What's this?

30 yr.

This is ugly and not good. The 10 yr is not confirming on my metrics (yet), but this really bears watching. Rising yields will puncture this BS equity rally fast.

Wednesday Update

Jason over at SentimentTrader.com has put out some interesting stats this morning. Considering his musings and the fact that China is in the process of breaking down, I will probably call the Santa rally over (for me) if SPX breaks below 1112.

Everything is so thin this time of year it doesn't make sense to do much... certainly nothing big.

Crude is up a percent today waiting for an expected bullish inventory report.

Key Level

Look out for China!

Important post

Great post by Mish. Highly recommended!

http://globaleconomicanalysis.blogspot.com/2009/12/fictional-reserve-lending-and-myth-of.html

Target

Lets see if we can't hit the TD Wave projection around 1130+ on the SPX before the holiday seasonal period is done. In a post below I pointed out the TD Combo countdown need another two weeks of higher highs and higher closes. On the cash SPX it only needs one more.

What bothers me is that I hear more and more people calling for a correction to start the year.

Friday Update

Still in the slop for stocks. Still have positive seasonals but continued trading below 1100 for SPX or 600 on R2K may bring in sellers wanting to lock in this years gains. Real selling to occur below 1080 on SPX I would guess, if we get that far.

Update

This morning is interesting in that we are at price levels in the big indices that, if they give, could beget more selling and maybe the abandonment of the Santa Clause rally. As of now, I still think Santa Clause is coming to town. Look at the weekly chart with TD Combo on it. It needs two more weeks of higher highs and higher closes to generate a 13 count. Absolutely nothing says this has to happen; but its a decent set up.

Euro

In 10 days we have taken out 13 weeks of upside. The currency game is a relative one. The Dollar is not some island of stability but there are PLENTY of problems out there, and sometimes the ole buck stacks up OK.

Update

Still lightly long as seasonals are positive for this time of the year. The AD line and Tannies on the NYSE also help me stick with a small position that I fundamentally can not stand. The AD line on the Naz is terrible and the SOX have put in an ugly daily candle. The Naz is OB relative the the SP on the monthlies so I will be looking hard at that as a short candidate going into the new year.

Also, remeber how 666 marked the lows in the SPX in March. Well look at the Russell 2000's 62.8% retrace level. You guessed it... 666. That's some decent upside for the R2K, but if this year has reinforced anything its that markets can and will do crazy stuff. I personally think that would be a great place to end this 'hell'acious rally. (Sorry; I couldn't resist.)m

Retail Sales

Stocks pre retail sales

This market is like hamburger hill... thus the reason for hanging it up this time of year. I am still playing lightly, but I am losing bias in either direction for the short term. It could come out of this range in either way... but we have come down to a point I would guess. Tomorrow is Friday, and with retail sales to boot.I will safely bet on.... movement!

Albert Edwards made some comments to Barron's as to history and a longer term view:

Albert Edwards, Societe Generale's world-class global strategist, points to the scarcity of bears among the newsletter writers tracked by Investors Intelligence, which last week fell to the lowest level since the stock market peaked in 2007.


"The likelihood is that the next leg of the long-term structural bear market is closer than people realize," he writes in a note to clients.


While Edwards has steadfastly pointed to Japan and its stock and bond markets as the examples the West should study for long-term patterns, he similarly argues that investors could have participated in cyclical rallies of 40%-50% in Tokyo -- even though the Nikkei stands some 75% below its 1989 peak.


The key, he explains, has been to exit the Tokyo stock market when leading indicators for the Japanese economy show signs of topping out. That's usually just about the time analysts start to argue that the economy, at long last, is about to embark on a sustained expansion. Which has yet to happen.

The Dollar and the BDI

One could make the case that turns in the Baltic Dry are associated with turns in the buck...

Thursday morning

According to SentimentTrader.com, " The S&P 500 has gone 22 days without a 2% deviation, the longest streak since July '07." Tight range!

It didn't break yesterday, although it got close. I've still got a little long because its December, the SOX is acting really well vs the SPX, and the cycles are bullish for a little longer. Fundamentally, I hate this market so if it starts to break down, I will not argue.

Another thing to consider is the Dollar (see my earlier post for technicals). It appears to have bottomed. It could easily retrace a little bit of its recent move, but odds are its put in an intermediate bottom which should be measured in weeks and months.

Wednesday morning

Fears of Greece debt default (a continuation of Dubai) has the dollar up and stocks off this morning. We are approaching price levels on the indices that would suggest a biggger down move is in the works.

Tuesday Update

Chop, Chop, Chop. Holiday trading. This market isn't going down and I am now flat and actually looking to get slightly long for the end of the year. SPX close below 1085 would probably make me change my mind, but given the SOX and the seasonal time period I am willing to try for a few points on the upside. No real position mind you, still too many danger signs for that.

I know of some very good traders who pretty much shut down for this time of the year. Its probably a good idea.

