It is save to say now that we broke the uptrend for the SPX and as the chart tells we have quite some downside within the bigger uptrend channel which is still a correction but a steep one as our target is now the 1125-75 bigger price window within the next months. The tricky part though is that being still in month 6 within a bigger 9 count we could still be within a distribution pattern for the next weeks but right now it looks like wave 5 of 5 is done. The next days the downside will resume though a small bounce is possible on Monday depending on the Libya drama. Today is a day 3 count and bounces happen around 5/6 but also in price terms we first should hit the 1275/80 level before a bounce is likely. Escalation is possible well into next week as the Full Moon has exactly marked the top the initial wave down should last another week. Plus a big potential for panic liquidations
Surges - Total Free Cash Lowest Since July 2007, Just Prior To Quant Wipe Out
Submitted by Tyler Durden on 02/24/2011 11:54 -0500
The NYSE has released its January margin debt data. Not surprisingly, total margin debt hit a peak of $290 billion, the highest since September 2008, but the one category that shows just how much purchasing is occurring on margin is total Free Credit less Total Margin Debt drops to the lowest since the all time credit bubble peak in July of 2007! At ($45.9 billion) this number is just below the ($52.8) billion last seen just before the August 2007 quant wipe out which blew up Goldman's quant desk, and arguably was the catalyst for the beginning of the end. In other words, as we have shown, everyone is now purchasing on margin and the level of investor net worth is the lowest in over 3 years. Which means that should the market decline from this week persist and the Fed be unable to stop it, the margin calls will start coming in fast and furious, and unwinds in otherwise stable products like gold and silver are increasingly possible as hedge funds proceed to outright liquidations.