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Global Macro Morning Update
By Nic Lenoir of ICAP
Insanity is upon us, let's make it official. The market in S&P futures is up 26 ticks overnight despite a dismal close last night on absolutely NOTHING. There are people out there who will say that it is all based on the positive news out of Korea. First of all a war between North and South Korea was never priced in the market in the first place. There were a couple tremors in the market but yesterday we opened grossly unchanged so clearly the story was not a bother for the markets. Furthermore last night's sell-off had nothing to do with the Koreans who were sound asleep when US equity markets decided to tank in the last hour of trading. Before we delve into the price action and update targets and levels, it is worth noting that: a) volatility is here to stay and getting worse b) the market is broken and a true disaster waiting to happen, one day we will get a move down and there will be utter complete liquidation that even the mighty plunge protection team won't be able to stop.
As far as the price action is concerned, the 1,000 pound elephant in the room is the inverted H&S in the S&P future. We are right on the resistance this morning. Base case game plan for day traders should be to sell 1,088 here with a stop around 1,093 and reverse long if the stop is triggered. The next target to the upside is 1,113, meanwhile to the downside the market has support at 1,053/1,055. While most will be extactic at the bullish price action, selling here does present the argument that we are already up 26 ticks on the day which has barely started for absolutely no reason...
The one constant in this market is Gold. 1,171 was our trailing stop on a daily close and we did get a few worries last week, but the market held where it should have and is looking to move higher now. From a fundamental standpoint, the never ending bailouts and dilution of fiat currencies remains a huge driver for the trade.
In rates space the market has reversed bearish for the near term. We have a target in the 10Y future at 118-15 (wave 4 of lower order). It is unclear to me whether we have completed a bullish impulse on the upside or weather we only just terminated wave 3 and this is an intermediary retracement, but 118-15 is the common case target and we see on the daily there is an overlap support at 119-05 so 118-15/119-05 should be reasonably good support on the downside. Bigger picture I think we are in and uptrend until we get a daily close break below 118-15 so I would recommend caution for people trying to capture the move to the downside.
Good luck trading,
Nic
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Money supply is at scary numbers....and I love London completely ignoring the dismal retail sales numbers that came out ....a 32% miss to the downside (forcast +14% actual -18%)...European depression 2 is starting and all is well...?
"...and I love London completely ignoring the dismal retail sales numbers that came out ...."
Thank you for pointing that out. This market, meaning the players in the market, are becoming more infantile as they desperately look for anything, including makes good news out of nothing as well as ignoring bad news, to remain in fantasy land.
We must always respect how powerful the impulse is to remain in La La land.
"...the impulse is to remain in La La land."
Sure, but also the political guys and their media enablers depend for
their livelihood on the masses remaining torpid. It is clear that the PPT
will spend our last tax dollar to maintain DOW 10,000. This is not the
whole story but holding up stock markets to higher-than-justified levels
makes sense to a broad class of the powerful.
"NNNNNOO! I don't want to face reality! You can't make me!"
"Insanity is upon us, let's make it official."
Insanity is the new normal.
Ergo: another normal day.
US money supply plunges at 1930s pace as Obama eyes fresh stimulus
http://www.telegraph.co.uk/finance/economics/7769126/US-money-supply-plunges-at-1930s-pace-as-Obama-eyes-fresh-stimulus.html
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This is why BP is lying about the size of the spill:
BP faces 60 billion $ fine on oil spill so far. Could be 240 billion $ in 3 months
Translated post: http://babelfish.yahoo.com/translate_url?doit=done&tt=url&intl=1&fr=bf-home&trurl=http%3A%2F%2Fwww.hln.be%2Fhln%2Fnl%2F7179%2FOlieramp-Golf-van-Mexico%2Farticle%2Fdetail%2F1110125%2F2010%2F05%2F26%2FWaarom-BP-liegt-over-de-olieramp-in-de-Golf-van-Mexico.dhtml&lp=nl_en&btnTrUrl=Translate
original post: http://www.hln.be/hln/nl/7179/Olieramp-Golf-van-Mexico/article/detail/1110125/2010/05/26/Waarom-BP-liegt-over-de-olieramp-in-de-Golf-van-Mexico.dhtml
Tony Hayward's PR offensive:
"Hey, get outta there. Get outta there. Get him out. Get him out!"
