Monday, April 25, 2011

4/25 Daily Commentary

The stock market is crowding the SP futures 30-minute M/A.  It touched it twice today, which was enough to launch mini-rallies this morning and late afternoon.  A break of this M/A will only occur on a 30-minute close SP June futures below 1324.
We are running out of time for this bull market.  I've eased into a position short stocks with 6% SDS,  1% SOPIX, and 1% UCPIX.  I bought 2% QID near the close but sold with a tiny gain in after-hours.
I don't believe that anything will come of the FOMC meeting announcement and Q&A.  It might induce volatility that I can increase shorts on.  The market assumes that the Fed will just roll over maturing garbage into treasuries, so the balance sheet will level off once QE2 ends.  The size of the balance sheet INDIRECTLY influences (subject to other offsets) the monetary base which is the total of reserves available to the banking system.  The size of reserves determines the ease with which large hedge funds can play the dollar carry strategy.  Having zero interest rates is the first part of a currency carry, the funds need to be available to institutions that are not reserve members in order to find their way as global hot money, driving whatever trends are prevalent.  We have those conditions in the U.S at this time.  Silver has rallied to $50 as a direct result.
I went short May futures at 47.92 and bought 1% ZSL at 14.15 after silver hit 49.80, declined to 45.65, and in the process formed a 5 down. So far from the 47.95 retracement top a 3 wave decline has formed. If this turns into a 5 then the downtrend is confirmed.
My stop on futures is 47.71.
Once I get tonight's batch of data I'll post an addendum.


  1. Thanks Steve

    Jack C

  2. Jack,
    How are things? You still short?