Friday, August 21, 2009

Morning Update/Market Thread 8/21

Good Morning,

Equity futures rose “in the midnight hours” once again, rising non-stop from midnight eastern at 996 on the /ES to this morning at 1,013 – a leap over resistance:



And the dollar was getting pounded, breaking down beneath short term support and losing .5% of its value overnight. Of course that’s the Inflation trade, dollar down, gold up, oil up, stocks up. The disconnect between the market action and the deflationary data is truly stunning. Keep in mind that there is a point where the dollar losses so much of its value that trade collapses. Hmmm… I wonder what Joseph Stiglitz would say about that…
Aug. 21 (Bloomberg) -- The dollar’s role as a good store of value is “questionable” and the currency has a high degree of risk, said Nobel Prize-winning economist Joseph Stiglitz.

“There is a need for a global reserve system,” Stiglitz, a Columbia University economics professor, said at a conference in Bangkok today. Support from countries like China should ensure orderly discussions on a new reserve system, he added.

Now that’s CHANGE, it’s coming in some form, that may be one of them. Almost an anti-American statement?

Naw, everything is fine here. We only have to auction off $197 billion in DEBT next week (ht Point, [check the “upcoming auctions” tab]):

*U.S. TREASURY TO AUCTION $27 BILLION IN 52-WEEK BILLS
*U.S. TREASURY TO AUCTION $42 BILLION IN TWO-YEAR NOTES
*U.S. TREASURY TO AUCTION $31 BILLION IN THREE-MONTH BILLS
*U.S. TREASURY TO AUCTION $28 BILLION IN SEVEN-YEAR NOTES
*U.S. TREASURY TO AUCTION $30 BILLION IN SIX-MONTH BILLS
*U.S. TREASURY TO AUCTION $39 BILLION IN FIVE-YEAR NOTES

The dollar is down just beneath the 78 level this morning. Here’s a weekly chart of the dollar showing that once support is broken at about 76, then the next stop would be the prior lows, and it’s clear air beneath that.



The Point & Figure chart shows a dollar bear target of 69, just beneath the old lows:



So, the current run up is still based on hot money and manipulation while the underpinnings of the economy get further eroded away. Once the rug is pulled on the hot money, and that is coming, the nonsense in the markets will end, and it’s likely to end suddenly in my opinion.

All the short term stochastics are currently overbought again… the long play is way long in the tooth, it’s one that Goldman is welcome to have all to themselves.

I’ve been watching the NDX closely because the daily Bollinger bands have been necking down on the price.



That’s a condition that usually indicates a rapid and large movement is about to happen. Up? Down? I’m still not betting either way in the short term, far too much manipulation in the markets for me (QE and such). I still think that the deflationary forces overcome the hot money… I know I’ve been saying that for a while, I’m almost always early!

McHugh has another turn date next week. Not that his turn dates have been producing turns lately, they haven’t because it’s been a nonstop rocket-shot again on the back of manipulation and money printing.

You know… a drug addict can get worse and worse until one day they just collapse to the floor. That’s usually a clue to stop doing drugs and hopefully they get cleaned up. The alternative, of course, is that a drug addict pumps themselves so full of drugs that their systems simply stop to function and they die. Frankly, I hope we hit the floor soon to prevent the latter.

Goldman, an Evil Woman drug pusher?

ELO – Evil Woman:


You made a fool of me, but them broken dreams have got to end...

...Rolled in from another town,
Hit some gold too hot to settle down,
But a fool and his money soon go separate ways,
And you found a fool lyin' in a daze,
Ha Ha woman what you gonna do,
You destroyed all the virtues that the Lord gave you,
It's so good that you're feeling pain,
But you better get your face on board the very next train

Evil woman how you done me wrong,
But now you're tryin' to wail a different song,
Ha Ha funny how you broke me up, you made the wine now you drink the cup,
I came runnin' every time you cried,
Thought I saw love smilin' in your eyes,
Ha Ha very nice to know, that you ain't got no place left to go
.