Money Hockey

Chop Chop

2010-07-13T08:54:00.014-05:00

How to go nowhere in 60 days while peeling off half the VIX.

Lots of hemming and hawing where the market is headed with this H&S pattern. However, for every scenario there is an equal and opposite scenario to consider. Momentum managed to break out on July 7th and is tracking the triangle shown in the RSI above, which is now hitting the upper line of the triangle. In the very short-term the market appears to be setting up for a +/- 30 point move, none of which is indicative of the trend - just more range-bound markets. I personally would not draw any conclusions in the event we pullback to the 1060 area. We are considerably overbought in hourly in what looks to be an ending diagonal, but still putting in higher highs in the RSI. I'll look for a negative divergence if we reach 1100 for any cues of a possible tactical trade. It's not safe to assume we can't see an reverse H&S within this larger H&S. I'm sure this probably violates some e-wave rules but when all else fails they can just re-label the chart or call it truncated*.

Swinging for the fences here is not prudent. Stay nimble.

[*] I'm only joshing at the E-wavers. Elliot Wave Theory does have it's merits and is widely followed. But just like any technical analysis, it's not an exact science and is very open to interpretation. Just beware of anyone who tells you with EWT you do not have to know the reason for the rhyme in the market and that EWT is all-knowing...It's just another tool in the toolbox. There are several sites who offer EWT analysis but I would recommend Tony Caldaro's blog. His daily summaries are very useful and you are not required to get a headache looking at squiggles, zig-zags and roman numerals (unless you want to, in which case he has those too).

EURCHF

2010-06-23T11:02:00.013-05:00

The SNB might push their remaining chips to the middle of the table (all-in) near the levels shown because there is lots of air to 1.30. Just keep an eye on those levels for a possible relief rally.

Two or there voodoo lines hints the EURCHF is near an inflection.

Junkyard Wars

2010-06-23T09:19:00.013-05:00

In the short term, +3 and -3 have been decent signals for possible mean reversion

[Insert some smart-looking analysis here]
[Add caveat leaving yourself an out if it doesn't work... You know, like, past performance is not indicative of future results, or something like that. Or how correlations are unstable when the shit hits the fan.]
[Vie for slot in Octobox]

Guest Post: Is Francium the next Gold?

2010-06-16T20:36:00.032-05:00

The following was submitted by Richard Trickle, Senior Strategist at Do-We, Screw 'Em & How

Greetings and Salutations everyone. I'm coming at you live from the Periodic Table of Elements Conference and I've got a special treat for you all tonight. *applause* When I was first asked to deliver the keynote address, frankly I didn't think any of you were worth my time. Let's cut to the chase here. I'm right and you are wrong. *applause*

What I'm about to tell you is G-14 classified so please keep this on the down-low...

Francium occurs as a result of a disintegration of actinium. Francium is found in uranium minerals, and can be made artificially by bombarding thorium with protons. It is the most unstable of the first 101 elements. The longest lived isotope, 223Fr, a daughter of 227Ac, has a half-life of 22 minutes. This is the only isotope of francium occurring in nature, but at most there is only 20-30 g of the element present in the earth's crust at any one time. No weighable quantity of the element has been prepared or isolated. There are about 20 known isotopes.

You might want to read that again. Look, I had a beer with the CEO of a francium mining company and he told me that there isn't even 10 grams at any one time! This one is a no-brainer people...Buy some francium off ebay and bury it in your backyard.. I don't need food, cash, equities or bonds. I'll be just fine with some Francium, Rhodium, a little Tungsten, a dab of Copper, a drum of Oil (currently free below the 33rd parallel N), a pinch of iron-ore with a splash of random length uncut [Canadian maple] lumber (The lumber is for diversification purposes only. I haven't figured out how to keep the buried frozen pork bellies from spoiling).

Here's a futures chart of Francium for all those who participate in the market but somehow incapable of viewing your own.

FRANCIUM BITCHES!!!!

