SPX Classical Hammer Formation
Before going short into this move, consider the below turning points. SPX has a tendency to bottom out, at least short term, with classical hammer formations. More on this tomorrow, but here is a chart for the close;
FT story On, Off, On….
Too bad for the non premium HFT subscribers. The story is on FT’s frontpage,
Italy turns to China for help in debt crisis
and yes, the market is ripping. Let’s see what happens when SPX joins Nasdaq in positive territory.
Italy in Talks with China Fund to buy Bonds-FT
Manic Markets…..and 10 minutes later, FT denies….
Remember Dow 20 000?
Remember mr Bull? Well, the market veteran predicted Dow 20k imminent…only a few months ago….
From CNBC;
In the edwards campaign when he enough of the doom and gloom already, our next guest is boldly predicting that the dowwill go to 20,000. he says it could happen in the next 12 do 18 months. that is james altersure, managing director and author.brains behind the recent article next stop, dow 20,000. we read it and called him. he decided to come on the program. 20,000 on the dow, make your case. it’s kind of david letterman style, top ten list. exactly. i want to take a little break from all the doom and gloom pessimism. people act like every economic report should crash the market or boom the market qe2 has not even begun to have an effect on the economy. just because the printing press is printing, doesn’t mean it’s affecting the economy one second later. it typically takes 6 to 18 months for the economy to have any effect from the stimulus. next, we’re still — obama’s basically done nothing to the economy. he’s extended bush’s tax cuts, we’ll see what happens with health care, he’s backed off on wall street. the actual stimulus isn’t just 600 billion, but when you use those stimulus dollars to buy adoughnut and then the doughnut guy buys a newspaper and thenewspaper guy buys some furnituring there’s a multiplier effect.600 billion could be up to $3 trillion in stimulus on the economy.that’s a significant – except a few hundred billion of that went to transfer payments. okay, i’ll deal with that. again, 3 trillion is an enormous effect on gdp. finally, companies are sitting on 2 trillion in cash, the greatest amount of cash in history. this is is the only recession where companies quarter over quarter increase their cash every single quarter of this recession. they never went down a quarter. what are they doing with this cash?they’re spending it. stock buy backs are the highest levels in history.
Risk Off resumes
Precious metals melt down. Silver off by 4%, just breaking the 40 support. Gold is down almost 100 USD from the “pre manipulated” levels at 1890, yesterday. USD catching some bid, as equities drift lower.
Global Crisis and Equity Contagion
By ECB on Global Crisis and Contagion.
The 2007-09 financial crisis has been truly remarkable in its severity and global reach. This paper seeks to understand the global transmission channels of the crisis in equity markets, studying the cross-sectional heterogeneity of the crisis incidence across 55 equity markets. Despite its origination in the US, we find little evidence of systematic contagion from US markets to global equity markets during the crisis. Instead, there was systematic contagion from domestic equity markets to individual equity portfolios.
Yet, the financial crisis did not spread indiscriminately across countries and sectors. In particular portfolios in countries with weak economic fundamentals, poor policies and bad institutions experienced more contagion, both from US and domestic markets, and were overall more severely affected by the global financial crisis. Moreover, good macroeconomic policies and the presence of financial policies during the crisis, in the form of debt and deposit guarantees, were instrumental in shielding domestic equity portfolios to some extent from the 2007-09 financial crisis.
The irony of this perhaps most global crisis ever is that a market’s external exposure played such a small role in determining its equity market performance. Instead, investors focused primarily on country-specific characteristics and punished markets with poor macroeconomic fundamentals, policies and institutions. Our findings support the recent efforts by policymakers and international organizations to better understand macroprudential risks and perhaps institute a closer surveillance of such risks both at a country level and at a global level.
Full report here.
Skew Divergence Update
The divergence between the SPX and the implied volatility skew continues to grow implying continued equity weakness is highly probable. By Macro Story;
Fund Managers frustrated by HFT-Regulators to wake up?
The Trader has written about the HFT problems for a long time. During the ever increasing Flash Crashes, the market has stopped working, especially if you like to manage large positions. The HFT disease is destroying the market micro structure, despite the exchanges all defending these Algo Machines with arguments such as “liquidity improves”, “spreads are narrower” etc. This is true, but what use is it if small spreads provide very little liquidity. The frustration HFT are causing the market place, is now spreading to the fund managers. Watch video here. By Securities Technology;
Long-only institutional traders are widely worried about the impact of high-frequency trading programs on the shape of equities markets, according to a survey conducted on behalf of Liquidnet, operator of a venue for trading anonymously in large blocks of shares.
According to the Liquidnet Institutional Voice Survey, more than two-thirds of traders at leading asset management firms around the world are concerned about the impact of high frequency trading (HFT) on the equities market.
At the top five global institutions, 73% of the traders said they regarded high frequency trading as a high-priority market-structure issue, according to Liquidnet.
The firms polled collectively manage equity assets of more than $13 trillion. Liquidnet’s customer base includes 630 institutional asset management firms.
Full article here.
Daily Gold
By GoldCore;
Gold is marginally lower in most currencies and is trading at USD 1,836.60, EUR 1,350.90, GBP 1,158.90, JPY 141,320, AUD 1,779 and CHF 1,626 per ounce. Gold reached a new record nominal highs in Australian dollars, Swiss francs and euros this morning.
Gold’s London AM fix this morning was USD 1,843.00, EUR 1,354.94, and GBP 1,164.10 per ounce. Friday’s AM fix was USD 1,879.50, EUR 1,359.39, and GBP 1,177.12 per ounce.
ECB and Bond Buying….
ECB will buy bonds and save Europe from going bust, or? As The Trader has argued, the Big Elephants in the room, are still “under control”. The crisis spreading to Spain with unemployment at +20%, youth unemployment at close to 50%, “hidden” local debt, further declines in property prices (and transactions) will be much greater than the Greek mess. In order to understand the full scope of the Spanish contagion, one needs to live in Spain, in order to understand the mentality of NEVER taking a Stop Loss.
Italy on the other hand, with Berlusconi guiding the country in these stormy waters, will end in a total disaster. Note, Italy is Spain, Ireland and Portugal combined….
ECB coming out to rescue? Sure, but they lack the fire power, or will Ben join the party? We clearly see what happened in Ireland and Portugal. Spain and Italy coming up, or is this time different? We say no, it never is different.
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