Living Inside a Broken Clock – Monday, Dec. 14, 2009

by gmak

What a great weekend!: warm with gentle fluffy snow flakes falling. It was easy to forget that the CRE domino is falling in slow motion. Obama gives new meaning to word irony as he insists that Wall Street doesn’t get that he wasn’t elected to put cash in the pockets of fat cat bankers. I guess he didn’t read the Rolling Stone Tabibi article on that very theme.  Abu Dhabi bails out Dubai with $10 bb – so movie stars and swimming pools will have somewhere to go hide when the revolution starts. – and construction companies around the world breathe a sigh of relief 🙂

Volume in the equity markets is now measured in milliliters instead of gallons. Rogers has it both ways as he calls for both the USD and Gold to go up.  Public Service Pensions are looking underfunded all over the Western world. I wonder how happy taxpayers will be to shoulder an extra burden so that these can be topped up. Whats another 1/2 trillion among debt slaves? But, Champagne prices are down – so Bankstas and Gangstas rejoice! Tick tock. Tick tock. 

EQUITY

ES still crawls the tend line from March 2009 (however you draw it with a touch in July, or a touh in November).  At the same time, ES is pushing up against that invisiblew barrier shown by the dasked violet line just above the bars from the last month.  Volume is dropping off materially.  ES is at a crossroads – and I am never any good at predicting how these flat edge triangles will break.

SPX is continuing to trace out the next bump in a series that began November 10th. We’re starting to get near a lower risk short trade – as SPX gets near that horizontal white line at 1113.69 (1114 rounded off).  It would be a good spot to go short with a stop above the HIGH at 1119. Patience.

The world is mainly green. Those larger red blocks are Japan, India, and Canada. The DAX opened up and did its own version of Pop goes the Weasel. You’ll notice that DAX has left the support way behind and is now bullishly pushing the envelope up near the highs. But, it looks a little flacid today.  However, only Health Care and Capital Goods are red (plus some small slivers in food retail and Consumer Durables).

ES poed at midnight – must have been related to the Dubai news, and has been weak ever since. The EUR has vollowed the same pattern, and probably DXY as well (inverted). I do note that there are higher lows forming on the EUR (see chart later) – which may lead to another attempt to rally. I suspect that it will be extremely difficult without a FED liquidity shot in the arm.

Piots of note:

• R2: 1111 = still below the highs, but where ES is trying to get a foothold.
• R1: 1107 = bottom of the current range. Nice swing trades setting up with clearly defined risk levels. Sell at R2, but at R1 going into the open. There is no news today.
• Neutral: 1101.75 = was a floor overnight until the rocket launch at midnight.
• S1: 1098 = Support for bounces last Thursday and Friday.
• S2: 1092.50 = Also support last Thursday.

FX

The USD is up, but fighting a headwind without having reached a key “High” level to be breached. The pivot at 76.40 is providing support for now.  Treasury auctions are happening this week(short term), and next week (long term bills). There is also a big chunk of TAF maturing ($55 bb on the 17th – this Thursday). I believe that the the financial system will be given a shot of liquidity in advance of this – but there is no telling which asset classes will benefit from the spillage.  Watch GOLD. If it isn’t moving much then the pumpage will likely come right back into short-term tbills.

Oddly enough, CAD is down even as JPY and EUR are up. Looks like a new type of trade forming. JPY could be due to relief that the printing is not as much as originally thought. EUR is just a relief rally on Dubai and short-term oversold conditions. Plus, there are rumours of BIS buying at 1.4630.

The EUR broke down from a bearish flag but is putting in hgiher highs and higher lows since Friday afternoon.  The pivot at 1.4659 is providing resistance for the time being – but it does not seem very strong.  Looks like a “wait and see” mode to me, in spite of the upward sloping mini-channel. Industrial production was down MoM – but as expected – so there is really no catalyst visible today for the EUR.

NEWS

DATA

It’s all tomorrow. Watch what happens into the close for an indication of what the market believes.

Low volume, no news = short sharp moves and changes in direction, as positions are trimmed and squared away for the holiday season.

Cheers.