Monday, May 11, 2009

Morning Update/ Market Thread 5/11

Good Morning,

Futures are down pretty substantially this morning with the /ES being supported right at the 912 pivot point:

On the upside the next higher pivot is 935 although 929 has held so far, then 961 is above that. On the downside, if 912 falls there is much support on the uptrend line in the 900 area. The next lower pivot is all the way down at 848.

Here is a 3 month daily showing that the rally is forming a rising wedge (dashed red lines). Rising wedges are normally bearish and they are a pattern that once the uptrend is broken tend to return all the way to their base:

The dollar is higher, commodities lower, and bonds are higher as well, reversing the rally trend. The KEY FOR ME is the lower boundary of that rising wedge. I am completely neutral until that breaks, then I am bearish. Don’t be surprised if this wedge overthrows the top and makes a run to the 950 area or even the 961 pivot as that is where the 200dma is and it is co-located with the weekly upper Bollinger band. I’m not saying it will go there, but I’m saying it’s a possibility, and remember that this is options expiration week and last Thursday was a down day which increases the odds of an up week. Again, I am doing nothing here until that wedge is broken.

And we must be close to breaking that uptrend because Trichet came out and said that central bankers are seeing that economic recovery is imminent! LOL, this statement by the same people who never saw a problem to begin with and even after experiencing a taste of the trouble that awaits, they still do not understand what’s happening. At least he doesn’t, I’m certain that the central bankers pulling the strings know exactly what they are doing, and they are ruthless.

No economic data today, Ben Bernanke speaks this evening. The important economic data for this week will be the continued onslaught of bond auctions and the release of inflation data, the PPI and CPI. This is important because the markets have been front running inflation and I believe the markets are incorrect, especially when you look at a year over year basis. When you do, you will see crashing oil prices, crashing real estate prices, and a crashing stock market… this despite a roaring rally over the past couple months.

I didn’t see a lot to get excited about this weekend so we just enjoyed Mother’s day and I stayed away from the computer mostly. Seems most people are taking a break from the economic news being front and center, not one 60 Minutes piece on the economy! Bill Moyers, however did do a good interview of Senator Dick Durbin .

Best to your trading this week! Here’s an uplifting tune to get your Monday going!

I Don't Like Mondays - Bob Geldof & Bon Jovi: