Wednesday, December 9, 2009

Morning Update/ Market Thread 12/9

Good Morning,

Equity futures are flat overnight with prices on the /ES so far supported by the 1,090 level but held so far below 1,096. In the chart below, DOW futures are on the left, S&P on the right:

The dollar slipped back down to just below 76 in what could be a kiss back of support. There is pretty heavy resistance at the 76.33 area, it will need to break over that if it’s going to head higher. Bonds are down a little, but have come back closer to level this morning. Both oil and gold are up slightly.

Yesterday, President Obama, was giving away more billions that he simply does not possess. Call this program “Cash for Caulkers.” I’d laugh if it weren’t so pathetic. The man and his central banker team simply will do anything but the right thing, this time Americans will simply go deeper into debt while buying appliances made in Korea, Japan, and China – up to $12,000 per home.

And here in the land of deception, the lone “economic report” this morning is the equally pathetic MBA Purchase Applications which supposedly rose 4.0% following last week’s 4.2% rise. Again, this report is beyond meaningless, in fact the meaning to me is just how far people will go to hide what’s really happening. A classic example of why the raw data should ALWAYS be provided with every economic release. We are not playing “hide and seek” here, we are playing with the real economy that affects real people’s lives. The folks at MBA should simply be ashamed for ruining this report.

But who can we trust? Yesterday Japan reported that their previously reported 3rd quarter GDP was not really the 4.8% they initially reported, no, it was only 1.3%! This is a miss of 3.5%!! Can we have any faith in their reports with revisions this large? I don’t. I don’t believe the U.S.’s numbers, I don’t believe China’s numbers, and now I don’t believe Japan’s numbers. I’ll stick to believing tax receipts – Ooops, down again - and shipping numbers.

Wholesale trade numbers are released today at 10 Eastern, the Petroleum report at 10:30.

The overnight pattern in the indices produced a classic ‘w’ pattern. This pattern can break in either direction, the tell for me is what happens immediately following the end of the w… normally there will be a pullback right off the end. My rule is that if the pullback retraces less than 50% of the w, then it’s a bullish pattern and prices are about to go higher, but if it retraces more than 50%, then generally prices are about to go lower. Just before the open, they retraced 100%, so my guess is that 1,090 may not hold, but it is heavy volume support. If it doesn’t, the next level of support is 1,080, the bottom of the flag or range that we’ve been in.

The dollar also just rose back above 76 and is running at overhead resistance. That will be the key for today. Also, the XLF is just looking very weak still, closing yesterday right on the lower Bollinger band. Failing to hold this level will be quite bearish.

The short term stochastics are mostly oversold, but there is plenty of room for more decent on the Daily charts. There’s not really a lot else to say until this range breaks. It’ll get exciting when it does.

You may have noticed less posts from me the past couple of days. I’m hard at work on my proposal and am intentionally trying to focus on that – it doesn’t come out as quickly because there’s a lot to consider and get right before release. I’m close enough now, however, that I’m going to kick it off by releasing my initial introduction either today or tomorrow. It won’t have the guts of the program in it because I’ve decided that those ideas need to come out all at once so that people can view all the parts and how they work together.

Hang in there, I know that being in this trading range tests the limits of people’s patience. That’s a part of the market psychology. Don’t blink, though, because we could be out of the range in as little as 60 seconds from here!


Shawn Beamer | MySpace Video