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Nic Lenoir's Market Close Observations

Tyler Durden's picture




 

From Nic Lenoir of ICAP

Since I just got back today after 5 days away, I will say little since I need to reflect a bit more on the price action.

Until I send a more complete market overview tomorrow, there are a few things I want to point out: The market data is atrocious and yet we fail to accelerate lower. I have highlighted the past two weeks how the 1,040/1,050 are should provide strong support here and so ar so good. We remain core short from 1,126 but feel rather pleased to be out of tactical positions so the chopping around the lows does not give us any headaches. I still believe we should see 1,085/1,100 at the minimum before selling off more aggressively.

Beyond noting the daily support for the S&P and concurrent support for the DAX tested and held today, the intraday volume and month end activity into tonight's close is worth noting: 200,000 ESU0 (mini S&P) futures traded in the last 10 minutes. Even this may very well be simple month end activity, expect most algos out there to take good note of the volume spike on the uptick. The market kept trading strong in after hours and more could be expected on the back of this. Should this play out it could give the momentum necessary for us to go kiss 1,100 goodbye before moving lower. In terms of economic data the work my friends Julian Brigden and Jonas Thulin were kind enough to share with me more than comforted my very doom outlook for the next 2/3 quarters, so we will be looking at reloading tactical shorts into the rally should it materialize.

Good luck trading,

Nic

 

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Tue, 08/31/2010 - 17:24 | 556305 TWORIVER
TWORIVER's picture

There three kinds of Head and Shoulders patterns: Tops Bottoms and Continuation. Until 104 closing basis SPY is broken, we may be in Continuation as July low has held.

Tue, 08/31/2010 - 17:33 | 556321 BlackBeard
BlackBeard's picture

Up, down or sideways?

Tue, 08/31/2010 - 17:44 | 556341 Thorlyx
Thorlyx's picture

All three, but at a different time.

Tue, 08/31/2010 - 17:51 | 556361 taraxias
taraxias's picture

It will rain tomorrow. Unless it doesn't

Tue, 08/31/2010 - 17:58 | 556376 Thorlyx
Thorlyx's picture

Actually, it could rain for part of the day and stay dry otherwise. Or vice-versa.

Tue, 08/31/2010 - 17:55 | 556373 scatterbrains
scatterbrains's picture

Why do my charts show an almost full point drop at 16:25 on the sept. zn futes ?

Tue, 08/31/2010 - 22:36 | 556791 Al Huxley
Al Huxley's picture

Oops, sorry, I accidentally junked you, when I really just wanted to reply.  This doesn't look like continuation to me - way too volatile, and biased to the downside.  We may see  arally, but I'd be surprised if we don't push down to around 1000 on the S&P first. This is September after all...

Tue, 08/31/2010 - 17:35 | 556322 repo 105
repo 105's picture

I'd love to see charts during the day. But then again my broker is ThinkorSwim so I can't chart or trade.  Guess I'll have to see how I did today when the newspaper comes out in the morning, I think they still have quotes available in the Business section.

Tue, 08/31/2010 - 17:43 | 556338 Translational Lift
Translational Lift's picture

"my broker is ThinkorSwim so I can't chart or trade."

Say-what??  That's what TOS is good at..........what's the problem??

Tue, 08/31/2010 - 18:05 | 556388 ShankyS
ShankyS's picture

ToS has totally F'd up the system. "Charts" take many minutes to load and the "Prophet" charts simply lock up or will appear 15 minutes behind. Data gaps? LOL several. They have really screwed up what was a pretty good thing. Very frustrating.

Tue, 08/31/2010 - 17:52 | 556362 functionform
functionform's picture

He's referring to TOS's upgrade issues since Monday.  Charts have issues loading, quotes are delayed, and even chat is hampered.  Overall most people are very happy with their service.  So many headaches in one release is not the norm from them (which is part of the reason people blame the TD-Ameritrade purchase occasionally).

Tue, 08/31/2010 - 18:06 | 556392 Translational Lift
Translational Lift's picture

Check.........maybe TOS should go back to the previous ver. until they get the bugs worked out.

