Week Ahead Musings...

I'm travelling to NYC in the wee hours of Monday morning to visit some good customers in Manhattan and Connecticut.  I'm going to skip any charts this week because there's nothing new to add to the conversation.

Last week we suggested selling the 1357-1365 zone which aligned with the 61.8% retracement of the entire move down from 1422 to 1266.  It was an area that was definitely going to be sold by technicians everywhere, so why not join in the "fun."  It's difficult to know exactly who buys into a bear rally right at the 61.8%, but we're glad they exist.

S&P 500 shorts should consider 1349 and 1364 as first and second level stops in the week ahead.

We've been liking the "look" of the Dollar for a few weeks now and suggested that being long was a "good idea."  That idea was "paid off" last week as the DXY spiked strongly from the 81.23 level.

DXY longs should consider 81.74 and 81.49 as first and second level stops in the week head.

Additional Musings....

In the last several weeks, the WTI market has witnessed an impressive structural shift.  In early May the Sep12 vs. Dec13 spread was $4.00 "backward," meaning that the near month Sep contract was worth $4.00 more than next years Dec contract.  As of this writing, Sep12 is now trading $3.00 UNDER the Dec 13.  The market is now in "contango."

You can never take that much from the mere "flat price" action of a commodity like crude oil.  Whether it's $140 bucks or $40 bucks, you can't tell much about the economy or the "strength" of the market by the price alone.  The real "tell" is the structure.

Contango Markets = WEAK
Backwardation      = STRONG

End of story.

So, not only has crude oil dropped precipitously in the last few months, the structure of the market has also been hammered.  The same story has also played out in the petrochemical and chemical feedstock markets, the building blocks of the global economy.

It's a very ominous signal.

Addenda

Miami Heat looked very impressive in the Finals.  That was a case example of "men" playing with "young men."  The Heat were just 'stronger' physically and mentally as they played with the scars and pain of past competitions.  I hope they Thunder can come back and be stronger, because I like those personalities.  My fear is that the they become the Portland Trailblazers (circa early 90's)...those good teams that failed to the likes of the Los Angeles Lakers, Bulls, and Pistons.  Only time will tell.

Pre-tournament, I picked Germany to win it all in the UEFA Euro 2012...I'm sort of loving that pick right now, though I would rather of seen them play the shitty England side as opposed to the tougher minded Italians in the Semis.

Germany vs. Spain in the finale would be something special....



SPX
Bearish long day. Midpoint below EMA(10). Tested and failed SMA(21). Still failing the 61.8% minor retrace (1343.55). No daily 3LB changes (reversal is 1304.86). QE2infinity.



DXY
Bullish short day. Midpoint above EMA(10). Holding above the 38.2% minor retrace (81.70). Tested and held SMA(21). New high on daily 3LB (reversal is 81.38).



VIX
Spinning top day. Midpoint above EMA(10). Tested and failed SMA(55). Tested and held its 50.0% minor retrace (20.22). No daily 3LB changes (reversal is 26.66).



EURUSD
Bearish short day. Midpoint below EMA(10). Tested and failed SMA(21). Still failing its 38.2% minor retrace (1.2710). Daily 3LB reversal down (reversal is 1.2699).



10YR YIELD
Bearish short day. Tested and failed SMA(21). Midpoint below EMA(10). Holding above its 0.0% retrace (14.71). No daily 3LB changes (reversal is 17.65).



WTI
Bearish short day (didn't confirm bullish piercing). Still failing all SMA's. Midpoint below EMA(10). Still failing its 0.0% retrace (81.14). No dally 3LB changes (reversal is 83.00).



HYG/LQD
Bearish short day. Tested and failed SMA(55). Midpoint above EMA(10). Holding above its 61.8% minor retrace (0.7643). No daily 3LB changes (reversal is 0.7646).



Remember this:

26 comments:

AmenRa said...

http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620?print=true
The Scam Wall Street Learned From the Mafia

Matt Taibbi article on how banks were bid rigging the muni bond market.

