Wednesday, October 19, 2011

Market dynamics or dynamic markets?

Well, that was interesting a nearly 5% move in the ES intraday low to high…some key facts of worth, the VIX is in a clear bull flag and bouncing off support. US Treasuries put in bullish cycles a few days ago and did not get near their recent lows when equities got near their highs…the same applies for the dollar, which is sporting a rather nice looking pattern…and a head and shoulders on the 120 minute EURO chart...for all the noise about 2 trillion bailouts the EURO did not seem to energetic…having remained below its 61.8% retrace today…

So, all in all, though the systems have taken some very nice profits…they are still short and the same scenario still seems to be in play - a triple top rectangle….rather bearish indeed and highly probable too.

Many people are expecting a complex set of waves up over the next few weeks…the action in the dollar and the VIX and our pattern say otherwise.

On another note, we continue to have massive accounting fraud in the earnings of all the major banks…Citibank’s clear manipulation of its books is just one example of an outright abomination. The market is saying we do not believe you will pay us back Mr. Citibank and Citibank is saying our clients are so good we can reduce loan reserves…and call both earnings. There is only one option, if the market thinks that Citibank is at increased of default - what its saying is that Citibank clients are likely at even higher risk of defaulting. How Citibank can turn that into 3.8 billion of earnings via loan loss reserve reduction and the decline in their own debt value, is simply unfathomable. In fact, given this situation, Citibank should have increased loan loss reserves not decreased them.
© 2009 m3, ltd. All rights reserved.