{"id":183,"date":"2009-06-22T18:17:15","date_gmt":"2009-06-22T22:17:15","guid":{"rendered":"http:\/\/www.cheapiv.com\/?p=183"},"modified":"2010-09-30T18:21:59","modified_gmt":"2010-09-30T22:21:59","slug":"trade-the-markets-06-22-2009","status":"publish","type":"post","link":"http:\/\/www.cheapiv.com\/?p=183","title":{"rendered":"Trade the Markets 06-22-2009"},"content":{"rendered":"

\u00e2\u20ac\u0153Monday, Monday\u00e2\u20ac\u00a6\u00e2\u20ac\u009d<\/p>\n

Monday mornings have been some of the most interesting times in the market over the past few months.\u00c2\u00a0 It seems that we\u00e2\u20ac\u2122re commenting on either a sizable gap to the upside or downside at the start of every week.\u00c2\u00a0 Today has brought us another downside gap of significance.\u00c2\u00a0 We put out a rather lengthy market update video over the weekend about where we \u00e2\u20ac\u0153think things are\u00e2\u20ac\u009d right now.\u00c2\u00a0 These are very interesting times.\u00c2\u00a0 Geopolitics are now stealing most of the headlines that we\u00e2\u20ac\u2122d guess the illusionists had planned for more talk of \u00e2\u20ac\u0153green shoots\u00e2\u20ac\u009d.\u00c2\u00a0 The list goes on and on but the BRIC countries and the Japanese providing \u00e2\u20ac\u0153happy talk\u00e2\u20ac\u009d publicly as they are probably running for any and all exits of the US dollar would rank at the top of our list for sell catalysts.\u00c2\u00a0 The movie theater is on fire but \u00e2\u20ac\u0153remain calm, all is well\u00e2\u20ac\u009d they tell us while slinking towards the periphery.\u00c2\u00a0 \u00e2\u20ac\u0153Thanks guys!\u00e2\u20ac\u009d\u00c2\u00a0 But quite honestly, who can blame them?\u00c2\u00a0 They see what our central bank and federal government are up to and the ludicrous scale that they\u00e2\u20ac\u2122re now working with.\u00c2\u00a0 They know what it portends.\u00c2\u00a0 They effectively know they\u00e2\u20ac\u2122ve been \u00e2\u20ac\u0153had\u00e2\u20ac\u009d.\u00c2\u00a0 If there weren\u00e2\u20ac\u2122t a short-term cost to refocusing significant portions of their economies away from the US consumer it\u00e2\u20ac\u2122s likely that they\u00e2\u20ac\u2122d have been long gone already.\u00c2\u00a0 Clearly they can receive a much better return than they would here in the US.\u00c2\u00a0 It\u00e2\u20ac\u2122s not hard to beat interest payments that will lose vs. inflation and principal returned via in the form of a significantly devalued currency.\u00c2\u00a0 All of this \u00e2\u20ac\u0153currency stuff\u00e2\u20ac\u009d is meant not to discount Al Qaeda via Pakistan\u00e2\u20ac\u2122s nukes and of course N. Korea with their own variety actively threatening the US with warfare-like chatter.\u00c2\u00a0 Oil and the precious metals are in full scale retreat as the market is cracking and the tensions are rising, especially in Tehran.\u00c2\u00a0 Let\u00e2\u20ac\u2122s not forget to mention that Goldman Sachs appears to be very close to reporting record profits and thus record bonus payouts for the first half of 2009.\u00c2\u00a0 With US economic conditions still officially deteriorating, albeit at a slowing pace, we doubt that the average US citizen will welcome the GS news wholeheartedly.\u00c2\u00a0 This could finally be the time when it starts to sink in across the board that regardless of which of the two major parties holds sway in D.C., the bankers and Wall St. finscamciers are always taken care of in the end to the great expense of the taxpayer.\u00c2\u00a0 The average taxpayer cant\u00e2\u20ac\u2122 count on bailouts, loans, the ability to write legislation and dictate policy nor do they have a direct line to prime movers so that they\u00e2\u20ac\u2122ll know tomorrow\u00e2\u20ac\u2122s news last week.\u00c2\u00a0 Goldman just happened to hit their stride trading-wise over the past 9 months, right?\u00c2\u00a0 The financials all needed to raise capital through stock offerings and lo and behold a historic rally ensues in the nick of time followed by green shoots happy talk ad-nauseum and almost magically they\u00e2\u20ac\u2122re all exchanging shares for cash but often at price levels that are up 200 to 300% from where they were only WEEKS<\/em> ago.\u00c2\u00a0 We wonder if the big Wall St. firms were able to make any money in and around and through that action\u00e2\u20ac\u00a6.\u00c2\u00a0 The world may never know\u00e2\u20ac\u00a6<\/p>\n

