Stock market analysis and commentary from a trader's perspective

Tuesday, March 31, 2015

Tuesday -- USD, UHNW, Volume?

ES Futures:
Down hard . . . on strong dollar narrative. Wait, wasn't it supposed to be bullish?

News Speaking of real estate yesterday, great timing -- there is a new joint report between Wealth-X and Sotheby's on Ultra High Net Worth individuals and where they live (and presumably where they purchase ultra high-priced homes). Loved their typical, extrapolative summation:

"The future of luxury residential real estate looks highly promising and positive . . . luxury residential real estate is set to see more and more growth in demand."

Blue sky...

FX:
USD confounding those that proclaimed it over and done just days ago. Anything over 99.46 and they will have even bigger problems.

Treasuries:
Continuing to point higher and correct with lighter volume than up vol.

Energy:
Crude is trading heavy as it gets closer to 47. NG nearing a buy area should a new low occur.

Metals:
Gold still below 1200. Heavy.

S&P Outlook:
Not surprised to see a pullback overnight. Yesterday's rally was great. 2090 nearly tagged as mentioned, but the volume thing is happening again. As in None.

2067.15 looks like it should not be messed with or else a more bearish near-term pattern could be developing to take the S&P below 2039.69.

Monday, March 30, 2015

Monday -- PBOC, Real Estate, Cash, AUD, Crude

ES Futures:
Straight up on overnight China narrative -- possible easing by PBOC.

PBOC always makes me think of PB&J.

News:
Here it is: real estate's latest whopper. This house just sold for $1.2 million. It's basically a tear down.


From Marketwatch.com -- "The 1,832 square-foot house, listed on Redfin.com as a “contractors special” in a “deteriorative state” that “needs everything” just sold March 24 for a whopping $1.21 million in cash, (or $660 a square foot) after being listed in February for $799,000 (a premium of $411,000). At that per-square foot price, it was more expensive than the going rate in Boston, Washington and New York."

There was also mucho drama about a comment by Janet Yellen about cash. Zero Hedge went nuts and blew it completely out of proportion. Santelli poured fuel on the fire too.

For the record, she said (and I emphasize) that "cash is not a very convenient store of value." I agree with her.

She did NOT say that cash was not a store of value.

Try taking delivery of $100,000 from your bank. Chances are they won't have it. Then, after you do get it, after they file a few STRs on you with local, state, and federal authorities (suspicious transaction reports -- which are now required), where do you store it? Or more accurately, where do you hide it?

Try hauling around a 400 oz. gold bar. It's heavy.

Anyway here's the clip. She's right.



FX:
All the talk overnight about China easing doesn't seem to have helped AUD. Below .76108 and it could have big problems -- at least further lows.

Continuing to see USD decline as corrective and thus open to higher rally highs.

Treasuries:
At first glance, everything was up but the 30yr. Now it has joined the party.

Oh, and this morning was the first time in a very long time that the 10yr didn't have the highest overnight Globex volume. That went to the ES.

Energy:
Should crude fall below 47 it would likely break the nascent uptrend.

Looking for new lows on NG, but would then look for longs.

Metals:
Gold simply blew it last week. First it was unable to crest 1223. Then it couldn't even hold 1200. Much more of this and it might be a challenge to hold 1100.

S&P Outlook:
With futures rallying from an important juncture on strong overnight volume, the cash market will have every opportunity to crest 2072. If it then holds, there is not much overhead congestion up to 2090. But a failure could see the 2039.69 swing point give way. Then pretty much anything down to 1980.90 is game -- and that better not break or there could be huge problems.

However, after studying charts of DAX, FTSE, NASDAQ, NDX, RUSSELL, and DOW, it appears that rising wedges are in play across all these markets -- and they appear unfinished.

So unless 1980.90 breaks, my money is on further upside to complete the pattern. Then larger opportunities await.

Friday, March 27, 2015

Friday -- Easy As A-B-E? Maybe Not. Crude. Yellen. A/Ds

ES Futures:
Nearly flat after uneventful overnight session.

News:
Unfortunate timing:

London's FT has a story on its front page "As easy as A-B-E: Prime minister argues Abenomics is working better than people realise" while another headline noted "Japan near deflation as core CPI hits 0%."

