Tuesday, March 23, 2010

Morning Update/ Market Thread 3/23

Good Morning,

Equity futures are close to flat or are slightly up this morning. Below is a 5 minute chart of the DOW futures on the left and S&P futures on the right:

The dollar is higher but has yet to break upwards from its recent range, the Euro is under more pressure again, and bonds continue to trade tepidly just above that very large H&S neckline and support area. Both oil and gold are lower overnight, but oil was down big yesterday before the open and came roaring back to a very positive close. Trading in a huge $3 range, it is quite obvious to me that market has become wrought with speculation. Markets that have too much hot money and are under the control of just a few entities will eventually have very difficult and volatile times – tick tock.

Existing home sales are released today at 10 Eastern.

Yesterday’s Monday ramp job was brought to you by the same speculative fervor still riding high on the back of accounting fraud and government sponsored hot money, your future obligation. Welcome to higher taxes to service it all, another half trillion in taxes was levied on you with the insurance industry bailout bill yesterday, it also takes money from both Medicare and Social Security in addition to the forecasted $1 trillion shortfall in the next 10 years. And you know how good those forecasts are in an exponential math environment – not.

Senator Dodd’s bill for financial reform passed committee yesterday. There are actually some good things in there, but there are some foolish things as well. Putting the “Consumer Protection Agency” under the FED is not at all like putting the fox in charge of the henhouse, it’s more like just go out collect up all the chickens, grind them up and feed them to the foxes at a gourmet style sit-down dinner. The devil for the other provisions are, of course, in the details. My overall cynical take is that the rules will be written by the bankers to favor the bankers while putting on a show for everyone else. Nothing works to help Americans until we address who creates the money – that the is the core issue. Nothing in his proposal makes the math of debt backed money any better. By the way, anyone who doesn’t think our money is backed by debt doesn’t understand how our system works.

The markets are still living in Wonderland. Historic high trailing valuations, parabolic style move, historic volume divergences, overbought readings on all the oscillators on all timeframes… broken record. Buy before you’re priced out forever, lol. Hey, I’d go on, but in a speculative fervor none of the traditional measurements seem to matter, that is a great clue that “investment” is not what the market is currently all about.

The SPX 1,168 area is overhead, a break above that level is bullish and break beneath 1,150ish is bearish. Just a spectator until the trendlines begin to break.

Pink Floyd, Comfortably Numb: