So markets finished sharply higher, closing on the highs. Impressive action, while the bears are licking their wounds. After breaking through the 1220 level, ES futures rallied and closed at 1234. The Trend Channel we outlined 10 days ago, is still intact, and is giving us guidance going forward.
We are looking forward to the day Algonautors take over the markets totally, and all use the market like an ATM Machine. Win win, or? For the ones that missed the HFT opportunity of the night, Malaysia dropped 5% and recovered the move in a few minutes while you were sleeping.
Guest Post by DShort.
A major risk factor for margin squeeze is the increase in commodity prices over the past several months with the price of oil and gasoline as the dominant factor. Commodity prices have moderated, but the squeeze remains in evidence.
So let’s take a broader view of these two indicators by viewing them within the context of inflation as measured by the Consumer Price Index. As the first chart clearly shows, the all-time high in the PPI crude-to-finished-goods ratio was in July 2008, the same month that crude oil and gasoline prices in the U.S. hit their all-time highs. The previous ratio high was in the summer of 1973, a few months before the outbreak of the October Arab-Israeli War and the Oil Embargo. Inflation had already been rising in a series of waves since the mid-1960s. But Middle-East events of 1973 were the primary trigger for the nearly ten years of stagflation that followed.
The September 2011 ratio is at the 98th percentile of the 775 data points in this series, up from 97 in August and 96 in July. The interim high since the 2008 peak was the 99th percentile in April.
Full reading here.
Market trading in no trend no volume fashion today again. Below are some important charts. First presented 30 day charts of Stoxx and SPX. Note we are still trading within those Trend Channels, although markets are losing some steam lately. Just wait out the charts, until we start breaking soon.
Stoxx 50 30 day chart.
Saab Automobile’s chances of avoiding bankruptcy dwindled after the two Chinese companies that had agreed to invest in the company instead offered to buy it for a token sum. Citing people familiar with the discussions, http://ftalphaville.ft.com/thecut/2011/10/21/708181/saab-investment-plan-in-trouble/
The Cabinet of Japanese Prime Minister Yoshihiko Noda signed off on steps to deal with the soaring yen on Friday, the WSJ reports. Fleshing out proposals made last month, Tokyo’s plan aims to curb further http://ftalphaville.ft.com/thecut/2011/10/21/708101/japan-moves-closer-to-52bn-yen/
Dexia, the stricken Franco-Belgian lender that has been at the centre of recent market turmoil, loaned €1.5bn of fresh capital to its two largest institutional shareholders which then used the cash to buy Dexia shares before 2008, http://ftalphaville.ft.com/thecut/2011/10/21/708106/e1-5bn-dexia-loans-used-to-buy-shares-in-dexia/