Chop Chop!

I’ll be very brief tonight – at least I’ll try to – we all know how this usually turns out. Today’s tape gave me plenty of opportunity to catch up on some tasks I had put on the back burner. Among other things I grudgingly relented to pressure and added that coveted medium term indicator the majority has been voting for (damn all of you!). I also produced two new and improved icons for the short term (daily) and medium term (weekly) indicators. Let’s do a quick icon roll call:

Up/Down:

When you see this icon it is expected that the market rallies in the morning but then descents before the close.

Down/Up:

When you see this icon it is expected that the market drops in the morning but then ascents before the close.

Mixed:

We don’t want to make things more confusing, but it has become apparent that the current market conditions are not always well expressed by the ‘mixed’ icon.

Sideways:

Sometimes we expect mostly sideways action (like today) and this is the icon expressing such a market. I loath sideways markets, but I do like this icon 🙂

Down:

That’s the theme icon for the bears and by far my favorite. Red means profits.

Up:

Bullish this means – and of course it’s green. Beanie’s favorite and we use it sparingly – at least for now.

On to the charts. Nothing really has changed since Tuesday when I posted this the first time, except for the percentages. Although today’s tape didn’t really get us anywhere the bulls seemed to control most of the action. The Yen was a trooper at first, giving us a shot at a bearish swing trades, but then fell apart after lunch – must have been some bad sushi.

However, buying was consistent and increased markedly in late trading. Thus, barring any catrastrophic news overnight, the triangle case scores the 50% tonight, which puts us into (c) of 4. 20% go to the flat scenario Berk talked about yesterday, which would require that we breach the upper resistance line I’m showing on the chart. But I’m still leaving a 30% chance for a drop into {iii} of minor 5. Why, oh why, handsome and omnipotent Mole, do we have to keep enduring the bearish plunge scenario while the market keeps pushing up?

Because the credit markets are screwed, for a lack of a better term. First, TED spread is not narrowing:

And the spread between the Moody’s BAA yield and the 30-year T-bond yield is holding and might actually be widening (again, I always have to wait one day for the data on the Moody’s) – I counted 5.22% this evening. Unless I see this puppy narrowing I have a hard time accepting the bullish case.

The Baltic Dry Index is screwed – nobody is shipping.

So, I would be completely bearish, if it wasn’t for my ‘shiny mystery indicator’ which works on a weekly basis. It’s usually spot on and hasn’t failed me yet. And as you can see, to my chagrin it’s screaming that a rally is just getting started. Unless it swings down in a very short order I have to keep entertaining the notion that we might be pushing up from here.

At least Gold is doing what it’s supposed to – nothing really new to report here. You know the drill – grab short positions on GLD, GDX, or any other precious metal related ETF on rips. Start taking profits once we breach 640.

That’s all I got for my stainless steelrats tonight – tomorrow (or actually the weekend) should bring us closer to some much needed clarification. I would love to be able to disqualify one of the three scenarios above.

Cheers!

Bonus Clip for you Karl Denninger fans:

Also, read more about Karl’s latest ‘evil plan‘ – you have to respect his devious line of thinking.