We\u00e2\u20ac\u2122re sticking with what\u00e2\u20ac\u2122s worked for us over the years and that is \u00e2\u20ac\u0153keeping our eye on the ball\u00e2\u20ac\u009d.\u00c2\u00a0 We\u00e2\u20ac\u2122ve yet to see significant hiring of any meaningful kind and with more and more workers having employment difficulties the likelihood that things are really improving is low.\u00c2\u00a0 The viscous cycle of declining construction, declining home prices, worsening employment conditions, and riskier mortgage terms coming due is only being compounded by the absurdities coming out of the federal government.\u00c2\u00a0 Just as we asked the question \u00e2\u20ac\u0153If GM can\u00e2\u20ac\u2122t make it with 2 consecutive bubble booms in which they sold high margin SUVs like hotcakes, then under what conditions can they make it?\u00e2\u20ac\u009d, we now ask, \u00e2\u20ac\u0153If we couldn\u00e2\u20ac\u2122t afford all of the Bush and Republicans at the helm out of control spending, then how can we now quadruple that and afford it with a seriously weakened financial state of affairs across the board?\u00e2\u20ac\u009d\u00c2\u00a0 Dramatically adding federal government weights to the backs of average American during difficult times like these seems about as foolhardy as it gets to us.\u00c2\u00a0 Who knows?\u00c2\u00a0 Maybe Bismarck will be proven prescient yet again.\u00c2\u00a0 Let\u00e2\u20ac\u2122s hope so:<\/p>\n

\u00e2\u20ac\u0153God has a special providence for fools, drunks, and the United States of America.\u00e2\u20ac\u009d<\/strong><\/p>\n

The Technical Picture:<\/strong><\/p>\n

This is our technical picture from 2 weeks back that we\u00e2\u20ac\u2122re reprinting:<\/p>\n

\"\"<\/p>\n

<\/em><\/p>\n

We\u00e2\u20ac\u2122ve switched our color scheme around on this SPYs chart.\u00c2\u00a0 It seems as though quite a few folks didn\u00e2\u20ac\u2122t care for our white backgrounds with vibrant colors.\u00c2\u00a0 Hopefully this will work better for them.\u00c2\u00a0 We\u00e2\u20ac\u2122ve kept the labeling to a minimum too as that was apparently getting in the way of the picture for too many readers as well.\u00c2\u00a0 This is mainly a breadth chart that we review regularly.\u00c2\u00a0 There isn\u00e2\u20ac\u2122t a screaming sell signal at this point but we think that it\u00e2\u20ac\u2122s clearly a time to expect a consolidation if not more.\u00c2\u00a0 The momentum of the market seemed to wither somewhat last week.\u00c2\u00a0 The market was unable to reach our projections so that tells us that things are either \u00e2\u20ac\u0153over\u00e2\u20ac\u009d for now or will take a little longer than we anticipated.\u00c2\u00a0 We have a horizontal support line in RED<\/strong> that we\u00e2\u20ac\u2122ve identified as our secondary support if the GRAY<\/strong> support line is penetrated.\u00c2\u00a0 Our view is that we need to see how things are shaping up should the market head to these levels as we\u00e2\u20ac\u2122d expect them to at this point.<\/em><\/p>\n

Here\u00e2\u20ac\u2122s this week\u00e2\u20ac\u2122s picture:<\/p>\n

We referenced our picture from 2 weeks back because things have only gotten worse and it now looks like the time we alluded to at the end of those comments is well upon us.\u00c2\u00a0 The maelstrom of variables, of which we only ticked off a few in our opening comments, seem to be forcing this market towards support levels in a hurry.\u00c2\u00a0 In the DOW we see 8200ish followed by 7950ish follow by 7700ish as the \u00e2\u20ac\u0153step down\u00e2\u20ac\u009d levels.\u00c2\u00a0 We\u00e2\u20ac\u2122ve been looking for a 10% correction from the highest highs and 7950ish just about fills the bill for the DOW.<\/p>\n

\"\"<\/p>\n

The SPYs however have a little bit different of an outlook.\u00c2\u00a0 We\u00e2\u20ac\u2122ve noted $87.50 and $82.50 coincidentally on the SPY chart.\u00c2\u00a0 $87.50 would more or less provide us with the 10% correction we\u00e2\u20ac\u2122re looking for and obviously $82.50 would be a good deal more.\u00c2\u00a0 With as many \u00e2\u20ac\u0153balls in the air\u00e2\u20ac\u009d though that there are right now, we won\u00e2\u20ac\u2122t eliminate the possibilities of anything. <\/em>Earnings reports will soon be coming fast and furious along with forward looking commentary.\u00c2\u00a0 And perhaps, most importantly of all, we\u00e2\u20ac\u2122re only a day or two from a succession of Treasury debt auctions that are historic in size.\u00c2\u00a0 How they \u00e2\u20ac\u0153go\u00e2\u20ac\u009d and how the results are \u00e2\u20ac\u0153treated\u00e2\u20ac\u009d by our market-moving friends could be very interesting indeed.\u00c2\u00a0 That\u00e2\u20ac\u2122s why as bad as things look this morning we won\u00e2\u20ac\u2122t rule out epic short squeezes even as we believe that the correction should have further to run all things considered.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u00e2\u20ac\u0153Monday, Monday\u00e2\u20ac\u00a6\u00e2\u20ac\u009d Monday mornings have been some of the most interesting times in the market over the past few months.\u00c2\u00a0 It seems that we\u00e2\u20ac\u2122re commenting on either a sizable gap to the upside or downside at the start of every week.\u00c2\u00a0 Today has brought us another downside gap of significance.\u00c2\u00a0 We put out a rather […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[],"class_list":["post-183","post","type-post","status-publish","format-standard","hentry","category-week-ahead"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=\/wp\/v2\/posts\/183","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=183"}],"version-history":[{"count":0,"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=\/wp\/v2\/posts\/183\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=183"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=183"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=183"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}