Many readers have asked for the 08/11 updated comparison chart. Here it is. Note how we flirted with the 200 day moving average. The market turned perfectly, within the negative trend channel.
MF Global instead if Lehman, and voilá, we have the perfect storm set up. We doubt the Greek people will support the austerity in the referendum vote coming up. Eurozone crisis 2.0 has just started, and will end in tears, unless we get another really BIG bail out….
Futures are still trading, despite the Cash markets closed, and going lower. The European Stoxx and Dax futures have now taken out the Bail Out levels completely, just as we suggested in early European Trading. We believe the market has made the Top we have been waiting for, and the psychological set up is very interesting. A nasty correction is around the corner. Both Bulls and Bears have been run over, and the latest rally shook out the last bears, and attracted many new momos. MF Global imploding, Greece basically pulling the plug, are all ingredients for the dynamics to continue playing out. Below some “after hours” chart updates.
SPX “falling out” soon?
European futures below.
Markets taking another aggressive leg down. Greece is implying of pulling the plug. With Interactive Brokers walking away from MF deal, due to balance sheet issues beyond…..let’s see what China says about balance sheet issues before they accept the generous offer of investing in the EFSF.
SPX Channel still intact, but this is definitely trading weakish.
We hear a lot about Greece, Portugal, Ireland and other rather small Economies. What happened to California, much bigger than many of the troubled nations we read about everyday? Michael Lewis on California, from Vanity Fair.
The smart money says the U.S. economy will splinter, with some states thriving, some states not, and all eyes are on California as the nightmare scenario. After a hair-raising visit with former governor Arnold Schwarzenegger, who explains why the Golden State has cratered, Michael Lewis goes where the buck literally stops—the local level, where the likes of San Jose mayor Chuck Reed and Vallejo ﬁre chief Paige Meyer are trying to avert even worse catastrophes and rethink what it means to be a society.
Full article here.
Mega Bullish at 1290 accompanied with “extra” bullish positions, dreaming of ultra short at 1080 (but actually 20% long), now Mega Bullish at 1290 again, and we trade at 1265. Time to name an Indicator after the Guru. Bloomberg video below explaining just how bullish Biggs is again, and MF Global is just a minor thing…..
Despite having picked the Wrong Trade, once, you should listen when Bill Gross speaks. PIMCO’s latest reading summary. We advise to read the whole article here.
- Once interest rates inch close to zero and discounted future cash flows are elevated in price, it’s difficult to generate much more return if economic growth doesn’t follow.
- Equity markets should be dominated by dividend yields and the return of capital via share buybacks, as opposed to growth.
- In fixed income assets, we suggest that portfolios should avoid longer dated issues where inflation premiums dominate performance.
Markets trading lower. MF Global is imploding, NY Fed suspending MF from conducting business, and there we go, one primary dealer less in the World. The EFSF short squeeze effect is soon gone. The below circles mark the EFSF (non) event we got last week. Many shorts have been totally killed during that massive move we saw. With focus shifting back to Italy where rates now trade well above the 6 % mark (6.1%). Don’t forget Spain, unemployment hit 21.5% last week, but hasn’t received the attention, as the EFSF Euphoria was the Top News.
The SPX Trend Channel is still intact. Sentiment is clearly on the weak side, but the market is trading in a no volume regime so far. We believe the market has reached levels, where a correction is very probable. Let’s see where markets head later while we enjoy this World of Intervention, unless somebody pegs SPX at 1500?
Japan’s Ministry of Finance intervened in the currency market for the first time since August to weaken the yen, sending the currency down as much as 5.1 per cent against the US dollar, the FT reports. Jun Azumi,http://ftalphaville.ft.com/thecut/2011/10/31/715896/japan-intervention-pushes-yen-lower/
MF Global spent the weekend desperately trying to sell itself as the broker moved to secure a deal before the US open, and talks were continuing late on Sunday in New York. After a hectic weekend of board meetings and courting potential buyers, the talks have apparently narrowed to one bidder, http://ftalphaville.ft.com/thecut/2011/10/31/715951/mf-global-in-talks-with-interactive-brokers/
Qantas began resuming flights on Monday afternoon, after a labour relations tribunal ordered a stop to industrial action at the Australian flag-carrier. The FT reports Qantas shares rallied in response and were up 6.8 per cent by midday in Sydney on Monday. Alan Joyce, http://ftalphaville.ft.com/thecut/2011/10/31/715871/qantas-resumes-flights-after-ruling/
Last week Europe Circus was like reading press releases from Pink Sheet Gold Exploration companies.
“We (think we) have found Gold. We are confident we will explore it and dig it to the surface. We have no machines (yet), but we will get them soon. There is quite some Gold, but we are not sure how much yet. It looks like good quality, but we are not sure. The best is that we have a buyer in China, you know, they buy all the Gold in the World. We haven’t asked them about it yet, but we will call them first thing in the morning and offer them Gold, we don’t have, yet”.
And the Euro Bail Out explanation for Dummies.