http://www.hln.be/hln/nl/3384/video/video/detail/1110066/BP-baas-manipul... BP Exec's Explain Plan to Solve Gulf Disaster: detailed plan: http://www.youtube.com/watch?v=yamxsz9YgTI&feature=related
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No change in Pipe leak so far:
At the 2:20 mark you will see the same view and the same colors coming out of the various hole, only difference is, they are now bigger. Also there are now 5 plumes where there used to be 1, THE FEED IS NOT SHOWING THE PRIMARY LEAK! This is the "smaller" leak further down the pipe which is open again! (1ste leak to be capped, or so they said) http://bp.concerts.com/gom/rov_riserkink...
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May 26 (Bloomberg) -- A BP Plc document shows the company’s well in the Gulf of Mexico may be leaking as much as 14,000 barrels of oil a day, more than the 5,000 barrels a day publicly estimated, a spokesman for Representative Edward Markey said today. The internal BP document is from April 27, Eben Burnham- Snyder, a spokesman for Markey, a Massachusetts Democrat, said in an e-mailed
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BP: Can my Cousin Vinny be the Judge?!
Obama: Whatever, but now you're here, let's talk about my 2012 reeclection campaign...
http://www.kentucky.com/2010/05/26/v-print/1281493/bp-wants-houston-judge-with-oil.html
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GM can take on some more debt. While we're add it... http://www.bloomberg.com/apps/news?pid=20601087&sid=ajK77ZqB3tf0&pos=5
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Not all idiots live in the US. Europe has it fair share also: http://www.telegraph.co.uk/technology/apple/7767464/Apple-to-open-stores-early-for-iPad-shoppers.html
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China's secret army training camp: Be affraid... be very affraid... http://www.telegraph.co.uk/news/newsvideo/weirdnewsvideo/7767371/Kung-Fu...
I do believe the situation has turned political, the Demos are in a panic with the recent election results, the polls and the (lack of) popularity of their sitting President.
And the biggest problem they see is deflation, this dooms the biggest debtor in the world, the US Government.
So they may go all in and have the "mother of all stimuli" programs. They may do something on a scale never before considered, something in the trillions. I do believe "Helicopter Ben" is about to come true.
If the market factors in an increase in money to the people of $40-50K per family, $10K per person, then Dow 15,000 here we come.
Just wild conjecture, but it would not surprise me in the least .... :-)
sschu
At least there is no apparent conflict of interest for Judge (Cousin Vinnie) Hughes. His interests are clear and unambiguous.
I thought it was because China announced they were not selling treasuries/gilts/bunds/debt holdings...?
I took that to mean they hoped nobody else would before they could.
I'm not sure the Chinese practise Goldman Sachs-style doublespeak.
Believe me, EVERYTHING gets confused in translation between East and West. When someone is telling you "no" in China, you very well might not know that.
Exactly, why rattle the market and allow folks to get out ahead of their trade. And I don't believe they said they would continue making NEW purchases, so there goes one support leg for the euro market.
Entire staff of SEC now employed by PPT?
And you actually believe that?!?
/rolleyes
This is a much expected technical bounce. Enough said....
The only chart that matters is the Dallas Fed web site M1 graph. Is the fed printing or not. Yes, market higher, no, correction or worse.
Don't look to the ripples, watch for the stone.
Could be the correlation with AUSJPY forcing algos to buy?
The market is not broken. This is how it always has acted.
Here's a fund manager, who came of age during the depression, describe market action in the 1940s & 1950s:
1943-1945
A consistent major uptrend in prices.
