Sunday, October 24, 2010

10/24 1:00pm

Markets open in a few hours.  In the midst of a blatant currency devaluation the U.S. points it's finger at China.  Meanwhile, G-20 ministers dither and no perceivable change has occurred.  Germany is now proud of the UK for it's budgetary austerity and continues to rein in the EU golden shower on it's profligate southern members.  I'm sure the stronger G-20 members were exchanging notes on how to best sterilize the Fed and Treasury money creation and prevent their currencies from appreciating further.  I'm stepping aside from currencies until the dollar takes out it's low.
Near the close Friday I increased my stock shorts and short crude.  The market upticked out of the diamond and I brought my stock exposure back to Thursday's level.  I count a b wave up ending and the c started at and after the close.  If this is the case I can short stock, silver, and crude futures at higher prices.  Since commodities are looking like a retracement rally is in store this supports the prospect of a Sunday evening pop up in stock index futures.  I'm looking for nominal new highs, if any.  I'm currently flat all futures except for a tiny DJ futures longer-term position.

The market is still at weekly resistance on SPX:
I1 is declining through Tuesday or Wednesday.  I have a ton of buying power and will use it in the following way:
Short gold futures 1% at 1344.90
Short crude futures 1% at 82.47
Short SP futures 1186.
If SP does not reach target then shorting at 1176 stop.
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4 comments:

  1. Gary MorganOctober 24, 2010 at 2:53 PM

    Evening Steve. If I remember correctly, there was a time lag between I1 bottoming in March/April, and the market following it down. But it sure did follow it down through May!
    I think (hope) we'll see the same this time round, but with more violence and speed.
    I just have a feeling the US were given some kind of ultimatum on the G20 by China et al...sort the dollar out, or we'll start selling treasuries and stop funding you.
    What have the Chinese/Japanese/developing countries got to lose? A weakening dollar just costs them exports, and imports inflation, certainly the last thing China needs.
    So, does the US back down this time? Can Obama control the Fed? Who blinks first?
    How the markets can avoid a meltdown in the midst of all of this is beyond me, so here comes a meltdown. Good luck to us all.

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  2. SteveKotelesOctober 24, 2010 at 2:59 PM

    I'm hoping for a bounce to go short this evening. China is gaining stature every time the boys get together. The other BRICs as well, and they are lining up against U.S. policy.
    After the election we'll see if the Fed keeps expanding it's balance sheet. 500B brings it up to 2.7T?

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  3. pimaCanyonOctober 24, 2010 at 7:44 PM

    Good evening, Steve.

    Looks to me like the SPX weekly has penetrated resistance, no? So it would not be resistance anymore, but likely support now. It has gone above the 172 week MA. How much leeway do you give it? I calculate that it has exceeded the 172 week MA by 2.7 percent.

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  4. pimaCanyonOctober 24, 2010 at 8:52 PM

    Makes sense to step aside from currency trading right now. However, because the dollar and stocks/commodities have been moving inverse to each other, can we really expect stocks to turn lower if the dollar keeps making new lows?

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