Tuesday, October 12, 2010

Morning Update/ Market Thread 10/12

Good Morning,

Equity futures are down this morning with the dollar rising, bonds rising, oil up slightly and gold down slightly.

There is no meaningful economic data this morning, however the FOMC minutes are released at 2 PM Eastern. Keep in mind that we have learned that the contents of these minutes are leaked to certain “privileged” individuals like Bill Gross prior to the public release - insider sanctioned trading, coming right from the top. This is yet another hypochritical message sent by this country's "leadership." They will throw you in jail if you trade on inside information but if they do it it's a-okay. And you want to trade against these criminals? LOL, good luck. Speaking of gross, the game of hanging on the phony “Fed’s” words is ridiculous. In fact they have created the problems, been completely ineffective at stopping the problems, and that’s because they ARE the problem. Who controls the production of our money is THE most important facet about our economy and yet it is completely ignored by design. Giving insider information to people like Gross is absolutely disgusting.

But everyone at this point seems convinced that the “Fed” is going to save them! In fact the Market Harmonics NDX sentiment index is higher now than it was at the 2007 peak – that is extreme (ht Scott):

The VIX closed below the lower Bollinger band yesterday. This sets up yet another VIX sell signal, the second one in a month. To trigger the signal, the VIX must simply close back inside the range of its 2 standard deviation bands – that could happen today. It is rare for a VIX sell signal to fail, I would look at this one as a cluster, the market simply exented following the first one. Again they can take time to work, so don’t expect an immediate response:

There was a small change in the McClelland Oscillator yesterday so we can expect a large directional move today or tomorrow. The Oscillator is still positive, I am waiting for it to turn negative as a sign that selling is likely to gain momentum.

There may be a rising wedge in play. I’ll post charts of this pattern inside of the daily thread as I want to see the market open to see how the lower trend line appears. The descent and bounce overnight may actually be defining the lower boundary a bit lower than I thought yesterday or we could be retesting it from underneath. At any rate I’ll be happy if we can get a descent going without creating massive gaps on the way down – the massive gaps on the way up will get filled, it’s just a matter of when. Don’t let the emotion created by rising prices fool you, make sure you see what the market in this analogy really looks like in the end!