In part 2 I will talk about the prospects of Lanthanum; a very rare earth element that is the brains behind your Lithium. It's not a matter of if, but when, we run out of palladium and rhodium from all the catalytic converters, and as a result these battery-powered cars will deplete Mother Earth of her Lanthanum. Are you positioned to profit?

*standing ovation*

Guest Post: Where we've been (update)

2010-06-15T10:04:00.029-05:00

The following was submitted by Captain Obvious, Sole Proprietor of Fly By Night Capital, Beer, Wine and Spirits.

[update after close] The market closed at 1115, I just wanted to state the obvious again [end of update]

Greetings, Captain Obvious here. In the last S&P forecast nearly a month ago we were coming off a closing low of 1071 with a forecast of chop to persist through June. Here we are midway through June and just a couple percent higher since, but not without some impressive jack-knifing between then and now including the SPX/JNK recombination which led to nice 2-day shank. All in all, over the last month we're pretty much unch. There were several opportunities for tactical trading but otherwise just chop, or you might refer to it as Flüchtigkeit. Speaking of that, we've also seen zEuro found support right on the demarcation point between Reprieve and No Man's Land at 1.19 (1.1871) and is currently trading north of 1.23. Again, the same resistance levels previously listed for zEuro are in play as well as a possible bounce to the 1.30's which would no doubt be bullish for the markets.

For the S&P there has been no reason to update because the scenario with a possible H&S forming is still in play, except the right shoulder might not reach 1165, but instead between 1136 and 1145, and still resolves between 950-980 (depends on how you draw the lines) area if it were to play out. The bull case is that we held the trend line from '08 as well as the 38.2% fibo-fan. The '08 trend line is important to me because it's where I view the bottom of the trend be. I think as long as we are above that level we are ok, but not out of the woods. We've caused some serious technical (and psychological) damage to the market and as a result we've reached 3-year highs in bearish sentiment which often times should be treated as a contrary indicator (at least in the very short-term)...from extreme euphoria to major depression in just 2 months time. Apparently some of the withdrawal symptoms from Sugar High addiction creates violent mood swings in the market. Either that or all the daytraders ran out of disco biscuits and are gacked out on the sofa, leaving the market is disarray.

A move above the 1150 area will likely result in push to the 1200 area and possibly re-test the highs. The onus is on the bulls because there are clusters of resistance above the current level (1107/1117/1128/1136/1145) which will bring high levels of price friction. The market has rejected 1105/07 twice and it's imperative that the bulls be able to push through now (1104 as of this writing).

E-wavers are more than likely debating (with 5 or 10 alternate counts on each side) over whether or not we have completed the correction and back towards the Obama double of 666*2 (not impossible, please consult the Laszlo/Biggs Tandem in your nearest octobox)? Perhaps that was just an intermediate A and we are now in the B up before C down to 950? Or maybe that was a intermediate i of v of Primary wave 5 down to S&P negative pi. Then again, it could be a baby minuette, grand-supercycle, minor wave 5 of primary-major W double-zig-zag, sub-fractal (iii) which would land us near S&P 1999? Who will be right? Probably 1/3rd of them.

I'm personally wanting to see how things play out at 1136/45 because that's where the shenanigans will take place with the squeeze zone just above there. With only tactical trades here and there I remain non-committed to either direction. If anything the fundamentals have taken a change for the worse after having failed to crest above the dog-crap level for the last year. It's going to take additional policy measures to spur more artificial growth.

No Junk In The Trunk

2010-06-03T10:27:00.007-05:00

In a previous post titled 'This Market Is Junk...No Really" it was noted how highly correlated High Yield and the S&P were . Since that post JNK managed to make it to the first of the 3 lines before turning down, along with the market.

