Monday, September 28, 2009

Morning Update/ Market Thread 9/28

Good Morning,

I’m back! Turns out that Arno has a broken ankle and will need about 6 weeks to heal. Fun while it lasted, it’s a very difficult and disappointing way to end the trip. The window for doing the trip as planned has passed for the year, as far as I’m concerned, and I’m not planning on attempting it again.

Thanks to all who supported the effort, and especially Davos who kept this site going. If you are not aware, Davos has announced that he is stopping his updates on Chris Martenson’s site at the end of this month. And, since I’m back he will also stop the updates on this site at that time. He plans on working on some projects and spending more time with his family. It’s difficult to put never ending work into a blog, and he deserves a well earned break and all our thanks for his help in spreading around some reality.

Equity futures are up this morning, here’s the overnight action on the /ES and /YM (S&P and DOW):

The dollar is up slightly, oil is flat, gold is up a couple dollars but still stuck below the $1,000 mark.

No economic news out today, that’s good as it gives me some time to get caught up on things. That’s going to take a few days, so please be patient with me and I’ll get back to writing full force again as soon as I can, but I’m going to have to work into it as I get settled again. Later in the week we have consumer confidence, another Q2 GDP trumped up revision, Chicago PMI and a host of the other usual highly questionable statistics! The next large event that everyone is looking forward to is the employment situation that comes out next week on the 2nd of October.

Below is a 6 month chart of the S&P 500. You can see that the rising wedge is still in play. According to McHugh, this latest down move should be followed by one more up move to finish off his wave count for the large wave B up, that puts C down to follow. Looking at the stochastics, the daily has a way to go before it’s oversold, but the 60 minute is on a fresh buy and the shorter term oscillators are mixed. I do see a very short term positive divergence but the negative divergence is still there, and quite large, on the longer time frames. My guess is that we may tap the bottom of that wedge sometime soon and then we’ll rise back to the top and possible make a new high. Wave 5’s, however, are tricky as they can either extend and rise above the top of the wedge, or they can truncate. This next wave up, when it begins, will likely be the bulls’ very last chance to escape with their pants on.
Numbers to watch? October 13th, and SPX 1133 in honor of Seth? What happened to him anyway? I’ll have to write him and find out… prison is not ruled out, lol. The pivot points to watch are support at 1,041 (next lower at 1,018), and resistance is at 1,061.

Speaking of bulls, even Jim Grant has turned bullish? That’s a great indication that the psychology for a major top is in place. During the Great Depression, there were also some very famous investors who turned bullish only to be wiped out later. Their thesis correct, it simply takes longer than you would think to draw in all the idiots, err… dumb money, which the world seems to flooded with. Insider selling? Still at record highs. Price to Earnings? Off the charts by historic norms. The math of debt? Even more unworkable than before. Banks? Still insolvent, but hiding via accounting tricks and supported by the government that is complicit in the deception.

No, those things have not changed one iota in the two weeks I was gone, and as you can see, neither has my outlook. The fleecing is ongoing, it’s going to get real ugly in the next round.

Not my favorite tune, but hey… I’m back in the saddle again!

Aerosmith - Back In The Saddle