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A Very Different Day Until 3PM
From Nic Lenoir
A Very Different Day Until 3PM
It was very busy today. It started with Singapore deciding to widen the band it allows its currency to fluctuate in (aka they allowed the SGD to reval up) so people in the US had the pleasure of waking in with the USD down big on the day as the move by Singapore also sent EURUSD and AUDUSD to new recent highs (and many other crosses most likely). Yet Gold reversed sharply and looked like a nasty bearish hammer on the high for most of the day. Credit opened wider big time as bank CDSs gapped up with the mortgage-gate starting to sink in the collective minds. In fact as of 3PM we had a key bearish reversal day in S&P future (bearish engulfing day following 3 days up). Fixed Income turned south in the long end with a poor bond auction contrasting with otherwise better than expected auctions of late. And the front end of the Eurodollar and Euribor strips were under pressure all day as 2Y swap spreads bounced off their 16 support and fears of wider Libor on the back of weak bank stocks spread throughout the day.
In other words things were very different: volatility was high and VIX traded up, Gold traded weak most of the US session, and stocks were under pressure with credit leading the way down. Refreshing from the QE self reinforcing morally bankrupt logic that has pushed us up in risk the past few weeks.
Unfortunately at 3PM stocks went ballistic and rallied vertically to take out the bearish signals in place. Conspiracy theorists could say it was the plunge protection team. I look towards correlations: as the EURUSD Vs SP chart shows, the USD was weak all day, so FX never validated the weakness in risk during the day. Maybe the algos out there unwound their book which were short after they got given all day and they bought back against EURUSD to converge back to FX... Either way it is a travesty. Without that I had many more charts to show you tonight, none of which relevant now. Only one that stands: we did get bullish confirmation for VIX today, which usually spells trouble ahead for equity markets. Typically the lead of volatility over prices in bottoming/topping is 5 to 10 days: buyers beware. Also worth keeping an eye no is the Shanghai Composite which posted a very ugly bearish hammer on the local highs last night. If it gaps down it could even turn into a bearish island reversal. On the flip side, if the authorities manage to ram this thing a bit higher, look at the beautiful inverted H&S on the Nikkei and Nasdaq that the bulls are dreaming to trigger.
What are the authorities trying to salvage ramping up the markets? Well a system where honnesty, laws and ethics no longer matter one bit for those in power. Many traders I talked to were somewhat dismissive of the mortgage fiasco saying "ya I heard about that thing it's been going on for a bit no?". I would not otherwise have felt the need to clarify as I thought it was common knowledge, but here are the key poitns to keep in mind:
1) everytime ownership in a mortgage changes (not the guy paying the mortgage, the title holder collecting payments) paperwork must physically change hands
2) during the last 10 years with securitization they estimate on average the minimum a mortgage documentation should change hands to be securitzed would be 4... in case of CDO^2 it could be 8 to 10 times
3) it surfaced that some foreclosures have therefore been done when the ownership of the title can be questioned
4) banks realizing this hired over the summer tons of random people (from unemployed teachers to janitors) to sign affidavits according to which docs were lost but they had effectively changed hands properly, and rushed a lot of foreclosures
5) foreclosure process has been halted in many states and for many banks: this means that new mortgage origination is dead because no insurance would insure a mortgage if the property cannot be foreclosed on
6) beyond foreclosures, there is a caveat in most mortgages that if something was not processed properly at origination or in the paperwork, the mortgage can be put back to the original seller
This is not an absolutely exhaustive description of the situation, but a quite good summary. Don't discount this, it is a HUGE deal. And just in case you thought your government would never pass a law behind your back to cover the mess it created with the help of its favorite accomplices, think again:
http://news.yahoo.com/s/nm/20101007/pl_nm/us_usa_housing_whitehouse
That has received little coverage in the mainstream media given the importance. I used to think the president vetoing a bill passed in less than 24 hours by both chambers without one media outlet discussing it with at stakes trillions of mortgages' ownership and potential hundreds of billions in losses was a big deal, but ever since the bailout 2008: I guess we don't care about that anymore, especially with the Fed chairman potentially announcing 10 quadrillion of QE tomorrow.
Good luck trading,
Nic
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With GOOG and AMD going up 5% in AH - tomorrow is probably another 10+ pint day on SP500.
I don't think so II2. The bearish signals are still intact. Look at the largest banks in the financial sector. This market rally will not last without their participation.
(Not long or short anything at the moment)
Look at WFC, JPM, GS, BAC, MS and a lot of the regionals. Total technical disasters.
Agreed. But this rally has been going on without the banks and probably will not end until they ridiculousy rally also.
When you see the dow down a hundred on a pomo day, the end is near, the dow will be below 10,000 before nov. 2.
Silver, Bitches!
Honestly... 'honnestly' - Seriously? Really?
All your bearish signals are mine, make your time...