The purpose of this post is to illustrate how disconnected these two have become over the past few days. I'm probably the last person you'd want to ask about the credit markets but I will go out on a limb here and say that if high-yield doesn't re-establish correlation on the upside then this rally will peter out sooner rather than later. Also, as others have pointed out, the Euro has decoupled from our indexes but so far has managed to hold the key level of 1.212 as a result of blatant Central Bank intervention in the currency. Despite two interventions occurring at this key level we've seen zEuro stay under pressure and has tested this level three times as of today (triple bottoms are as rare as a peaceful day in Afghanistan). Soros might be one-upping himself and instead of taking down one Country he's going for the entire continent this time.

The market chop should continue as [forced] de-leveraging takes place as well as a lot of participants have found themselves trapped and will use higher prices to get out.

Shanktacular

2010-05-21T08:55:00.011-05:00

I just wanted to get these two charts out to show we've reached an inflection and possible bounce point. Despite blowing through major moving averages across all time-frames you can see on the first chart we are still within an uptrend (until that line is broken). Take a look at the RSI on the second chart and how it's plunged worse than the last crash. If the market rallies from this point the 1165 area looks magnetic and it will bring out the Head&Shoulders crowd because that would resolve at 980! However 1136 is a big-time pivot. On the other side of the coin you'll have Lazlo Berini and Barton Bigs backing up the truck. Imho, we could see this choppy market persist through June but the question is when do the Dems solve the next crisis to give them a feather in their cap heading towards mid-terms?

[Update] Here is a quick and dirty monthly view.

I will try to follow-up with more detail on intermediate targets and scenarios as time permits.

Good Luck.

Pa-LOL-dium

2010-05-19T10:50:00.014-05:00

-20% in 23 days equals a 300% return on your outlay of $3500 per contract.

Too bad I posted this in another forum. Is this the poor-man's platinum? If you want to guard against fiat melt-down, do it with Gold/Silver and NOT Red Gold (Copper), Black Gold (Oil), Rhodium and Palladium. Yeah yeah, you can use it to barter and trade for your grains when the world nears it's end...There is always a farmer looking to fashion a catalytic converter and is willing to trade you for your "Palladium". Otherwise let me know how many calories are in an ounce of pa-lol-dium.

Granted all of the base metals and precious metals have had huge gains over the last year, but when the proverbial shit hits the fan, there is only one AU 79. For those who are invested in these the past year, congrats. For those momentum chasers looking into the next Platinum or the next Gold, sorry. Those who just recently shunned anything fiat and went "all-in" across base metals / commodities / not-so-precious-metals still have your sense of "security" but are currently under-performing as commodities and all-things not gold have tanked. If we return to "recovery mode" these things will be repatriated. Otherwise, stick to gold...You dig?

Forgot to put Copper on that chart. It's -18% over the same period.

On a related note, the dollar is roughly where it was in April 2009, Gold was 900 then. In USD terms Gold recently traded at a 40% premium. Of course the market is a zillion% higher now. This correlation is meaningless and often goes to extremes depending on where we are in the cycle. I'm not implying Gold is 40% overvalued.

In the next post I will look at the USD, Gold and the S&P to examine a few technical scenarios.

zEuro

2010-05-18T09:23:00.015-05:00

You might have "heard" zEuro has come under considerable pressure lately when the region was hit over the head with a shovel.

From a technical perspective zEuro is at or near important moving averages off the MONTHLY chart. I also note the current RSI is touching the trendline and will be watching for how this closes on the month. This is a momentum indicator and often times prior to a correction we see positive divergences between momentum and price, so do not assume a rising momentum indicator equals a rise in price.

Nearby areas to watch for on zEuro would be 1.22750 and 1.21250, with 1.19 lingering. If that fails then there are inflections at 1.14, 1.10 and 1.07 to name a few but I'd like to see how things unfold in the near-term.

On the weekly chart we see a similar situation with respect to RSI where it is sitting on the bottom trend line. Again, if we are to see a reversal I'd expect to see it come with a higher low in the RSI, anything else will likely just be a corrective phase with new lows down the road.

