CTA Trading Desk Morning Report
[7:00am ET] Good morning.
Crazy markets this morning. Europe is red hot, led by banks and miners. The S&P 500 future is almost back to 1350. Precious metal futures are bullish. Only Crude Oil is showing some weakness. Contract margin increase maybe?
I don’t know what to say. I’m at a loss to figure out this market.
Yesterday morning was just like Friday morning in the precious metal stocks group in that right before the opening bell, with European miners in the red, there was a massive pre-market pop (but on small volume) that extended into the open for just a couple minutes before spending the rest of the day in distribution (i.e., large volume with prices that were flat to lower). But yesterday afternoon there was a second pump, so this morning’s bullishness is not unexpected.
How long this Bull move lasts is anybody’s guess, so I’ll leave it to the rest of you to have at it.
Have a good day.
Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
| Symbol | Name | Last Trade | Change | Related Info |
|---|---|---|---|---|
| ^ATX | ATX | 2,803.00 |
 33.00 (1.19%) |
Components, Chart, More |
| ^BFX | BEL-20 | 2,729.32 |
34.64 (1.29%) |
Components, Chart, More |
| ^FCHI | CAC 40 | 4,063.02 |
55.76 (1.39%) |
Components, Chart, More |
| ^GDAXI | DAX | 7,518.35 |
107.83 (1.46%) |
Components, Chart, More |
| ^AEX | AEX General | 360.77 |
4.84 (1.36%) |
Components, Chart, More |
| ^OSEAX | OSE All Share | 491.01 |
3.78 (0.78%) |
Components, Chart, More |
| ^SMSI | Madrid General | N/A | 0.00 (0.00%) | Chart, More |
| ^OMXSPI | Stockholm General | 372.82 |
2.37 (0.64%) |
Components, Chart, More |
| ^SSMI | Swiss Market | 6,540.76 |
63.87 (0.99%) |
Components, Chart, More |
| ^FTSE | FTSE 100 | 6,013.22 |
70.53 (1.19%) |
Components, Chart, More |
http://finviz.com/futures.ashx
http://finviz.com/fut_chart.ashx?p=m5&t=ES
http://finviz.com/fut_chart.ashx?p=m5&t=ZB
http://finviz.com/fut_chart.ashx?p=m5&t=DX
http://finviz.com/fut_chart.ashx?p=m5&t=GC
http://finviz.com/fut_chart.ashx?p=m5&t=SI
http://finviz.com/fut_chart.ashx?p=m5&t=CL
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Cara on Trends & Cycles
Vad's Catch of the Day
Kaimu's Sound Money
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report
Good evening. Patrick here.
Sometimes you just shake your head; can skype really be worth $8 billion to Microsoft (MSFT -0.58%)? Hard to believe this deal is going to jump start the lumbering, stumbling tech titan…
Another quiet, unremarkable session, equity prices drifting higher for most of the day as sellers were few and far between. Once the market successfully held the former Feb and April tops around S&P 1345 buyers stepped into the arena targeting another assault on 1370, with higher objectives of 1381 and 1400.
Moving right along…
Trading is beginning to resemble a video arcade, lights flashing and audio sounds alerting traders’ auto generated orders have triggered. The fastest robots are all vying to lock in a .0001 edge every couple milliseconds the quant playbook to exploit repeatable edges, thereby increasing assets under management (AUM) the ultimate goal for those using other people’s money (OPM).
High frequency trading may increase volume but only creates an illusion of liquidity; when multi-faceted strategies cannot be efficiently executed in a reasonable amount of time, machines will be shut down and those needing liquidity will have to pay through the nose to close positions.
Something to keep in mind if and when volatility returns to capital markets…
Silver (SLV+1.76%) tested the underside of its 50-day moving average and a gap fill today; the next day or two one would expect sellers to reenter the market and test the resolve of silver bulls.
While gold (GLD+0.28%) and silver were both up miners (GDX-0.72%) again underperformed, a not so subtle sign big money is banking on precious metals heading south.
