Fed does it again. Fed’s Evans comments “expects the policy rate to stay low for longer than mid-2013“, are lifting the Markets under the no volume regime. The negative channel is broken, and the HFT squeeze is on. Well, somebody had to lift the market, it can’t go down forever…Next is Evans on CNBC at 11 a.m ET.
The outlined Trend Channel we have been posting over the last couple of weeks is still intact. The circle marks the shake out before we got the final short capitulation today. There are many big “smart” guys getting run over today, especially in Europe. In this complex world, it’s best to keep it simple. Stay tuned for our full chart review later.
Asian shares rose on Monday and the euro held near a one-month high amid hopes that a crucial week for the eurozone crisis will see policymakers finally come up with a plan to resolve the region’s debt woes and recapitalise its banks,http://ftalphaville.ft.com/thecut/2011/10/17/703106/rising-markets-adds-to-pressure-for-eurozone-deal/
Regulators ordered MF Global Holdings, the brokerage firm led by former New Jersey governor Jon Corzine, to boost its net capital in August after they grew concerned about its exposure to European debt,http://ftalphaville.ft.com/thecut/2011/10/17/703126/mf-globals-eurozone-exposure-led-to-capital-boost/
Barack Obama, US president, offered more support for protesters against the global financial system after a weekend of demonstrations in cities around the world, but called on them not to “demonise” those who worked on Wall Street.http://ftalphaville.ft.com/thecut/2011/10/17/703101/obama-indicates-support-for-ows/
Singapore’s exports unexpectedly fell in September as weakening expansion in the world’s biggest economies eroded demand for electronics and petrochemicals, says Bloomberg. Non-oil domestic exports fell 4.5 per cent from a year earlier, http://ftalphaville.ft.com/thecut/2011/10/17/703056/singapore-exports-unexpectedly-decline/
Three bilateral trade agreements passed the US House of Representatives and Senate on Wednesday. But the votes came with a sense of relief rather than celebration from their supporters, and resignation rather than anger from their opponents, http://ftalphaville.ft.com/thecut/2011/10/13/701141/congress-agrees-trade-agreements/
Apple has won an important legal battle in a Sydney court to block rival Samsung Electronics from selling its Galaxy Tab 10.1 in Australia ahead of the crucial Christmas shopping season, the FT reports. In a blow to Samsung,http://ftalphaville.ft.com/thecut/2011/10/13/701101/australian-court-blocks-samsung-tablet/
Growth in Chinese trade slowed significantly last month as the effects of the economic turmoil hitting its most important trading partners in Europe and the US, the FT reports. Overall Chinese exports increased 17.1 per cent in September from a year earlier, http://ftalphaville.ft.com/thecut/2011/10/13/701061/news-corp-questioned-over-circulation/‘
China has for the first time revealed the estimated size of its copper inventories, implying the country’s consumption may have been lower than thought, the FT says. Chinese copper inventories stood at 1.9m tonnes at the end of 2010,http://ftalphaville.ft.com/thecut/2011/10/13/701026/china-reveals-size-of-copper-inventory-2/
Leading European banks say they would rather sell assets than raise expensive new capital to meet compulsory demands from the European Union for higher capital ratios, threatening a further contraction of credit to the enfeebled eurozone economy, http://ftalphaville.ft.com/thecut/2011/10/13/701001/eu-banks-could-shrink-to-hit-capital-rules-2/
Guest Post by Macro Story.
What better way to put today into perspective than the following chart by Zero Hedge. Seems low volume holidays when the bond market is closed is a great opportunity to put a nasty short squeeze on. Today was tough but in 2008 it was about 4 times tougher with an 11% ramp.
Sentiment trader is also reporting today is the first day in the history of the SPY that it rose 3% or more on its lightest volume in a month.
US regulators have warned Standard & Poor’s that they may file civil charges against the credit rating firm, the FT reports, alleging that it violated federal securities laws in connection with its rating of one of the structured finance instruments that was at the heart of the financial crisis. McGraw-Hill, http://ftalphaville.ft.com/thecut/2011/09/27/686331/sp-faces-sec-threat-over-its-rating-of-1-6bn-cdo/
Freddie Mac, the US government-controlled mortgage financier, used flawed procedures for determining how lenders repurchased soured loans, probably saddling taxpayers with billions of dollars in losses,http://ftalphaville.ft.com/thecut/2011/09/27/686306/freddie-under-fire-over-bad-loan-procedures/
Standard & Poor’s says Chinese property developers face tough times, Dow Jones reports. Most developers it rates could absorb a 10 per cent fall in property sales next year, but many would struggle with a fall of 30 per cent. http://ftalphaville.ft.com/thecut/2011/09/27/686261/sp-expects-more-strain-for-chinese-property-developers/
Government of Singapore Investment Corporation faces a Sfr6.7bn ($7.4bn) loss as the biggest investor of UBS, Bloomberg calculates. The sovereign wealth fund also has about $500m of unrealised losses on its Citigroup stake, http://ftalphaville.ft.com/thecut/2011/09/27/686236/singapore-faces-7-4bn-ubs-loss/
The business model of the Big Four accounting firms is under attack from the European Commission, which is pushing for tough rules that would force the firms to abandon their consultancy businesses and share audit work with smaller rivals. http://ftalphaville.ft.com/thecut/2011/09/27/686161/big-audit-firms-face-brussels-onslaught-2/
As we have been arguing as of early morning today, the market is in squeeze mood, as the bulls have all become bears…Listening to everybody talking about Europe as a dead, has certainly attracted many new pundits claiming they know Europe is going down (although many of them do not understand Europe). The European markets have collapsed due to the many problems Europe is facing, and we now risk a huge move further on the upside, just to wash out the new “smart” shorts. This is greed and fear at its most. We are structurally bearish, but the market set up is very squeezey here. Below SPX and it’s new trend.
With the extreme bearish sentiment in the market, where the bulls have become bears,where Roubini is calling the collapse of the World on a daily basis, where Biggs wants to be ultra short etc, the set up for a huge squeeze is here. We will present our Chartology later, but for now, beware of the squeeze coming up. First squeeze of the day, Stoxx 50.