This is so exciting!
The Futures are up, Europe is up, the Dollar is down – despite the fact that the last Fed Statement, the last Fed Minutes and Bernanke's last speech all said, VERY CLEARLY, that there will NOT be any more QE UNLESS the economy worsens. We just had the new Beige Book on Wednesday and, thankfully, the economy is not worsening. Therefore – one may conclude – no easing today. To do so would make the Fed seem capricious and inconsistent and erode their future ability to steer the markets with rhetoric.
Of course, this doesn't matter to the robots who are jacking up the Futures after the foolish humans sold all day yesterday – and the day before, and the day before that, and the day before that. But not last Friday – although last Thursday was terrible too and last Wednesday wasn't so good and last Tuesday was awful – so how about that rally?
As you can see from our Big Chart, we're getting exactly the sell-off we've expected but, as I've pointed out to Members, things are much weaker than they seem as the Dollar, at 81.50, is down 2.5% from where our levels were drawn (83.50) and that means that each set of lines on the chart – including the 50 and 200 day moving averages, need to be moved up one notch and that means the Dow failed it's 200 dma yesterday (at an adjusted 13,100), the S&P dropped below it's must hold line (adj 1,400) and needs to break back over the 50 dma (adjusted to 1,414) in order to get back momentum.
The Nasdaq is still above it's adjusted 50 dma at 3,037 but now need to get back over the adjusted Must Hold line at 3,075. The NYSE has failed all of it's support and has to take back 8,000 for any rally to be taken seriously and, finally, the Russell is right on the adjusted 200 dma at 804 and failing to hold 800 would be a huge sell signal.
For now (8 am), none of that is an issue as the Dollar has fallen another full percentage point (81.18) as the Euro climbs back to $1.26 because ECB Executive Board Member, Benoit Coeure said: "ECB bond purchases in the sovereign debt market must be subject to strict conditionality." What? What do you mean that doesn't sound bullish to you? The man said BOND PURCHASES! Don't you see? It's a code – the code means the ECB is planning to buy bonds – if someone asks for them (which Merkel is actively discouraging) and if they meet "strict conditionality." See – IT'S IN THE BAG!
Fortunately, as we learned yesterday, reality is only what you say it is and Mitt did a much better job than his VP in wowing the crowd yesterday with his Reaganesque vision of America and I was particularly impressed by this documentary on his life:
With all this love in the air and the great news out of Europe, we decided to go long on the Nasdaq Futures (/NQ) in early morning Member Chat to lock in yesterday's gains on our bearish positions. Most likely, we'll be back on the short side before the market opens as we're still just a tad skeptical of all the rhetoric but nothing that happens at the open really matters until we get Bernanke's speech from Jackson Hole at 10am. '
We have our long hedges that we discussed Tuesday, and the Tuesday before that and the Tuesday before that (in case you missed it), but our short-term $25,000 Portfolios are skewed 70% bearish and we added more downside protection to our Income Portfolio, in anticipation of some disappointment from Bernanke this morning.
As I said earlier this morning to Members, I don't think they can get the Dollar below 81 and it's already (8:50) at 81.05 so we're going to be cashing out our Futures longs already and shorting the Dow (/YM) at 13,100 and the S&P at 1,410 as these are both lines that should be easy to bail out of if they break but this is simply stupid at this point – erasing all of yesterday's losses in the Futures based on an optimistic interpretation of a statement made by a guy we never heard of. You can mess around with the Futures all day long but once you begin to try to push Forex past resistance – you'd better have something more substantial than an out-of-context statement by a minor official.
Jens Weidmann is not a minor official – he is the President of the Bundesbank and he has threatened to resign if the above-mentioned bond-buying program is put into effect by the ECB. Sounds like strong opposition to me… In Berlin, a government spokesman said Chancellor Angela Merkel supports Weidmann but declined to comment on the report, which lays bare a deep rift within the ECB over the bond scheme that is increasingly being played out in public.
Stepping up the pressure to attach conditions to the plan, fellow German ECB policymaker Joerg Asmussen said late on Thursday the ECB should only buy sovereign bonds if the International Monetary Fund is involved in setting the economic reform programmes that should be demanded in return. "Opposition from Weidmann and reservations from some other Council members will mean that ECB bond purchases would be highly conditional, be focused on the short end and would not aim to bring yields down quite as much as Italy and Spain might like to see," said Berenberg Bank economist Holger Schmieding.
Ah well, enough talk – let's see what Uncle Ben has to say….
Dollar down to 81.16 is this a pump job or does someone have insider information. Maybe the accidently released the meeting speech 14 hour early to the banker peeps
Oppenheimer upgraded Corning (NYSE: GLW) from Perform to Outperform with a $16 price target.
The firm said the stock has has limited downside – given share buybacks and a good dividend – plenty of upside potential from its current business once macro improves, and optionality with new technologies.
