Tuesday, March 2, 2010

Morning Update/ Market Thread 3/2

Good Morning,

Equity futures are higher again this morning, below is a 60 minute chart of the DOW on the left and a 15 minute chart of the S&P on the right:

On both those charts you can see a rising wedge with an overthrow out of the top which is typical of rising wedges. The only problem with these wedges is that while they are clear in the futures, the wedge is not so clear in the indices themselves without the overnight trading, and thus my confidence in those being terminal patterns, as they normally are, is lower.

Both the dollar and bonds are lower, oil and gold are both higher.

The only economic data of the day are the silly Redbook and the Goldman ICSC. The ICSC was down .8% week over week, but up .7% yoy. Redbook is up 1.4% yoy, both are totally false readings as they do not account for store closings. This is why we turn to sales tax data which for state and local governments nationwide is now down about 5% year over year, even lower than the very bottom of the panic occurring one year ago.

First Greece is going to be bailed out, that’s cause for markets going higher. Now they say that within just a few days they will announce measures to help get their fiscal imbalance back under control. Yeah, right! When your money is backed by debt, you can spend more and go deeper in debt, or you can cut back and watch as your economy contracts. Darned if you do, darned if you don’t. Neither a bailout or austerity measures are the answer, yet those are the only options being considered.

The European Union needs a dose of Freedom’s Vision, and they need it soon. The problem for Greece and individual EU countries is that they are now tied to the Euro which means that they are at the mercy of the central bankers who managed to place themselves in power. Their power is much more thorough and complete than the elected officials, they tell the elected officials what they are going to do and how they are going to behave. Same in the U.S.. We let our central bankers steal that power from us in 1913 when the Federal Reserve Act was passed without a full Congress in session.

At any rate, the Euro is up on the non-news and just like yesterday and last week there is really no fundamental reason whatsoever for equity markets to be higher. But they are, and the Russell 2000 is even nearing its prior high, the Transports are not that far behind (that’s a good one as they are being led by the airlines), and now the S&P and Industrials are both well over their 61.8% retrace levels.

So, if we don’t turn down here, it seems likely that we get the RUT and maybe even the NDX onto new highs. There are a lot of similarities between the action today and the action near the ’07 top. Then, as now, we had a large rising wedge that broke lower, and then prices crawled along the bottom boundary and even went onto new highs. Then, as now, there was the rotational trade game being played, remember? One week tech stocks were hot, then they would fade and commodities were hot, etc. The same thing today – Amazon and Apple are ramping for no apparent reason other than there’s hot money chasing return. These are symptoms of a financial system out of control, and they are symptoms of topping action.

The VIX has fallen below last week’s low and has pretty much invalidated that inverted weekly hammer – but the week’s not over, so we’ll have to see what the weekly candle looks like. It needs to turn around now or else it was not a meaningful candle.

The Supreme Court has decided to review a Second Amendment case regarding the Constitutionality of gun control limits as there is now in Chicago. That will be interesting.

The Emergency Unemployment extension is held up still, that too is going to be interesting. I’m sure the Central Bankers actually support printing more money to placate the masses, why not, it’s just more debt from which they profit.

Kiss Saturday mail delivery goodbye, can’t afford it, yet amazingly we can afford $400 Billion PLUS in interest payments to the central bankers and literally Trillions more to buy down interest rates.

Hey, buy stocks, your future depends upon it, LOL! No, I haven't turned into a Cramer like shill, it's just another bad joke, but I'll keep pushin 'till it's understood! There's trouble in the heartland, got a head-on collision, smashin in my guts man... Poor men wanna be rich, rich men wanna be kings, and a king ain't satisfied till he rules everything.

Bruce Springsteen – Badlands: