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Tuesday, November 29, 2022


GDPhursday – Big Chart Review

Same as it ever was.

It's a very sad day in the market when I can send out an Alert at 9:48 that pretty much lays out the whole day's action (move up to 2.5%, pullback to 2%, failure there leading to 1.25% finish).  In fact, my comment to members was: "the closer we get to yesterday's highs, the more nervous I am that we get about a 2% pullback on profit taking so don't be the last person to take gains off the table!"  We had one mother of stick save into the close but all it did was get us back to my levels so now we'll see if part tow of my prediction pans out and we fall all the way back to test yesterday's lows again on the GDP and Jobs data.

We are still overbought and the VIX certainly isn't complacent at 42.25 but the buyers still are as Da Boyz sell the hell out of the markets from noon until 2 then start buying again for an hour and then have CNBC tell the retail investors that the sell-off was all because Tim Geithner "accidentally" said that a global currency wasn't a terrible idea.  Good comedy is all about timing and teamwork.  Geithner floated his one-liner during a Foreign Relations Council meeting and the dollar went into free-fall – that was the set-up.  Then, after the damage was done, his long-time comedy partner (they both worked in Clinton's Treasury) and now Fund manager, Roger Altman, pretended to be a regular member of the audience so they could close the conference with this zinger:

"I'd like to ask one final question, in effect on behalf of the market," said Altman, "Let me ask the question this way. Do you see any change over the foreseeable future in the basic role of the dollar as the world's key reserve currency?"  Geithner responded: "I think the dollar remains the world's dominant reserve currency."  See, all better!  Not since the great comedy team of Rice and Bush have we had a policy duo that could keep the audience turning in circles like this trying to figure out what the hell they are saying. 

If you thought the markets were jacked up at the end of the day, you should see the pump job they did on the futures once the markets closed.  The Dow was driven all the way up to 7,794 at 2:45 am in a buying frenzy of dozens of contracts while the S&P peaked out at about 822 as literally hundreds of traders must have wanted to buy calls at that price at 2:45 in the morning US time ahead of the GDP and Jobs data.  Why would someone want to waste 2% buying fairly iliquid S&P futures 8 hours ahead of the US open?  Mainly they want to do it when they intend to dump S&P shares into the open so the higher they can push the open, the better.  This is almost a daily occurrence on the NYMEX, where you can buy almost every day at 1:30 and sell the next morning for a profit

Perhaps we won't lose 650,000 jobs this week.  Perhaps our GDP is BTE.  Perhaps Geithner will announce a toxic asset bailout pre-market…  Certainly there are several events that could be bullish and we went into the close just 55% bearish as we weren't positive that we'd get a big sell-off but it does seem a little more likely than rallying off the worst GDP report in decades.  It didn't hurt that we had a great day for market timing.  Our 10:02 alert was: "The dollar just fell hard against the Euro for some reason – another positive for the markets so let's be very disappointed if we can't make and hold 2.5% now" and, at 1:27, I called it dead saying: "Doesn't look good to me for holding this spot – not without a stimulus of some sort" just ahead of a 160-point drop. 

We were playing around with the financials as momentum plays but generally, we made our bullish bets last week (see Weekend Wrap-up) and we hit our Buy List on Thursday, Friday and Monday so now we're just along for the ride.  The play of the day yesterday was at 3:07, when I called the bottom – saying to members: "They’ll need a pretty big stick to save this day!  790 is worth a try on the S&P futures now, with a stop at 788."  That was a perfect entry and, as I mentioned, the S&P Futures topped out a ridiculous 34 points higher early this morning (the futures don't quite trade exactly where the S&P itself it but close).  Each S&P futures contract (the minis) pays $12.50 per .25 move in the S&P or $50 per tick – lots of fun on a slow day!   As I'm writing this right now (8:10am) the Nas Futures are 1,254 and make a great short at $20 per tick with a $200 stop and the S&P is now back to 820 and make a fun short too!  Generally, in the futures, we try to pick an overhead resistance point and look for a 4 tick down move where we set a 1.5 tick trailing stop.  There's more to it, of course but that's the basics.

