Wednesday, January 27, 2010

Morning update/ Market Thread 1/27

Good Morning,

Equity futures are higher, no lower, no higher this morning… below is a chart with the DOW and S&P overnight action:

The Dollar is higher, bonds are higher, while both oil and gold are lower.

Today the FOMC will release their “decision” at 2:15 Eastern. Of course with rates at zero and staying that way we are left only to marvel at their wordsmithing. It is simply amazing to me that our nation hangs on every syllable spoken by a central banker mouthpiece. What an archaic system, we never should have allowed the bankers to control our interest rates much less our money system. Banks and money systems are two completely different things, the money function belongs to the people and we need to take it back.

Playing the market after the statement is dangerous if you’re a short term trader… be careful. We also have new home sales out at 10 Eastern and the petroleum report at 10:30.

Bloomberg offers the following expectations about the Fed’s announcement:
Jan. 27 (Bloomberg) -- The Federal Reserve may take a chance the housing market can stage a comeback without its support by announcing today it will stick to the plan to end a $1.25 trillion program of mortgage-debt purchases in March.

Fed Chairman Ben S. Bernanke and other policy makers meet after the sixth straight monthly gain in home prices in November added to signs housing is stabilizing. With financial markets rebounding, the central bank has said it plans to end emergency aid to bond dealers and money markets by Feb. 1.

Riiiight. Of course the markets cannot stand up without support! What’s shocking is that we allowed it to get to that condition with them stealing the fruits of our labors the entire time. Again, our nation has put itself at the mercy of the bankers. Why do we allow that? It’s time to take control of our money system back. Replacing Ben Bernanke, by the way, won’t accomplish a thing. Let me say it again… We need to take control of our money system.

The completely worthless MBA Purchase Applications report fell 3.3% in the past week, the refinance index falling 15.1%. Again, I can only shake my head in even calling it an economic report. Kids slinging crap is what it really is. But someone must love the smell of it every week, because no one’s talking about changing it besides me that I can tell. Freedom’s Vision would create an Independent Data Panel to consolidate economic reporting, create complete transparency, and benchmark how data is to be reported. This wouldn’t even make it in the door for consideration:
The Mortgage Bankers Association's refinancing index fell 15.1 percent in the Jan. 22 week, leading the MBA to issue a rare comment in their text: "Although rates remain low, there appears to be a smaller pool of borrowers who are willing to refinance at today's rates." The average 30-year mortgage rate edged 2 basis points higher in the week to 5.02 percent. MBA's purchase index fell 3.3 percent.

It’s obviously not just government statistics, in fact, allowing corporations like Goldman, or like the NAR to report on economics is very much like allowing the fox access to the hen house. Again, why do we allow such obvious conflicts of interest?

The sideways action the past two days has given the Bollinger bands and oscillators time… the sideways action looks like a wave 4, but is now getting long in duration compared to the other waves and is not a large enough retrace for a typical wave 2. So, the favored count is that wave 5 down hasn’t happened yet. However, this is a dangerous assumption, I think this is a good time to just be observing. When wave 3 occurs, that will be the safest profit opportunity.

Below is a 3 month chart of the DOW. You can see the two sideways days sitting on the lower Bollinger while it turns downwards. The daily stochastics are just getting oversold, but can stay there, the weekly is just now working its way down from overbought:

The XLF was hit hard yesterday. The more it looks like they really mean separating Investment and Commercial banking, the harder it gets hit. I don’t know what to believe in this regard, I have a hard time believing that real change is going to come from this Administration, we’ll see. Instead, I feel another hostage situation coming on, do this _______ or else we tank the system and _______ will happen, befalling terror upon you all! Fun game isn’t it? How about we just take our money system back?

Yesterday the VIX closed back beneath the upper Bollinger band. This is a market buy signal. Only been three of those in the last three years, each one has produced a significant rally in the markets within the following few days. Not immediately, but I would expect that by either late this week or early next we will be rocketing higher in a legitimate wave 2 retrace that typically will retrace about 61.8% of the move down:

Playing the first wave down is never easy. If I had to gamble in this casino the way it is now, I would stay completely away until wave 3s come along, get in and then get out. Let the central bankers and quants have fun playing with one another in the mean time until we can take the system back and return it to a functional and healthy market that serves the purpose for which it is intended.

Yes, I do have high hopes we can do it, just remember that their game is to box the issues in and then to divide and conquer:

Pink Floyd - High hopes (Division bell)