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Macro Update: Still Bearish Big Picture Despite The Fed
From Nic Lenoir Of ICAP
Good morning,
We start the day with an update on S&P futures. We initiated a sell recommendation at 1,126 for the long term and we are staying with it. At 1,070/1,075 we recommended taking partial profits while keeping a core short position, planning to add to shorts around 1,095/1,105 with a full stop on a daily close above 1,108. The game plan is intact. There are several possible Elliott Wave counts here. On the 180-minute chart we see that we could be missing one last impulse lower with a target around 1,060) before a final bounce ahead of wave 3) lower which will be a lot more violent. On the 30-minute chart however it seems relatively possible that we completed wave 1) at 1,066 and we would now already be in wave 2. Given that we already saw the 50% retracement from the highs for all intents and purposes the bounce could possibly be over but I personally think we will be consolidating a bit more and test 1,100/1,105 before accelerating south. Either way the game plan sticks: we had an opportunity to sell above 1,095 yesterday and whether we get another one or not I feel that traders should be and remain with a core short position.
Regarding Gold I had indicated that unless we had a daily close above 1,225 I had a preference for further correction. We did close above that level but barely. There are elements that make me feel that we still have more downside ahead. While fundamentally worldwide quantitative easing and monetary policies looser than teenage pop stars make me look desperately for a way to escape the government-orchestrated crash course, and while gold is right now the only viable alternative to escape politicians' control over one's wealth, I have to stay true to my trading methods. Taking a step back from the recent price action, I see that we have strong bearish divergence on the monthly, weekly, and daily charts. Most possible Elliott Wave counts all indicate that we have seen a key intermediary top or we are one last push higher from it, either way between that and divergences I feel it is hard to be bullish for the near term. As for the longer term: commodity rallies almost always end in a supply scare parabolic explosion, and we certainly have not witnessed that. I therefore remain confident that once the deflationary wave which may well coincide with the repricing of government debt occurs, we will see much higher levels. Zooming back in to the recent price action on the 180-minute and daily charts, we have seen the 61.8% retracement from the sell-off since the highs, and we have hit resistance at 1,228 so short-term trading confirms a possible corrective sell-off which is in line with our medium term expectation resulting from the strong divergences observed.
Last but not least, the Fed is back buying Treasuries. Yesterday's pop in equities was a nice resh reminder of what happens when the Fed pumps liquidity into the system. I added a chart of the 10Y US Treasury future because it is too funny to be ignored: the market rallies ahead of the Fed buying... and then dips, so the Fed not only injects liquidity in the system supporting a doomed market with your tax dollars, but it also splashes primary dealers in the process. The gift will keep on giving, as here is the list of the upcoming POMO operations:
August 19, 2010 August 20, 2010 Outright Treasury Coupon Purchase 8/15/2016 – 8/15/2020
August 24, 2010 August 25, 2010 Outright Treasury Coupon Purchase 2/15/2013 – 7/31/2014
August 26, 2010 August 27, 2010 Outright Treasury Coupon Purchase 2/15/2021 – 8/15/2040
August 30, 2010 August 31, 2010 Outright TIPS Purchase 1/15/2011 – 2/15/2040
September 1, 2010 September 2, 2010 Outright Treasury Coupon Purchase 2/15/2012 – 1/31/2013
September 7, 2010 September 8, 2010 Outright Treasury Coupon Purchase 8/15/2014 – 7/31/2016
September 9, 2010 September 10, 2010 Outright Treasury Coupon Purchase 2/15/2013 – 7/31/2014
September 13, 2010 September 14, 2010 Outright Treasury Coupon Purchase 8/15/2016 –
I am working on digging up the hourly price action for the 24H before and after the POMO days of 2009 in order to isolate the patterns for equities and Treasury futures and also try to measure the impact of the maturity being purchased on the curve. More to come on this when I have a chance to finish the study! Remember tomorrow is a POMO day so don't expect Treasuries to lose their bid, and then expect tomorrow to see today's gains washed away as dealers cash in. After all can you blame them: would you sell today if I told you a multi-billion buyer is guaranteed tomorrow? I didn't think so...
Good luck trading,
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when will this bitch keel over and die?
patience, bitchez
sept 21st
Significance?
With all this ramp up, it won't keel over, it will crash! I mean look at the 85 level in ES, they're fighting for their lives to keep it up.
http://i36.tinypic.com/v4biwh.jpg
Didn't you say two weeks ago that the SPX would easily push through resistance at 1100 to revisit the April highs?