The CPI headline has since been removed and the A-B-E story buried "below the fold."

Oh, and WSJ is out with "Japan’s Zero Inflation a Setback for Abenomics." Tough luck in British Newsland today.

Meanwhile, 30-year JGB yields head toward their steepest jump in two months.

Elsewhere, Yellen speaks today at 3:45 pm Eastern time.

FX:
Quiet but for GBP which is stronger on comments by BOE's Carney. Higher interest rates could be in the wings for Great Britain. USD chart still not broken.

Treasuries:
Prices up across the complex.

Energy:
Crude may be thinking things over. Commerzbank commodity strategist Carsten Fritsch said, "Yesterday's price rise was a knee-jerk reaction to events in Yemen and market participants are now making a more sober assessment of the situation.”

NG's fizzle continues.

Metals:
Gold is trying to hold on to 1200. Trying is the operative word.

S&P Outlook:
Did the S&P stop its decline yesterday where it had to, or to take a rest before breaking through the 2039.69 swing point?

The two scenarios posted yesterday anticipate (but do not require) that 2039.69 could fail. So again patience is the word.

Internally, Ticks and A/Ds are not as bleak as one would expect if the decline was heading much lower. But that's about it. Would prefer to see the index back to the 2072 level today.

Thursday, March 26, 2015

Thursday -- It Took A War

ES Futures:
Down hard, but not yet through the important 3/11 swing point.

News:
Should have known it would take a war to wake up the markets...

FX:
USD showing firmness. USDJPY showing a more aggressive move (toward yen strength) which is not a good sign (and with Nikkei down hard overnight).

Treasuries:
2s through 30s alternating pos-to-neg, which is odd.

Energy:
Again, it took a war close to a significantly strategic global shipping lane to wake up oil. The chart still looks messy, but there is no reason why it can't head higher. But again, no interest from me here.

Metals:
All this doom & gloom & war boom and gold still failed to crest 1223.

S&P Outlook:
A big level is 2039.69. Below it could be a much bigger problem in the market than most expect, including me, as I've been giving the pattern the benefit of the doubt.

However, the most important level for me is 1980.90.

If 2039.69 were to give way but 1980.90 holds, it is possible that the third wave of the wedge is in and that a fourth wave is in play.

I've seen other more bearish wave interpretations -- and overall I'm a bear -- but they are unsatisfying and I tend to doubt them. They tend to disregard too many swing points, but perhaps the worst offenders are the waves themselves.

Once again, what should be the first sub-waves of an epic decline leave much to be desired -- they do not seem impulsive at all, which is the final arbiter for me.

Here are the two counts that I'm currently working with.



Wednesday, March 25, 2015

Wednesday -- Hardball, Buffett's Put, USD Chop

ES Futures:
Choppy & flat. Slight upward bias.

News & Commentary:
Hardball, European style -- Reuters reports that the ECB has told Greek banks not to raise exposure to their own government's debt. Really?

If this is supposed to force them into a compromise, it could force them into a default instead. Does the ECB still think it's going to be paid back?  Haha, right.

Still thinking bank runs beat the bureaucrats.

Elsewhere, Buffett is buying more junk food. Buying Kraft is like buying a put, in my opinion, if you think the economy is going nowhere. People will downshift.

FX:
Pullbacks in USD and USDJPY look increasingly corrective which means yet higher prices could still materialize. This chop seems to be affecting energy & metals, too.

Treasuries:
Up, up, and up.

Energy:
Crude is being coy. The May contract did not get above its Feb 26th swing point (47.80 on the continuous contract). Another reason why I'm not playing this yet.

NG is being coy, too.

Metals:
1223 still remains untouched in gold. Until then, nothing here for me. Note: using the weekly continuous chart here. I like big trades.

S&P Outlook:
There is a volume shelf at the 2088-2090 area that coincides with 38% Fib support around 2086. Thus far the market seems to be content with a possible test. It wouldn't be until a break of 2060 (actually 2061.23) that things would change for the worse, in my view.

Again, the pattern is developing on a weekly chart. Giving it time.