I wish someone would set up us the bomb, we get signal already... what you say? ha ha ha.
bearish signals, more like landmines
Chart: ES
"A 1...a 2...and a 1, 2, 3."
http://99ercharts.blogspot.com/2010/10/es_3028.html
We are so screwed.
Nick, Nick, Nick.
You need to start reading Zero Hedge!
Really!
There was no POMO today, so the market went down.
There WILL be POMO tomorrow. AND Monday.
So someof us just bought the dip, a little early.
This is not all that difficult ....
I used to trade almost strictly on technicals back in the day but that all changed a couple of years ago. Certainly has solidified in the past year with lower volume and machine running the show.
Nic, I admire that you try to ascertain info from the charts but I gotta say, it's a losing proposition these days.
That has received little coverage in the mainstream media given the importance. I used to think the president vetoing a bill passed in less than 24 hours by both chambers without one media outlet discussing it with at stakes trillions of mortgages' ownership and potential hundreds of billions in losses was a big deal, but ever since the bailout 2008: I guess we don't care about that anymore, especially with the Fed chairman potentially announcing 10 quadrillion of QE tomorrow.
This surprises you? There's no sex, or dancing, or singing involved. Turn it into an app and charge everyone .99 cents to use it and maybe they'll notice. Otherwise, give me more Chilean miner rescues.
The cash indexes all formed bearish "Hangman" candles.
But they will probably not confirm since there have been other bearish candles in the lat few weeks that didn't confirm either. We do have POMO tomorrow and Monday - 2 days in a row. The only candle you can trust anymore is a hammer at support - those always work.
http://finviz.com/futures_charts.ashx?t=NQ&p=d1
That is all that matters
<...Russian accent/> "Is no Bear. Is no Bull. Is only Fed." </Russian accent...>
[no real reason for the Russkie accent; it just sounds better in my mind.]
Futures plus 2 ,TWO !, on all the a/h tech fireworks. Plus two! WHOOP TE WHACKY DOO
Just pump the AAPL and the world follows you....
the MSM wont report anything they believe is negative to their god
"Somewhere in Kenya a Village is Missing its Idiot."
Somewhere? naaa... they know what address to put on the return to sender label.
So much for that spike in the VIX. I can hear the stampede coming as we speak. Run! This should be the perfect storm for the bears with the Fri/Mon double POMO, Bernanke chatter, GOOG news etc. I guess once all the shorts have finally covered, there will be no bids left. Maybe we finally see some bigtime capitulation tomorrow? S&P 1200+?
May be a double Pomo, but it's a Monday/Wednesday/Friday next week.
Shorts (if any), are going to be fried.
I had CNBS on mute and thought the market traded right off of technicals today. Anything new happen today?
a
The Dow really needed to close the week above 11,000. If it can go up another 1000 before elections that would be ideal.
I'm long gold, silver and basic commodities until I run out of ammo.
Succinct if not elegant.
I am long Ammo, to protect my gold, silver and basic commodities.
a 50 cal ammo can, can hold 500 rounds of loose .308 easily. Just sayin' :)
Yeah? Have yer 9 year old pick it up and bring it to ya. jess sayin
big cans for big storage.. 30cal cans for easier transport. Besides.. I don't think I'd be asking my [N] year old to grab the whole can, but he can surely speed load the mags :).. just sayin'.. again..
hey mofos.... you can come over to my place and take everything I got.... caus if you think i'm gonna be eatin vianna sausages and caned beans.... well... just put a mother fucking bullit in my mother fucking head....
now why would we do that? can't we share some saussies over a fire and work together?
When yer ready I'll trade yas a 4 pack of vienna sausages fer a Maple Leaf. Oh, and I dont make change. Oh, and my AK holds 30 rounds and is bigger than any pop gun ya carryin in yer left pocket.
and when you lay your AK down and pick up your sausages out comes my tiny .380 from the left pocket. Thanks for the AK Mr. goldmiddlefinger
:P kidding
They don call ye scatterbrains fer nuttin ! I'm selling viennas fer Maple Leaf, Krugs. You be the one payin up n eatin, scarecrow.
Did anyone see the run in DIA at around 3:40 - 4:00?
Someone had to know what the hell was up with GOOG coming out with a shitstorm. It was odd to see though DIA do this and the others didn't really follow suit.
I do believe though ndx100 futures are up a solid 20 points or so from 4:00 close. It doesn't make any sense at all to be short shit but Natural Gas lol. And I am sure that will have its day soon as well.
Aww, they just pulled the rug out from under the dollah at that time. Watch the tick.
And GOOG did wonders for the futures. Neg 2. Hehehe
I continue to hold my core gold and silver positions (CEF & PHYS). In addition, I'm cost averaging into the miners (so far 10% of portfolio). I think they can break out at anytime. We shall see.
By the way Nic, don't blame your terrible short call last week (whenever) on anything or anyone else but yourself.
