Party Could Be Over - At a Minimum All Cash the Prudent Move

Looks like the boys didn't like that ES going below my 1342 key level and EURUSD down below 1.21.  Shalom and Draghi probably called each other seventeen times in the last few days.  This stuff is becoming very predictable.

Atlass,   I've personally never seen a market with so little upside, other than 1999-2000. TZA baby

Always enjoy reading your stuff.   Mac

Ridiculous how the Market is rallying today because Draghi says the European Union will do everything in its power to stay together.

Really?!

This news is good enough for the Dow to rally 200+ points?

Wow our market is desperate for any type of positive news.

SMH

Prepping for potentially making some meaningful moves fellas.  I need to see what happens between 1407 and 1422.

looking for confirmation in the following three charts:

TZA

UUP

TYD

I like the potential setups in these. 

For you fundamental only guys - I'm still seeing confirmation of no new QE in the metals, debt markets, and currencies.  Even if he does do it looks to me like it's already baked in the cake.  he would have to do a massive new QE which expanded the balance sheet beyond the wildest dreams of even the most pie in the sky cheerleaders.  Do that with food prices ramming higher and oil threatening to send gas above $4/gallon? 

Also seeing confirmation in EURUSD.  Looking back it has gotten less and less of a pop out of each subsequent cutesie Euro summit where it's purported that 'everything is fine" and they have solved all of the problems instantaneously.  it ran to 1.31 before, then 1.27, and now just 1.24ish off this latest joke of a summit/meeting followed by Draghi threatening the markets.  Makes me think the markets are becoming less and less responsive to threats of central bank intervention and/or actual intervention. 

Looks like the boys are gonna wrestle over this 1407 just like they did with 1365.  I had 1365 earlier as a key level and they sure did throw the kitchen sink at it to move it above that.  they had the media person endlessly cheerlead imminent QE and Draghi came out with his tough guy act threatening to use his secret weapon (which btw does NOT exist).  Note how some type of central bank activity takes place at damn near every key level.  seen many times where they pop it above a level like this as if to trap as many longs as possible.  if this were to happen could be a quick drop in USD and rise in UST yields as well to really crank up the cheerleading.  so let's watch for any movement above 1407 to 1422 or even 1429.  if there is minimal volume (volume has been embarassingly light) and it kind of floats around (perhaps leading up to Jackson Hole where Bernanke will save us all with his magic wand) then maybe that sets up TZA and the others.

Leaning to TZA because this move since June is 110% based off of central bank Kool Aid and driven by large caps.  Smaller issues have shown less relative strength.  when the short term trend changes they should show more weakness. 

Also considering shorting EWP (no offense if you live in Spain).  Looks tired and sluggish and the cat is obviously already out of the bag on all these so called solutions for Spain.   

EWP getting tempting if it pops again above 26.50 on modest or light volume.  Does not appear as though it is setting up to bust through that 200 DMA although it does have a somewhat reasonable double bottom base in play.  The downtrend line goes back to April/May of 2011 so if it floats around up here and doesn't break above it I might just have to go short.

as expected a pop above 1407 on the spider tested 1422 initially and then 1426ish (not the 1429 I predicted - yet).  Watching very closely here to see if it kind of drifts around for a few days.  In fact I wouldn't mind seeing a further move lower and a snapback towards that 1422 with minimal volume.  If we got that long TZA will most likely take place for me.

Waiting longer on TYD.  UUP I can just about justify as a long entry point but I will wait a bit longer and see if they punch it down below that support line ever so briefly and see what happens.  like watching paint dry but perhaps some decent entries are forthcoming.  

long TZA at 16.65.

 

added to long UUP at 22.37. 

I will be looking for a weekly close above or below 1407.  a close below will increase my confidence in a test of 1391 next week.  if volume picks up on this then it should mean the trend has changed and a significant move lower is underway (especially if next week closes below 1391).  if it closes above 1407 for the week it's kind of in no man's land unless it rocketed above 1426 (highly unlikely).

meanwhile, in fantasy land the CNBCheerleaders crowd is expecting Bernanke to wave his magic wand and instantaneously eliminate all of the world's problems.  also, the dreamers feel that everything in Europe is fixed because Draghi waved his finger at all of us.  just in case you didn't get the memo . . .

spider closes at 1406.57.  1407 obviously remains a key level.  they (meaning the central bankers) just won't let it go down without a fight will they? 

The FED is playing a game with the markets..

It's like I said all along.  The Fed and ECB are in a box and they do NOT have any magic wand.  Their current tactic is as I have noted in this thread to lay the coke down on the table and lay the hookers on the bed without letting the junkies actually touch them. 