Apple (AAPL+0.53%) had a burst in stock and call option volume just prior to the close – a news announcement soon to follow?
Have a great evening.
Comments
Cara 100 Ratings Changes For POMO Tuesday
Good morning.
5-7 Billion Dollar POMO Injection Today.
------
8:30 - Import/Export Prices
10:00 - Wholesale Inventories
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BHP - BHP Billiton initiated with a Buy at RBS.
CSCO - Cisco initiated with a Buy at BGC Financial. Target $24
------
“Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy.” ~ Groucho Marx
Crazy Markets
The Subject Title pretty much sums it up. I don't know about everyone else, but I'm in Loss Protection Mode. Difficult to determine direction when manipulation runs rampant.
We're not out of this crisis yet. Sovereign debts continue to grow, deficits growing with no real dedication to reduce, U.S. home values continue the escalator down, promoting those with mortgages to underwater status. Congratulations.
Noticed Chase 30yr fixed home mortgage loan in my zip code is at 4.625% this morning. It was 5.00% just last month. If you want one of these loans, your credit score better be way above 700 as well. Also saw where BAC is charging 30% on newly issued credit cards! Will they break your leg if you don't pay on time?
Another strange occurrence this week was our local property tax valuation. Value of our agricultural land DECREASED. With ag land selling at premiums, it was odd that our valuation/tax bill will be lower this year. Not that I'm complaining, it just struck me as odd.
I'm sure with the POMO schedule running full speed the markets will keep on chugging along until June 30. Unless something CRAZY happens.
For All You Silver Crazies Out There
I must be one too, as I see real value in precious metals, especially silver, everything considered. Thanks to Bill, we all had an inkling about what was to unfold last week. Here's another perspective, from one of the most vocal, active, and intelligent silver crazies out there. Hope I'm not banned for presenting this link.
http://news.silverseek.com/SilverSeek/1304873055.php
CS update on SLW today: they say Wait
Silver Wheaton Corp. (SLW.TO) NEUTRAL [V] R. Profiti
CP: C$ 35.47 TP: C$ 45 CAP: US$ 12.7b
Q1 a Slight Miss; Waiting on an Entry Point; Lowering 2011 Estimates
• Event: SLW reported 1Q11 EPS of $0.34, which compares to our estimate $0.41. Revenues of $158Mln were lower vs. our $195Mln on lower attributable silver sales (4.9Moz vs. our 5.9Moz) owing to timing of concentrate shipments. Realized silver price was largely in-line at $32/oz.
• View: Q1 lower on sales lagging production, no change to guidance. Attributable silver equivalent production of 6.2Moz was in-line, while sales of 4.9Moz lagged due timing of concentrate shipments. Mgmt expects the shortfall in Q1 sales to be made up over the course of 2011, with the current high silver price relative to Q1 providing a net benefit. FY11 guidance was maintained at 27-28Mln oz of attributable silver production. Barrick Gold's Pascua Lama (PL) project is forecast to commence production in 1H13 and be the source for the next major growth project in the SLW portfolio. To date, 45% of pre-production capital budget has been committed and earthworks are 65% complete. Once in full production, we estimate PL will account for 25% of attributable production.
• Catalyst: Dividend has room to grow. We believe SLW's strong balance sheet and high-margin/fixed cost business model is in a strong position to grow the dividend in the future without risking management's ability and desire to enter into accretive silver stream transactions. SLW currently has $564Mln in cash and a fully undrawn $400Mln credit revolver to provide liquidity.
• Valuation: Looking for attractive entry points. Our TP is based on an equal weighting of 1.8x our cash-adjusted NAVPS of C$24 and 20x FY11 CFPS ($2.02). We believe SLW will trade at a premium multiple to the group due to its above-average growth profile and fixed-cost structure, which allows for a rising silver price to flow directly to the bottom line. We continue to look for attractive entry levels for the stock as silver prices correct and valuations contract. We maintain our Neutral rating at TP of $45. Our FY11 EPS goes to $1.85 (from $1.91) reflecting actual 1Q11 results.
