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How do You Know They’re Lying?
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How do You Know They’re Lying?

by The MoleApril 27, 2010

by gmak

Their lips are moving.

The yield on Greek 2 year bonds is higher than that of Venezuela. In fact, it is the highest rate IN THE WORLD. Soon the debt will be toxic enough for GS to do God’s work and stick it in a CDO-squared to push off on unsuspecting foreign investors. Then they can pump each other up with profanity in internal emails and self-congratulations on duping the suckers yet again, and eternally with the .gov’s blessing.

In the meantime, Lloyd is going to swallow his pride and thank the taxpayer for their support – all the while pretending that GS has paid back every cent with interest. Pay no attention to the fact that Lloyd’s boyz are still responsible for about $21 billion in TLGP loans which are FDIC insured – meaning you are still on the hook for them. By happy coincidence, this is just over the amount that the boyz paid themselves in bonuses. From your wallet to God’s hands. Meanwhile, their favourite uncle-shareholder is showing that he is not beyond twisting legislative arms to keep his face in the trough. Oink me!

Thank goodness for the NFL draft to distract the masses while they’re fleeced. Welcome to the broken clock.

OverNight

First, here is a link to a section on investor sentiment. It’s well worth a read. It says that the dumb money (that’s us) is overwhelmingly bullish while the smart money remains ambivalent.

http://tinyurl.com/2cm5agt

Second, here is a lesson on how to properly draw channels around waves. Focus on channel drawing – and how to modify the channel based on the length of each wave.

http://tinyurl.com/35tzfxq

Finally, Noma of Copenhagen has been named the #1 restaurant in the world. El Bulli of barcelona has won second (and was first for the last 4 years). third is the Fat Duck from the UK. Gordon Ramsay didn’t even make the top 100.

The Data today includes the CaseShiller home price index, the Richmond FED mfg Index, and Consumer confidence.

Asia was red, except for Japan. The fear trade is back on. Europe is red except for Iceland (I don’t know – check the CDS spreads). The DAX has been selling off since the first hour and has almost closed the gap up from yesterday. Only Utilities are green at this time and Financancials and Consumer Discretionary are leading the market lower. Breadth to the downside is strong. This sets the tone for the ES and the SPX for today. I repeat: It looks like the risk trade is off. ES wandered sideways for most of the night, and then sold off with the DAX to find support at the S2 pivot.

  • R2: 1220 = Not likely with the fear trade back on.
  • R1: 1214 = Around the high from yesterday. It’s possible today – but, IMO, not very likely given the sentiment. I see this as outside the range for today.
  • Neutral: 1210.75 = Looks like this area will be the top of any range that gets going.
  • S1: 1205 = Not a factor yet. Might act as resistance as ES tries to crawl off of S2.
  • S2: 1201.50 = Looks like this is the bottom of any range.

Note that ES put in a local wave 5 down to get to the S2 pivot.  ES is being remarkably well-behaved TA-wise this morning. We’re looking for the ABC wavelets up – where I see ES = 1207.50 as the top of this move (a TD resistance level). I don’t see any data points that could change sentiment this morning, so if that point is reached then it is likely that the S2 pivot will be tested again on the way down.

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DAILY SPX CHART

Some key points in the chart:

Bearish

  1. TD Pressure has another low risk sell on (the last one is still active from April 16).
  2. SPX has not pushed through the upper Bollinger.
  3. The 62% FIB remains a barrier
  4. The 2-day bar pattern is bearish, so is the 1 day.
  5. SPX has /is putting in a TD wave 5 up – to be followed by an ABC correction.
  6. The world abounds with bad news

Bullish

  1. The Bollinger bands, 55-day SMA are sloping up.
  2. Support lies below at 1200.83
  3. Higher lows and higher highs.
  4. The 2-day bar pattern has seldom indicated a top.

Of course the 2-day bar pattern would NOT indicate a top. Yesterday was not a local high. (d-oh). As well, the 2 day bar combination of ’25’ and ’41’ has NEVER preceeded a top. In fact, of the 12 times that this combination has occurred while SPX is in a postiive daily slope, CLOSE < OPEN 58% of the time.  When looking at only the ’41’ bar and a positive slope, CLOSE < OPEN for 49% of the time vs CLOSE > OPEN for just 40% of the time. The odds favour CLOSE < OPEN today. The most likelyl bar shape is ’52’ followed by ’32’.  A ’52’ means that the CLOSE < OPEN but CLOSE > LOD. A ’32’ means that the HOD is above the OPEN, and the CLOSE < OPEN but > LOD. (clear as mud?).

It’s a good sign that these probabilities are in synch with what the ES is saying. I would look to get short in the 1207 – 12111 range after the turn back down. I’m not sure if it’s worthwhile getting short betwen 1201.50 and 1205ish. I am loathe to chase ES down into the hole, is why.

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Summary: Sentiment is negative. The risk trade is off. It looks like a down day off of the open. Pick your spot to get short and don’t chase. Lloyd is in the house.

My Best Regards.


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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