Don't you have anything better to do?
I repeat my question.
Didn't you say two weeks ago that the SPX would easily push through resistance at 1100 to revisit the April highs?
Yes - is it okay with you if I changed my mind?
No problem at all. But considering your in-your-face taunting on ZH during the month of July, I figured everyone would like to see the more humble and lovable side of realtick.
Thank you for responding.
No, thank you. That's what I like about ZH - people pay attention.
http://www.zerohedge.com/article/hindenburg-omen-here#comment-519891
So in other words, your daily taunting during July is fully offset by one (two....three...more?) thread last Thursday. And shame on me for not seeing your change of heart. Too bad you didn't put as much energy into advertising your change in heart as you did in your taunting.
Let's see if we can find common ground here. You seem to find no problem with taunting others when you feel justified. But you don't like it when I bring up your failed month long supposition that the SPX is going to the April highs.
OK, let's call a truce.
Pardon me Blood, but...
http://www.youtube.com/watch?v=6fgDxAASI_c&feature=related
LOL
I surrender. Where do I bend over? You don't happen to have any K-Y handy, do you? :>)
only the idiots dont change their minds on technical dis-confirmations.
From the front page blurb.
Is that funny as in "Ha ha" or funny as in "Oh shit"? Just askin'
BTW thanks for the list of upcoming Fed manipulation days. I wrote them down for safe keeping and constant review.
"queer" funny.
the gift will keep on giving until the checks are cleared-the big philanthropy movement checks
Ooops....
The "General Jim" countdown continues.
Only 90 trading days left until January 11, 2011
Gold must rise by $4.77/day to reach $1,650.
And that drop off the Gold cliff (among hundreds of documented cases) doesn't disturb you. Forget about your current bandwagon agenda against "General Jim". Don't these movements in Gold raise your eyebrows just a little Robo?
No shit, CD.
Just like "realtick" above, Robo will be held accountable if/when JS is proven correct.
An ~$7 drop on an item that is at $1225 is a 'cliff'??? Wow, you guys should stop using dollars as it drops far more than that in % in a day.
And Robo, those girls of yours need to EAT something. Try visiting Brazil, seriously. Real men 'break' stick figurines.
As is everything else in life, everything is relative. I qualified my statement by saying there are hundreds of documented cases of large movements in Gold prices, often for no discernible reason. And if Gold is moving by 50 cents or a dollar per ten minute span and then suddenly it moves $7, then "yes" that is a cliff in relative terms. This seems to happen often around the morning price "fixing".
There have been countless articles on ZH and elsewhere over the past year documenting the strange movements in precious metals and just about every other market of late. To ignore this is to expose agendas or internal bias.
Agree the market is volatile and that things are moving faster than in decades past. All things being relative, well, call it 'coincidences'. It is juts a coincidence that members of the house/senate/etc can trade on inside information legally. It is just a coincidence that Fred/Fann can be illegally purchased by the Fed and when last week that came to light in front of congress that now there is serious moves to do something about these pigs. It is just a coincidence that Saddam stopped selling oil in dollars and that the USA invaded that country. it is just a coincidence that Iran's bourse for oil also does not want to deal with dollars and...
a four dollar drop. oh my, the sky is falling! classic obsessive compulsive dementia. your recurring bête noire is an unconscious manifestation of repressed anxiety-an unhealthy and sordid affair with equities. automaton
Time to load up on some gold now that it is on sale today.
and an hour later Au =$1232!
Anyone want to give a volume breakdown of SPX or ES from open to 11am EDT? The market seems to have fallen off a cliff, so I was wondering if volume has been up this morning.
Crude oil about to shite the bed ....OT
Am watching that too... with USD not moving so much and the potential Iran thing its a bit odd. Dont trade it much so I may just use it as an indicator for other ideas rather than taking a view on oil itself...
Chart: ES
Well...so much for the bounce.
http://www.screencast.com/t/ZTdmOTA2ZD
"What" happened. I looked at futures at 9:15 am and saw the market would open slightly up. I got on the phone and didn't look at the market again until 9:35 am and the market was down 60 on the DOW.
What did I miss?
Don't know; don't watch the news no mo. Looking at the charts, there was strong overhead resistance to the RS of the IH&S that the bulls were hoping for. Elliott Wave fans are going to have a field day this week.