Futures fading fast. GOOG is POOP
Watched the 60 minute stochs bottom out on a higher low and watched the crossover at about 3:30. did nothing. Dohhhhhh! But that would mean i only had 30 minutes to hold the position. Hope no one here is holding overnight unless you are up a bazillion %. You know that limit-down open will come like a thief in the...well...morning.
Charts
DX http://99ercharts.blogspot.com/2010/10/dollar_271.html
USD/JPY http://99ercharts.blogspot.com/2010/10/usdjpy_14.html
EUR/USD http://99ercharts.blogspot.com/2010/10/eurusd_14.html
Once again news traders are confuzed. News doesn't matter. ES market wanted to solidify the low 60s, 62-63 zone, for a move to 84 1/2 and then to 91 1/4. The sort of action was very bullish.
When this goes down it'll be ugly - like a home invasion. Knock, knock......door opens, bat to the head. You get it.
You gold bugs, I've got a little - but looking for more but do you guys go for physical or paper, if so, which of each - is there a paper that is redeemable w/out mega storage fees, etc. I can't help think I'm buying high here, but you guys have been in the zone for some time, so share the wealth, er....I mean, your wisdom...
Not a bug. Just common sense. NO PAPER GOLD. NONE. ZERO. ZIP. NO STORAGE. IN YOUR OWN SAFE.
Seriously...paper gold? Not a chance. Buy from reputable dealers only.
As for buying high? Yeah, it's parabolic right now. Would I buy more right here, right now, personally no. I'm sure others here would though.
reputable dealers - like who? Goldline, Blanchard, who?-what?-where? Do you mean like local coin shop collectible guy or .....help!
I personally use a small local dealer in Oregon. Many people here on the blog use Apmex. Do NOT use Goldline. The number one thing you need to do is know the premium over spot they are charging. Apmex (and there are others--search ZH for Apmex and other names will come up) has a good rep for Zh'ers.
Paper is not gold. Gold is not paper.
- "172. First let us postulate that the computer scientists succeed in developing intelligent machines that can do all things better than human beings can do them. In that case presumably all work will be done by vast, highly organized systems of machines and no human effort will be necessary. Either of two cases might occur. The machines might be permitted to make all of their own decisions without human oversight, or else human control over the machines might be retained.
173. If the machines are permitted to make all their own decisions, we can't make any conjectures as to the results, because it is impossible to guess how such machines might behave. We only point out that the fate of the human race would be at the mercy of the machines. It might be argued that the human race would never be foolish enough to hand over all the power to the machines. But we are suggesting neither that the human race would voluntarily turn power over to the machines nor that the machines would willfully seize power. What we do suggest is that the human race might easily permit itself to drift into a position of such dependence on the machines that it would have no practical choice but to accept all of the machines' decisions. As society and the problems that face it become more and more complex and machines become more and more intelligent, people will let machines make more of their decisions for them, simply because machine-made decisions will bring better result than man-made ones. Eventually a stage may be reached at which the decisions necessary to keep the system running will be so complex that human beings will be incapable of making them intelligently. At that stage the machines will be in effective control. People won't be able to just turn the machines off, because they will be so dependent on them that turning them off would amount to suicide."
http://en.wikisource.org/wiki/Industrial_Society_and_Its_Future
Shanghai provides the hint to the animal spirit (ie Pavovioan copy-cat hedgies that frequent massage parlours more than they spend time thinking about investments) - and very interesting because the flow of hot money into China (hence the incredible pumping of the SSEC index despite the continuing tightening of banks and rea estate sector) over the last 2 months has been frantic. They are still believing the reval is inevitable and Singapore validated that by widening yesterday following Malaysia and following Japan's no-show despite USDJPY nearing 80. An important CCP policy meeting is due soon, rumblings and rumors abound, so the recent market highs will be maintained. After that meeting, heed Rumsfeld's advice to fear what you do not know.
the panic of '08, the collapse of '09 and the depresson of' '10
'11? of course everyone knows '12 is the end.
“”You gold bugs, I've got a little - but looking for more but do you guys go for physical or paper, if so, which of each - is there a paper that is redeemable w/out mega storage fees, etc. I can't help think I'm buying high here, but you guys have been in the zone for some time, so share the wealth, er....I mean, your wisdom...’’------------------------------------------------------------------------------ No wisdom here. I bought gold years ago and cant afford the price now. I am going to buy more Kennedy half dollars clad if and when there is a pull back. Looks like silver finally came on.
Americans' ratings of government efforts to solve international and domestic problems are now about where they were in early September 2008 -- in the last year of George W. Bush's term, but shortly before the Wall Street financial crisis that sent consumer confidence plummeting.
http://www.gallup.com/poll/143195/Americans-views-vary-active-government...
maybe I'm nuts, but isn't the bullish risk trade getting a little "crowded"?
Really this is a great post from an expert and thank you very much for sharing this valuable information with us.
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