Weekend Edition

"We're in the boredom killing business"

"You have meddled with the primal forces of nature"

"Why is it that a woman always thinks that the most savage thing she can say to a man is to impune his cocksmanship"?

"The daily business of life is a corrupt comedy"

AmenRa's Corner

A place where a skillful caddy always offers cool contemplation when it comes to your "stick" selection.

Creditcane™: It's happening all over. Can't you feel it?

SPX
Bullish short day again. Midpoint above EMA(10). Still above all SMA's. Made a new 0.0% retrace. New high on daily 3LB (reversal is 1332.32). QE2infinity. JBTFD…



DXY
Bearish short day. Midpoint below EMA(10). Still above the 14.6% retrace (77.54). Back below SMA(21). Daily 3LB reversal down (reversal is 78.61). Well below weekly 3LB mid.



VIX
Doji day. Midpoint above EMA(10). Still below all SMA's. No daily 3LB changes (reversal is 15.69). Still out of the "no fear" zone. Currently has a monthly 3LB reversal.



GOLD
Spinning top day. Midpoint above EMA(10). 0.0% retrace holding. Now above all SMA's. New high on daily 3LB (reversal is 1374.10). Must have the precious. Had a weekly 3LB reversal up.



EURUSD
Bullish long day. Midpoint above EMA(10). Still above 1.3506 (the 50% retrace). Back above SMA(21). Daily 3LB reversal up (reversal is 1.3478).



JNK
Bullish short day. Midpoint above EMA(10). Still above all SMA's. Now above its 61.8% retrace (40.67). Finally crossed above lower trend line. Daily 3LB reversal up (reversal is 40.34).



10YR YIELD
Bearish short day. No test of 0.0% retrace at 37.44. Still above all SMA's. Midpoint below EMA(10). No daily 3LB changes (reversal is 35.20).



BKX
Spinning top day. Midpoint above EMA(10). Above all SMA's. No test of 0.0% retrace. No daily 3LB changes (reversal is 54.90).




TLT
Bullish short day (but closed lower). Midpoint below EMA(10). Still below all SMA's. Not testing lower trend line. No daily 3LB changes (reversal is 88.19). Currently has a monthly 3LB reversal (down).



EEM
Doji day. Midpoint above EMA(10). Back above SMA(21). Still above its 38.2% retrace (45.06). Tested but failed the 23.6% retrace (46.42). No daily 3LB changes (reversal is 46.76).



SILVER
Bullish long day. Still above all SMA's. Midpoint above EMA(10). Made a new 0.0% retrace. New high on daily 3LB (reversal is 30.54). Blythe?!? Blythe?!? RU OK?

LEFTBACK'S BOND REPORT

The Bond Report 2.18.11

The non-death of the US fixed income market continued, as rates continued to be range-bound within the new parameters recently established. It was risk-on, with HY > IG and TIP > TLT as The Dread Spectre of Inflation stalked the land.

Munis continue a mild but not wholly convincing recovery. Zeros approach a new nadir, but should offer an attractive risk/reward opportunity at some point.

Corpies: LQD 0.15%; AGG -0.02%; JNK 0.34%; HYG 0.30%
Govies: TLT -0.31%; IEI 0.07%; TIP 0.46%
Munis: IQI 0.25%; MUB 0.19%
Mortgages: MBB 0.08%
Specialty: ZROZ -0.98%; TBT 0.53%

We did nothing, but contemplated the continued upward trajectory of our junk. In equities we re-entered the cheeky short of China and Emerging Markups of which we have lately been so fond.

14% long US stocks. 30% short EMs and China.
17% AGG, 9% JNK, 9.5% TLT, 5% LQD and 5% TIP. [45% total]

Morning Corner 2.18.11

Composite Home Price Index

The HPI is back below its monthly 3LB mid and holding on for dear life at its weekly 3LB mid. If rates continue rising the move back to the lows might be faster than one would expect.



EMB (weekly info)
new low 104.58
trend=down
low= 104.58
rev= 105.97; mid= 105.28


The long term trend is down. The intermediate trends down move seems to be abating. But the weekly candles are small and don't really give any clues. Looks more like consolidation.