So that was our day – lots of fun waiting for our ship, which already came in, to crash and burn on the rocks.  We will be pleasantly surprised if all goes well today and we have lots and lots of things we'd like to buy if this rally gets serious but, so far, we're not even at our dollar-adjusted breakout levels.  Also, from a Big Chart perspective, things may have gotten a lot better since our March 6th Review but they are still a long way from great: 

    3 Week 2007 % 50% March % From
Index Current Move High Loss Down Low Low
Dow 7,749 1,123     14,021 45% 7,011 6,469 20%
Transports 1,473 217       3,114 53% 1,557 1,233 19%
S&P 813 130       1,576 48% 788 666 22%
NYSE 5,127 843     10,387 51% 5,194 4,181 23%
Nasdaq 1,528 235       2,861 47% 1,431 1,265 21%
SOX 231 36          549 58% 275 188 23%
Russell 426 75          856 50% 428 342 25%
Hang Seng 14,114 2,770     32,000 56% 16,000 11,344 24%
Shanghai 263 51          588 55% 294 234 12%
Nikkei 8,632 1,546     18,300 53% 9,150 7,021 23%
BSE (India) 10,003 1,843     21,200 53% 10,600 8,054 24%
DAX 4,241 622       8,151 48% 4,076 3,588 18%
CAC 40 2,896 408       6,168 53% 3,084 2,465 17%
FTSE 3,892 417       6,754 42% 3,377 3,460 12%

We are still down 50% on almost every index, having pulled back from DOOM at the 60% off line last month.  We needed at better than 20% bounce to get bullish and that would be the 50% line, which we are still waiting to cross on all but 5 of the indexes we watch.  When your index is down to 40% of it's high, a 20% bounce off the bottom is only 8% of your original total coming back.  We need a 12% retrace of the 60% we lost to be bullish, winding us up at -48% and, by that standard – only the Dow, Nasdaq, DAX and FTSE are hitting levels we can hang our hats on.  So 20% of 60 is 12 which is  30% of 40 – that's what constitutes a real rally, not 20% off the bottom when you are down 60% (8 out of your original 100).  That is the faulty media logic that leads them to tell you a .50 move on a financial that fell from $30 to $1 is a "rally."

Notice the Russell is at the hyper-critical 50% line and needs to take out 428 to join the party.  The NYSE should be next at 5,194 and the Transports already made a nice run at 1,557 last week but were soundly rejected by the declining 50 dma, which is not a good signal to Dow theorists.  It is not good that Asia is still closer to 55% off the highs than 50% and this chart includes this morning's trading.  One has to wonder how much of our own "progress" reflects end of quarter "window dressing" as well.  So color me skeptical at the moment – it's been a great rally but we have a long way to go before we hit a comfortable new floor.


It's 9am now and the GDP was a little bit better – revised up to "only" -6.3%, which is revised down from the earlier -6.2% estimate but those always-reliable experts put out expectations of -6.6% so we have a relief rally on those numbers.  Total jobless claims rose 652,000 and over 5.5M people are now collecting unemployment – a new record!  That should push the official unemployment figure up to about 8.1% so we have that report to look forward to.  We got a little sell-off on the announcement but, at 9:06, we're still very surprisingly holding onto most of the futures pump.  There won't be much else to do but cover the rest of our long puts and run with the bulls if the Dow can stay above 7,800, which is where the open indicates but I'll believe it after I see it.

Be very careful out there – lots of shenanigans going on this week.



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they call this stability coming back into the market ?

XLF  I’ve got 1/2 covers with Apr 9s vs 2 Sep 7s and 2 Jan 11 7s.  About right?

ORF fees are showing up in my TOS account.  Any idea what they are?  I’ll call the firm AH

this am,  i rolled down UYG 2011 $3 calls to the 2011 $1 call  foe 70 cents

This clse is just more evidence of market stability !

This reminds me of the pump job we had at the end of Dec and the beginning of January when we were up for few days on low volume and then went down hill.

I think they ran out of people to suck money from and they are just reloading on people with fresh money to drain them again.