Re: For All You Silver Crazies Out There
4ever,
Re: "Hope I'm not banned for presenting this link."
Thank you for the link. Btw, the ones who get banned are ill-intentioned people who don't have a valid e-mail address and who send us spam. Believe me; the system catches a lot of it.
As for opposing viewpoints; I'd like to see more of it, particularly when it's based on fact or experienced and credible opinions. Every trade in the market is backed by opposing views!
This community can filter out nonsense pretty well, I think, but you know I seldom get complaints other than regarding gratuitous political remarks, and so I thank you all for sticking to the high road.
Re: For All You Silver Crazies Out There
Appreciate it Bill.
I do have a question for those following SLW closely. As silver funding/purchase contracts mature, are the renewal terms as favorable as in the past? Or were they able to lock in below market prices for the life of the mines? If the former, would that not cut into margins?
DUH moment
(US) Fed's Fisher: Monetary fuel feeding speculative activity; must wait for econ data before deciding to tighten or not
- To support stimulus only in the event ot a major economic shock.
- Worried over the loosing of certain credit standards.
- Excess liquidity is facilitating the volatility in commodities.
Takes them a while to admit the obvious...
Nasdaq has a little more room to run
Based on my weekly Nasdaq I see a little more room to run to the upside to let the big boyz load up some shorts before they pack their bags and head to the hamptons for a nice summer break. LOL
http://img62.imageshack.us/img62/7113/201105100735...
We shall see....
Re: CS update on SLW today: they say Wait
Something that doesn't seem to be discussed for SLW is the counterparty risk. SLW has put up capital, but what happens if a counterparty has some sort of "Force Majeure" (sp?) event?
FD - no position in SLW.
BofA to cut $850bn bad loan book in half
http://on.ft.com/iiZa4o
Scale of the problem:
Cara 100 Update
SLW - PT Lowered from $57 to $55 @ RBC. Outperform
Higher Crude Oil contract margins
http://uk.ibtimes.com/articles/20110510/crude-oil-...
Where is this confirmed? Anybody?
I just reviewed the entire CME website and saw nothing.
Re: Higher Crude Oil contract margins
http://bit.ly/iyzLWM
“Crude’s open interest has soared over the past week, meaning that there were a host of new shorts coming into the market, many of whom presumably had to cover on Monday after the market refused to break down,” said analysts at MF Global.
VALE
$VALE: traders closed out 39,562 May 30 puts yesterday. Open interest now 37,884 contracts
http://twitter.com/#!/rmbrenna
Re: Higher Crude Oil contract margins
Bill - confirmed on Reuters and CNBC
http://www.cnbc.com/id/42966436
Re: Nasdaq has a little more room to run
Where's your resistance expectations basketguy, the orange downtrend line?
I see bearish divergences abound in the indexes. SMH, which I follow along with the indexes, shows these divergences best.
Opened some September JNK $40 puts, August SPY $130 puts and avoiding this noise. Tops are stops.
Re: Higher Crude Oil contract margins
copy of a letter from CME Group
http://www.zerohedge.com/article/and-here-they-go-...
Re: Higher Crude Oil contract margins
Bill,
They have a mailing list you can subscribe to.
http://www.cmegroup.com/tools-information/subscrip...
Sorry, wrong link. I've changed it now.
Notice #11-162
http://www.cmegroup.com/tools-information/advisory...
Re: CS update on SLW today: they say Wait
TD cuts target on SLW from $54 to $44:
Q1/11 Results Prompt More Cautious Outlook
Event
Silver Wheaton reported adjusted Q1/11 EPS of $0.34/share, below consensus
of $0.41/share and our forecast of $0.44/share.
Impact – NEGATIVE
The company reported a weak quarter, in our view, with operating and
financial results below consensus and our estimates. Silver-equivalent sales
came in well below attributable production in the quarter (4.9 million ounces
versus 6.2 million ounces), primarily due to the timing of concentrate
shipments from several mines, according to the company. Production was also
slightly below our forecast of 6.7 million ounces, reflecting lower-thanexpected
output from Penasquito and the Barrick mines.
