What? No End Of Day Fireworks?
I had to leave for a couple of hours just before the close, so I was afraid I would miss the end of day fireworks. I come back to find out there weren't any. We did manage to get back above the 995 pivot point, which is somewhat bullish. We did, however, have a nice big red candle, on j=higher volume, so there is distribution going on. I did not get IBD today, but in their market wrap video they called a distribution day yesterday (Stockcharts has lower volume for yesterday). If they haven't revised that, that would make 3 for the SPX, meaning it's time to get cautious.
the Nasdaq had a skoosh higher volume today, so that should notch a distribution day as well. I believe that is 2 for the Nasdaq. Since the big breakout move in July, this has weakened significantly.
The Dow industrials may be the strongest thing going right now. The volume, which was disappearing, has increased the last two days, so this could be in trouble. We are overdue for a real correction, and a 5 percent (rather mild) correction will take us down to just about the june highs.
Just as the Russell 200o was asserting some leadership, it gets whacked. If we are headed down, this will most likely make the biggest move.
Since I was late retrieving the charts tonight, I thought I would look at gold, which I rarely do because, for whatever reason, stockcharts doesn't update the gold chart until a couple of hours after their other charts. The price relative is screwed up here, so it won't tell us much, but gold seems to be underperforming relative to the weakness in the dollar. At the risk of irritating any gold bugs out there, i really don't like the gold market, it is way too small, is easily manipulated, and has the government with a big motive for keeping it down. Despite all that, this has been basing for a very long time and I think a breakout could easily lead to a 30% move higher.
There is an intersting development in the treasury auction department. It seems that after the 5 year auction that didn't go very well, we had a 7 year auction that went much better - that is, until it was found out that the Fed is the one buying the 7 year (Chris Mortensen broke the story, Zero Hedge picked it up, and as usual, Denninger put it in a way I could understand> Props to all of you.)
3 comments:
thank you very much for answering my questions the other day. Here is some other things Ive been milling over , and once I dont get them then Ill bring them to you.
1) Denninger repeats very often that debt has to be liquidated or defaulted on so that the economy can recover. What exactly does this mean? Lets say for example that people owe 500000 on thier mortgage on a house thats 300000. By walking away and not paying it, does that mean that they are now able to spend thier money somewhere else where the economy grows. But doesnt that mean that who ever was on the recieving end of the loan and interest payments gets screwed and is now that much poor. In a sense wouldnt defaulting on the house be a tax on those with capital/ the rich?
Denninger says that interest is always deflationary, but it seems that even if you owe more interest in the future and your money is "deflated" by paying out more in the future than you have now by not borrowing, that money paid in interest isnt being destroyed, its simply being transfered to different hands ie an ivestor. So please explain how liquidating of deffaulting in debtt help recovery, in the case of the banks and the the individual. Right now Im doing part time work for a mortgage company that does short sales and loan mods. Its almost like people are being encouraged just not pay. there a lot of shady stuff going on.
2)I read that zero hedge post you put up about volume "basically fewer and fewer trade to the upside and only the liquidity providers give the illusion that there is notable volume which is "pushing" the market higher. Down days expose this for the scam it is." Can you explain how the illusion takes place and how to spot it?
3) Also ( I know this is a lot), what do you think of alex jones. He runs the site prison planet. He is basically a conspiracy theorist that believes that obama works ( just like the last 5 presidents) work for the bulderger foundation and is helping orchastrate a NWO. Have you heard of this before. Tell me if you think this has any truth to it. Im starting to really get into this thing and Im afraid Im becoming a conspiracy nutjob. He has a movie on you tube called the obama deception.
Thanks
From up the 15
Sorry I ment Bildeberg society ( soros is in it).
Hi Eddie:
I am now way an expert on banking, so I don't know how good an answer I can give, but if you've ever been through a bankruptcy you can see how it works. I went through one several years ago after a divorce. It wasn't the debts that were killing me (although they were pretty high, it was the interest that was being piled on. It was taking more than 50% of my income just to make minimum payments. So when I went through the bankruptcy, the first thing that happened was that interest stopped immediately. The bankruptcy judge made arrangements for the debts to be paid off, without interest, over time in a manner which didn't strangle me. By the time I had the debts paid off, I was in pretty decent financial shape.
When you are in a deflationary environment (and there is a lot of debate right now about whether we are or not), being in debt is the worse thing you can do, because the real value of the money you are paying back is going up. Conversely, in an inflationary environment, money being paid back is declining in real value.
I can't say for sure about the Zero Hedge post, but I think that, despite the large increase in high frequency trading volume in recent months, there is a general decline in volume in the market. Since the high freq traders can trade millions of shares in seconds, they can easily produce the illusion of high volume, and if they push the market up, they can get other traders to buy in, thinking there is a high demand, when the HFT's are just trading between themselves. However, the HFT's can just as easily trade the other way, or even move on to something else, collapsing the volume and leaving the late buyers holding the bag. I don't know how to spot it, but sometimes I see things on one minute charts that look suspicious (such as very large price movements and volume spikes that come out of nowhere). When I watch the last two hours or so of the SPX on minute chart, it's almost comical to see, exagerated up or down movements which sure look to me like a HAL 9000 front running institutional orders.
I first heard of Alex Jones somewhare around 12 or 13 years ago, and at first I thought the guy was an absolute nut case. However, in recent years a lot of what he says makes sense, which really scares the hell out of me. I don't know if there is any truth to the Bilderberger thing, I've heard it for years, but I don't dismiss it out of hand anymore. About the best I can say is, while I don't dismiss him as a nut case anymore, I take everything he says with a grain of salt and a healthy dose of skepticism.
Good questions today, hope I answered them ok.
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