Phil, your old buddy FIG has doubled in the last four days but if they’re going to start buying bad paper cheap like BX they could really take off.  What do you think of buying the stock for free by selling the JAN 2.50 puts and calls?

Unfriggin believable.  I could really kick myself for not buying before 3pm.  What is this Romper Room?!  Why don’t people ever complain about them jamming it up in the end?  Geeze at the end of last year we had 3 days of selloffs at 3 or 3:30 and everyone started to cry.  Everyone’s happy.  As long as they are fat and happy.

Matt:   I am with you.   The BBC not only shook me down for my lunch money, but they got my half-eaten sandwich too…..      That’s okay, they will soon be done at the trough and then WE will dine…..

I know I sound like a broken record… but I really think tomorrow will be the sell off we were looking for today.  And then Monday and Tuesday will be up big.  Wednesday Down.  The MTM review on 4/2 will probably be a non-event.  Just like the GDP numbers today were. 
Keep ’em confounded!

An interesting point is that , as Phil says, emotions aside, we and a number of commentators believe most of the upside is manipulation and so WHY ? There are no economic indicators until next week. Whats in the pipeline ? It could be to make the new Goverment actions look good and instill confidence which might feed more upside. If thats the case surely the prices will collapse into the void that Phil has mentioned numerous time.

Remember what started this nonsense?  Citibank said their January and February looked good.  Guess so when you’re getting your money for free.  But they will NEVER be as profitable as they were.  The new regs will see to that.  And THAT has not been priced into the market  yet.

Matt – Good point about Citibank. Also what spooked the FED into buying Bonds ? The generally accepted criteria was that they wouldnt for a few months and would wait to see what 0% interest rate bought.  So what do they know that we dont.

Phil, if this were a natural event, there wouldn’t be the ridiculous buying into the close each day.  It’s very clear to me that kind of action is designed to instill fear in bears and greed in bulls.  We are being coerced higher.  I really think it will be past us in early April.

Don’t I get credit for pointing out the V in the daily chart ?
And where is my COLOR ??

Looking at that chart, the last time we were above the 50 dma we were there for 7 days before going back under.  Guess when 7 days from the point we went over will be?  You guessed it.  Wednesday, 4/1.  It’s all way too perfect.  There is no friggin way we are having a V bottom with such definition to this mess.

My daily chart, w/ the V bottom, allows for a re-trace to 7550 while keeping the V bottom intact.
Lets get 300 down tomorrow, just for kicks and giggles, spike up the SKF some and let me cover my DIA short down there ! 
That’s not too much to ask now, is it ?

Phil, what say you re: Rahmbo ?
Gee, just another Dem sucking on FNM or FRE.  Same guy who just happens to be O’s chief of staff.
I have more to say on my blog.

Good Morning everyone.
The UK opened flat this morning. Nothing much to get excited about here other than , perhaps, that Barclays appears to have passed a "stress test" and has been deemed to have sufficient capital. The press , as predicited by Phil, is full of how the Nasdaq is flat for the year and nearly everyone is getting excited and saying that the bottom is in for the stockmarket. Thats an amazing turn of sentiment in just 3 weeks. Reminds me so much of the comments on the Nasdaq during the burst of the tech bubble. I’m staying as short (but hedged) as I can until earnings are over.

Good Morning Phil, DB & all

Hi Phil
UK hanging in there with small gains +0.3% @3936. US futures are getting a little worse.

Hi Ramana

Asia Markets :    Friday, March 27, 2009
(The following is from WSJ; please cross check with other sources to confirm.)   

Nikkei Average*                               8626.97     -9.36    -0.11%
Hang Seng*                                   14124.09    15.11     0.11%
China: DJ Shanghai*                        274.36      2.45     0.90%
Seoul Composite*                           1237.51    -6.29    -0.51%
Bombay Sensex                            10048.49    36.28     0.36%
Baltic Dry Index                                 1714.00  -26.00    -1.54%

*at Close

Asia Wavers as Economic Data Keeps Lid on Optimism

Asian stocks wavered Friday, trying for a fifth day of gains, as hopes the global economy could not get any worse kept investors buying riskier assets, though U.S. and Japanese data left some doubts lingering. But in Japan, the world’s second largest economy, contracting consumer prices beckoned deflation and deepening recession while a larger-than-expected fall in February retail sales were more signs of gloom.

Investors appeared to be latching on to the view that mixed economic data, as opposed to completely horrible, was enough motivation to pick up stocks at low valuations and lock in yields on heavily discounted bonds. They also have been heartened by further clarity on rescue efforts for U.S. banks, though whether any policy would ultimately be successful in stimulating global demand in the near term was anyone’s guess.

Japan’s Nikkei closed a touch lower paring back earlier gains of over 1 percent. Exporters climbed on growing optimism about a recovery in the U.S. economy but other stocks succumbed to profit-taking after rallies over the past two weeks.

Seoul shares ended lower on Friday, giving up earlier 1 percent gains and snapping a five-session winning streak, as financials declined, outweighing gains by some techs.

Australian stocks rose 0.7 percent, the fifth straight day of gains, as miners rose on higher metals prices, though bank shares were mixed. Materials made the biggest positive contribution thanks to commodity price strength, with London Metal Exchange copper hitting a five-month high in Asian trading.

Hong Kong shares closed 0.1 percent higher.

Singapore’s Straits Times Index lost 0.8 percent.

China’s Shanghai Composite Index rose 0.5 percent, led by solar-energy-related equipment makers, after Chinese Ministry of Finance said it would offer subsidies for solar energy.

Bombay Stock Exchange’s Sensex was at 9936.06, down 67.04 points or 0.67 per cent. The 30-share index touched an intra-day high of 10,127.09 and low of 9913.40.  Indian benchmarks were moving in a narrow range on Friday after a sharp surge in previous trade. Europeran markets moved higher following gains in banking space.

The following is from the silly and ridiculous department. For those of you who can remember, during the Asian financial crisis, Mahatir Mohammed, Prime Minister of Malaysia, accused and charged ‘jews’ for the financial crisis. His target then was George Soros. And how did Malaysia get around the crisis, it followed Paul Krugman’s advise (he wrote an article in Forbes, I think, i could be wrong about the publication) !
Dr.Mahatir, as far as I know, never thanked, Paul Krugman!
Brazil President Blames ‘White People’ for Crisis
Brazil’s president blamed "white people with blue eyes" for the world economic crisis and said it was wrong that developing countries should pay for mistakes made in richer countries, sparking accusations of racism.

European Stocks Drop as Oils Weigh

European shares were lower in a choppy session on Friday, with energy shares losing ground on weaker crude oil prices, but Barclays jumped on reports that the bank may not need any fresh capital. The pan-European FTSEurofirst 300 index of top shares was down 0.3 percent at 743.29 points after trading in a range of 742.94-747.30 points.

The index is down 10.6 percent in 2009, but has risen 15.3 percent since reaching a floor on March 9, and is on track to record gains for a third straight week.

Banks were mixed.A person familiar with the matter said that Britain’s financial regulator has concluded a "severe stress test" on Barclays and is satisfied the bank does not need any fresh capital. The shares soared 10 percent.  Lloyds Banking Group, Banco Santander, Royal Bank of Scotland and Societe Generale were up 1.1-9.4 percent. However, UBS, Nordea Bank and Credit Suisse were down 0.7-1.8 percent. The DJ Eurostox Banking index is up around 16 percent for the month, but is still down about 12 percent for the year.

Energy stocks fell as crude edged towards $53 a barrel, having touched a 2009 high in the previous session. BP, BG Group and Total were 0.5-0.9 percent lower.

Capgemini slipped 7.5 percent after US rival Accenture lowered its full-year outlook, citing the global economic downturn.

Shares in Air France-KLM fell 4 percent after Europe’s largest airline warned of a 200 million euro ($271.4 million) operating loss in its financial year ending on March 31.

Among the risers, Daimler, BMW, Volkswagen and Volvo rose 1.6-5.7 percent.