The company expects the shortfall in sales to be made up as silver deliveries
increase throughout the year. However, the company has minimal influence
over the timing of concentrate shipments and expected inventory declines at
Yauliyacu (which accounts for approximately 40% of the current 3.0 million
ounces in unsold silver) should be offset by corresponding gains at Penasquito
and Keno Hill, as production ramps-up. As a result, we believe the potential
for material timing differences in future quarters remains and have adjusted
our forecasts to reflect the potential for sales to continue to lag production
over the balance of the year.
While management remains confident that it can meet its annual production
forecast of 27-28 million ounces, we believe the lower-end of this range is a
more realistic target for the company following the quarter. After
incorporating Q1/11 results and making minor revisions to our project model,
we now forecast production of 26.5 million ounces (from 27.5 million) in
2011.
We believe there is heightened potential for silver to underperform in the near
term on continued weakness in speculative investment flows following the
sharp decline in the metal last week. Accordingly, we are lowering our target
multiples to 2.1x NAV5% (from 2.5x) and 21x 2012 CFPS (from 25x). Net of
these changes, our 12-month target price decreases to $44.00/share (from
$54.00). We maintain our HOLD recommendation.
Re: Higher Crude Oil contract margins
Wonder how these margin increases will affect the price?
This is less of a surprise than the Silver increase's were and I don't think they will be as dramatic.
Also, as someone who only purchases energy equities, these are (in my opinion) only reflecting about $90 oil anyhow in their values.
Waiting...
for UXG to follow SLW up the ladder
SPX 1361
Looking for this corrective wave to top out at 1361 area which is 78.6% Fib plus where leg A = C. If the decline we saw last week was an impulsive wave [which I believe was] then the next wave down once we top out at the target will be a steep [Wave 3 down].
http://stockcharts.com/h-sc/ui?s=$SPX&p=15&yr=0&mn=0&dy=7&id=p13183187473&a=233714281
I see oil currently putting in the right shoulder of a H&S with a target initially of 83.6 which is a NL of a larger H&S.
Currently short PCLN from May 5th [comment #85366] along with gold [DZZ] and energy [ERY]. Will short oil directly using DTO once the gap is filled http://stockcharts.com/h-sc/ui?s=DTO&p=60&yr=0&mn=...
Re: CS update on SLW today: they say Wait
ChrisM,
Canaccord has this to say about SLW risk:
Investment risks
The typical investment risks associated with any mining investment include commodity and exchange rate risk, permitting and technical (developmental/operating) risk. In particular, investors in Silver Wheaton should consider the absence of operational control and thus reliance on future purchase agreements/acquisitions for growth. Despite the minor penalties that would be paid to Silver Wheaton if guaranteed minimum silver deliveries are not met, the company will not be entitled to any compensation if Luismin or Zinkgruvan do not attain annual production targets or shut down operations on a temporary or permanent basis. Development risk and timing of production at Penasquito and Pascua Lama is somewhat protected by a completion guarantee by Goldcorp with minimum production hurdles by specified dates. Downside silver price risk is mitigated by virtue of the purchase contracts which allow for the minimum of the prevailing silver price or $3.90/oz (subject to inflation adjustments).
Re: SPX 1361
Strong work and thanks for posting.
I was also short USO and energy, but got stopped out on May 2. Then all the money I made shorting silver from the top I lost when I bet on a rebound in miners and was stopped several times in the very volatile Wednesday-Friday.
This another time I was right but lost money. Moments like this make me think I should not waste my time with trading (glad have a day job).
I'm also planning to reload shorts, but will wait for dollar to drop to do so.
FD: mostly in cash now.
Re: CS update on SLW today: they say Wait
Thanks Bill. I don't anticipate that GG would be a risk, although it does seem that Pascua Lama has some tricky environmental considerations. SLW looking OK this morning, but needs to clear 37.70, whereupon it will have a pretty reverse H&S base in place, but I'm expecting it to test 37 at least once.
