Living Inside a Broken Clock: Thursday, Dec. 17, 2009.

by gmak

The final curtain is rising as Bernanke is Time’s current kiss of death, preceded by the Housing Boom, “You – the Boomers”,  and Obama.  Greece gets downgraded – after the fact again. The Arab Gulf states fake creating their own currency and the USD bears wail, forgetting that the EUR didn’t replace the USD either.  GOLD can’t decide if there is inflation or deflation – so watch the prices of non-speculative inputs. The ECB now wants to look under the skirt of the collateral they were given against loans to European Banks.  Citi rapes its shareholders to pay management fat bonuses for taking up space and paper shufflling. Welcome to the broken clock.

EQUITY

To paraphrase the comedic “Dad, look at my hand!” (You had to be there), “Rats, look at my chart!”. SPX put a pin through resistance and was beaten back.  Anyone going short here should know where to put their stop, right?  And the target? At least 1086 on an inter-day basis. If you’re cautious, like me, you won’t put on a longer term position until SPX is below that 1086 and there is a lower low to match the recent lower high.

The world is red, except for the odd country, Kudos if you’re long Denmark, Australia,  or Indai. I imagine that NorthAm will follow today – barring some startling NEWS at 8:30 AM EST.

Notice how the DAX tried to push higher and fell off the table – yet is still finding support around yesterday’s lows. A GAP fill is at stake if this one lets go (down).  IT and Consumer staples are holding green – but everything else is red. The financials are taking it the worst after being yesterday’sleaders. Confused? Who says the market discounts the future. Six months from now must be one schizophrenic financial system.

ES is testing the lows from Dec 11. 1080 was the ultimate support from the 10th.  It’s been a steady decline o/n after the fall into the close.  Pivots of note:

• R2: 1116 = We’ve seen this number before (yesterday).  Another red flag for the bulls to charge.
• R1: 1110.25 = same as yesterday – and well above the level of recent ramp jobs.
• Neutral: 1107 = smacked ES down before midnight.
• S1: 1102 = Doesn’t seem to offer much of support or resistance.  ES=1103 is an important TD risk level, acting as resistance. It’s a good place to put on a short scalp, if you’re so inclined.
• S2: 1098 = Acted as a floor earlier. May provide more support into the open – it’s hard to say from the actionl. Certainly TD feels that it is the appropriate “Fib” level for its mini 5th wave (down). ES is currencly tracing out the A-wave of ABC (down sequence). Bears hope that it will be followed by another 5 waves down.

The TD wave counts are on the chart in yellow for the down squenc and blue for the up sequence.  Keep your eyes on the green dashed lines for important retrace /resistance levels.

FX

USD is running away. CAD, EUR, GBP are all weaker by a lot. JPY is a tad weaker.  Weren’t you told that Fear was back in vogue yesterday?  Unfortunately some of my lines fell off the chart due to the time scale (and Bloomberg seems to be limiting the amount of data this AM). But, DXY is handily above the most recent high – and above all pivots.   Looking at a daily chart, one see what appears to be a bottoming process. The yellow numbers are a down sequence for TD waves, the blue numbers an up sequene. DXY is either going to go up a bit in an ABC (down sequence), or is starting wave 1 of 5 in an up sequence. The dashed green lines show levels of TD support that need to be broken for the move up to continue. DXY is at one now. The drill is to close above, then open higher and close higher still. In other words – no immediate retrace. This usually leads to a continued move upward instead of a retrace at that line. Although it is hard to read, DXY is at the end of a SELL setup, and TD Pressure is showing overbought levels. This usually means either a retrace or a sideways correction. If this is ignored by DXY, then it is a bullish reversal of the trend. The closest one under siege at the present time is  at 77.475.

The EUR is looking for some support below all its pivots for today. Rumours are that there is US custodial buying at 1.44 – but that didn’t last.

NEWS

See for yourself:

DATA

IF ESH0 gets up to 1101 – scalp it short with a stop at 1103 and a target of 1097 – not great risk /reward, but not bad for a scalp. Looking at the TD indicators, I’m having a hard time believing that ES will get above 1100 today. But, the pivots are quite tight. Funny how all the king’s horses and all the king’s men, and all the alphabet FED printing programs and unheard of stimulus money, with ZERO INTEREST RATES, can’t get this tired market above that white barrier on the daily SPX chart.

Cheers.