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Global Macro Update: Houston, We Have A Problem!
Submitted by Nic Lenoir Of ICAP
Let's start by summarizing my convictions and market outlook: the rebound which we managed to anticipate from 1,040/1,045 in the S&P future was purely technical. That is why at 1,085 we recommended closing tactical longs and observe the price action. The market caught most bears trapped as it broke above the 200-dma, but the volume and price action did not really confirm a major acceleration. Fundamentally the economy has started to roll over, H2 could be a real disaster as the underlying fabric of Western economies is feeble, and stimulus is dissipating with a decreasing political support for more monetization and bailouts. As such we were hoping to sell the rebound should it reach 1,150 in S&P future.
Unfortunately I don't think we will have that pleasure. First of all everybody is waiting for that level so we either fall short or we will blast through it to shake all the weak hands. Secondly, today's price action tells us the tops for the rebound could well be in. We have a key reversal day in the SPX and AAPL (AAPL is the most impressive), and bearish engulfing candles in EURUSD, GBPUSD, USDCHF, Nasdaq, Gold Silver, and probably a gazillion other securities... In theory we will not close above the mid-point of the body of the today's candle. That would mean shorts in SPX with a stop on a daily close above 1,118. As we had pointed out the other day the fixed income market had not confirmed the euphoria with 10Y Treasury futures not breaking through the key support at 119-23/26. We failed this morning once again to break through support. So technically things are very ugly. [ZH: we don't recall encountering this technical term in Advanced Trading strategies]
Now a quick word on this mockery of a Sunday night rally in risk: a revaluation by China is nothing positive for risk in general. This is nothing less than implicit tightening by one of the biggest monetizers in the gobal ponzi scheme. How that could be a good thing for Australia, Copper, or anything else is a mystery to me. As a side note I am waiting to see what this revaluation really ends up being. This was a pre G-20 announcement which could well be nothing more than a political maneuver. You have the American delegation walking in with the Sheriff's boots ready to talk tough, but before they can even start their speech the Chinese basically kill their entire game plan, while falling short of doing the actual revaluation for now. Seems to me like cutting rainman's fish sticks so he stops whining.
Watch closely on all the respective markets as the bearish engulfing candles are in, and the mid-point of the bodies should not be violated. We need another round of risk aversion so that central banks start printing again to extend a bit more the masquerade.
Good luck trading,
Nic
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Houston, bitchez
China --- Schmina
Glen Beck
Soros
Petrobras
2 billion loan to Petrobras to drill 14,000 ft
Ban Gulf Drilling deeper than 5oo ft
Forget Houston... Washington has an even bigger problem if you ask me...
http://www.zerohedge.com/forum/how-peacefully-overthrow-oligarchic-klept...
I challenge anyone to find a flaw in this plan to 'democratically' overthrow the U.S. government. Seriously it will work!
Na na na na naaa... I'm smarter than you guys! You guys are so stupid! Blah blah blah blah blah blah...
Listen 2,000 hit's already and my boat is still floating... sink me Bitchez!
Why don't you toss this ball over to the likes of Denninger?
I mean the doode seems committed to "the cause" and may very well have an idea or two on this subject. He's also one of those who can spread the word.
Just a wild idea i guess....but who knows.....
LMAO
It sure was nice knowin' ya, Zer0head
now set to disappear in
3
2
1
.....
Just kidding. There is still hope for us hairless apes with the likes of you around :)
What is sedition?
Sedition is the illegal promotion of resistance against the government, usually in speech or writing. What is illegal depends on the government and its regard for freedom of speech. The crime of sedition is alive and actively prosecuted in many countries today. In the United States, sedition as a crime has been enforced at several points in its history, notably during the presidency of John Adams under the Alien and Sedition Acts of 1798, during and after World War I, and under a 1940 federal law, the Smith Act, criminalizing membership in the Communist Party. When the U.S. Supreme Court first addressed the question of the constitutionality of sedition laws after World War I, the majority used what was then the traditional standard for judging "seditious" speech--whether it had a tendency, even a remote tendency--to stir people to resistance or rebellion against the government...
Could we ever see such laws again?
Yes--if we cave in to fear and hysteria. The terrorist murders of nearly 3,000 persons in New York, Washington and Pennsylvania on Sept. 11, 2001, provoked fear, hatred, anxiety and another round of laws designed to enhance our security. Unfortunately, some of those laws, such as certain provisions of the USA PATRIOT Act...
http://www.seditionproject.net/FAQ.html
"Listen 2,000 hit's already and my boat is still floating... sink me Bitchez!"
I hope you get something going.
Jun 21 1877
The Molly Maguires, ten Irish immigrants who were labor activists, are hanged at Carbon County Prison in Jim Thorpe, Pennsylvania. Author and Judge John P. Lavelle of Carbon County said of this, "The Molly Maguire trials were a surrender of state sovereignty. A private corporation initiated the investigation through a private detective agency. A private police force arrested the alleged defenders, and private attorneys for the coal companies prosecuted them. The state provided only the courtroom and the gallows."