Agree with the coming EW fans fun fest.
It appears the futures were "wrong". Hmmmm. "Wrong"? The futures? Something stinks. It appears the "wrong" futures market was trying to get people to lean the "wrong" way at the open. Look at oil as well. A report was just released that contradicted a report released just yesterday.
Surprise. Wrong again. But that "wrong" report yesterday sure as hell helped revive animal spirits in oil and, by extension, the stock market. Surprise!! :>)
i wouldn't be so adamantly against gold. looking at the delivery situation, smoking is pouring from the windows of the comex. silver is on the edge of blowing off the roof. there's only so long they can play this paper game......
when they don't have the gold or silver to deliver, its over.....and it looks like, if you analyze the inventories and the delivery requests....
that's happening now.........good luck to all, especially you guys walking on the edge of a black hole with a gold/silver short.
Parental advisory: Jesus fucking christ these markets are fucked up, I watched the fucking european markets all day and something is seriously wrong!
Wrong-er than normal? (Normal these days, I mean. i.e. these effing unusually effing uncertain ones...)
If you had've watched the DAX today, you would've seen it's more F-up than normal...
See what you mean. (Also CAC, Euronext - in fact, only the FTSE seems to be attempting a degree of British restraint, albeit with the same pattern. I suspect these kinds of intra-day hoick-thumps will begin to seem normal fairly soon, though.)
Chart: CL
Oil futures backtesting upper boundary of down channel; may bounce.
http://www.screencast.com/t/MzQwOTI1Yz
Memo to TBTF: Fuck You (I'm taking my marbles and gonna play elsewhere.)
Singapore Mercantile Exchange to Start Gold, Energy Futures Trade Aug. 31http://www.bloomberg.com/news/2010-08-17/singapore-mercantile-exchange-t...
i'm not particularly a gold bug at this moment, but you'd have to be stupid to mock them. among easy, buy-and-hold strategies, it has been one of the very best. they could have been reading the complete works of dostoyevsky and tolstoy for the past couple years and still beat 90% of active traders.
anybody who tries to predict year-end price targets, for gold, the s&p, or whatever, is going to be off more often than on. so what?
i guess i don't play with gold much because i don't like buying future political decisions. but if the fed is switching its mortgages to treasuries amid a slowdown, that is a pretty good indication that it's likely to increase purchases of treasuries as the slow-down worsens into renewed contraction.
I like Nic Lenoir's comments, but the twists and turns that Elliot Wave Guys have to go through is always amusing. It's Wave 3. No, wait, it might be downwave B of upwave 2. My pivots are unclear.
Newbie: I am trying to figure out how to trade the pomo tomorrow with the use of etf's. Would one buy the DIA and/or the SPY/SSO for the equity side of the trade. And, would one buy a bond etf say TLT in the AM with a stop after 11:00 or so? Just asking.... Thanks in advance.
Dear Plausible Denial:
I’m not a financial guy, I’m a retired computer programmer. Still, my advice is never send your money to some Ivy League puke who claims he’s going to “invest” it for you. There is no investing going on in Wall Street, it‘s just a big casino.
All the monkey-in-a-suit will do is pick red or black and watch the wheel spin. If he picks the wrong color he goes looking for another sucker/client. If he guesses right he’s off to the Mustang Ranch with your money and an ounce of Peruvian marching powder up his nose.
Latest joke making the rounds of Tony Montana type cocaine cowboy down in the Caribbean who need to launder their money: “What? Are you going to trust your money to some Skull & Bones monkey on Wall Street?”
Nic, A Study of the Seasonality in Gold Prices may be worth a look when trying to understand Elliot wave possibilities. You write "one more push higher is possible" September may give you that count as it tends t o be a strong month for Gold prices. http://rosenthalcapital.com/blog/
Nic, ZH has been theorizing for a while that the Fed has been a big buyer of equities since 666. If thats the case then they can keep manipulating equities even at these inflated levels using profits from their lower level purchases. Are all our charts/theories going to be laid waste thanks to Fed shenanighans ?
Chart: ES
Does the Red Line stop downtown...or will it jump the tracks today? We have backtested a rising trendline (in red) dating from the July lows. Good luck, bulls!
http://www.screencast.com/t/YzYwOTYzMWMt
There are certainly a lot of details like that to take into consideration.I read and understand the entire article and I really enjoyed it to be honest.
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