Tuesday, February 23, 2010

Morning update/ Market Thread 2/23

Good Morning,

After yet another no volume ramp job overnight, the rug was pulled out and now futures are lower this morning. Below is a 30 minute chart of the DOW on the left and 5 minute S&P on the right to show the overnight action:

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

The S&P Case-Schiller Index came in lower for the month of December. The year over year rate of price decline did slow somewhat, from -4.5% to -3.1%.

The ICSC and Redbook are also out, but not worth discussing, I feel sleazy even typing their names they are so worthless and deceiving.

Citizen (consumer) Confidence is released at 10 Eastern.

Speaking of sleazy, Bank of England’s Mervyn King says he’ll just do “whatever seems appropriate” for the economy, lol. Nice plan, Mervyn, I’m sure the people of England will rest well knowing that:
King Says BOE Will Do ‘Whatever Seems Appropriate’ for Economy

Feb. 23 (Bloomberg) -- Bank of England Governor Mervyn King said officials are prepared to do “whatever seems appropriate” to prevent a relapse in the U.K.’s economic recovery.

“Our central view is still that the most likely set of outcomes are along paths which involve a gradual recovery,” King said in testimony to Parliament’s Treasury Committee today. “But anyone who has lived through the last two years will surely know there must be enormous uncertainty on either side of that.”

The U.K. economy is entering a “very grave stage” and the Bank of England should expand its 200 billion-pound ($309 billion) bond-buying plan to fight the risk of a relapse, former Treasury adviser Roger Bootle said yesterday. Officials paused the program this month to gauge the strength of the recovery.

“Monetary policy can either be more expansionary or more contractionary as the situation demands,” King said. “We stand ready to do whatever seems appropriate.”

Yeah, like print money until the cows come home? Indebt the people to the tune of 300, 400, 500 percent of GDP, whatever… no biggie, no plan, but by golly he’s there to do whatever seems appropriate. Is there any doubt these people have no idea what they are doing? They don’t, and that includes all the central bankers – they have created a debt backed money machine that is spinning wildly out of control. There is a known outcome, that outcome is approaching faster than most are willing to acknowledge.

Yesterday’s price action did not resolve the small change on the McClelland that occurred Friday. That means the odds are high that there will be a large directional change today.

The futures have broken a small rising trend line, so some type of correction is expected today, whether it’s the start of wave 3 down or not has yet to be seen, but I am expecting that to occur soon.

I see a small H&S formation on the NDX 5 minute chart, a break below about 1,812 would break the neckline and confirm the pattern:

The short term stochastic indicators are all in the middle with room either way, but the daily is now overbought again.

Yesterday the VIX produced its ninth down day in a row (RUT nine up days) and produced an inverted candle that is close to being an inverted hammer. Watch to see if it rises today, if so it could mean a change of direction for the market:

The HUI, gold bug’s index, has developed a H&S top formation. I’ve been watching gold and it does not have such a clean pattern as the HUI, but I think this pattern needs to be watched. A break below the neckline would be quite bearish for gold and this pattern is aligning with what I’m expecting for the coming wave 3 down:

LOL, love the Mervyn King comments…

Beattles – We can Work it Out: