Still Crazy After All These Years.

by gmak

http://www.youtube.com/watch?v=46bkXgxb66E

However bad all bears feel about the pressure on their P&L, imagine the desperate straits of someone who needs to circulate a rumour on Thursday before Opex that the FED is going to raise the discount rate. Imagine my incredulity to see the EUR sell off 85 pips. For the discount rate?!!! The rates used by dying skanky pseudo-banks with nicotine-yellowed fingers pullin tattered sheets of MBS, CDO, and CMOs out of stained and patched raincoats?!!

Imagine my surprise getting ready to ride the elevator back up only to find it stalled at 30 pips……………………. I had to work hard to pull back to near even last night. Something nasty is coming, IMO.  I just don’t know what it is, nor where it’s coming from; but it’s big, and it’s ugly, and it is going to put a hurt on a lot of people. Still hazy about all these fears.

I sat back and thought about what it would mean if the FED kicked those holding calls in the pills, just like the last time (and Aug 17, 2007). IF you want to understand what evil lurks in the Heart of FEDs, look to who is holding a major losing position in index options. If it’s vampire squid and cronies, then it can be no surprise when that kick comes before the market opens on OPEX.

Otherwise, there is somone somwhere who is desperately sweating and likely trying to wish the SPX below 1165 at tomorrow’s open, IMO. I think that their collective backs are against the wall and they’re staring into the cold wet eye of a vampire squid. I’m very happy that it’s not me. Still solvent after all these tears.

Welcome to the broken clock. Still lazy about all these gears.

EQUITY

After knocking on the “since Oct 17” trendline on Wednesday, we get nothing but a sort of spinning top yesterday. And I need to know, is this for real? I see the meat. I smell the cash. But is that a string leading to a pulley holding up a Wile Coyote safe? I’m sticking to intra-day trading. Besides, TD Pressure has yet to signal a low risk SELL (see the pink box). Still  leery of those buccaneers.

http://www.uploadgeek.com/share-B0EF_4BA2AB3C.html

Thursday’s bar (a 44) had only a 1.54% chance of occuring – but it did. The probabilities of an open and close being in the same bar segment were 14%. Surprises abound, and the odds are best over a long period of time, I guess. My opinion is that there will be more specialists and market makers happy if SPX opens and closes below 1165 than the alternative. Still sleazy for all these profiteers.

It never ends: Tomorrow, the odds of an OPEN > CLOSE are 50%; OPEN < CLOSE = 40%; OPEN in the same bar segment as CLOSE = 10%. The most likely shape is 15, followed by 51. THe two day pair of 14 – 44 have only occured 10 times since April 1982. 7 of the subsequent bars have been OPEN > CLOSE. 2 were OPEN < CLOSE, and 1 was the same segment (33).

Today is OPEX.  Yesterday was a mildy down day from the previous close. The SPX is in an up trend. When all of those are put together (down Thursday and positive slope), there are only 89 / 334 OPEX that meet the screen.

You can draw your own conclusions. OPEX is a nasty day and no information should lead one to dabble  in equities unless you are stuck with your hand in the monkey jar. 

ES OVernight saw Asia green in a bright way, except for Malaysia. Europe is red in smaller areas such as Holland, Greece, Austria and Spain (HAGS or NAGS. heh.).  The breadth is weak in all green markets there. The DAX gapped up a the open (How unusual!), but faded like a pair of summer jeans hugging a nice body and followed the EUR down. Breadth is quite good in the green sectors, and even the 3 red (Ind., Healthcare, and Info tech) sectors are 50% up.

ES was quite flat all night, and the paint is still drying. A two point range leads to toothpicks in the eyelids. PIvots:

• R2: 1168.25 = I don’t think this is likely if pinning is a valid spectator sport today. I get the impression that 1) either Bendover and the FEDs will put a hurt on the open, or that there are those who would benefit from a sub-1165 open and day.
• R1: 1164.75 = Same reason. My gut is saying “run away. run away.”
• Neutral: 1160.50 = This is the pre-market floor. Tested early and now just recently.
• S1: 1157 = This is also the level of TD support – and is likely to play heavily in any dips that slip away on this likely low volatility day (guessing at this – but the intro usually sets the tone on OPEX< no?)
• S2: 1152.70 = My opinion is that this is a myth for today to give the bears some hope.

I’m going to avoid SPX, unless the most juicy of steaks is offered. I’m going to dance and flirt with EUR instead (she wears scarlet well, and that’s red’s sexy cousin). Still racy after all those beers.

FX

The daily EUR chart still shows that classic bottoming process. Yesterday strikes me as the cleft before forming the right cheek. After all, they are a pair. Deux fesses qui se connaissent. The bounce back from the 50% FIB that the TA suggested occured – but with much more violence and virulence that I had expected. I don’t see any reason to put aside the range trades between 1.3550 and 1.3850ish. The chart shows much support from FIB and TD risk (the support indicated by the purple dashed lines) just below. Plus TD pressures has experienced some release -so there may still be a test of rumoured stops below 1.3520 but I think the cork will bob back up to the surface (just in case, I’m packing my stop-loss). Still amazing after all those jeers.

http://www.uploadgeek.com/share-42FF_4BA2A9EB.html

I got up to finish this piece just in time to see the other bookend  of the 590 bounce finalize after the Europe open. Didn’t have any traps set, but I might indulge in a little tail coat riding of the rumoured sovereigns playing safety net. I’m ever mindful of the supposed sell stops down below 620 where the salivating heddge funds were said to lurk and wonder “is this all there is?”. Pretty tame if it is. Maybe time to ride the elevator back up a bit like last night.

Looks like there are buys set up all the way down to 1.3550 (the bottom part of that apparent range up to 1.3850). I think a long around here is a suitable risk for a scalp. I’ve got TD support at 1.3570. I’ll risk 10 pips to make 15 on my darling EUR. Still slaving after all these profiteers.

NEWS

Greece still on tenterhooks. Some commodities catching a bid after the US jobs report. Roach wants to knee cap Krugman. China must have shown him pictures of his grandchildren going to school with dangerous intersections. UK unemployment fell so much due to those giving up.

DATA

ON MONDAY: Chicago FED at 8:30. Followed by Home Sales, and all the attendant hangers-on at 10AM EDT.

Nothing today to make OPEX really like a knuckle ball.

Have I mentioned that it’s OPEX? 🙂 Still crazy after all these years. Time to listen to a little “The Pierces” for a change of pace. The secret is that there is something about a bobbed blonde in gold lam-ay flapper skirt.

http://www.youtube.com/watch?v=y60rfjNCJM0