Wed, 09/01/2010 - 09:22 | 557330 Translational Lift
Translational Lift's picture

Looks like they took my advise.............  :>)

Tue, 08/31/2010 - 18:53 | 556454 Thunder44
Thunder44's picture

True, happened a few times to me today with charts and once the platform wouldn't load.

Tue, 08/31/2010 - 22:39 | 556801 Navigator
Navigator's picture

Option Monster....move on up to it.

Wed, 09/01/2010 - 00:12 | 556930 Young
Young's picture

Wait 'til you guys run some thinkscripts, then you'll be in for a nice surprise next time you load up the platform. Or maybe I should say TRY to load up the platform...

Wed, 09/01/2010 - 03:54 | 557090 mephisto
mephisto's picture

Could all you poor guys running such a shitty system please check you havent accidentally bought 200,000 ESU0 on the close last night? Thanks.

Tue, 08/31/2010 - 17:37 | 556328 Boilermaker
Boilermaker's picture

Thanks for the guesses.

Tue, 08/31/2010 - 17:46 | 556347 Thorlyx
Thorlyx's picture

If we would know for sure, we all would be very rich, right ? 

Tue, 08/31/2010 - 17:50 | 556357 Boilermaker
Boilermaker's picture

Well, no doubt, but this is a bit ridiculous.  I mean, honestly, you have to put some actual reason behind statements like the the SPX will race to 1,100 and THEN fall...

I'm no fan of TA because most of it, to me, seems like hopeful guessing where you proclaim clairvoyance if right and unexpected and extenuating cirumstances if not.  It just strikes me a 'professional' guessing.

Especially with the massive interventions going on, I don't know how anyone could reasonably trade with this.  Perhaps I'm wrong.

Tue, 08/31/2010 - 17:53 | 556366 taraxias
taraxias's picture

You are NOT

Tue, 08/31/2010 - 17:55 | 556371 Boilermaker
Boilermaker's picture

At least it is free...

Tue, 08/31/2010 - 18:41 | 556428 Getagrip
Getagrip's picture

Everyone (including the PPT) is looking at the support/resistance/pivots as these markets haven't traded on fundies since at least 1995 (maybe 2001- as 10 year P/E avgs. never washed out). Gotta use TA or perish. You could just close your account, buy physical PM's and be done with it till this plays out.... When the Dow gold ratio hit's 2:1, start selling some gold for cash flow real estate and high yield large caps. Then retire to Belize...

Tue, 08/31/2010 - 18:43 | 556439 Boilermaker
Boilermaker's picture

Well, I believe that the PPT is using it for plausibility in gunning the hell out the market.  But, come on, this TA crap is a bit of a sham.  I honestly can't remember even hearing about it 10 years ago.  Now, their is a step-right-up carnival fortune teller who wants to predict future activities based on a historical chart.

Look, I don't know, but it sure seems like a pile to me.  Whenever anyone can't substantiate a prediction based on facts, then it's just a SWAG, in my opinion.  Hell, I've got several free SWAGs myself.

I appreciate the free content and the effort...but, come on...

Tue, 08/31/2010 - 19:04 | 556463 Getagrip
Getagrip's picture

Totally agree. I started investing in the early 80's when you bought stock as an investment and not a "play". The bogus accounting/obvious manipulation that started after the 01 crash has now become, as you say, a circus. I guess that's why the average retail investor has bowed out. Can't invest in a manipulated traders market... By the way, since everyone is looking at the same price point's, it becomes self fulfilling

Tue, 08/31/2010 - 20:47 | 556636 Boilermaker
Boilermaker's picture

Winner, winner, chicken dinner...agree 100 percent.

Wed, 09/01/2010 - 00:16 | 556940 Young
Young's picture

So you guys are like the opposite of Buffet? You look at fundamentals, then short and hold?

Wed, 09/01/2010 - 07:19 | 557158 Boilermaker
Boilermaker's picture

No, I short and lose.  Not like Buffet at all...

Wed, 09/01/2010 - 03:45 | 557087 ThreeTrees
ThreeTrees's picture

Hate to be the young whippersnapper that's talking too big for his britches, but TA ain't nothing more than watching for trending and confirming momentum. Moves aren't confirmed until AFTER they've been partially completed. There is no clairvoyance in any of this, even the best technicians are already late. All the prognostication is contingency planning as charting on the fly is hard.

Support and resistance represent real aspects of the markets their charts represent. In markets there are undeniably price points/ranges that trigger changes in buying habits in real economic actors, ie: people. This is exactly the kind of behaviour alluded to via support resistance.

Example: X price of crude causes an economic slowdown due to crushed margins. That's resistance.

Tue, 08/31/2010 - 19:09 | 556486 economicmorphine
economicmorphine's picture

If you're not a "fan" (whatever the hell that means) of TA, what are you a "fan" of?  From where I sit, you either read financials or charts, or you watch CNBS.  Since one can no longer rely on financial statements, what else is there?  Darts?  CNBC?  No, TA is not perfect.  Far from it.  It does feed biases, but it's the best tool in the toolbox at the moment.  By far.

Tue, 08/31/2010 - 20:46 | 556634 Boilermaker
Boilermaker's picture

Fair enough.  If you can explain your chartology and make rational and factual sense of it, then I'd gladly pay you a grand for your hour of time.  You can't.  My money is safe.  It's a crock of shit.  It's based on what you think, believe, guess, and / or want to happen.  I'd also venture that it's notoriously inaccurate...to the tune of about 50 percent.

Tue, 08/31/2010 - 17:48 | 556350 Thorlyx
Thorlyx's picture

Good luck trading,

Nic

 

Thanks, that's really all we need !

Tue, 08/31/2010 - 17:58 | 556377 Rick64
Rick64's picture

Thanks Nic, good analysis. I think we will see a couple of weeks of ramping up and then start falling breaking the support that held today. JMO

Tue, 08/31/2010 - 18:00 | 556378 Getagrip
Getagrip's picture

I can't help thinking that after a selloff in Sept/Oct- that maybe takes the Dow to 9000-8700 or so, the Fed fires off QEII (with both barrels). Could we see 25000+ over time as the dollar tanks? No real gain in buying power, but it sure would look good on the monthly statement...     

Tue, 08/31/2010 - 18:11 | 556398 Hall 9000
Hall 9000's picture

SEC Drops Moody's Fraud Case


AUGUST 31, 2010, 3:48 PM

The Securities and Exchange Commission let Moody's off the hook for failing to heed its own rating guidelines.

"The SEC blamed "uncertainty" tied to the regulatory reforms enacted last month in dropping the widely watched case, which stemmed from Moody's 2007 failure to fix some European debt ratings after it discovered an error in their calculations. The Dodd Frank Act limits the SEC's jurisdiction to cases with a strong tie to the United States, the agency said.

But the securities regulator sternly admonished Moody's and other officially favored rating agencies -- known as nationally recognized statistical ratings organizations, or NRSROs -- not to let it happen again.

 

The report then goes on to explain why the SEC isn't pursuing a case that only three months ago it seemed to have been pursuing.

The report says that because of uncertainty regarding a jurisdictional nexus between the United States and the relevant ratings conduct, the Commission declined to pursue a fraud enforcement action in this matter."

http://wallstreet.blogs.fortune.cnn.com/2010/08/31/sec-drops-moodys-frau...

"Generally, a nexus refers to a connection. In case law, the term may appear when discussing the legality of a governmental restriction, and whether the means of restriction is justifiable in light of the right being restricted. A nexus is often required in all types of cases to establish jurisdiction, apply conflict of laws issues, establish due process in criminal cases, prove causation, etc."

http://definitions.uslegal.com/n/nexus/

 

 

 

 

 

 

 

 

 

 

 

Tue, 08/31/2010 - 18:59 | 556470 Caviar Emptor
Caviar Emptor's picture

How do you expect the market to breakdown?

You got a Bernanke put, HFT bots, zombie banks turned trading boiler rooms using taxpayer money, PPT, downside circuit breakers, a 24/7 propaganda unit, ZIRP + QE money tree harvest, TBTF protection for any financials of ANY size, full nationalization for large non-fiancials like GM and Chrysler.