HUI (weekly info)
-no change (below mid)
trend=no
direction=down (2 bars)
low= 504.77
rev= 581.53; mid= 543.15

Seems like the miners are now in sync with gold. This week HUI has gotten above its weekly 3LB mid. Are they ramping up production to keep up with demand?


TED Spread

My version of the TED spread using 3 Month LIBOR and 90 Day Treasuries. Only because my provider doesn't have the spread.



Now above the 10-08-6/10 trend line. Ruh roh?

h/t Ben

AmenRa's Corner

A place where a skillful caddy always offers cool contemplation when it comes to your "stick" selection.

I see another group of traders interested in the US market...

Creditcane™: Will work for debt.

SPX
Bullish short day. Midpoint above EMA(10). Still above all SMA's. Made a new 0.0% retrace. New high on daily 3LB (reversal is 1329.15). QE2infinity. JBTFD…



DXY
Spinning top day. Midpoint below EMA(10). Still above the 14.6% retrace (77.54). Back below SMA(21). No daily 3LB changes (reversal is 77.90). Still below weekly 3LB mid.



VIX
Bearish short day. Midpoint above EMA(10). Still below all SMA's. No daily 3LB changes (reversal is 15.69). Still out of the "no fear" zone. Currently has a monthly 3LB reversal.



GOLD
Bullish long day. Midpoint above EMA(10). 0.0% retrace holding. Now above SMA(55). New high on daily 3LB (reversal is 1365.50). Must have the precious. Also still above weekly 3LB reversal price.



AUDJPY
Spinning top day. Midpoint above EMA(10). Trading above all SMA's. Still below its 85.4% retrace (0.8368). No daily 3LB changes (reversal is 0.8319).



JNK
Bullish short day. Midpoint above EMA(10). Still above all SMA's. Held above its 50% retrace (40.47). Still can't best lower trend line. No daily 3LB changes (reversal is 40.63).



10YR YIELD
Bearish short day. No test of 0.0% retrace at 37.44. Still above all SMA's. Midpoint below EMA(10). No daily 3LB changes (reversal is 35.20).



CRB
Bullish short day. Midpoint above EMA(10). Above all SMA's. No test of 0.0% retrace. No daily 3LB changes (reversal is 335.44).




IQI
Bullish short day. Midpoint above EMA(10). Back above SMA(55). Held above its 23.6% retrace (11.68). No daily 3LB changes (reversal is 12.30). Back above its weekly 3LB mid (11.76).



EEM
Bullish short day. Midpoint at EMA(10). Below all SMA's except the SMA(144). Still above its 38.2% retrace (45.06). No daily 3LB changes (reversal is 46.76).



SILVER
Bullish long day. Still above all SMA's. Midpoint above EMA(10). Made a new 0.0% retrace. New high on daily 3LB (reversal is 30.27).

LEFTBACK'S BOND REPORT

The Bond Report 2.17.11

Today saw strength in the belly of the curve, with a POMO of 7s to 10s. The market shrugged off the PPI/CPI double whammy of 0.8/0.4, which means that was already priced in, as well as lingering worries about the US deficit and debt. This suggests that there are other things to worry about and that return of capital is becoming a factor in asset allocation.

Munis also had a good day, as there is just a tiny bit of unease creeping into the markets. But maybe it is just ourselves, maybe everything is for the best, in the best of all possible worlds.....

Corpies: LQD 0.23%; AGG 0.26%; JNK 0.04%; HYG 0.20%
Govies: TLT 0.13%; IEI 0.28%; TIP 0.38%
Munis: IQI 0.68%; MUB 0.59%
Mortgages: MBB 0.13%
Specialty: ZROZ -0.27%; TBT -0.32%

We remain about 45% long fixed income. We did have a hedge on, but we removed the hedge after the inflation data failed to move the needle at the long end. We re-entered our EM short and added to it. Follow the sick antelope and you will find the hyenas ready to eat.

We are not going to crow about the success of our macro model which called for 30y yields to peak between 4.60% and 4.80%. OK, we are. We see range-bound yields until it is obvious that the inflation meal has worked its way through the python. That could be months.