Socgen has raised its recommendation on the European automobile sector to "overweight." "After significant underperformance, the auto sector is ready to rebound and now is the right time to buy the auto sector," SocGen analysts say in a note.

Oil Edges Down Towards $54 But Eyes Rising Equities

Oil edged down towards $54 a barrel on Friday, after having touched a 2009 high in the previous session on stronger equities, which the market hopes signal a recovery in oil demand down the road. Asian stocks opened higher on Friday, after U.S. stocks rallied for a second straight day on Thursday, on increasing optimism that the economy’s worst days are behind after the government reported data that was less dire than expected.

U.S. light crude for May delivery [ 53.52    -0.82  (-1.51%)] fell 30 cents to $54.04 a barrel by 0149 GMT, having gained nearly 3 percent on Thursday to $54.34 a barrel, after rising as high as $54.66.

London Brent crude [ 52.68    -0.78  (-1.46%)] fell 23 cents at $53.23.

OPEC seaborne oil exports, excluding Angola and Ecuador, will fall 770,000 barrels per day in the four weeks to April 11 to 22.23 million bpd, deepening the previous week’s five-and-a-half-year low, U.K. consultancy Oil Movements said on Thursday. OPEC could agree on a new production cut at the next meeting in May if it is warranted by market circumstances, such as high global crude stocks, Venezuelan Oil Minister Rafael Ramirez said on Thursday.

Yen Rises Against Dollar on Japan Repatriation

The yen rose against the dollar on Friday, recovering some losses made the previous day, as a major Japanese investor repatriated funds from overseas ahead of the business-year end this month. Traders said price actions in Asian hours are likely to stay choppy as more flows are expected to come through the market before March 31, when many Japanese companies and investors close their books.

The yen had fallen against major currencies the previous day and hit a near five-year low versus the New Zealand dollar earlier in Asian trade, as investors grew more comfortable about buying risky assets including higher-yielding currencies. The New Zealand dollar has been propelled broadly higher this week after government yields rose in a sign that investors were reining in expectations for lower rates.

Despite the abrupt flows, widening stability in the stock markets has been increasing investor risk appetite and that looks set to boost riskier and higher-yielding currencies such as the kiwi while damping the yen’s safe-haven appeal, traders said.

The dollar fell 0.2 percent from late U.S. trade on Thursday to 98.55 yen [ 98.07    -0.62  (-0.63%)   ] as traders said a major Japanese investor was selling the greenback.

The euro edged up against the yen [131.64    -1.86  (-1.39%)    ], while it rose 0.3 percent against the dollar to $1.3562.

The New Zealand dollar climbed against the yen [ 56.19    -0.60  (-1.06%)   ], its highest since November 11, on the Reuters dealing system, before retreating a tad to 57.00 yen, up around 0.3 percent on the day. It was up 0.3 percent to $0.5786, in reach of a 10-week high of $0.5803 struck on Thursday.

The euro slid to a session and week low of $1.3369  helping lift the dollar index 0.7 percent to 84.64.

Gold flat, ETF unchanged at record

Gold was at $934.25 per ounce at 0620 GMT, little changed from New York’s notional close of $933.05. At current levels, gold looks set to shed nearly 2 percent from a week ago. The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings remained unchanged at a record 1,124.99 tonnes as of March 26.

Silver inched up 0.5 percent to $13.53 an ounce. The world’s largest silver-backed exchange-traded fund, the iShares Silver Trust, said its bullion holdings rose 116.49 tonnes or 1.4 percent from the previous day to a record 8,296.93 tonnes as of March 26.

"Record-high holdings of gold and silver by the major metal-backed ETFs is evidence that investment demand remains the supportive element for precious metals", said an analyst.

Johnson Controls — guides down; announces job cuts
AMZN:  To Close 3 Distribution Centers !!

[…] they hit “goal.” Goal for the financials was up 60% off the floor at $6 on the XLF but, as I mentioned in yesterday’s post, 60% of $6 is about $3.50 but $3.50 is ONLY about 10% of the $32 drop from the top. So an 80% drop […]

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