Euro Trash

It’s Superbowl Sunday – one of my most favorite and the same time least favorite day of the year. Why? Because on one hand I get to watch this year’s top NFL teams duke it out for the coveted Vince Lombardi Trophy. On the other hand – it’s the final official NFL game of the season and I’ll have to put up with seven months of mind numbing basketball and baseball coverage (the horror… the horror). Fortunately for us Euro trash – and hot blooded latinos/latinas – 2010 is the year of the FIFA World Cup – so I’ve got at least something to look forward to this summer. If you don’t know anything about ‘soccer’ (or football in the rest of the civilized world) then I suggest you get yourself a latino friend – he’ll be more than happy to get you up to speed on some of the top teams in the running. If you’re a female reading this – get yourself a hot latin lover and kill two birds with one stone.

Talking about Euro-trash – Greece pretty much is in the crapper and a default is pretty much guaranteed as the big rats are leaving the sinking ship in droves. ECB chairman Jean Claude Trichet is sitting between a rock and a hard place: Bail out Greece and set a terrible precedent for how to deal with the rest of the PIGS (Portugal, Italy/Ireland, Greece, Spain) – or do nothing and perhaps be responsible for triggering a worldwide financial meltdown. Not a decision I would want to have to make. Or would I?

Mwuuuhaaahaaaaahaaaa!!! (insert echo of your choice)

Anyway, I have a football game to watch – so let’s get to the meat and potatoes:

Three scenarios here:

• Orange: We are in the midst of Minute {iii} of Minor 1 of Intermediate (1) of Primary wave {3}. Friday’s late spike up is nothing but small degree second wave – which means {iii} is sub-dividing and will get us to below the 1000 mark on the SPX (probably 970ish).
• Blue: The count shifts around a little and we either finished Minute {iii} on Friday afternoon or will do so on Monday around 1035ish. This should be followed by a strong push back toward SPX 1100 which will be counted Minor 2 of Intermediate (1) of Primary wave {3}. The confirmation point for Blue is 1104.73 – admittedly way too late – so if you’re skittish prepare to sweat bullets.
• Green: The Bears Get It Up The Ass Again Scenario: Instead of  painting a motive wave we corrected in the form of a zigzag (A-B-C). Which means we are pushing higher aggressively, don’t look back and make new highs for the year.

Note that I highlighted a horizontal line which delineates exactly where we bounce don Friday. You might assume that I drew this line this weekend but actually it’s been there for months (check my prior posts if you doubt me). In order to see where it traces back to we have to zoom out – way out:

There you have it – it goes back to October 2008 and marks the top of Minor 4 of Intermediate (3) of Primary {1}. The Zero Lite had been painting a monster divergence all day (are you a sub – if not get on it!) and it was clear that a bounce was in the making. But although it was orchestrated and executed perfectly the Euro didn’t play ball:

Yes, that’s my handrolled TOS correlation chart – I hope you’re green with envy 😉 Anyway – you can see that we bounced at the 78.6% fib extension relative to Minute {i} as per the orange count. The Euro however kept dropping and by quite a bit I might add. Forgive me if I can’t take such blatant intimidation tactics courtesy of the bulls seriously. And neither should you if you had the foresight to bulk up on long term puts like me. Remember – they will try and they will scare the shit out of you on several occasions as they won’t give up without a fight. But they will fail – in the end – and I’m going to stick to my guns until the fat lady sings.

OR – we get Soylent green and I’ll have to re-apply some of that left-over vaseline I’ve kept on my desk. It’s a little memento I kept around to remind me of the horrors of 2009.

I you look at the VIX chart you realize that the bears might just have received an unitended favor by our friendly prop desk junkies over at JPM. Had those wankers not banged the tape higher we would have probably closed outside the 2.0 BB (i.e. one step towards a buy signal). Instead we pushed the bubble out further and then closed inside. Nice 🙂

I also looked at the NYSE A/D ratio and the reading at the close was 0.734 – pretty weak. So, I believe that we might be able to stay inside that downside channel you see on the first SPX chart. If we breach above it and don’t snap back then Soylent Blue is probably in the works. I don’t put much stock in Green right now – would have to see more consistently bullish A/D ratio readings in combination with convincing ‘vol-ume’. But it’s not impossible of course and I talked to a bunch of bullish trading buddies who went long in a big way at the close. So, the dip buyers are convinced this will be the known as the bear’s Waterloo (i.e. the final defeat and short squeeze from hell) – so, Monday should be interesting to say the least.

And that’s pretty much all I have for you rats tonight. Time to pop open some Hefeweizen and watch the battle of the titans.

Cheers,

Mole