Stocks

This has been a range bound, choppy market for weeks. The thing that really bothers me (from a bearish perspective) is that we had a few failures last week (one day after another) and the market just never followed through. I do think stock is being distributed, but the fact that the indices will not 'die' given ample opportunity makes me nervous considering the time of year. I must admit that I have been debating just getting flat tonight, and maybe even partially long tomorrow for some sort of year end rally. Friday close should have been much much worse. I think I will just watch tomorrow though. There is the Dollar to consider too. But I am itchy and and somewhat uncomfortable with my position in all honesty.... and I could flip by the close tomorrow.

Amen!

Preaching the truth!!

http://www.ritholtz.com/blog/2009/12/saving-banks-not-banking-2nd-lien-version/

Dollar

There is a lot of talk about a possible dollar bottom, and its implications on other markets. The negative correlation on many markets has been persistent and relentless. I have posted many times that 'its all one trade.' Well, Friday does show technical evidence of a bottom. But its Sunday night, and we all know what usually happens on Sunday night. (Usually dollars get sold.)

From a TD Wave count perspective you can see that it is very possible that a B Wave concluded on the weeklies at a projected area. Same on the daily chart. Also, TD Sequential generated a buy signal last week on the daily chart. Friday closed over resistance. Its interesting and worth paying attention to.

NFP

Pretty good report this morning. All the headline numbers were better than expectations and the market is loving it. We will see if it can maintain the enthusiasm. Big moves off of NFP are usually faded in the days that follow.

Friday

Big NFP number today. Expectations seem to be around down -100k to down a little more like -125k. I always get a kick out of the BLS birth/death adjustment. Seriously, its sad. People really knock themselves out to trade on this number but its become meaningless with the revision and the birth/death. But the market sure does like to move around on it.

Two charts today. One is one of concern for the shorts. JNK did not participate at all yesterday. Now, the up volume vs down volume chart is a little messy. I put lines on it to show where the market is (usually) after a run up in down volume vs up volume (since the March lows) like we have seen recently. Usually, its much lower... at the bottom of a decent correction. Well now we are at the highs. That, by my way of thinking, is distribution.

Close

Well we got the reversal. Lets see what sort of follow through there is. Payrolls tomorrow. Goldman must not have liked the number they got from the government. :)

Noon

Another tail after the morning session. If we can trade below today's lows we could probably get some down side going. Otherwise its new highs baby. I am still holding my shorts and should know by the afternoon if I need to take them off. Frustrating market.

Open

Another pump/ramp and selling into. We may break out the next minute and go to 1180 on the SPX, but it sure does seem to me that 'someone' is creating activity in the morning and then selling/distributing into it.

Gold

Whenever we had traded 20% above 30 week average in this bull run we have experienced a sizable pullback. Like now.

Thursday

This morning things are looking as if I am going to be wrong. Yesterday had good breadth by the AD line and the SOX have been outperforming in a big way for the last couple of days. TF futures are @600 now. If JNK trades above 38 and and ES takes out its recent highs and TF maintains 600 I will have to call it what it is (a loser) and get out.

ES now

Okay. TF futs barely poked their nose above 600 to 600.30. I held on to that. Now look at the ES. This 6 hour bar closes at 12:00 and it looks like it will be red and below the TDST level. I am going back in with the idea that the highs today are not taken out.

I have written many times that I believe some big boys are creating activity in the mornings to unload some inventory.

This may not work out but I will soon find out.

Bitter End

The R2K still hasn't taken out the 600 level... but when that happens I will cover it and it is my last short.

Hiring and Firing

Challenger's count of layoff intentions slipped to 50,349 in November vs. October's 55,679. In a reminder of how much layoffs have eased, the year-ago total for November was 181,671. But a bad sign is a lack of hiring intentions, totalling only 10,076 in the month vs. October's 57,520.

ADP estimates November private payrolls will drop 169,000.

Monday Night

Not the Monday I wanted... but it certainly was no surprise either. The last few weeks have been one big range trade, but we still haven't broken out on the S&P, nor the Naz. The small caps as represented by the R2K is way back there (but has a nice bottom formation). Anyway... I am going to hang in for now. I did get a little smaller today.

Update

SPX filling 1110 gap now. Action after this is crucial.

Dollar

Approaching lows.... and commodities like copper, crude, and gold moving up. But look at the 2 year! Rates going lower? hyper-inflation... but not.

Caution

SP futures are over 1100 this morning so SPX should open above there as well. Gold is bumping its nose on 1200. We are still filling a gap, but extended trading in this zone is bullish. I have posted some charts that show signs that we still could see the year end rally. The AD line did not confirm the recent sell off, and the volume line has crossed back above zero and its longer moving average. The small caps could be forming a base here, off which they could try for new highs. Like I said, we are still just filling gaps so far, but I would feel a whole lot better if this open is sold. If its not, I will have to seriously consider getting smaller.

I remember back in the summer of 2007, we were dealt some pretty serious blows in the credit markets. The stock markets sold off hard, but then rebounded to test or surpass old highs into October. Maybe Dubai is sort of like that. Its a blatant symptom of the credit bubble and what it left behind, and one would think that it would make people at least think about what is really out there, but equities may just decide to keep partying.