1946-1948
A short sharp decline followed by a long period of hesitation.
1949-1952
An irregular up-trend with an unusual number of reversals and false moves.
1953
A decline which caused us to do some precaution selling that proved unnecessary.
1954-1955
A consistant up-trend in prices.
1956-1957
A highly irregular period.
1958-1959
A sharp rise ending in an irregular period for the last six months.
1960-1961
An irregular period which caused us to take a defensive position in bonds.
Brett,
Your examples are covering years. We are talking about hours now -- seriously there is almost no correlation to your example.
You really think it was different during the day?
There's a book called "The Game" written in 1897. In it, the author describes the stock market as 5% investment, 95% betting on price fluctuations.
The only thing that has changed is the technology.
how to fix the economy ....well its a piece of cake ....check it out from rense.com...my favourite site:::
http://www.rense.com/general88/howto.htm
HA! impossible. That plan costs 40 trillion dollars. I guess it's correct to assert that if we collectively had 40 trillion dollars our problems would be fixed.
Dude, what today is impossible?
At the rate of unproductive money creation Ben will soon blow his nose with 40 T.
Do it!
It is less insane than what we are doing now and it speeds things up.
Touché!
Garbage article from a garbage website. Anything from rense.com is not worth the time to click the link.
[O]ne day we will get a move down and there will be utter complete liquidation that even the mighty plunge protection team won't be able to stop.
That day may be today if Elliott Wave folks are correct about a possible "three of three" starting as soon as this bounce completes. Good luck!
A must read Daid Einhorn article in NY Times today...
My favorite paragraph...
Subdued reported inflation also enables the Fed to rationalize easy money. The Fed wants to have low interest rates to fight unemployment, which, in a new version of the trickle-down theory, it believes can be addressed through higher stock prices. The Fed hopes that by denying savers an adequate return in risk-free assets like savings deposits, it will force them to speculate in stocks and other “risky assets.” This speculation drives stock prices higher, which creates a “wealth effect” when the lucky speculators spend some of their gains on goods and services. The purchases increase aggregate demand and lead to job creation.
I half agree, except that the Fed doesn't give a rat's ass about the economy. It's simply a tool of the financial establishment which wants the public in the market to buy at retail what exchange insiders bought at wholesale during the crash.
Large inverted head & shoulder pattern (bullish) in the US index futures. Should be good for a pop back to Dow 10500, all aboard!
The rally is because we missed GDP, downward revision, what a "surprise".
It's not that the market is broken, it's that there is an overload of participants in the market who are institutions, HFTs, gamers, crooks, government, or combinations of the above. Anyone thinking in terms of investing, the long-term, or of value simply isn't equipped for the battle, like cavalry in the age of drones. The crooks win by preying on the investors, but the investors have decided to not play, leaving nothing but crooks to prey on each other. We see the results.
That's the stock market.
It started as a way for street hustlers to soak the rich. Then, with the rise of the middle-class, it became profitable to take that group to the cleaners.
Don't know why, there's no sun up in the sky...stormy weather.
Instability. In severe weather lexicon, instability refers to systemic variables that, when combined with one-another, often lead to catastrophic weather events. As an experienced severe weather climatologist and storm-chaser, I know how instability impacts the formation of severe thunderstorms and tornadoes. And I can atest to power of such storms. I have seen them first hand. I have watched as people have lost both homes and lives to such storms.
