapidly into rarefied territory where it has only been for less than 12% of the time (when above the SMA) since 1962. I really don’t know how to interpret this other than to say that it can go on – especially when looking at the probability of how long SPX has been above the SMA. Usually, I would impute, SPX rises about the same rate as the SMA – but this is definitely more rapid and increasing, yet not exponential (which is tough given the declining volumes).
Bottom Line: SPX is moving AWAY from the 55-day SMA. It is more than 6% greater than the SMA and this is a fairly rare occurrence. We are definitely getting to the end of journey but we don’t know when that will be. My best guess is that SPX can go up another 12 points (1% of the 55-day SMA) at least – until the odds really shift against a move higher.
Another setup is coming from the VIX and the Bollinger band – as Mole wrote about here
My own take is related, but slightly different. In this chart
I have hi-lighted the areas that I am referring to with circles. The VIX has closed outside the bollinger (I use (21,2)). Theory says that a close back inside, followed by another bar closing higher indicates a reversal within a week. Usually a TD BUY setup completed (as indicated by the green number 9) is followed by a 1 – 4 bar mini correction.
HOWEVER, VIX is a derivative and probably does not play by the same rules. In any case, the bar closed below the purple dashed line which is a TD Combo RIsk indicator. This level is based on the last time a TD BUY countdown (purple 13) occurred. Violating it (along with 1 or 2 other rules that I won’t get into) suggests that the reversal is NOT going to happen from that last number ’13’.
The pink box down below in the TD Pressure graph suggests that the downward pressure is NOT over yet. In fact, given the probabilities regarding today’s SPX bar, IF THEY ARE VALID, I would expect VIX to stay at the same level or be lower. So, I don’t expect the famous Bollinger signal to happen until that TD Pressure starts to move up off the bottom – just like in February.
VIX Summary: Of course we will get the signal, but I don’t believe the VIX will move back inside the Bollinger today. I’m not trading this – I’m using the opportunity to observe closely the behaviour of the DeMark indicators on this derivative measure, and how the signal gets interpreted by live action in the markets. This is an OPEX week, and it affects the measure strongly due to the front month of options “dropping off” the computation.
Nothing has changed in the chart. One more day, one more number in the SELL setup count, one more day closer to the 12 bars that would annul the previous SELL countdown which TD uses to indicate a major reversal point. 8 more days, including today until that count is invalid and the next one takes precedence.
I will note that the TD Risk level at 1200.83 held. This resistance level only becomes invalid if SPX closes above it, the next day the bar opens higher and closes higher still. If that happens then SPX will continue to move up. Otherwise, it acts as an elastic and will pull the move-above back down.
The chart snapshot was taken around 8:30PM EDT. The EUR is not making a new assault on the 55-day SMA (the yellow line), and has not been able to close above it. Does this look like the move of a currency headed up? I think not. I not that the 10-day and 21-day SMA are attempting a bullish cross – but more impetus is required.
There has been a higher high and a higher low – but the 55-day SMA seems to be a formidable barrier. We may see a re-test of the 62% FIB at 1.4497 (or the purple trend line that is just crossing the FIB) before heading up – if EUR has the momentum to do so.
This is a very difficult currency to read past the next hour because it is hard to know what is motivating the moves beyond short covering. I can understand that the EUR would be under pressure from the apparent printing inherent in any EU bailout of Greece. However, I am having a hard time coming to terms with the strengthening in the EUR that would result from below-market-rates financing that enabled Greece’s ongoing overspending and fiscal imprudence. If I can’t understand what is driving a security, then I stay away.
EUR UPDATED: This AM, I see a spinning top on the EUR, and the 55-day SMA has still help. I think that the sharks smell blood again.
Every move in the SPX, IMO, is going to be deceptive in what it is saying. This is OPEX and nothing is ever what it seems.
Cheers.