Long GG
Re: SPX 1361
jack black I will try to throw up some oil charts later once I get them cleaned up. Too many trend lines on them as of now to post.
As for the timing on oil. I am thinking we may see a small drop in oil tomorrow after the inventory numbers are released at 10:30. Usually there is a knee jerk reaction until 11:15 or so, then the trend going into the report usually continues. So I expect a good time to start looking to short oil will be from late Wed afternoon on. Of course keep an eye on the SPX. Once it turns so will everything else. This next wave down I expect to be sharp and fast.
Re: DUH moment
It may have taken Fisher a while to admit the obvious (which I'd call progress), but he's probably still the only one on the Fed with that opinion.
He has a history of being the lone dissenter on their votes.
Re: SPX 1361
This another time I was right but lost money. Moments like this make me think I should not waste my time with trading (glad have a day job).
Same here Jack. I was doing ok up to the beginning of the year then made a few bad trades. I enjoy trading. Just can't figure out how to make a living at it.
Re: DUH moment
Yeah, another occasional dissenter being Thomas Hoenig, retiring next year I think. I am waiting for Ben to admit that - not holding my breath though.
Quebec clears way to north's resources
FT
Posted: 10 May 2011 10:23
Quebec has unveiled plans to open up a vast northern region, twice the size of France, to mining, energy and forestry investment. The province's premier, JEAN CHAREST, said Quebec was seeking to benefit from emerging economies' burgeoning demand for raw materials. Major deposits of iron ore, nickel, gold, uranium and diamonds have already been identified. The first phase of the project, known as Plan Nord, includes a campaign to attract foreign investors. The region's annual iron ore output could grow from the current 40mt to 100mt, according to analysts. Quebec has also undertaken to develop 3 500MW of renewable energy at an estimated cost of C$25bn. The bulk will be hydroelectric projects built by HYDRO-QUEBEC. The government will contribute C$2.1bn to the first phase of the 25-year plan, of which about half will be earmarked for roads, ports and other transport infrastructure. This news brief represents a summary of the original article.
Source: Financial Times -Bernard Simon
(US) Fed's Lacker: -
(US) Fed's Lacker:
- Reiterates tight policy could be necessary to prevent prices despite unemployment levels
- Sees possibility of inflation rising even if economic activity does not come back to its pre recession levels
- Recovery being led by household and business spending along with export growth
ERX [my 2 cents]
These charts have a lot on them but you can see where I am looking for ERX to possibly reverse.
If the trend lines hold then around 79.60ish area on both the 60min [see black circle] and the daily [see top of projected yellow candle] ERX could reverse. Also the MACD is in agreement.
The next leg down will give a clue as to whether the correction upwards is over. A drop below 71.46 would indicate the A-B-C correction is over and most likely will be an impulse wave down when it does happen. But the B & C corrective waves may not be in yet especially with OPEX week coming up so if playing the short side [ERY] keep that in mind and be ready to sell and reload at the end of the C wave.
60 min http://stockcharts.com/h-sc/ui?s=ERX&p=60&yr=0&mn=...
Daily [Blow Up] http://stockcharts.com/h-sc/ui?s=ERX&p=D&yr=0&mn=3...
SPX 15 min updated
Bull flag in the making. The rest of day looks uneventful. I expect a gap up tomorrow morning. http://stockcharts.com/h-sc/ui?s=$SPX&p=15&yr=0&mn=0&dy=7&id=p13183187473&a=233714281&r=4768&cmd=print
Currently looking at BGZ for a future short play. Will post chart soon.
Geithner: China will protect intellectual property
About time. Welcome to the 21st century.
Re: SPX 15 min updated
Hi GW,
This market has plowed through much. It's like money is moving into value where ever it can find it. Nice charts.
regards,
Earl
BGZ
BGZ just busted a move downwards as I was doing these charts. [A little outdated]
60 min http://stockcharts.com/h-sc/ui?s=BGZ&p=60&yr=0&mn=...
Daily [blow up] http://stockcharts.com/h-sc/ui?s=BGZ&p=D&yr=0&mn=4...
EOD
deleted
Probe what?
US Senator Levin calls commodity prices a concern, aims to hold hearings on oil market speculation
- Reminder: on 5/7 US Attorney General Holder says his energy market working group to probe the recent rapid drop in oil prices; and on 4/21 US Attorney General Holder forms working group to examine fraud in energy markets. Focus will be on oil and gas prices, Obama comments that some of the investigation will geared around oil market traders and speculators.
They intend to probe the DROP? I would probe the RISE...
Re: Geithner: China will protect intellectual property
Mark,
Somehow I can't quite picture little Timmy making effective demands. The Chinese will nod, bow and continue to do as they please, I suspect.
Respect our intellectual property, or else.
Or else what.
We won't use your cheap labor anymore.
I picture more of an Abbott & Costello routine —
Timmy: "Hu's on First."
Obama: "Who?"
Timmy: "Yes, Hu is."
Obama: "That's what I want to know... who?"
Etc.
An alternative view on the end of QE2
The generally accepted view is that the end of QE2 and dollar destruction means inflation (at least where commodities are concerned) and a drop in bond prices.
Here is an alternative view from the Financial Times.
A good time to snap up health care and tech stocks
BillMiller Published: May 9 2011 18:48
"The market has been absorbing a lot of DDT [Dollar Debasement Trade] without yet succumbing to its noxious long-term effects. From this point on, a lower dollar with concomitant higher oil and commodity prices, is bearish not bullish. We expect the Fed to end QE2 this summer. The System 1 reflexive view that Fed policy means higher commodities and a lower dollar will lose one of its pillars."
Since last November's effect on bonds was the reverse of expectations, perhaps he is right.
Any thoughts?
Grym
Re: BGZ
Entered the zone of interest. Gap filled. Updated chart
http://stockcharts.com/h-sc/ui?s=BGZ&p=60&yr=0&mn=...
Re: Probe what?
Hi Vad,
I believe it’s all Holder/MSM hype and 'distraction'. He does not want the focus on his having the DOJ shut down the largest jihadist funding investigation in history - where is the MSM on that? (Investigation headquartered in Dallas Texas...) There's competition for commodities, that's a concern? Holder - If it was not so sad it might even be funny. Vad, I can see a little speculation in everything – even my investing is speculation. What’s he going to do about all the pension funds that have been buying commodities? I hope the price of oil does drop – better for everyone involved IMHO – take care
Earl
Edit - actually what the DOJ shut down was the Co-conspirator element of the investigation - you won't find mention of that in the media... http://www.fbi.gov/dallas/press-releases/2009/dl05...
Re: BGZ
maybe good for EOD GW. Needs to develop a little in the hourly time frame. JMO. We shall see.
Re: BGZ
Les... agree. I am thinking another push down on BGZ to clear out the stops and produce more of a divergence on my daily and hourly MACD which are set different than the standard settings.
With One Trading Hour Left, NYSE Volume Is 50% Of Average
http://www.zerohedge.com/article/one-trading-hour-...
Re: With One Trading Hour Left, NYSE Volume Is 50% Of Average
C roll-back
Re: Probe what?
Maybe Congress should probe currency debasement and the effects on global commodity prices and foreign exchange volatility. But blaming it on evil speculators seems much easier.........
Conceptual computer from Germany
Easy to carry; just roll your laptop up.
Still in development concept, for designer, architect and anybody.
Not sure it can be an iPad killer, but it is cool nonetheless.
Roll up laptop. Check it out.
http://www.youtube.com/watch_popup?v=7H0K1k54t6A
http://myrolltop.com/
Re: Conceptual computer from Germany
Seamus -
That roll up laptop is interesting but the real future is the SixthSense as illustrated by its inventor's instructor in this Ted lecture. It will blow your mind.
http://www.ted.com/index.php/talks/pattie_maes_dem...
Cheers.
Re: Probe what?
