Thursday, June 18, 2009

Morning Update/ Market Thread 6/19

Good Morning,

The futures are up overnight with the /ES in the 920 area:

A break over 926 or so would put prices above the little channel that’s formed over the past two days, but a break beneath 912 will put it below.

From a technical perspective, we did not receive the large movement that Wednesday’s small movement in the McClelland Oscillator called for, and thus I would expect a large movement for quadruple witching Friday.

The 30 and 60 minute stochastics are now overbought so the odds would favor seeing some more downside soon. When I count the waves from the June 11th peak, it looks like a clean 5 wave pattern, one of the first countable wave patterns in the past several months, wave 5 ended at 905. From that low, it appears that we have made a shallow wave 2 with a clean abc pattern that may be complete already – you can see that in the SPX chart below in the small upsloping channel

If that EW count is correct, then wave 3 down should start sometime soon – Friday sometime or Monday at the latest. You’ll know that’s happening if the 903 low is taken out. There are also several divergences that lead me to believe another move down is not too far around the corner.

Yesterday was nothing short of a bloodbath in bonds… with the market up less than 1%, the 10 year fund (TNX) rose 5.1%... Why? Could the fact that we learned that the Fed is going to auction off $165 BILLION in ONE WEEK next week have anything to do with it? Could be! Limitless supply, constricting demand, and the growth in governmental debt is just exponential at this point.

Lucky us, now the government is going to subsidize those who have been the biggest users of natural resources by offering up to $4,500 for vehicles that get less than 18 m.p.g., but nothing for those who were responsible enough to keep the size of their vehicles down. Naturally, this spending of money we don’t have was attached to a war spending bill, LOL! It doesn’t get any funnier than that or any less of a free market.

$1 billion 'cash for clunkers' passed

Here’s a short piece on the airlines. Combined they lost $9 billion, TWICE what analysts expected. Just another example of analysts overestimating earnings in this environment:

Have a great weekend,


Administrative note: I will be out of town from Friday morning until Sunday afternoon… Again, I appreciate everyone’s comments and keeping everyone up to date on the current events. Investing and dealing with the economy is a team sport… only without the steroids or big money television endorsements!