AmenRa said...

The Troika was supposed to put together a report on how Greece was doing on the austerity measures. They were to report the info to the EU Summit this week. But since Samaras and Rapanos are unavailable due to "medical" reasons that report has been pushed back a week. There was an earlier report from the Troika that showed that Greece was hiring more government workers than firing. Also that 20% of the money Greece received made it into the country coffers instead of paying back the IMF. And now Greece is trying to negotiate the terms of their austerity even though they haven't lived up to the terms. Rant off.

Andy T said...

AmenRa:

In re: Greece. "Shocker."

The situation is 'untenable.'

Anonymous said...

re: Muni-Bond bid-rigging..

those Municiplalities should tell those 'Banks' to "____ Me"..

also, Quotage..

"If a jury have not the right to judge between the government and those who disobey its laws, the government is absolute, and the people, legally speaking, are slaves. "
-- Lysander Spooner
(1808-1887) Political theorist, activist, abolitionist
http://quotes.liberty-tree.ca/quote_blog/Lysander.Spooner.Quote.F83A


"Jury lawlessness is the greatest corrective of law in its actual
administration."
-- Roscoe Pound
Legal scholar
1910
http://quotes.liberty-tree.ca/quote_blog/Roscoe.Pound.Quote.8B60


"[The] purpose of a jury is to . . . make available the common sense judgment
of the community as a hedge against the overzealous or mistaken prosecutor and
in preference to the professional or perhaps over conditioned or biased
response of a judge."
-- U.S. Supreme Court
Source: Taylor v. Louisiana, 419 U.S. 522, 530 (1975)
http://quotes.liberty-tree.ca/quote_blog/U.S..Supreme.Court.Quote.8BA5

Lysander Spooner is great, little wonder that He isn't, widely, taught..

AAIP


Q4,

re: prev. thread..

thanks for the Input..

I thought the Idea was sound, as well.

AmenRa said...

Samaras to speak with Obama later today. "Please send someone to the EU Summit to convince them to save Greece."

AmenRa said...

Chicago Fed NAI
Level -0.45 prior 0.8
3m MA -0.34 prior -0.13

BinT said...

If you hold onto an investment for longer than five days, consider yourself the new millennium’s version of Benjamin Graham.


The average holding period for the S&P 500 SPDR (SPY), the ETF which tracks the benchmark for U.S. stocks, is less than five days, according to shocking statistics in analyst Alan Newman’s latest Crosscurrents newsletter.

“Given recent average volume, the SPY trades its entire capitalization and then some each and every week,” wrote the always-provocative analyst. “Does anyone really wish to argue where valuation might enter the picture in this scenario? Value does not matter in the slightest.”

Analysts blame the hot potato market on the disappearance of the individual investor and the entry of the high-frequency trader. After three bear markets in the last decade, individual investors – especially baby boomers careening toward retirement – don’t have the risk tolerance to be burned once again.

...http://www.cnbc.com/id/47947707

AmenRa said...

BinT

No one in their right mind wants to hold that long these days. Too many "and...it's gone" moments in the marketplace.

AmenRa said...

EURCHF spent another day below the peg. I really want to see next release of the SNB's balance sheet.

AmenRa said...

DXY up, Gold up, yields down, WTI down. Is gold back to being a safe haven (mainly on hard down days)?

AmenRa said...

EU could rewrite eurozone budgets

The European Union would gain far-reaching powers to rewrite national budgets for eurozone countries that breach debt and deficit rules under proposals likely to be discussed at a summit this week, according to a draft report seen by the Financial Times.
The proposals are part of an ambitious plan to turn the eurozone into a closer fiscal union, giving Brussels more powers to serve like a finance ministry for all 17 members of the currency union. They are contained in a report to be presented at the summit, which will also outline plans for a banking union and political union.

---->Officials cautioned the report is still a work in progress. The four co-authors – Herman Van Rompuy, European Council president; José Manuel Barroso, European Commission president; Mario Draghi, European Central Bank chief; and Jean-Claude Juncker, chair of the eurogroup of eurozone finance ministers – met on Monday afternoon to revise the draft, which was expected to be sent to national capitals later on Monday night.