The daily RSI is a little more interesting in that it leads me to believe we could see lower momentum on zEuro before it could catch some relief. If it manages to hold the current lows some inflection points are 1.25, 1.275 and 1.30. Both 1.30 will be pretty stiff resistance with an outside chance of 1.33

Also keep in mind the record short-interest in the Euro, while fundamentally correct, might be a tad crowded down at these levels in such a short time.

Same Shit, Different Day

2010-04-05T17:03:00.010-05:00

Pretty much standard operating procedure. Anything with a ticker is being bought in the mother of all squeezes that is now 145pts off the recent lows while those looking for 950 found themselves in a nice little BearTrap.

How many times has the S&P parked right up to resistance then gap over it by the start of trading the next day? For many months now the bulk of the markets gains have been outside of normal trading hours (I pity the fool who can't trade futures, else you are getting front-run day in and day out). Today we saw pretty much the same thing that's been going on the last 4 weeks in that the TICK is not supportive of the market action, well not until it reads oversold (while the market grinds higher) then the algos start lifting any and all bids for the rest of the day.

This tight range in volume has been consistent for about 4 weeks now, with 50% of the daily volume transacting within 1 point on the ES (S&P Futures). Strange Brew

Gold / Oil / Retail (Update)

2010-04-05T11:40:00.024-05:00

As expected, Oil continues to out-perform while gold is pretty much standing still. It has recently broke out of it's trading range and is targeting $92, but is currently at resistance near $87.50. I would expect a pullback near here to around $84-$85 area. In the event of an actual recovery (both home and abroad) it's clear which two of the asset classes will outperform. However there is so much supply waiting to hit the market it's tough to get behind a bull run in oil, just yet. In fact, someone I know, who works at XOM, talks about how slow things are and the amount of crude sitting idle at the refineries and diesel production. That being said, it's doubtful this out-performance can continue not to mention how damaging it could be to an actual recovery.

Speaking of XOM, it has been in a downtrend ever since the acquisition of XTO and continues to be a bearish price structure in which 68.50 (150d xma), $70 and $72 (unfilled gap) will be resistance. If it's able to take out 68.50 then it should be a clear path to 70. Bottom-line: This is still a bearish chart with multiple downward-sloping moving averages just above it. Keep an eye on this and other index Heavyweights going forward. Any breakout in this stock and it's going to pull the entire energy complex (and likely the market) with it.

Even as commodities surge, the retail stocks continue to be the "must-have" as people camp out for their iPads. Seems logical...(right). The XRT is right near the 42.50/43 upside-resistance mentioned here. If there is a full-blown reflation trade that kicks off it will be at the expense of this sector, imho.

Hayek vs. Keynes

2010-04-02T08:22:00.002-05:00

Video Link Here

31-Mar-2010 Indicator Update

2010-04-01T13:50:00.017-05:00

This is from yesterday's closing. I'm just noting it took 14 calendar days the last time this indicator peaked before the market gave back ground. Coincidentally it has 14 days as of yesterday's close since it's peaked. The more it grinds sideways/higher, the more the indicators work off their overbought levels. At this very point in the market, given some of the strange trading conditions the past 4 weeks, it's hard to assign a high level confidence in it's predictability so take it with a grain of salt. Although next week the Fed needs to sell $185B in toilet paper, so a shank down should net Goldman enough profit to walk into the futures pit on any correction of 5%. Could it be the usual once per quarter Shank-For-Treasuries (tm) ? See: FOIA: Obama/Bernanke Video

Before you know it Ben Bubbles Bernake will announce a QEv2.0 just as soon as interest rates creep higher. Currencies are setting up for interesting moves. Does the reflation trade go from mini-size to full-throttle, launching the S&P up near 2,048 by month's end? Or does the euro break down to 1.30 flat and shank the market down 5%, sending people to gobble up the $185B in bonds?

Good luck whichever way you chose, brave soul. Unless you have some good inside info (ie: you're goldman) you probably should just bet on the basketball games; it's the same odds.