 

I can argue that the Fed can not and will not do another QE in the same form as it was previously.  if they do new QE it will have to take another form.  up until now QE purchased primarily treasuries off the balance sheets of the primary dealers.  they get the "wink wink" from Bernanke and use the cash to jack up risk assets.  there's just one problem and Bernanke has even stated exactly this in front of congress.  treasuries are the most reliable and strongest asset on the balance sheets of these banks.  bernanke can't keep buying them because it will actually make the banks less stable.  that's how fucked up this circle jerk is. 

as far as "why do they need to do it with markets near highs" my own personal opinion is that this just reinforces how bad the situation is.  they know their only hope is to "extend and pretend" and that the markets are addicted to money printing so they'll string them along as far as they can.  if they print oil and food skyrocket and several wars break out when oil is above $200 and the guy in a less developed country can't buy food or energy for his family (not to mention what food and energy inflation would do to China).  if they pull back and announce no more easing the S&P gets cut in half in a month or two.  so they pray and act like they have a magic solution. 

Yep I think FV is half or lower. The EPS numbers are reliant on low rates, China and risk cash. I see rationalization of current and higher levels and I just dont see it. 

so far in 2012 deposits at Spain's banks have dropped by almost 18% and it is picking up steam.  that's called a bank run.

don't worry though, tune into CNBCheerleaders on Tuesday morning and they will assure you that "everything is fine".  it IS all connected and it doesn't matter how many times they try to convince you otherwise.  the entire system is 100% reliant on faith and confidence. 

 

... Which is exactly what the FDIC does in this country.  It is a faith & confidence tool, giving depositors the insurance their money is backed by the faith of the Federal Government.... The Euro Zone has none of this , and shows the many pitfalls they still have to contend with.

I said this in another thread.. it will be shocking to see the Euro Currency stay alive, period.  How you expect different countries with different  cultures , different work ethics, etc. to share a currency is challenging to say the least.   Spain and Greece are seeing this play out, having no ability to de-base their own currency.... because they don't have one.


The Euro Zone has a very tall order.    When will the markets require some specifics, besides Draghi telling the markets "we will do whatever it takes." 

Mostly bad news today, with most indexes off slightly. Yet, the Russell 2000 up 1.2 percent.  Insane.

Only a matter of time before this fantasyland takes a nasty twist.

I agree with you Billymac... I have little confidence Europe get this right, and we ride again the roller-coaster stock market.

Our recent economic reports here in the U.S. are spotty as well.   Still lots of uncertainty out there, and doesn't seem markets have correctly accounted for this..

Time will tell

Trimtabs came out today with their jobs estimate ahead of the report on friday..they estimate that 180k-ish will be the number for payrolls..

120K may not create much of a reaction.  remember this is the "bad is good" and "awful is great" market.  awful news is considered yippee because the thinking is that it just means the Fed will definitely print more money.  this is how many people view it not myself.  120K might be viewed as so so.  not bad enough to guarantee free money being printed and not too hot that it negates the need for money printing.

i think closing above or below 1407 or 1391 is the key for this week along with the ECB spouting a bunch of "blah blah blah" tomorrow.  it doesn't look like they have that magic bullet after all. 

This market is hilarious..

buy now, or be priced out forever!

It has to be tough to sit on the sideline waiting waiting waiting for the big collapse,when there is good money to be made.

definitely have to bookmark this one.  exactly the type of attitude that leads to wealth destruction over time.  it can only go up huh? 

besides that - i made it clear way back in this thread i was describing my long term positioning.  what makes you so sure i am not consistently making short term moves based off of the key levels mentioned in here?  taking advantage of these key levels mentioned here correlates with a very high "winning percentage" if that term fits.  you must have access to my accounts.  i don't announce everything here and didn't realize i had to. 

1440-1460 more likely in the short term.  major short squeeze in the EURUSD. 

the algos driving about 80% of equity trading volume had a field day with Draghi it seems.  that term "unlimited bond buying" was a virtual orgasm for them.  unless i can't read it looks like they applied plenty of conditions to essentially the exact same program they ran before.  it provided short term euphoria back then and then it failed.  so Draghi will provide "unlimited" buying power but yet a sovereign must first apply for it and meet several "conditions".  so how is it unlimited if they must first meet conditions and apply for it?  ah hell who cares I guess the ECB will just buy up every single debt issuance in Europe from now until the end of time.

german court thing this week.  Fed expected by everyone on the planet to not only launch more QE but launch a massive new QE. 
https://www.zerohedge.com/news/scary-math-behind-mechanics-qe3-and-why-bernankes-hands-may-be-tied

Note:  I am not pimping ZH here.  i think the site provides a lot of very good information but I do not agree with everything they say.  this article though i feel is an excellent piece of just how much of a free lunch QE may or may not be.