We expect that Colin is smiling, with Kevlar gloves laid to one side.

Morning Corner 2.17.11

Rough Rice (weekly info)
new high 15.89
trend=no
direction=up (2 bars)
high= 15.89
rev= 13.70; mid= 14.80


This week rough rice is getting sold HARD. It's only Wednesday and it's already below the weekly 3LB mid. Weekly pattern has formed an evening star. It still is above all SMA's. I wonder if China is somehow involved in the sell off.



Coffee (weekly info)
new high 251.65
trend=up
high=251.65
rev= 240.50; mid= 246.08



Coffee is still getting more expensive. At least it hasn't broken above the trend line. If it does then Starbucks may have to change its name to Starchange.



SPX/Gold Ratio (monthly info)
-no change (above mid)
low= 0.7663
rev= 1.0700; mid= 0.9182




This ratio is back above its monthly mid and the weekly is trending up. The last time is made it above the mid was in April 2009. From this one can see that even if the SPX gets back to 1500 its value is still far off the peak. Using the high from July 99 of 5.5933 and todays gold price ($1375.10) the SPX would have to be at $7691.35 to be comparable. Or gold would have to be $238.91. Think either of these will happen anytime soon?

The Bears may have to break out "The Final Getsuga Tenshou" to get this market to correct...

AmenRa's Corner

A place where a skillful caddy always offers cool contemplation when it comes to your "stick" selection.

Creditcane™: Tired of getting gored by the bulls.

SPX
Bullish long day. Midpoint above EMA(10). Still above all SMA's. Made a new 0.0% retrace. New high on daily 3LB (reversal is 1324.57). QE2infinity. JBTFD…



DXY
Bearish short day. Midpoint above EMA(10). Still above the 14.6% retrace (77.54). Tested but failed the 23.6% retrace (78.72) again. Still above SMA(21). No daily 3LB changes (reversal is 77.90). Back below weekly 3LB mid.



VIX
Bullish short day. Midpoint above EMA(10). Still below all SMA's. No daily 3LB changes (reversal is 16.69). Still out of the "no fear" zone. Currently has a monthly 3LB reversal.



GOLD
Doji day. Midpoint above EMA(10). 0.0% retrace holding. Now above SMA(89). New high on daily 3LB (reversal is 1364.10). Must have the precious. Also still above weekly 3LB reversal price.



EURUSD
Bullish long day. Midpoint below EMA(10). Back above 1.3506 (the 50% retrace). Still below SMA(21). No daily 3LB changes (reversal is 1.3675).



JNK
Spinning top day. Midpoint above EMA(10). Still above all SMA's. Held above its 50% retrace (40.47). Still testing and failing trend line. No daily 3LB changes (reversal is 40.63).



10YR YIELD
Spinning top day. No test of 0.0% retrace at 37.44. Still above all SMA's. Midpoint above EMA(10). No daily 3LB changes (reversal is 35.20).



IQI
Spinning top day. Midpoint below EMA(10). Back below all SMA's. Closed above its 23.6% retrace (11.68). No daily 3LB changes (reversal is 12.30). Still below weekly 3LB mid (11.76).



TLT
Spinning top day. Midpoint above EMA(10). Still below all SMA's. Now testing lower trend line. No daily 3LB changes (reversal is 88.19). Currently does not have a monthly 3LB reversal (down).



EEM
Bullish long day. Midpoint below EMA(10). Below all SMA's except the SMA(144). Still above its 38.2% retrace (45.06). No daily 3LB changes (reversal is 46.76).

Morning Corner 2.16.11

ES (daily info)
-no change (above mid)
trend=up
high= 1327.75
rev= 1315.75; mid= 1321.75



ES in the AH has already taken out the weekly high price. It's opex week aka bear stew. Unless the PPI, CPI and weekly claims are WTE the bears may want to hide in their caves. Markets should be allowed to correct sometimes so the cave is only temporary.



AUDJPY vs 10yr Note

I don't like the fact that this graph is indicating that "risk on" mode is back.

Unforunately this is what happens to bears during opex week...