Tuesday, March 24, 2015

Tuesday -- Speculations & The Special Situation Of The Year

ES Futures:
Flat.

News:
Reuters -- "Britain sees no inflation in Feb for first time on record."

Deflation is spreading.

FX:
Heard a trader say yesterday that "the dollar is over!" (same guy who, back in 2006-2007, said that anyone who thought the S&P would retest its 2003 lows was "dreaming").

Suppose he's correct, however: perhaps it's why the charts of the yen and the dollar index suddenly look so similar.

Jim Rogers preaches the mantra that one should always bet against central banks, with the recent action by the SNB being the latest example of its efficacy.

I fully agree with Rogers.

I do not believe that Japan will be able to destroy the yen as much as they'd like.

I do not believe that the Fed will be able to destroy the dollar just yet.

What follows is some on-the-fly speculation.

Perhaps if the dollar rolls over here it heads to a long-term low around 60. It would probably ignite the bond market to truly cause a bubble, bringing US yields down below those currently in Europe while yields (& the euro) in Europe could rise as Greece exits and hilarity ensues.

So too could the yen head to around the 60 level -- on a massive Risk Off move, as the Japanese carry trade finally gets closed when it appears that things are unraveling at home.

I have a very long-term chart of yearly dollar closes back to the year 1800. 60 is 150-year support.

From there, with Japan probably in trouble and Europe, China & US teetering, and when everyone declares the dollar worthless and dead, we could then get a taste of what we've seen in the dollar since 2014, only magnitudes greater, because it would likely be fueled by the final implosion of the bond market, causing massive deleveraging.

The dollar would then pop to unimaginable levels. And so would USDJPY (meaning the yen would weaken).

So if that guy is right, hang on.

Hell, hang on anyway. FX moves are becoming more and more erratic lately. And when FX gets erratic, things break.

Treasuries:
The rally continues. As it should if the above is occurring...

Energy:
Crude got above 47.80 last night on the continuous contract, so the door is open to higher prices (55+) or a more complex pattern, but I'm still not playing along -- the May contract did not get above the equivalent area (the Feb 26th low).

NG still shaky, but could rally in sympathy with crude if energy sentiment improves.

Metals:
Still below 1200. Fish or cut bait.

S&P Outlook:
I get trolled for posting stuff about the moon. Screw 'em. Here's some more. It's the Bradley Model. Even further out there.


Notice the 12/26 in bold which coincides with the January S&P high (which is assumed to be wave 1 below).

Using existing rally and correction time cycles since Oct 2014 -- the supposed origin of the current wave form -- our rising wedge projects to June, and the important 6/9 Bradley date, in time for a June swoon.


My target for the swoon is 1750, roughly 20%, echoing the 2011 decline.

From there, a different pattern than a v-shaped bottom would likely take place, based on Elliott's guideline of alternation. But a ripping, riotous rally to new highs (2300+) could then ensue which would echo 1998 and 1999.

Oh, and the full moon is June 2nd.

Special Situations:
Given the above speculation in currency and the S&P, volatility should be considered to be a special situation for 2015.

Monday, March 23, 2015

Monday -- Merkel, Tsipras, Euro, DAX, Patience

ES Futures:
Down slightly after a rather solid week. No harm there.

News:
Nothing really on my radar today. Merkel meets with Tsipras later. Maybe some fireworks, maybe not.

FX:
Euro is bid (with DAX down rather hard). Yen and USD charts look virtually identical over the last two weeks.

Treasuries:
Price continues to cooperate, even if volume doesn't.

Energy:
Crude still hunts lower, though 47.80 remains key level above which it could rally well into the 50s. NG looking iffy still.

Metals:
Hearing calls for $2000 gold is humorous with it trading heavy below 1200 after a big "rally" last week.

Special Situations:
Biotech. Resisting calls for a top, yet probably closing in on one in the next few months. Like most other high flyers, including the S&P, probably not finished yet. But deserves watching.

S&P Outlook:
No sooner did I post a weekly A/D chart on Friday than the market made a mockery of it. One more subtle indication that the current up leg is a "3" rather than a more bearish "5."

Patience is required. Letting the pattern develop until proven wrong is the name of the game here. Below 2060 would be the first danger tell.