Living Inside a Broken Clock: Thursday, Feb. 25, 2010
Living Inside a Broken Clock: Thursday, Feb. 25, 2010
Greece is in dire straits. California cancels $2 billion offering and moves closer to solvency. Everyone knows CRE is a falling domino except those pumping the stocks. There is roughly $800 billion in high yield securities (lesser credits) maturing between now and 2014. Indirects continue to shrink in the Treasury auctions. Bloomberg holds the mirror to the corpse’s mouth and sees the end. Can sovereign defaults be far away?
http://www.bloomberg.com/insight/america-tied-up-by-record-debt.html
Welcome to the broken clock.
EQUITY
The market seems to have thrown everyone a head fake yesterday (except here). Zero Hedge suspects skynet.
http://www.zerohedge.com/article/guest-post-spy-getting-jump-key-levels-quant-algo
The main culprits are the usual squids:
What I see is a market that is remarkably consistent with its patterns, if one ignores the outside world. Today, just looking back a few months, I would expect a bar inside (or close to it) of yesterday’s – likely red since I don’t believe (opinion) that SPX will go above yesterday’s close. The Gartley pattern is still intact, and would remain so unless the most recent high is exceeded on a close. As always,
Here are the numbers I get for SPX:
X = 1150.45 (Jan 19)
A = 1044.50 (Feb 5)
B = 1109.98 (Feb 19, 22)
C = 1058.50 – 1069.50 (projected range)
D = 1124 – 1135 (projected range) Go short here if the pattern holds
Asia is red. Emerging Asia is mainly green. This seems like another version of the risk trade, except Europe is red except for Sweden (the men made it through to the finals in curling). It looks like the DAX gapped DOWN at the open and then spent the time since in clawing its way up – now looking like the DAX is running in an upward sloping channel along with yesterday, currently on the down wave. More sectors are gren – but just barely so. Telecom, Industrial, and Utilities are red (so is consumer discretionary – shhhhhh). Materials are very green. Financials barely so.
ES fell off a cliff (slowly) overnight as Asia opened and bottomed just around midnight (we’re gonna let it all hang out). Right now it looks like a long range-bound trade with 1095.50 at the bottom and 1100.50 at the top. 5 point swing trades. Yum. Pivots:
- R2: 1113.50 = Not today.
- R1: 1108.50 = was resistance before the pop on Feb 23rd that led to the sell off during the day. I cannot see ES reaching here today – especially after the fade-out yesterday.
- Neutral: 1100.50 = This is the range top. It’s been a resistance level in the past.
- S1: 1095.50 = This is the range bottom. It’s been suport in the past and just above an “eyeball” support line at 1094.50ish.
- S2: 1087.50 = Not Today, IMO.
FX
DXY has been sitting on top of the 38% FIB (low = 74.17; high = 89.624). I think that the major portion of the USD short squeeze is over and DXY is going to consolidate at this level. I see support around 79.50; and 79.00 on a TD basis. I don’t think that I would want to be the USD if California officially goes bankrupt. I am playing a small short trade this AM. Please note that I have a sufficient capital risk base that I can go through the stop running and hold my positions until they correct back.
The EUR has been channeling upwards overnight and is presently consolidating on the S1 pivot at 1.3485. The TA is mixed. MACD is trying to cross bullish. Ichimoku says neutral with base and conversion lines on top of one another. As I type, EUR is getting sold and DXY is running up. I’m looking to TD Pressure to go oversold and cross back – and then I’ll know that EUR is headed back up. Overhead resistance seems to come in around 1.35ish.
NEWS
Greece is having its problems with a population in revolt against austerity. Unfortunately, there is really no choice – please refer to countless TV shows on debt management. Wheat has seen a bumper crop this year and Russia plans to release from their stockpile.
Canada leaves no doubt in their domination of the Russian men’s hockey team.
DATA
8:30AM
Durable goods; Initial jobless claims.
10AM
House price index MoM
That’s pretty much it as I sit on a semi-foolish DXY short – looking for some strength in the EUR off of a bottom – but this doesn’t look likely. I’ve got my point of “scrap this trade”, and I continue to prudently manage my risk. Trading bias gets you slaughtered. Stick to the TA and know the point where you are wrong.
Cheers.
