Sunday night

The Aussie Dollar has opened up strong. As a short, that does not give me a warm and fuzzy feeling.

Market Outlook

Friday had some horrible breadth reading, but over all volume was still holiday light. Many international markets seemed to take it worse on a percentage decline basis than we did. It sure did seem like someone came in right at the open and started buying futures to support the market. I have pointed out the declining breadth and divergences that have shown themselves over the last couple weeks. A leader stock like Goldman has lagged badly, as have the SOX, and the emerging markets at the most recent high. Many foreign markets did not confirm that high and have lagged our DJIA.

The Dubai news is just that... news. I am not surprised by it, and as I wrote earlier, I seriously doubt that this will be the last entity that is unable to roll its debt before this credit cycle comes to its contractionary conclusion. It may be the grain of sand that starts a little avalanche however. We will just have to wait and see. Its interesting to note that TBills traded negative a few days before this news item hit the wires. Think anyone knew there was a credit event on the horizon?

Right now, I think many managers may be more than happy to lock up this year and fore go the possibility of a Santa Claus rally. I also think that the houses that make up what is left of the Street may need to get their leverage down again. All this adds up to rallies that are sold. There is a big gap above that some may gun for and this being a Sunday night the pattern has been to buy futures in the evening and set up for a big Monday morning. Those big days up are often sold for the rest of the week recently, though (thus my theory on the Street trying to get their balance sheets down). So we may see this play out tomorrow. I am comfortable holding a short through it if need be. If we see that gap filled handily and more than a couple of leaders acting well, I can cover for a small loss. But, generally I look for lower prices at least for a couple of weeks and possibly decent downside. I would think VIX would get closer to 30 and the McLellan Osc to get closer to -70. But those are just guesses. We will just have to see what develops.

Dollar

A TD Sequential Buy generated on the daily chart.

Markets are off Thanksgiving

The news is Dubai. Whatever it is; I seriously doubt Dubai will be the last entity that will be unable to roll its debt before this debt cycle is over.

SPX and R2K are below levels that I have been watching so I am switching to the short side.

The Dollar is a little bit higher, but is having a nice move against the Aussie $. That has been the leader imo.

Happy Thanksgiving to all! This is my favorite holiday. Very little commercialism, no gifts, just family, friends, football, food, and wine! Good times. I hope everyone has a great day today.

Some charts

Wednesday

I still have my small stock long (although it got real close yesterday) and just took off my heating oil short, as it appears we may try to push 'the trade' higher through the thin holiday week. The bulls want their 50% retrace on the SPX, and the bears don't seem to have the moxy to stop them. I am still interested in pursuing a decent correction, but will probably have to wait until next week. Gold relentlessly pushes higher, as the Dollar relentlessly pushes lower. Unless we are in the blow-off move right now (which I doubt) then I would expect a sharp pull back soon.

Distribution

I have posted a silver chart as a commodity example, but look at crude oil too. I actually took a short position in heating oil on the close. Look at the link below for examples of stock distribution. That was a really strong morning that got sold into in a big way across the board. (Of course across the board... its all one trade!) Anyway... I have been thinking.... you know how TBill rates went negative and are still very close to zero? One excuse I have heard for that move is that banks need a really clean balance sheet for the end of the year so they are buying bills. Well, what if what is left of the street needs to get down too? How would you do it? Maybe you could start a bid in the Sunday night thin market and create some good excitement Monday morning... and then spend the rest of the week hitting bids to unload a bloated balance sheet. Maybe.

http://stockcharts.com/scripts/php/candleglance.php?EWA,EWO,EWK,EWC,EWQ,EWG,EWH,EWI,EWJ,EWM,EWW,EWN,EWS,EWP,EWD,EWL,EWU