Living Inside a Broken Clock

Thu Nov 19, 2009

 In the above chart, the surprise is the red bar for yesterday. Wednesday in an OPEX week was red.  ES lost its turgidity overnight.  What is happening?

Yesterday, in a comment, I wrote that the TA was supporting SPX weakness. Then, coward that I am, I hedged by saying it was OPEX week. From now on, forget that! I will write what I see and leave it to the individual traders to process through their own view of the market.  My only comment is that the TA still supports a weaker SPX for now. I’ve labeled all the trend lines and set up the legend so that it has the values for each trend line yesterday. The resistance and support points are there. 

The TD pressure at the bottom of the chart shows that SPX is still in a low risk SELL (having moved below the red line) although hesitating.  Volume was up yesterday, on a down day.  Remember that the TD SELL setup completed (Tuesday, where the little green ‘9’ is over the bar. I said that it was “perfected” in TD parlance, which meant that there would be a good possibility of a 1 – 4 bar correction. The trouble is that one can never know  how long – but the TD Pressure indicator, and volume, suggest that it may go on.

Equity

Asia was mixed with China and Australia green again.  Europe is red and up to 1%.  Here is the Bloomberg summary:

The IMAP below shows the DAX sectors and how they are performing. All RED with only a couple of companies in the green (the “UP” column).

The DAX opened in the green but sold off in steps after the first hour.

ES has brewer’s droop. It has been stepping down as well, with each step around a pivot point. The legend lists the pivot points, so I won’t repeat them.  Looks like 1095 is the floor of choice for now and we are seeing a reflex TA –type of rally.

FX

Surprise, surprise! The USD is strong again. Does anyone else get the feeling that the bears and the bulls are awake at separate times?  Apparently, it was a large Swiss bank selling CHF against the USD that has led to the move.

We are starting to see higher highs and higher lows on the tease – BUT DXY desperately needs to get above 75.622 for this to continue.

Only the JPY is stronger which says that the risk trade is OFF for today. Shrug.  Here is the EUR 30 min chart.

 One can clearly see the bottom for EUR down around 1.4828 (the 38% FIB). Last support level is at 1.4806 – which will likely be defended to the death given the 1.48 to 1.51 “do not touch” option out there (rumoured to be held by an Asian institution). The 3 min chart (not shown, trying to save your browsers if I can) shows that there is decent support at 1.4840. Resistance for now, baring some macro-news, is around 1.4884.

NEWS

Here are the main headlines.

Plus:
Marc Faber believes that excess liquidity is now flowing into Gold.

DATA

Here is the data for today:

As well, at 4PM the new FED B/S comes out. Plus, there is a TAF maturity today. Sometime between 10 and 11 AM EST, one can see what was rolled over at the Slosh site, here:

http://www.gmtfo.com/reporeader/OMOps.aspx

Remember that the biggest source of liquidity that we can see, is the MBS slosh, which can run until 1.25 trillion USD.  Now the New York FED has taken the whole program in house, it will be more difficult for the IBs to front run the liquidity injections (IMHO).

I guess that this is enough for a first point. Since it is now “public”, I’ll try to refine what I say. Let me know if the pictures are too much (in terms of browsers), and I’ll go back to my earlier style. But, a picture / 1000 words.

Keep an eye on GOLD, the USD (DXY), and EDZ – the emerging market 3x bear ETF – as liquidity gets pulled (beyond intra-day) they will likely be the first to show the effects, if History does indeed rhyme.

Cheers,

gmak