Dollar Blues

10:50am EDT: And there you have it – the Dollar breached 77.42 and made new lows this morning:

This most likely means more downside in the old buck and upside in equities.

However, my line in the sand for hedging myself is the SPX at 1029.5 – the 78.3% fib mark.

11:15am EDT: Here’s an updated BAA-TYX spread chart – thanks again to Hui, Graham, and Kevin for sending me those BAA readings every day:

We pretty much stayed sideways on the way down and have settled around the 2.19 mark. I’m not exactly sure if this is bullish for equities but it’s not bearish. As much as we bears hate to admit it but this market refuses to go down, be prepared for more upside. Today is going to be an extremely important day. If we breach my line in the sand I have now decided to reduce my load a little and try my luck again once we seem to complete the current motive wave as suggested in the blue scenario (see yesterday’s post).

11:35am EDT: $4.9 Billion in new POMO cash ready to be deployed this afternoon:

Yes, we did see a POMO auction without a follow through in equities about two weeks ago but odds are they’ll use it before the close.

I do however have a ponit to make: We are just about to push into new highs, there’s new POMO cash waiting to be leveraged, the Dollar just made new lows, and Gold is above the four digit mark. Not sure what you rats are thinking but it all looks way too easy to me – maybe I’m overthinking this but wouldn’t this be an ideal setup for a head fake to screw the bears?

Current NYSE A/D ratio is at 2.38 – below the Friday close at 3.83. The Zero Lite is pointing down right now and the signal has been fairly weak – so, there is a possibility of this being a head fake – but it’s not a necessity. The BAA-TYX spread also is not convincing me of the possibility of new highs. Nevertheless, I will need to lighten the load a little once we push past my uncle point – sometimes what you see is what you get and you can’t trade on hypotheticals.

2:08pm EDT: Nothing but VWAP reversion in the past three hours – participation is at a minimum on the Zero Lite. I don’t like the signals right now – a lot of conflicting indicators – readings do not make much sense. Feels like a big move is looming ahead – just not sure yet which way it’ll go.

3:19pm EDT: Message from U.S. Consumers to Obama:

…………………./´¯/)
………………..,/¯../
………………./…./
…………./´¯/’…’/´¯¯`·¸
………./’/…/…./……./¨¯\
……..(‘(…´…´…. ¯~/’…’)
………\……………..’…../
……….”…\………. _.·´
…………\…………..(
…………..\………….\…

Love it…

3:25pm EDT: They’re he-heeeeree….

The ‘TV people’ are haunting the market again…

3:40pm EDT: See the tape run higher after those horrible consumer credit numbers? Now repeat after me:

The news do not matter.
The news do not matter.
Fade the news.
Fade the news.

Got it? Good!