Indicator Update (SPX) (Update)

2010-03-25T12:43:00.012-05:00

Normally if we are about to see a market correction we get the following pattern. First the commodities rollover bringing the [artificial] bid over to the Fins/Consumers. Once those give way the Nasdaq is always the last man standing. Once the Naz rolls then we see follow-through on the downside in the market (you want to pay attention to fins and the naz). If the cycle aborts (ie: the Naz doesn't roll) what we usually get is a bounce in commodities, starting the cycle over again. At this point we haven't even seen the Fins start to weaken, which hint (but one day a trend does not make) at more upside shenanigans in the market. Things are looking shaky here, massively overbought and falling momentum. It would take a bit of good news to squeeze this higher before correcting at least negative 0.0001 S&P points before the algos smell "fear"

[Note the last time it went up here it took 14 days before the market went down]

What Does Max Pain Look Like?

2010-03-25T12:07:00.005-05:00

Refers to: "Dollar bears watch it" and "A few charts..."

For so long we were hearing the correlation in the market was that if the market was going up, the dollar would go down. Shorting financials and long gold seemed to be in vogue because any rising market would come from a bank bailout (read: dollar negative), right? Otherwise the fins were going to tank along with the indexes, right? WRONG. In fact I was quite convinced we were about to see a break in that correlation when the dollar bottomed. This was usually met with laughter because of "the R-squared synchronicity of the world says this can't happen". I was convinced the Fins, Reits and Consumer stocks would be the new leader. However we have seen this correlation get far-stretched and mean reversion is not unreasonable. A bounce in commodities will lead the indexes higher.

From a previous post titled 'Making the case for HE':

First off this is not a ticking time bomb. It has long tic'd it's last toc (been in motion a while).
The [bear] market is known to deliver max pain in each direction.
A general bias in the market is to go up
Green Shroom hallucination
You probably hear "CRE Time Bomb" at the local VFW Post #42.
They need to raise several factors more in capital.
Earnings season
The [fraudulent] maneuverability for earnings.
The debt holders of the CRE are small banks and large banks alike.
Underwriters of the offerings are banks.
Bernanke/Geithner
HB&B(and oil) underwriter who we all have grown to love: Goldman (pronounced like the Seinfeld, 'Newman'), JPM, etc...
SRS-flipping-Stocktwits
I've said this in the past...When the bulk of the market comes to expect something, it usually does not happen until it has destroyed the confidence on both sides of the fence.

Now what? If the EURUSD holds the 1.33 level then an relief rally back to to 1.35 is reasonable. Therefore the DXY would pullback. Otherwise failing to hold the 1.33 level would suggest a move down to 1.32 then perhaps 1.30 even. However with so many cross-currents in currency land right now you might as well throw away the charts. After all, Goldman recommend their clients get long the EURUSD. I guess one day people will catch on to how they operate with these calls. They might be telling the truth but they are on a much different time horizon than they lead you to believe. Basically when they need to put on a large position they will lead people to slaughter each and every time. In this case the prop desk was probably wanting to short the snot out of the Euro and needed some buyers to sell into. It's ok that the research department puts out a bullish call, after all their fine print allows them to get away with such conflicts of interest.

7

You went here:

Here is how they operate:

Guest Post: Strange Game

2010-03-25T09:08:00.001-05:00

The following was submitted by Wopr & Wopr Capital Partners and Bait Shop, LLC

In my hood we call this Pure Fucking Magic.

Achtung!

2010-03-18T11:55:00.006-05:00

S&P 500 Daily, presented without comment (oops, clipped off the price axis). Doesn't mean it can't go higher, just take note.

Pin The Tail On The Sector (Update1)

2010-03-17T16:38:00.019-05:00

Some of these correlations should start mean reverting soon?!?

Update1: Added a few more sectors / proxies

Check out some of the massive volume highlighted below price-points in the ESM10 (S&P Futures). This is not a normal distribution when compared to most days. Almost want to think there was some massive unwinding of futures into the equity squeeze.

This is ESM10 Futures

Disruption In The Force

2010-03-17T11:33:00.012-05:00

Hasn't see a reading like this since Oct 2006 - You think this market isn't bipolar?