Hopefully the lads went to heaven i/2 hour before the devil knew they were dead, and may the scum that were any part of the hangin wallow in a state of pain and persecution for the ever more than time.
Ahhhh, so... I shouldn't buy BP December calls?
That's the Play N Skillz when we out and cruisin'
Got warrants in every city except Houston
But I still ain't losin'
excellent analysis. thanks.
....except for the part about Rainman and his fish sticks. Not funny.
Stop whining.
Agreed. Thanks Nick.
Always enjoy your updates Nic, thanks.
Does Spence make you write this stuff Nic???
.
This technical analysis missed one key reversal point:
"Wait for GS Bullish outlook to Short ES"
GS is bullish. As far as I know, the SPX 1300 call for the end of H1 is still in effect, so expect seven consecutive 27 point moves tomorrow through June 30th.
Can't resist this one:
At two minutes and forty seconds to launch, technicians noticed that fuel pressure was running high, and Shepard was told there might be another delay...
"Why don't you fix your little problem," Shepard snapped, "and light this candle."
http://www.cnn.com/US/9807/22/obit.shepard.02/
great story.
>So technically things are very ugly. [ZH: we don't recall encountering this technical term in Advanced Trading strategies]
Come on Tyler you remember, it was right after "pretty bad" and just before "god awful". Must be gettin old.
Tyler,
China's move isn't really a tightening of monetary policy, as they were importing inflation via their dollar peg, like someone with a second floor apartment "fixing" a leak by cutting a hole in their floor (the inflation that should have happened in the US happened in China--China wasn't spending the money it was printing on goods, only dollars). China has now patched the hole (and waterproofed their ceiling, for the sake of the metaphor), and all the water is is now going to flood the second floor apartment instead.
This is not really tightening, it is just the Chinese no longer supporting a bloated American government. This is good for risk assets, because now the Chinese will have more dollars to spend on risk assets.
Just to recap today's gold price action, gold down huge on the news that Saudi Arabia's gold reserves are actually twice what we've been led to believe. Gold was down big-time as appreciation of the yuan will bolster demand for gold in China. Finally, the gold price was hit hard today as we're hearing that more Central Banks are diversifying into gold.
That's it for the free market enterprise report for tonight. God bless America and have a great free market capitalist night everybody.
Paper covers rock, still waiting to see someone throw down scissors and cut the paper. One, two, three, damn paper.
It's starting to look like someone's soon going to be cut by those scissors.
They managed to beat it down to 1230. It's coming up well now 1238. I watched it bottom and I thought "is that all you got".
Looks like a remarkably well formed cup and handle formation may be setting up.
And here I am unable to buy until the end of the week. Maybe they'll drive it down for me during that time.
According to China's Minister of Commerce, their exporters operate with a 1.8% profit margin. http://english.peopledaily.com.cn/90001/90778/90861/6936424.html
The last thing China needs is to kick off a 5-10% commodity rally in Dollar terms against 1-2% yuan appreciation. That would be the death blow to its already strained exporters.
The obvious solution to that is for the Chinese government to sell off its treasuries and use the money to subsidize/stockpile commodoty purchases.
Hyperinflation, here we come!
You mean, Fed goes wild printing money to permit issuance of US debt at sustainable interest rates, then hyperinflation.
Nic, your stuff is great
also, i love how cramer was right about this market all last week..then he goes bullish today at the peak of the market. now tonite on his show he's pumping HIGH PE CANDIES stocks again...you know...100 PE stocks like CRM , etc
unreal...........advocating people only buy the fashion show/croweded trade stocks after a bearish day like this
He's already pumped AAPL up a buck AH, along with numerous others that his legions find "must buys". I mean who wouldn't want to buy a stock that closed about 10 bucks lower than its morning high??
Sell AAPL before you get suckered any further, is what I say. It is a toymaker highly dependent on cheap as dog turds Chinese labor.
Today had everyone caught looking at "The Mysterious East" while the real action was happening behind everyone's back in the West. I think today was just all about deflation. When every asset class gets sucked down the rabbit hole simultaneously, even bonds. And I think it was about fund managers tip toeing to the door at a high rather than engaging in tape painting. We almost had a swoon in there as hardly a bid was to be found for long stretches.
More and more the tape is saying "reality bites". That's a far cry from this time last year.
Am I Imagining this? The Bid Size on the eminis in more than I have ever seen. 5600 contracts at 1110.5 ?
yes 5600 + then euro and aus/jen ramp up and s&p up a quick 5 points
"This was a pre G-20 announcement which could well be nothing more than a political maneuver. You have the American delegation walking in with the Sheriff's boots ready to talk tough, but before they can even start their speech the Chinese basically kill their entire game plan, while falling short of doing the actual revaluation for now."
Had not thought of that, but it is sort of tactically smart.
At G20: " Who us? Allow yuan to float? Huh? Did not you get the memo, Mr. Timmah? We did that last week (giggling of thousands of Chinese school children ensures, and even Mr. Timmah manages a smile.) "
No doubt the prelude to the newly minted status of the US as an export engine to the Chinese consumer so hungry for an iPad. (Is there a more useless toy to purchase? No.)