Billy,
thank you for making my point better than I ever could
Re: Nasdaq has a little more room to run
Les,
Sorry for the delay....I expect a test at the upper blue line..Maybe a run up to it one week with a close away from it and near the orange...I can add a slightly higher orange line...If you look i did not take the low low for my action reaction lines...
Les I like the JNK play too
Les,
Jnk looks good here like you said with the right stop. Thanks
http://img222.imageshack.us/img222/9246/2011051019...
Econoday Today
Settlements for HB&B must be ended
Banks Said to Suggest $5 Billion Deal in State Mortgage Probe
http://bloom.bg/j6fiJv
We should be out on the streets like in Greece.
Really good article on Microsoft's purchase..
also using overseas cash, so price is about 30% lower... Thanks Fleck ... http://www.extremetech.com/article2/0,2845,2385117...
Goverment IOU's worth less
The Irish government plans to institute a tax on private pensions intended to raise about €470 million in each of 4 years. How is that good for the retired or near retirement crowd. Looks like with no place to get capital they have to raid what ever streams of funding are intact.
Someone say going down.
Read more: http://www.businessinsider.com/irish-bombshell-gov...
Rise of the Rupee, Real and Renminbi
Something Bill's spoken often here in the currency space, but worth a read nonetheless
http://www.spiegel.de/international/business/0,151...
I was amused by the astute observations from the journalist:
"The historical first simply couldn't end without the usual mantra. At the first-ever press conference in the 98-year history of the US Federal Reserve, Fed Chairman Ben Bernanke announced last Wednesday what everyone was expecting, and wanting, to hear. Flanked by the Stars and Stripes as well as the flag of the US central bank, he said: "The Fed believes that a strong dollar is both in American interests and in the interest of the global economy."
Bernanke has often made similar pronouncements -- as has US Treasury Secretary Timothy Geithner. Invoking the dollar's strength was also part of their predecessors' standard repertoire.
This familiar litany is actually a worrying sign, however. The statement is always made when things are not looking good for the dollar. In one sense, currencies are just like people: Anyone who is genuinely strong doesn't feel the need to emphasize that fact over and over."
---------------------------------------------
Just reflecting on this as I see $ rolling over again and market reacting accordingly. UUP hit 40 MA resistance and is returning to find maybe higher support with the rising 8 MA - we shall see.
IWM has bearish divergences all over the place. TRIX was a new indicator learnt today so as to be rid of the volatility of short term moves. It's a triple smoothed EMA indicator. It tells a story.
Of course one must respect price action - that is the primary indicator of direction for trading, which is what we are here for. But if the 3 longer-term investors that I follow are a)noting topping action, b)hedging short the indexes and/or c)keeping their commitment light or nonexistent I have to ask - who is taking on risk here?
Oh I know the daytraders are still in, so are the momentum players and the penny pinching machines, but if they're the bottom feeders, who are the bigger fish taking trades off their hands? Keep an eye on Vad's trading log and you can see the days when institutional traders are in business, providing the sort of volume that makes a daytraders bread and butter. Yesterday was not one of them.
Greater fool theory? Clearly some hedge funds were caught with their pants down as traders were trapped in Sunday evening futures a couple of weekends ago. Good price discovery mechanism that is. Or are we all too early in calling the top? Certainly hard to press the pedal to the metal here.
Dr Copper at 4.00 testing support
something to watch.
corresponds with commodity producer markets under-performing relative to the S&P.
http://tinyurl.com/5wbj8pm
Australian market trapped between MA's in the daily and testing 40 MA support in the weekly. The Russian market is strong but some chinks in the armour appearing as it crosses the 20ma relative to the $SPX in the weekly time frame. Actually it looks like a majority of markets are underperforming the S&P. Is this because many markets are in the late, interest-rate tightening part of the cycle?
It's interesting to note that the $AORD didn't recover following its top in early April, despite commodity prices putting in a double top 3 weeks later. Another divergence signal then. The view doesn't look any better now.
Random thoughts and questions.