Somethings fishy here. My conspiracy theory is as follows: Disruption in the force over the weekend. Large caps (heavy weighting in the indexes) are being bought and the remaining high beta names are being sold, which are less of the weighting but there are 3x as many of these). This has created a phenomenon that gives the illusion that TICK is oversold and there are roughly 1,234,567 algorithms that sniff that out. The indexes can go higher with heavy buying in the futures market as well as the SPY, while shorting the underlying on the way up to 1169-1175. Futures will likely be sold (by goldman, for a handsome profit) and the market will take a fast drop for a few days/week or so. Once they play these shorts backwards they will be covered en masse after Goldman walks into the pits (somewhere near 1136, maybe lower) and buys about 1,500 BIG S&P contracts with the soon the be Treasury profits they'll make off of the flight to safety.

You'd be better off being neutral right here.

Double-Pump Head Fake

2010-03-16T23:02:00.014-05:00

The scenario I'm currently learning towards is a quick move to 1169ish to close the week (EURUSD 1.385)- Elliot Wavers relabel charts. Early next week I feel we'll get a large down day (1150) with another day of follow-through to around 1136 - Elliot Wavers will relabel charts. Market then starts the leg to 1200 (EURUSD 1.40) - Prechter files for bankruptcy.

Screw Mortgages, Going Shopping! (XRT)

2010-03-15T21:09:00.025-05:00

Weekly SPDR S&P Retail (ETF)

I don't know about you, but during hard times it certainly makes sense people are going shopping. After all, there was a pundit on Bloomberg saying women are just tired of sitting at home and had to get out of the house (that they stopped paying for about 9 months ago) and go swipe some plastic! To hell with making your house note when you can go buy iPhones/Tablet PCs/Polo Shirts and retreat to a Wynn Resort & Casino.

From a technical perspective its riding bareback on Halley's Comet, with the Sun in the rear-view mirror, on it's way to the aphelion position. Being overbought does not mean it can't go higher but I will be watching (through the Hubble Telescope) for weakness that would suggest a move down to 36.50 (perhaps down to 35). Shorts would want to protect against 42.50/43 which would come in the event of a total capitulation on the upside (which seems highly probable). The real question is whether or not the DXY stays under 80.36 on a closing basis. If so we'll likely see a mini-reflation trade that squeezes the indexes higher with commodity stocks if (There isn't much left to squeeze in the REITS and Retail). I suspect the DXY will ultimately come back to 78.60-79.00 as it recently put in a swing-high at 81.25.

Shenanigans Part Deux (Update1)

2010-03-09T08:51:00.017-06:00

[Update1: Chart updated at close]

I'm hearing "pundits" are calling for a pullback on this anniversary. I guess we're going to find out real soon if these so-called pundits are in fact all-knowing... There is no fundamental reason I can think of that would prove them wrong, but then again there is nothing fundamental about this market either! Therefore I'd be more prone to fade the pundits (as always)

For the last several days we've seen the market going up while TICK is going down. It's almost as if the underlying are being sold and the futures/spy bought (courtesy of the BIG 3). It's not safe to assume this is a bearish posture - what happens if at some opportune time the underlying shorts are covered (kind of like... SOON)?

Anyway, the above indicator is quite perplexing and all I can do here was highlight where it's registered similar readings. Draw your own conclusions.

Goldman: In More Places Than Visa

2010-03-04T18:14:00.006-06:00

Video Link

Older Videos:
Glenn Beck Explains The Goldman Web
Spitzer Says Banks Made `Bloody Fortune' With U.S. Aid
Ratigan And Ritholtz Discuss Goldman

Related Posts:
Searching For Bobby Fischer 2
Good Times, Goldman Sachs & Kneale

The Rest Of The World

2010-02-10T09:04:00.004-06:00

Yes people, there is the rest of the world to consider...

See Also:
10/05/2008 EURO: Dead man walking