And if that weren't enough there are no humans left trading, the "for the long run" crowd have turned to bonds and gold so there's nobody left to panic out. 

What's left are the zombie banks playing ping pong with the indices with taxpayer money.

Tue, 08/31/2010 - 19:11 | 556492 economicmorphine
economicmorphine's picture

Correct me if I'm wrong, but I believe we had all that stuff in late 2008 and early 2009 as well, and the market seemed to break down just fine.

Tue, 08/31/2010 - 19:21 | 556510 Getagrip
Getagrip's picture

Good point, but the algo's make money both ways. How will the Fed get bond's sold unless some fear is manufactured? Remember, these guys win no matter the direction.... 

Tue, 08/31/2010 - 20:18 | 556598 Jackfish
Jackfish's picture

Tell him the best part, Winthorpe.

http://www.youtube.com/watch?v=g4Uv4ftekaI

Tue, 08/31/2010 - 21:49 | 556718 Getagrip
Getagrip's picture

Perfect...

Tue, 08/31/2010 - 19:02 | 556473 Pillage
Pillage's picture

" 1,085/1,100 at the minimum " ........yeah, probably hit 1300 before moving lower then do a cartwheel go to 1200 before moving lower to 850

What wonderful news will bring us to a MINIMUM of 1100?

Wed, 09/01/2010 - 10:34 | 557514 MichaelG
MichaelG's picture

could give the momentum necessary for us to go kiss 1,100 goodbye

Looks like we're puckering-up for a big smackeroo... (1,076 & counting).

Tue, 08/31/2010 - 19:06 | 556482 dan22
Tue, 08/31/2010 - 19:11 | 556489 economicmorphine
economicmorphine's picture

Four weeks until October.

Tue, 08/31/2010 - 20:20 | 556600 Doug
Doug's picture

In a similar vein, gold has risen in light of all the bad news, but it's been in a rather tepid manner, over the last month or so.  I think it needs a good solid pullback to recharge before the next leg higher.

Wed, 09/01/2010 - 23:30 | 558950 Hephasteus
Hephasteus's picture

It can't pullback. I don't think comex made it's june deliveries and august deliveries seem to have broken trucks and boats as well.

Tue, 08/31/2010 - 20:21 | 556601 KTV Escort
KTV Escort's picture

check out the HFT bots having their way with UNG the last 90 minutes of trading today...

http://www.bloomberg.com/apps/quote?ticker=UNG:US#chart

(click on 1D chart)

Tue, 08/31/2010 - 22:20 | 556756 firstdivision
firstdivision's picture

Check out the past few days http://www.google.com/finance?q=NYSE%3AUNG

Wed, 09/01/2010 - 23:32 | 558958 Hephasteus
Hephasteus's picture

Isn't nat gas naturally an extremely choppy chart?

Tue, 08/31/2010 - 23:28 | 556868 No More Bubbles
No More Bubbles's picture

A Wall street "expert" said we're going to new highs.  We should all just have faith and believe him.....

Boo-yah!

Tue, 08/31/2010 - 23:35 | 556880 TwelfthVulture
TwelfthVulture's picture

Has anyone else noticed that a Death Cross has now arrived on the Transportation Index?

Wed, 09/01/2010 - 01:01 | 556992 Coldfire
Coldfire's picture

The Death Cross. The Hindenburg Omen. Melodramatically loaded TA descriptions much?

Wed, 09/01/2010 - 06:47 | 557140 jkruffin
jkruffin's picture

No worries,  they pump it up after hours, only to watch it collapse again when the data is released.  ISM Manufacturing will be under 50, worse than expected.  The ADP release will be interesting to see.

Market heading much lower, no matter what games are played.  The sheeple (suckers buying stocks) are being led slowly to the slaughterhouse. Just a matter of time.

Wed, 09/01/2010 - 12:09 | 557748 Josephine29
Josephine29's picture

Very impressive Nic. I did not expect you to be proved right about a rally so quickly and so strongly though....

Wed, 09/29/2010 - 06:51 | 612111 Herry12
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