In the case of tornado formation, instability is the measure of several varaibles: most significantly, heat, moisture and lift. The birth and maturation of tornado-producing thunderstorms is an incredibly intricate and complex process. All of the conditions must come together at just the right time in order to allow the potential energy (we in the weather world refer to it as Convective Available Potential Energy, or CAPE) to trigger the formation of rapidly rotating convective updrafts. But because weather is the most fluid of natural phenomena, severe strom meteorlogists cannot tell us exactly when and where a tornado is going to form. Tornadoes, while enormously destructive and deadly, are microscale events. Most tornadoes measure less than 1/2 mile in diameter, and often spend only minutes on the ground. Predicting well in advance the exact location of tornado touchdown is impossible. However, scientists can tell us with incredible accuracy where and in what general time-frame the conditions will be most favorable for the development of thunderstorms; thunderstorms that could in fact produce large hail, damaging straight-line winds, and tornadoes.
The metaphor, I'm sure, is clear. With regard to the global financial crisis, instability is a measure of fear, confidence and trust. With sovereign and private debt crises ripping at the fabric of virtually every continent on the planet, and with the international banking system not simply illiquid but indeed insolvent and gasping for breath, and with the world's fiat currencies teetering on the abyss, instability is on the rise. Societal Convective Available Potential Energy, or SCAPE, is increasing. The chances that we will soon see significant explosions of social dislocation and global conflict and disrution of critical supply chains for food and water, etc. is on the rise.
There is no question that an elogated global financial disaster, with all of its attendant social and political chaos and destruction, is coming. Instability is high. From the Korean Penninsula to the marshlands of the Mississippi Delta to the streets of Bangkok and Athens, temperatures are rising. As the nations of the world continue to try in vain to hide their deteoriorating finances from each other, the cumulonimbus clouds are percolating. The false weathermen on CNBC and NPR may continue to try and convince us all that the storm clouds are fading, but we know better. We can feel it in the air. Moisture is pooling. Surface breezes are strengtheing and backing. We all know that it's only matter of time before all hell breaks loose. We don't know where exactly it will happen, and we don't know exactly when, but we know its coming.
THE NATIONAL WEATHER SERVICE IN LUBBOCK HAS ISSUED A SEVERE THUNDERSTORM WARNING FOR NORTHERN YOAKUM COUNTY IN NORTHWEST TEXAS UNTIL 215 AM CDT AT 108 AM CDT. NATIONAL WEATHER SERVICE DOPPLER RADAR INDICATED A SEVERE THUNDERSTORM CAPABLE OF PRODUCING HALF DOLLAR SIZE HAIL AND DAMAGING WINDS IN EXCESS OF 60 MPH. PREPARE ACCORDINGLY TAKE COVER NOW. THIS IS A DANGEROUS STORM!
Barton Biggs quoted by Bloomberg today as saying the market is very oversold and ready for a back-breaking rally to above 1250. No doubt that was the agreed secret signal to GS and and 33 Liberty to start buying ES futures in the pre-market.
Houston we have a problem.
Kind of makes holding overnight problematic when the market gaps up or down 2%.
Who can trade this kind of market? Only smart hedgies and big players who trade 24/7.
The average joe with vectorvest is likely screwed with this volatility.
Much sound and fury signifying nothing?
Are not most of the Dow stocks pretty much where they were 10 years ago?
Except the banks that evapaorted?
Are all the gold commercials a sign that everyone is in, or, a sign that there is a seismic shift among more affluent americans from stocks to hard assets?
Gordon Liddy needs to update his gold commerical? He states the national debt is 10 Trillion dollars. That is so yesterday. 13 T and counting.
Is it true that gold production is about 2500 metric tonnes which sounds like a lot, except at current prices thats only a few hundred billion dollars per year. That's like a rounding error in the US budget.
This market has a very weird feel across all asset classes today.
I think it ends in tears for the bulls, with a major OUTSIDE DAY and ESM0 at 1030 or below.
I am beginning to think you might be right in that. I find it strange we are up 200+/30+ yet the vix hasn't even touched yesterdays low.
Has anyone considered we might have an upside crash? Some big players have been building large short positions. We could get an upside "capitulation" before imploding.......
Just a thought. Regardless, this market is going to ZERO!
well, now that they stopped everyone and got them to go long they can now let the market fall. sure seems like a good place to put your money.