THE DOT - if this turns orange or red be alert

Friday, December 3, 2010

friday brainstorming

1 .Now its getting really interesting as we have reached the April highs into the Uranus stationary - I rather expected a low here but as a matter of fact that might do the same trick after all. We are about to make a temp high between now and Monday with Uranus is even harder to say but we have reached daily Boll levels and the old highs combined with bullishness as the ISE Put/call ratio was at a multi-month high yesterday with 183. We can get a wild swing around the current level with 48h before another 5 or rather 10 % correction might start quickly is one version. The other is the expected year end rally occurs as expected with still a mild correction next week as markets could also test the weekly bolls who are 3% above current levels now. This market rises with now volume at all and is a pure hoax rally but once you are in you have to live with the tape even if it is a government sponsored scam. We have to consider wave 4 finished a wave 5 usually produces new highs compared to 3 thats the current level. Still we should get a reaction ( correction ) from these levels next week as a high into such an astro pattern means usually a turning point is at hand and the daily Bolls will slow down any upside anyway for now.
I think manic-depressive is the best way to describe the markets as it perfectly describes the markets actions. As soon as The VIX has closed below 18 once more we can expect another correction actually with more substance than the shallow last one.

excerpt

Some Cold Water In The Face Of A Manic-Depressive Market That Has Overdosed On Lithium





In an amusing turn demonstrating just how manic-depressive the market has become, stocks have gone from fearing an all out onslaught in Europe, to complete euphoria, based on a favorable ADP payroll number (which in the past several months had been broadly ignored due to its consensus misses). What is even more stunning is how the two main rumors that forced the market to surge: that Trichet was commencing a debt monetization program (refuted) and that the IMF would increase its funding contributions to Europe (mysteriously leaked by a "source" in the administration to Reuters, then also promptly refuted but only after it had already raised stocks another 50 bps) ended up being false. In the meantime we got an initial claims number that was weaker than expected, and an ISM that missed consensus, and a pending home sales that was so low it could only go higher, and which will likely result in half of the transactions falling due to the spike in mortgage rates. But hey: at least Goldman managed to boost the value of the stock portion of its bonuses, after the firm upgraded the economy, but more importantly, all banks, itself most certainly included. It is yesterday's ISM that we wanted to focus on. Much as we hate to rain on the parade, we (unlike Princeton educated Ph.D. economists) continue to firmly believe that the market does not make the economy, especially when even your cab driver knows it is all a ponzi scheme (or, rather, it's a buy the dip scheme). As John Lohman, and David Rosenberg subsequently, remind us, the spread between the inventory and the new orders components of the manufacturing ISM came at a spread unseen in over 30 years, and a phenomenon which without fail leads to at least a sub 50 print in the ISM, if not outright (re)recession.

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