Thursday, February 9, 2012

Capitulation...

Dollar hits a target...

What to expect if you are a central planner...

Wednesday, February 8, 2012

Sentiment is at extremes...

Every alternate elliotwaver thinks we are off to 15,000 on the Industrials and 1500 or greater on the S&P500 due to some wave eccentricity or other…While I have not expected the rise to be as strong as it is…I have not changed my view and see every reason not to change it now as people are capitulating. In fact, traders in the certain mutual funds nearly set a new record for assets in long funds versus assets in inverse funds in the major equity indexes. I think that people are in for a big surprise in that they are expecting a buyable pullback…I think that we are stepping into the one of the biggest declines that any of us have ever witnessed. It may begin tomorrow to next week…but sentiment and the highly extended state of the VIX which has been diverging nicely with our out of control markets and drivel broadcast on CNBC.

Sentiment on the NYSE is at extremes nearly never seen and highly indicative of complacent trading psychology.

Interest Rates are headed lower...

Tuesday, February 7, 2012

Transports and other things...

As Merkel pursues imperialism...the reason is not the stated one...

  • MERKEL SAYS 'WE NEED GREAT BRITAIN IN THE EUROPEAN UNION' - BLOOMBERG
  • MERKEL SAYS GREECE IN 'VERY COMPLICATED SITUATION'
  • MERKEL SAYS GREECE NEEDS FULL DISCLOSURE OF ECONOMIC SITUATION
  • MERKEL SAYS GREECE EURO EXIT WOULD HAVE 'INCALCULABLE' IMPACT
  • MERKEL SAYS JOINT DEBT ONLY PAPERS OVER COMPETITIVENESS GAPS
  • MERKEL SAYS SHE WILL HAVE NO PART IN FORCING GREECE OUT OF THE EURO - RTRS
The real urge for her and Sarkozy and all the central planners is clearly not the stated ones. They are really pursuing the imperialism of banking and leveraged finance. The reality is that they do not want to let derivatives contagious bankrupt the largest financial institutions. The really is that derivatives contracts impact well over 700 TRILLION (with a "T") notionally and many of them are naked or hedged with other derivatives that are ultimately not fully hedged or covered financially. This is AIG all over again except bigger...

The results of the total disrespect shown by central planners and regulators to sophisticated financial instruments that have become the pillars of our financial system has proven that the contracts that supposedly hold up the balance sheets for institutions and companies around the world are in many cases potentially not even worth the paper they were written on...for this reason people are rushing to close open derivatives and that is a big part of our deleveraging process that is going on.

There is a post the Charles Hugh Smith posted on some unintuitive dynamics effecting deleveraging that combine with rising prices that is worth a good read...Has Derivatives Deleveraging Fueled the Stock Rally?

Meanwhile the dollar is closely tracking the chart I posted the other day:

Transports...break support and retest

Russell 2000 fails to take out highs and reverses EURO comes into resistance. What a tortured machination these markets are in...
By the way, wasn't it just 6 or 7 months ago when Ben BURNanke said that the US financial system and banking system had little risk from sovereign or European stress. Now, apparently, he says exactly the opposite...what a surprise.

Meanwhile, the Greek deal is not done, likely will not get done as planned and the markets continue their tortured behavior.

Sunday, February 5, 2012

Nasdaq Symmetry...

Implications from these symmetry patterns on many indexes is that a very serious reaction will occur here…most likely the end and unravelling of the rally from 2009. This pattern IS a termination pattern and high probability.

Transports are not reflecting Dow patterns...

 
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