Friday, November 27, 2009

Morning Update/ Market Thread 11/27

Good Morning Wal-Mart Shoppers!

Welcome to Black Friday… But you have to wonder, is it Black Friday due to after Thanksgiving shopping or is it due to the stock market? Hmmm...

Well, from their close on Wednesday, the DOW plunged more than 300 points yesterday and since midnight have been climbing back out of the hole, now down about 190 points. Here’s a chart showing DOW futures on the left, and S&P futures on the right:

The dollar initially fell Wednesday evening to a new low and just when it appeared to be collapsing, magically the Dubai story broke and up the dollar jumped, back over the key 75 level and right into the upper downtrend line where it ran into resistance and turned down. The following chart is the daily dollar futures on the left and 30 minute chart on the right:

Bonds moved around some, but are basically back where they closed on Wednesday. Oil PLUMMETED, going from $78 to a little over $72 in very short order. It is now approximately $74. That move did cause it to break below the bottom trend line of its down channel… it tried to regain, but has failed to so far. Gold collapsed and fell all the way to the bottom of its rising expanding wedge, then bounced. It is currently at about $1,162, $32 below Wednesday’s close.

The news has now pegged this to the Dubai default story. However, there is much more going on besides that. There’s bank problems in Greece, there are debt and confidence problems in Japan, and there are derivative and counterparty issues involved with Dubai too.

I’m not sure how this will play out. There are going to be HUGE gaps in the charts on the open. Markets abhor gaps, they get filled eventually. If I were a member of the Pollyanna club, I would think that the selling was an overreaction and a buying opportunity. If I had an ounce of common sense, I would be long gone knowing that those who panic first, panic best. Or, I could be calm, cool, and collected, completely out of the fray. A spectator laughing at the spectacle of desperate clowns and market manipulators, knowing full well that with a debt saturated world that Black Swan events such as this would eventually appear. Gee, who could have known?

So today the overworked and overstressed “gatherers” will be out gathering in a marketing induced frenzy, while the “hunters” sit on the sofa drinking beer and watching their favorite Roman gladiator do battle in a taxpayer funded Coliseum, blissfully unaware that their modern day Rome is crumbling down around them. Oh yeah, there’s an uneasy feeling in the air, they just can’t put their finger on it.

Technically, we fell 50% of the gain of the last wave, erasing the past two weeks of market gains, just like that, while the markets were closed and the sheeple could not respond. I don’t know, but I’m thinking the sheeple who have yet to learn their lessons about our modern state of the markets are about to be taught another lesson. I have been warning that the background to the markets was not right. We had the very short end of the curve go negative and we had a backdrop of a declining dollar, a very dangerous situation. The market always knows, the stress leaks out in various places. This stress is caused by debt! Our masters are attempting to defy gravity, but the rule of debt is a natural law that cannot be defied. The rule is that all debts get repaid with interest in one way or the other. This stress would be the other.

All the criminals will be back to work on Monday, much will depend on how they plan to take your money. Profiting from the market at this point is going to be very tricky. I still believe that the selling will overwhelm them at some point and it could be ugly when it happens. That would argue for having some short exposure, and you can see that unless you are in front of it, you are likely to miss the beginning. But just how dangerous has front running been? VERY! This is why I’m still being patient waiting for the trendlines to break and for the E.W. count to be in a favorable position. This market has a long way to fall to get to reality, so there’s no need to get caught in the game too early.

And how about that Fibonacci spiral info? It’s now 3 for 4 dates this year from my perspective. The 4th date is December 10th. Pretty sure I’m going to have a position going in front of that timeframe. But in the mean time, it’s Black Friday, one way or the other – enjoy the show, the markets close early at 1:00 Eastern:

Steely Dan – Black Friday: