Friday, August 27, 2010

Morning Update/ Market Thread 8/27

Good Morning,

Equity futures are higher overnight, trending up all night and then spiking higher on the second release of Q2 GDP data. Bonds are sharply lower on the release, the dollar is flat, oil is flat, and gold is higher.

The Q2 data originally came in at 2.4%, and expectations had been knocked down pretty hard, as I mentioned yesterday, to 1.3%. It came in at 1.6%, thus removing 33% of the supposed growth, yet “beating” expectations. What I can tell you is that our GDP number is one of the most watched and yet most manipulated numbers in the world. It is VASTLY overstated and is simply a psychological tool belonging to the central banks who want you to believe that their financial engineering is the same thing as engineering something real. It is not. At any rate, we unfortunately live inside of their debt backed money box for now. Here’s Econoday:
The Commerce Department confirmed the claim by many economists that second quarter growth was softer than initially believed. Second quarter GDP growth was revised down to 1.6 percent annualized from the advance estimate of 2.4 percent. The new figure was higher than analysts' expectation for 1.3 percent.

The downward revision was primarily due to a higher net export deficit and a smaller gain in inventories. Also getting downgrades were residential investment and government purchases. Partially offsetting were modest upward revisions to personal consumption and nonresidential fixed investment.

Many traders are focusing on final sales. Real final sales to domestic purchasers was revised up to 4.3 percent from the initial estimate of 4.1 percent while final sales of domestic product (adds in net exports) was revised down to 1.0 percent from the advance figure of 1.3 percent.

Year-on-year, real GDP is up 3.0 percent, compared to up 2.4 percent in the first quarter.

On the inflation front, the GDP price index was bumped up marginally to 1.9 percent annualized from the initial estimate of 1.8 percent. The median market forecast called for a 1.8 percent figure for the second estimate.

Even though overall economic growth slowed substantially from the first quarter's 3.7 percent pace, domestic demand was actually stronger-4.3 percent compared to 1.3 percent in the first quarter. Certainly, there will be some slowing in domestic demand growth in the second half but a rebound in exports could help support the overall growth rate. The bottom line is that the latest GDP revisions are more supportive of continued recovery-albeit modest-than a double dip.

On the news, equity futures gained, rates firmed marginally, and the dollar index edged up.

There will be one more revision of this number, oh boy, I wonder what they can cook up and what the deflator will be? Just a joke to me, there has been no real growth in this country for at least a decade if not longer.

Corporate Profits were also released for the second quarter, coming in almost exactly flat from the first quarter, but up a ridiculous 37.7% from the year prior. Keep in mind that’s almost all financial engineering there too, with the financials returning from a brief mark to reality back to mark to fantasy. Even with Enron accounting times a million, corporate profits plateaued.

Consumer Sentiment is released at 9:55 Eastern this morning.

There was no Hindenburg Omen yesterday due to the number of new lows contracting to only 38. That is a positive internal divergence against the market that declined yesterday. There is also a short term positive divergence on the Stochastic and RSI 30 and 60 minute charts that I pointed out yesterday.



Keep in mind that this is likely a small degree move, and that it can end at any point, most likely when we least expect it.

One more indication that made me go “hmmm” yesterday after the close was the positive close and long tail up on the Transports behind a hammer with the tail in the opposite direction. Such “dueling hammers” almost always resolve in the direction of the second tail, in this case higher, and sure enough it is opening higher this morning, but doesn't mean that it has to finish higher:



This rise in prices this morning overthrew the top of the descending channel of the past few days, but quickly fell back inside. Note that yesterday afternoon’s decline stopped short of making a new low, thus this move still looks very much like a part of a small subwave 2. The key level to watch is still SPX 1040, a break below that level will likely mean a quick trip to 1010.



Being Friday, I would expect some back and forth during the day, but the usual game of late is to HFT ramp into the close, then rocket higher Monday morning. The surprise will be when that doesn’t occur. What a market. Free it ain’t.

Don’t forget that the “consumer” still comprises the majority of real economic activity and their sentiment (released this morning) is more important from my perspective than an engineered GDP number.

Thursday, August 26, 2010

Morning Update/ Market Thread 8/26

Good Morning,

Equity futures are higher this morning as what appears to be a subwave 2 bounce continues. The dollar is slightly lower, bonds are slightly higher after yesterday’s potential topping candle, oil is higher after finally finding support yesterday, and gold is lower so far today.

Although nothing to write home about, the weekly Jobless number came in less than the psychological 500k mark at 473,000 which is still horrific. The prior week was revised higher to 504,000 and the consensus was looking for 495k. Here’s Econoday:
Highlights
Jobless claims swung lower in the August 21 week in what should slow the deepening pessimism. Initial claims fell 31,000 for the second biggest decline of the year. Yet the 473,000 level is still on the high side when compared to levels in July, evident in the four-week average of 486,750 which is the worst since November. The prior week was revised 4,000 higher to 504,000, also the highest level since November.

On the continuing side, continuing claims fell 62,000 in data for the August 14 week. The 4.456 million level is the best of the recovery as is the four-week average of 4.509 million. The unemployment rate for insured workers fell one tenth to 3.5 percent. The continuing news is probably good news for the jobs outlook, suggesting that those who have been out of work are increasingly finding jobs. But some of the decline also reflects the expiration of benefits as job seekers simply fall out of the insured labor pool.

Stock futures are getting a lift from this report though the outlook for the July employment report still isn't very bright. The jobs market is certain to turn up in tomorrow's comments from Ben Bernanke.



They'll mention a falling moving average, but fail to report on the primary average that is rising. According to the Department of Labor, “The 4-week moving average was 486,750, an increase of 3,250 from the previous week's revised average of 483,500.”

Also according to the DOL, “States reported 4,899,646 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending Aug. 7, an increase of 199,493 from the prior week. There were 2,993,925 claimants in the comparable week in 2009.”

Of course the EUC number jumping 200,000 in one week doesn’t even get mentioned, nor does the fact that there are nearly 2 million more people drawing EUC this year (during the supposed “recovery”) than there was last year. Corn syrup for everybody, rounds are on the house!

Tomorrow is the Q2 GDP revision, the consensus is looking for it to be revised down from 2.4% to 1.3%. That’s a large adjustment they are expecting, it may be difficult for their Enron accounting to come up lower than that. Consumer Sentiment is also released tomorrow.

Yesterday produced yet another Hindenburg Omen, the 4th clean one to go along with one other that was on the line, and yet another that was extremely close. Again, this extends the four month window that the market is vulnerable to significant declines, and is an internal indicator of continued poor market health.

Below is a 3 month daily chart of the SPX, you can see that prices fell yesterday morning to support at 1040 and bounced. The favored count has this bounce as a small degree wave 2, and if that’s true, it may only make it up to fill the gap just under 1070ish, maybe a little higher. There are always other ways to count the action, however, so let’s remain aware of those. One more bullish way to count it is that instead of being in 3 of 3 down, we simply did a wave b of a larger wave 2 and now we’re beginning wave c of 2. But that’s much lower odds from my perspective, especially with confirmed H&S patterns in play - I’m just pointing out one alternative.



So far the DOW and S&P futures have been confined to the down channel I’ve been tracking, below is a 30 minute chart. You can see that this morning’s reaction to the sub 500k number still has not pushed beyond it. Keep in mind that this market is very vulnerable and could roll hard at any time:



The talk of the town is that all the bad data of late means that more wild central banker schemes are going to come roaring in to “save” us. Honestly, I don’t know who can think that way, especially now that it’s perfectly clear to anyone with more than two neurons that the fact is they are not just powerless, but they are the problem. So, if bad news is good because we’re going to be saved, then good news must also be good because we don’t need to be saved? This is the same convoluted and neurotic thinking that has gotten us and the markets where we are – we’ve seen that low brow mentality before, it’s time for the Fed and for the markets to get back to where they once belonged!

Wednesday, August 25, 2010

Morning Update/ Market Thread 8/25

Good Morning,

Equity futures are continuing lower this morning following more “worse than expected” data. The dollar is roughly flat, bonds are sharply higher, oil is down some more (down 13 of last 15 sessions), and gold is higher.

Yesterday S&P downgraded the debt of Ireland which is sending yields upwards. Of course this is well after the horse has left the barn, grown old, and has already passed away from old age. Still, it again raises the specter of national risk in the Euro zone area, and the likes of Ireland and Spain are far more significant than Greece. Greece, of course, was foolish enough to take loans and austerity measures from the IMF gangsters and thus are suffering accordingly. Once the reality begins to permeate the psyche of investors again, the potential for meaningful trouble is high (where isn’t it?).

The still worthless MBA Purchase Applications Index rose .6% in the past week, with the Refinance Index rising 5.7%. Again, their methodology is simply trash, what we do know is that we are just off historic lows in their index. Here’s Econoday:
Highlights
Record low mortgage rates fed a 5.7 percent surge in refinancing applications during the August 20 week. On a four-week basis, the volume of refinancing applications is up 26 percent. Low rates, the lowest in the 20-year history of the Mortgage Bankers' survey, are making it pay for borrowers to refinance loans that they had already refinanced within the last two years. Refinancing made up 82 percent of total applications, a reminder of how dormant purchase activity is. Purchase applications did rise 0.6 percent in the week. The average 30-year fixed mortgage fell five basis points in the week to 4.55 percent.

All the spin and yet homes sales are at record lows with record inventory (12.5 months worth), and hidden inventory to boot. Below is a good chart showing yesterday’s Existing Home Sales versus recent history:



Robert Schiller was on Bloomberg yesterday trying to mitigate the numbers… he called them “an anomaly” due to the end of the tax credit. No, Robert, it was the numbers with the tax credit that were the anomaly, yesterday’s report was showing more realistic demand, if you call 97% of mortgages backed by the government reality. Just imagine what true demand would be without the government behind nearly every mortgage, that would be reality and it would be very ugly indeed. On that point Bill Gross is right. But the ugliness he insinuates is coming without more intervention (to prop up his investments), in my opinion, is coming one way or the other.

I’ve been paying attention to real estate lately, in fact I have been actively looking for opportunities to take advantage of. Early, I know, but I was hoping the right distressed situation would present itself. I can say that I’m not finding those deals that I think will mark a bottom as they are still not penciling out. Those who are distressed are so underwater that they are controlled by the banks who are still not willing to take a loss on their balance sheets, and so I wait and hunt the deals. I am looking at both residential and commercial type properties. Anecdotally, I have also been watching the bubble world of boating in the Northwest and have long kept one eye on boat slip pricing. I am finally seeing some movement down in prices there, but it’s still so far from penciling that it’s not even funny. For example, a 45 foot slip sold at the peak for about $250k. I saw one advertised yesterday for $128k – it is leased for $410 per month. Drop the pencil to that and it is still two times more expensive, even at today’s historically low rates, than it can earn in rents. Not even close to a bottom, not even close to historic rent ratios.

Durable Goods came in worse than expected for July, but better than June’s -1.0% reading. Coming in at a .3% month over month rise, the consensus was looking for a wildly optimistic 2.5% rise. Ex-transportation was an even larger disappointment:
Highlights
Manufacturing is not as strong as hoped-based on July durables. New factory orders for durable goods in July rebounded 0.3 percent, following a 0.1 percent decline the prior month. The July rebound came in significantly below the consensus forecast for a 2.5 percent comeback.

The bounce back in July was led by the transportation component. Most other components slipped. Excluding transportation, new durables orders dropped 3.8 percent, following a 0.2 percent rise in June. While durables orders are a volatile series and some month-to-month dips are to be expected, the latest news is disappointing.

Most of new orders strength came from transportation which jumped 13.1 percent, following a 1.0 percent decrease in June. Nondefense aircraft spiked 75.9 percent after falling 25.3 percent in June. Defense aircraft orders declined 8.3 percent in the latest month. Analysts often focus on the ex-transportation component to see the underlying trend without the sharp monthly swings from aircraft. But excluding transportation also excludes one of the other few big positives in the report. Looking for a silver lining, the ex-transportation series may actually overstate weakness a bit. Within transportation, motor vehicles continued to post healthy gains, rising 5.3 percent in July after increasing 4.0 percent in June.

Other components were mostly down for the latest period. Declines were seen in fabricated metals, machinery, computers & electronics, and electrical equipment. Advances were seen in primary metals and in "all other."

Businesses may be hitting the pause button on equipment investment. Nondefense capital goods orders excluding aircraft in July fell 8.0 percent, following a 3.6 percent jump the month before. Shipments slipped 1.5 percent in July, following a 1.0 percent rise in June. However, orders and shipments for this series have shown strength for several months.

Year-on-year, overall new orders for durable goods in July were up 9.3 percent, compared to 17.1 percent in June. Excluding transportation, new durables orders came in at up 9.5 percent, compared to 16.1 percent the prior month.

Equity futures fell on the release.

New Home Sales are released at 10 Eastern.

Yesterday did produce yet another confirmed Hindenburg Omen, the third clean one with one more that was on the line. This cluster is very similar to the cluster that preceded the declines in 2008, and about in the same place in the decline – during and just after a wave 2 bounce, these are telling you that the market is very divided and that wave 3 is poised. We have already declined significantly since receiving the first Hindenburg, now nearly 400 DOW points. Those who did not take them seriously already are taking on water, it will get worse, and I hope that what follows takes Jim Cramer and CNBS completely off the air. When that happens, it may actually be time to go long.

On the very small wave scale, it is possible that we are close to finishing a subwave 5 down as the action over the past two days has produced what could be considered wave 4 of 1 of 3 of 3. That means that we could encounter a small degree wave 2 up soon. Below is a 30 minute chart, you can count those wave down from the previous larger degree wave 2 double top. Note that there are three sets of necklines on this chart:



Breaking support again below 1040 is the next step, we have targets at 1025ish, at 1010ish, and all the way down at 860ish.

Bonds are absolutely on a tear. The TNX is rapidly moving through support and is approaching its initial 2.3% target. If it were to break below that, then the target becomes the prior low at a minimum. Can rates possibly go lower than that? I don’t think so, not with all the middle-men who take cuts in the banking world. One wild idea I’m hearing bandied about is for the government to make mortgage loans directly to the public, thus cutting out all the middle rate steps. While ultra-low mortgages sounds nice if you work in the real estate industry, from my position that would be a complete disaster for our nation and for the world – but let’s face it, a disaster is unfolding now regardless, and structural change is coming:



The other day I pointed out a very classic Head & Shoulders pattern on Wells Fargo. Those who took that trade on a break of the neckline are doing well. This chart belongs in a textbook, pretty for technical analysis, not so pretty if you bought into the wave B manure that the debt pushers were marketing:



There are a lot of chart that look like that, and there are a lot of charts that look like the DIA daily chart below. Here you can see that prices have been pushing the lower Bollinger down and out of the way. The down move is coming on higher volume, but not yet panic type of levels – meaning the decline is likely not over despite reaching oversold levels on the daily charts (the weekly and month charts are not oversold). These charts have the same look and feel as the roll over during 2008:



The VIX is making an orderly turn higher out of the very large pennant it created. This is bearish in that there has been no panic days to send the VIX to a close over the upper Bollinger. Instead it has been slowly turning the Bollinger up:



The bulls can twist and shout all they want, but the cleansing is not over and I feel fine…



Tuesday, August 24, 2010

Existing Home Sales Worst on Record…

Back in February and March on this blog I spelled out and provided supporting evidence why we would see very bad housing numbers by the time the July data came out… and here we are.

June was bad enough with Existing Home Sales of only 5.37 million (now revised down to 5.26m), and that set a negative tone and consensus expectations of 4.6 million for July. But reality just struck as July’s actual number came in at only 3.83 million, the lowest amount in modern history!

That was a 28.6% plunge from the original June report – in just one month, and it was a 25.5% year over year plunge from July of 2009.

Here’s Econoday’s report, hard to spin those numbers:
Highlights
It doesn't get worse than this. Existing home sales fell 27.2 percent in July to a 3.83 million annual rate for the lowest level in 15 years. The 3.83 million rate compares with expectations for 4.65 million. Supply at the current sales rate ballooned from June's already swollen 8.9 months to 12.5 months for the worst reading in 11 years.

Yet prices showed little effect, down only 0.2 percent to a median $182,600 and reflecting relative strength for higher priced homes. The year-on-year median price edged lower but was still positive at 0.7 percent. Yet "was" is the word to note as extremely heavy supply, together with heavy foreclosures and distressed sales, point squarely at price pressures ahead.

There's nothing to explain away July's collapse. Single-family and condo sales show nearly the same deterioration. Regional data show no substantial variation. Stocks are moving lower and money is moving to safety in immediate reaction to this report, one that marks a new bottom for the run of disappointing economic data. The street was looking for an improvement in tomorrow's new home sales report but that's definitely now an outdated consensus.



Take a look at that chart and how the last vertical bar compares to the rest, which were already terrible… and to have historic low sales occur in the month of July is a disaster as we have yet to reach the end of the traditional sales season.

So, what does the future hold?

First, let’s acknowledge that this is NOT a bottom. This is because nothing has really been fixed, prices will remain under pressure, and that in turn will pressure all financials and the economy at large. The forces occurring now are attempting to cleanse. Much rests on actions yet to be taken. If we allow the cleansing process to continue unabated, we will be through it much more quickly as true investment opportunities arise. Should we continue to fight it with more crazy government schemes, then the process will be drawn out (is that the sound of an empty can I hear bouncing down the road?).

I have shown the mortgage reset chart many times, it has been a good predictor of when the data would turn down. We are now in a time where Option-Arm mortgages are resetting in large numbers, but this has only a short respite in a couple of months, and then zooms to a 2012 peak:



While Subprime loans affected the lower end of the housing market, Option-Arms affect the more expensive end. This will continue to pressure the Boomer's large and expensive McMansions, producing a trend for smaller yet higher quality homes that are more conducive to low maintenance and lower costs later in life for those who can still afford it. Those who fail to recognize these trends will continue to sail along with the S.S. Titanic.

These numbers are a call to action. The Administration is going to have their Arms full with this one (pun intended).

Will heads roll? Will it help?

The answer is, no, it won’t help as no correct answer can be developed inside of the central banker box. However, there are crazy schemes and ideas floating around that may make it enticing to buy real estate sooner than later – but any such scheme will punish the dollar and step us further away from a true free market, thus being very negative in the long run should such schemes be attempted.

In the mean time, wave C down continues to unfold and the social mood is being impacted accordingly. This should be the wave that eventually brings about a true and sustainable bottom, but that bottom is still out in the distance.

We saw the dollar plunge in reaction to these numbers, particularly against the Yen. Yen strength is a symptom of deleveraging, it is mechanical as those who borrowed Yen at low rates to invest in America are forced to unwind that trade with the prospects of very lows rates here in the U.S. as well. It is NOT indicative of strength in Japan. The relative game of floating currencies is just that – all relative, but relative as we all shoot ourselves in the collective foot. This is a systemic problem, not a cyclical one, and thus it will continue until systemic change occurs.

Note on my prior post this morning, BEFORE this data was released, that some piece of data or news would justify the wave 3 movement that had already begun... this would be it.

Morning Update/ Market Thread 8/24

Good Morning,

Equity futures continue their downward track this morning with the DOW rapidly approaching the 10,000 mark yet again. The dollar is higher, Euro lower, bonds higher, oil has fallen beneath $72 a barrel (down 14% in less than two weeks), and gold is falling steeply. Below is a 30 minute chart of the DOW and S&P futures showing yet another Head & Shoulder pattern. This one is a result of the right shoulder of the larger one that targets 1010ish, the right shoulder being a smaller H&S that is now targeting 1025ish:



So, we now have three H&S formations in play… the large one targeting 860ish, the medium one targeting 1010ish, and now this smaller one targeting 1025ish. All of these patterns are confirmed with broken necklines making arrival at their target destinations pretty high odds. In the 30 minute chart below, you can see all three necklines, Red (small), Blue (medium), and Purple (large).



There is actually one that is MUCH larger, but you don’t really want to know the target on that one… oh alright, here’s a hint with a 20 year chart of the DOW:



Speaking of high odds, combine those patterns with the confirmed Hindenburg and the volatile up/down days and you have a very sick market. Yesterday, however, did not produce another Hindenburg due to the fact that new highs, at 164, was more than double the new 52 week lows at 72. With declines today, it may be likely that we receive another.

The Dollar/ Yen cross has fallen to new 15 year lows on a strengthening Yen. Do not confuse that Yen strength for economic strength, it’s mostly due to the carry trade unwind and the deleveraging effects of deflation. Japan’s Nikkei Index is now once again in official bear market territory for this year. Below is a daily chart showing the breakout low:



Decades of fighting deflation with no results. Many don’t get it – but it’s all about the debt. Structural change is coming to Japan, it will likely happen there before it happens here, but make no mistake, structural change is coming here too.

Existing Home Sales will be reported at 10 Eastern this morning.

Money continues to flow out of retirement plans, not news to anyone who follows demographics, or has read my book, as this phenomena was easy to predict based upon demographic trends. We now see mutual fund and retirement outflows that those who are not aware of demographics cannot explain. They will continue to impact the markets for years into the future, the next demographic wave does not begin to strongly enter their peak earning and spending years until approximately the year 2022. This is one of the reasons why we keep seeing headlines like the following:
401(k) withdrawals hit 10 year high, says Fidelity

NEW YORK (CNNMoney.com) -- Withdrawals from 401(k) retirement saving plans saw their biggest spike in over ten years, Fidelity Investments said on Friday, in the latest sign of a dismal economy.

Fidelity reported that 62,000 Fidelity participants made hardship withdrawals from their 401(k) workplace plans during the second quarter. That's up from 45,000 participants during the prior quarter, a 37% increase. That means that 2.2% of Fidelity customers took a hardship withdrawal in the second quarter, compared to 2% in the same period last year.

So far it appears that the count is progressing as advertised yesterday, with subwave 2 of 3 of 3 (of 1?) finishing yesterday morning on the usual Monday morning HFT ramp. That wave 2 was weak and it was over quickly – typical of wave 3s. This morning’s decline appears to be wave 3 of 3 and so it should be powerful and at least as long as wave 1, most likely substantially longer (it, too, will have subwaves). I will not be at all surprised if some piece of news or economic data appears that takes the blame for what is going to happen regardless.

Nothing is “fixed” until debt saturation goes away – it’s that simple. The hard part is that those who profit from debt, we call them “debt pushers” but you can also call them “debt dealers” (aka central bankers), will never take the blame, nor the fall, for their own disaster. That is not until we make them – positive change will not occur until we do. In the meantime, the markets are shouting for HELP…

Monday, August 23, 2010

Morning Update/ Market Thread 8/23

Good Morning,

Equity futures are up slightly this morning, the dollar and bonds are down slightly, while oil and gold are both close to break even.

With 83 new 52 week highs and 95 new lows, we did receive another solid Hindenburg Omen on Friday as all other conditions were met as well. With an undisputed Hindenburg on the clock, the odds of a stock market plunge meeting the definition of a crash, -15% or greater, goes up to about 30%. No crash since 1985 has occurred without one, and the odds of a significant decline, something less than a crash, are significantly higher.

Combine the two Head & Shoulder patterns that are targeting 860 on the SPX along with the large number of 90%+ swings in both directions, and I think the market is telling us that we’re on the verge of moving towards that 860 target – achieving that target will meet the definition of a crash. Once a Hindenburg is on the clock, receiving more of them simply moves the window that it’s valid out further in time, currently this one is valid until almost Christmas. Four months is a pretty large window… as always, do not expect a straight line, but do expect the decline to unfold in waves.

It would appear that we may have begun wave 3 of 3 down last Thursday, and possibly finished the first subwave down. That means that we may be experiencing a small degree wave 2 that began Friday and that could continue for some time today – but keep in mind that wave 3s travel quickly, so wave 2 may not be as strong as other wave 2s.

There is definitely more recognition that the economy is weakening. Rosenberg is now forecasting negative quarter 3 GDP growth, this is the timeframe which I am also expecting that trumped up report to also roll (I don’t think we’ve had REAL growth for more than a decade). Friday the second cut at Q2 GDP is released, the prior was +2.4% and now the consensus is for a revision to 1.3%.

There is no economic data to report today, we get home sales data this week, Durable Goods on Wednesday, GDP and Consumer Sentiment on Friday.

I think it’s significant that the Iranians began to fuel their nuclear reactor without an Israeli strike as some people expected. I don’t know all the games being played, but I am still paying attention to that situation and think it still has potential to have significant developments at any time.

The bizarre headline of the weekend was Sweden filing rape charges against WikiLeaks Founder Julian Assange. This sounded very much like a subversive attempt to discredit and to silence him, and sure enough charges were dropped within a day. The American Administration and military, of course, hate what he’s doing and thus it’s not difficult to imagine that our own morons are playing games with yet another vocal critic’s life. It’s tough having transparency forced upon you when you’re a bad actor. The seeds of discontent are growing as are the games being played to keep the “weeds” out of their very fertile power and control garden.

For now the Monday morning ramp looks pretty weak but with the possibility of being in wave 2, I think we could run a little to shake out weak hands. Below is a 30 minute chart showing the smaller H&S pattern that targets approximately SPX 1010. The neckline of that pattern is broken and it is confirmed, however prices can bounce back above the neckline:



The 1010 target, when achieved, will reconfirm the larger H&S pattern made over the past year:



On the Weekly charts, last week’s candle deepened the 13/34 weekly exponential moving average bearish cross. That cross was whipsawed two weeks ago, once again showing that its best when using the long term crosses to allow a 1% cross before actually acting on a signal like that.

As Assange found out, the controller’s tentacles run long and deep... they consider the world their little garden.