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Not Worth Chasing
Submitted by Nic Lenoir of ICAP
We have a big earnings and options week coming to an end today. S&P futures are off quite a bit following BoA earnings. Maybe Ken Lewis did not feel like cooking the books much since he is leaving anyways, and there is no bonus coming up his way!
We just tested a key short-term support at 1080.50 in the future. Expect a little bit of resistance here. We haven't had a bearish options week in quite a while. We are still well up on the day, but given recent history hard to imagine putting a serious dent in the week's advance today. A betetr chance of that Monday. Still though on a break of the 1080.50 support fast money bulls should not be stubborn as we could go test the more significant intermediate support at 1,059.50/1,064 (the lower part of the range should hold to keep the bullish momentum intact). On the upside 1,090 is now resistance, and after that 1,100, it's not just because those are round numbers, it's the intermediary overlap and the topside of the short-term bullish channel.
The daily chart shows we are close to the upside of the open wedge, and close the yar's highs in RSI, though the latter is down because we are scheduled to open down. Overall though for the near-terms the market has become a better sell. You can take a stab at 1,090 or 1,100/1,103 (the 1-hour and daily charts' reistances) and add on a break at 1,080.50. I was alerted by a friend about USDKRW, which is posting a bullish morningstar today, and this FX cross has been very highly correlated with equities and carry trades in general.
Our main preference in Fixed Income was to play a sell-off in the 10Y futures from 119-23. While we think it is possible the market will go lower in the medium-term, short-term we have been testing a strong support between 117-20 and 117-29, and I would expect to bounce to 119 here before reassessing, so it may be worth playing a tactical long or at least trimming/taking profit on short positions.
Good luck trading,
Nic
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This market reminds me of the effects of IV cocaine haha the comedown is something to avoid at all cost
That's where the diazepam comes in handy.
If there's no reward to chase and all you have is a moral compass that was broken some time ago, what's a poor soon-to-be-out-of-work banker to do but stop working the Ponzi.
I feel your pain, Ken.
I would be shocked if the futures tested 1065 before they ran to 1100.
I bet GOOG will wrap a warm fuzzy blanket around the market and protect us all from an evil sell off.
Hey Nic...you write great reports. Stick to that. Regarding your pokes and jabs on Ken Lewis, you really know very little about the specific details of the MER/BAC acquisiton. And, even less about what really went on inside the bank's boardroom of that deal and the edicts that came from government, Bernake and Paulsen. People quickly lose sight of the fact that when they venture into areas they know little about, and couple and opine about it along side their real work, it demeans and lessens "their credibility" in the other work they do know about and is useful. Let Cuomo vet the Lewis/BAC details. And, when Cuomo's done with his investigations, and the proof and facts are out -- then draw judgment. Until then, stick to what you do best, reading the markets. Thanks.
I think you are mistaking that small comment about BAC and KL as analysis. Seems more to me as humour. Nic must have struck a nerve.
Oh yeah, as if...Cuomo will ever get the facts...lay off the crack pipe...and should Cuomo get the facts, well those facts are his ticket to Gov Mansion, he will promptly return the get of of jail card to Treas and FED.
Buy the dip! Markets coming back strong already!
Zombie market led by Zombie Banks
Just as the most of these companies are cooking the books to the upside with accounting tricks, does anyone think GS probably left a couple billion in revenue off the books as they would seem too greedy?
Mr. GOOG disagrees.
"Maybe Ken Lewis did not feel like cooking the books much since he is leaving anyways, and there is no bonus coming up his way!"
On that subject, see:
The Origin, Application, Validity, and Potential
Misuse of Rule 10b5-1
http://ssrn.com/abstract=1483812
Speaking of corporate luminaries, in light of Lazard, see:
When the Corporate Luminary Becomes Seriously Ill: When Is a Corporation Obligated to Disclose that Illness and Should the Securities and Exchange Commission Adopt a Rule Requiring Disclosure?
http://ssrn.com/abstract=1331511
Maybe, interim CEO wants to take a bath to show better than expected earnings in future periods?