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Point Of No Chart Return
Submitted by Nic Lenoir of ICAP
This morning we observe two very interesting resistances for risk. First AUDJPY tried yesterday and overnight to bypass its 50dma without success. Secondly we note on the S&P chart that the 50-dma for the continuous future is at 1,087 and we had the 61.8% retracement of the last sell off at 1,080. Similarly the Nasdaq is approaching the 61.8% retracement at 1,850.
While I must admit the Dax does look bullish here, probably because the lower Euro provides some tailwind for German exporters, there is bearish divergence on the hourly there, and we can observe the same for the S&P here.
We have retail sales tomorrow which I am told by my friend Julian Brigden of Calyon could well come in very weak. Similarly CPI could well disappoint and revive the deflation scares. On the flip side it's earnings season and the market loves to celebrates non sustainable earnings attained via cost cutting with weak consumer demand...
Overall I think it is a good entry to try to sell the S&P future with a stop if the SPX closes above the 50-dma (1.097 for the SPX) or if AUDJPY closes above the 50-dma.
On a separate note 10Y Treasury futures have a very strong support at 121-26.5, watch the market closely on a break as it could accelerate lower.
Good luck trading,
Nic
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Don't forget the positive benefit of completely fabricated balance sheets aided and abetted by our fascist government.
Right on Nic. We headed lower from here!
Please, save this for later:
Cramer: 'We’ve Seen the Lows for the Year'http://www.cnbc.com/id/38203002
The Cramer curse.... that's bad...
That is why gold prices have pushed the accelerator. At this momentum we could break resistance.
Yippee!!!
BUY!BUY!BUY!
Point Of No Chart Return
[after Nikita obliterates her target with a large automatic pistol]
Professeur de tir: You've used one of these before?
Nikita: Not on paper.
The only thing that scares me is that nasty inverted head and shoulders if you look at the big picture in the Nasdaq...
the only thing that scares me is Keyser Soze.
DXY has a H&S pattern too, and it ain't inverted...
As an aside (IE not @ you young):
Since the 80's CPI is a fabrication designed to hide price increases. No wonder it creates misguided deflation fears.
And M3 hasn't been reported since 2006, so if you are one of those rubes using it and CPI to stoke your pet deflation theory please remove a white-hot poker from your fireplace, sit on it and rotate.
One last note: to whoever keeps junking Muir's fantastic avatar: are you a prude, or what? Me, I find it pleasantly mesmerizing, and vaguely wishing that Muir would post more often.
There is a well thought out deflation theory that does not use M3 nor CPI because its is well know to be "massaged"
http://globaleconomicanalysis.blogspot.com/
Excellent link Iam. I was wondering when the erudite Mish would come up. He's a sharp knife in any drawer, and if you accept his definitions of deflation and inflation then, yes, there is what I like to call a 'Mishonary Deflation' underway, and has been since most of 2007.
I started writing a point-by-point response to that article, but because of all the qualifications of terms necessary it began looking more like a full-on thesis paper rather than a simple reply to your comment. And that is a testament to how much work Mish puts into his suppositions, whether I agree with them or not.
I can summarize my reply though:
Contrary to your assertion, Mish does include M3 in his deflation calculations:
"Deflation is a net contraction of money supply and credit, with credit marked-to-market."
That's all M3 Iam. Though I concede that if someone wanted an accurate estimate on that number, Mish should be considered an exemplary source.
"...Bernanke is far more likely to be worried about home prices and commercial real estate prices, neither of which are is in the CPI" -Mish
True, but here's another perspective from http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/7/8_James_Turk_-_Threat_To_The_US_Dollar.html:
"The ongoing erosion of the purchasing power of the dollar has been masked by wealth destruction as over-priced assets like houses fall back to realistic levels. This wealth destruction from declining prices feels like deflation, but it is not. In fact, it is forceful distraction taking our eyes off the real problem, which is that the dollar is approaching hyperinflation." - James Turk (I suggest you read the whole article.)
So, because M1, M2 and TMS are still increasing (IE inflating) despite the egregious deleveraging of the last two years, and prices of day to day necessities are also undeniably rising we have an overall formula that adds up to inflation no matter how you slice it. And with the next round of helicopters warming up on the pads, or indeed flying around right now but being of the 'stealth' variety...well, guess where that is taking us.