R3 – 97.16
R2 – 96.38
R1 – 95.51
PP – 94.73
S1 – 93.86
S2 – 93.08
S3 – 92.21
Very nice pump job this am. PP don't even matter….
Note what I just wrote in updated post:
Anyone know if there is a live feed for Uncle BB's speach?
Phil / For options on the DOW side, Weekly DIA Puts? Weekly DIA 131 Puts at (bid/ask) 1.21/1.33 Delta -.51. Ride the DOW down with a short stop?
Phil/impressed Phil, snap snap! PHIL!….DON'T LOOK AT THE LIGHT!!!
Almost lost him…..
Good Morning Everyone!
You da man Phil! Thanks for that futures note, I was in the right place at the right time for that one.
Will CNBC carry the speech or do they cut away like when the prez is on? First time I've turned on that station in months…
Quote of the day:
The disconnect with reality takes another turn for the worse. What an idiot….
Springheel Jack: My DX 5Yr Chart showing the huge significance of the support test today … DX/US is a very good technical performer. That makes this test really very important indeed. Game changer if it breaks.
Phil, the post is all messed up on the iPhone. Something is wrong with the video and it causes uncontrolled scrolling and massive amount of black screen. I can't even get it to switch to iphone view to ignore the article because of the uncontrolled scrolling.
And I sent the little spinning globe thingy at the top of PSW into an uncontrolled osscillation and it became very annoyed, stopped, and disappeared. Sounds like part of Phil's character was programmed into it somehow — fascinating.
augrusot / FYI
May be something related to your phone. Nothing happening on mine. Video works fine and no scrolling issues.
7.9 earthquake Philipines
fixed now. Thanks.
MoMo trade: Bought to close the 5 LNKD Sept 22 115 calls for 1.30. That closes out the LNKD trade completely. Reason for trade: If the "B" does a QE this puppy would explode upward. So a word to the wise. If you hold any short calls or puts in any of these MoMos you could gets your pants blown off today. The MoMo holds only the Jan AAPL bull call spreads at the present.
Very exciting Futures so far and Europe is way up (1-2%) so we'll have a strong open, no matter what.
Adjusted bull lines are Dow 13,100, S&P 1,414, Nas 3,075, NYSE 8,000 and Russell 820 and, as I noted above, we're bearish about this open because the pre-market gains were based on shoving the Dollar down to the 81 line where we will at least get a bounce.
FB down to $18.50 but STX making new highs at $33 so maybe it is good to actually make stuff.
Nothing matters until we get the Fed speech – keep an eye out because the text may be realeased early.
We had a nice drop on the Dow (/YM) and S&P (/ES) futures and now they are back up to our shorting lines at 13,100 and 1,410 but more dangerous now as the rumors are flying so I'd avoid the quick-moving Dow and use the S&P for shorting – if you are so inclined – but much more dangerous than the pre-market call.
Crazy day ahead – get ready!
All subject to big changes in less than 30 minutes!
RUT not joining the party.
MoMo trade: Bought to open 5 AAPL THIS WEEKLY 655 puts for .26 each. Insurance!
PHil – any FAS play just in case the "B" exudes some irrational exuberance and releases dollars bills in the air? Both C and BAC were up big time this morn?
Remember, we have the U. of Michigan in about 5 minutes and then the Factory Orders at 10:00 as Ben starts speaking!
MoMo trade: I made Phil's AMZN trade 10 of the 245 this weekly puts for .40.
FLAN – AMZN– Buy or Sell?
Gee, how many of you guys grabbed the XLF puts – volume is up to 500 and no other puts have traded so far!
DUH!!!! Sorry FLAN.
Buy the AMZN puts.
Reinhart/stj, She looks the part perfectly
Those puts never sold at 0.01.
OK Ben … Bring it on for the MoMo. You give us QE, our AAPL BCSpread goes up. You give us none, our AMZN and AAPL puts get cashed in (probably). I also made Phils XLF trade,not in the MOMO, just for fun. I see some others did too.
Consumer sentiment higher, who are these people?
GLW/DC – Love those guys.
No advance word on speech.
Leisman looks depressed. I like him better without the pom-poms.
Thanks Chaser – congrats.
Holy Cow, long speech but no immediate QE that I see in 15 seconds:
SDS 14 calls look tasty with no premium.
Thanks Phil on DIA. Normally not off on a Friday. Interesting day!
Dive, dive, dive…..
TLT Sept/Nov BCS…….selling for 1.40 or better.
at the 80.40 line P/F?
Damn, too much work…Been trying to follow but after reading today's post I have to say – Nicely done Phil! Impressive calls making a lot of people a lot of money!
How low do you think we go?
Turned on CNBC to hear the man but not what they want so CUT!