FWIW: I like Mish, and for the most part I see our differences of opinion being based almost entirely on semantics . IE if you accept his definitions of deflation/inflation, yes there is that version of 'Mishonary Deflation'. The reality of the situation that trumps Mish's definition of deflation though, is that the plutocrat's debts/credit are unlikely to ever again be 'marked to market' (owe the bank 10k and it owns you, but owe the bank 10 trillion k...), and the ever increasing 'True Money Supply' is going to continue to flood the planet picking up hard assets (real money) while it drains any wealth still left in the hands of the true debt-slaves who don't have access to their own fiat printing press, or arbitrage machine, or Gov't bond carry trade, or whatever you want to call it. Finally, Mish is contradicting himself by simultaneously contending that 'debt is money' and 'gold is money'. Sorry Mikey, but that's an 'if/or' supposition in the real world.
For all intents and purposes, I think Mr.Shedlock and I agree (semantic differences aside): Deflation for you, inflation for those controlling those who control the fiat 'printing presses' and get it for free (or less).
Or, as some astute blogger I paraphrase here wrote somewhere on ZH (I apologize for being unable to locate the comment/author while forming this reply),
"Youflation: where the things you own go down in value, and the things you need go up."
Regards
"and vaguely wishing that Muir would post more often."
Anyone trashing the bouncing is either a woman or flat ass gay. I like the bounce.
Charts? We don't need no stinking charts. That's so fucking 90's. Charts meant something a long time ago in a galaxy far far away. Charts today are nothing but colorful Photoshop designs that are used by wall paper designers at Home Depot.
Don't you see? If Cramer/CNBC/any whore media outlet picks up my comment then the pattern will be nulled!
I aint sellin schit!
...although i will add, if you are going to start selling, now is the time to start.
TA implies a model for market behavior.
I do not think that such a model has ever applied and it certainly does not apply in this market.
It is yet another CON used to sell soap or self-stroke to make one feel that their is an understanding of a situation.
I beg to differ. Of course, it will never "predict" what will happen, thats just nuts, and people that think it can will lose money, of that i am sure. What is to stop a trader selling a few bln of xyz at support? (He could pick a better spot though)
What TA can do for you is represent the market in a probablistic light, and this will give you, along with the implications of central limits theorem, your edge in a large enough sample size.
How do you think algos make money, read the FT with their feet on the desk and a cuban cigar in their floppy drive slot?
Left shoulder formed over the month of June. We are working on the head for the next couple of months.
This is not a comment specifically at you, firstdivision, but if I had a dollar for every potential head-and-shoulders formation people have written at over the past 2-3 years I would be a rich man. The previous head-and-shoulders becomes the new left shoulder of the new head-and-shoulders, etc., etc.
I am in complete agreement with you. I just wanted to be the first to make an unsubstantiated call today :)
As warned about earlier, DOW/SP500 remains bullish for now ...
http://stockmarket618.wordpress.com
So here is my question - If a respected technician interpreted this leg up as a successful test of horizontal support that would be followed by new highs, would that interpretation be published on ZH? This is not meant to be a criticism of ZH and does not necessarily represent my interpretation (as if that mattered). I am new to the site and just trying to understand whether it is edited by persons with, rightly or wrongly, a significantly negative bias who choose to post only what supports that interpretation. Again, that is certainly the prerogative of the site editors, and I am not saying it would be an incorrect interpretation, but will just help explain why there has been so little reporting of divergences in the DAX/SP during US and Eurozone weakness, stabilization in container rates despite the plummeting Baltic dry, record top line revenue and demand being reported by many US companies, the potential long-term upside to Euro austerity measures, the possibility of a soft landing in China, etc. The subline on this site states, "On a long enough time line, the survival rate for everyone drops to zero." That would seem to include even perma-bears, so that mean reversion will be the last man standing. Doesn't that call for a slightly more balanced approach?
If all your questions were rhetorical then you answered them all correctly. Well done.
Trade what you see, not what you cant prove you dont know.
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