What? No one from Germany involved in the discussions? BWHAHAHA. They still are trying to slip eurobills in. Germany: "Nein! Nein! Nein!"

AmenRa said...

Why Germany cannot save the euro

Good article by Edward Harrison at Credit Writedowns

AmenRa said...

What I found interesting in the above article is that Germany didn't have a referendum for joining the euro. It was done w/o the vote of the people. This was because they were afraid that Germans would vote against it (polling showed that to be the case). And this is why te CDU/FDP are losing elections there.

AmenRa said...
This comment has been removed by the author.
AmenRa said...

What I found interesting in the above article is that Germany didn't have a referendum for joining the euro. It was done w/o the vote of the people. This was because they were afraid that Germans would vote against it (polling showed that to be the case). And this is why te CDU/FDP are losing elections there now (no bailing out big spenders).

AmenRa said...

Added a few charts (ok with you Andy?)

AmenRa said...

Spain auction (today):

3m 2.362% prior sale 0.846%
6m 3.237% prior 1.737%

*prior sales were last month

Ouch.

AmenRa said...

Goldman adds JPMorgan to conviction buy list

(Reuters) - Goldman Sachs added JPMorgan Chase & Co (JPM) to its America's conviction buy list, saying the U.S. bank's capital position and earnings power can offset its recent hedging loss of at least $2 billion.

Goldman downgraded Morgan Stanley (MS) to "neutral" from "buy," and removed the stock from its conviction buy list, saying earnings could be hurt by muted capital markets activity.

While Goldman sees value in Morgan Stanley's shares at current depressed levels, it expects better returns at JPMorgan.

Got to help your boys out whenever possible...

AmenRa said...

http://globalbasic.econoday.com/byshoweventfull.asp?fid=453150&cust=global-basic&year=2012&lid=0#top

Italy : Retail Sales
M/M -1.6% prior -0.8%
Y/Y -6.8% prior 1.5%

AmenRa said...

S&P Case Schiller BTE:
20 city M/M SA 0.7% prior 0.1%
20 city M/M NSA 1.3% prior 0.0%
20 city Y/Y NSA -1.9% prior -2.6%

translated as no help from the Fed

AmenRa said...

Richmond Fed Mfg
actual -3 prior 4 consensus 5

AmenRa said...

Monti threatened to resign if there won't be any eurobonds. Statement was retracted a few minutes later.

Especially since Merkel was overheard earlier saying there will be no joint liability during her lifetime (private convo not official wink wink).

AmenRa said...

Egan Jones Downgrades Germany From AA- To A+

The unstoppable Egan-Jones juggernaut continues:

6/26/2012: Federal Republic Of Germany: EJR lowered AA- to A+ (Neg.) (S&P: AAA) (3413Z GR)
Synopsis: German chancellor Angela Merkel continues to create tension with EU member states by resisting calls for EU bonds (shared liabs.), money printing calls and for her pushing for fiscal controls and the seniority of bailout funding. Germay is likely to be outvoted by other ECB members and therefore will have greater prospective exposure. Watch for the EFSF and the ESM morphing into banks (thereby depressing eventual recoveries) and a rise in the number of euros. The fallout from a likely Greek exit needs to be monitored. We are cutting to " A+ "

Also mentioned at Big Picture. Did not see it on any of the MSM RSS feeds. Figures.

AmenRa said...

Addendum:

Now Germany has even more of a reason not to allow the EU to coerce them into eurobonds.

AmenRa said...

Congress Said to Consider Delaying Automatic Budget Cuts

Republican and Democratic congressional leaders are weighing whether to delay automatic federal spending cuts until March 2013, according to a House aide and industry officials who were briefed on the discussions.

The $1.2 trillion in automatic spending cuts over a decade, half of which would affect the Defense Department, are scheduled to begin in January 2013. At the same time, lawmakers must decide what to do about income tax cuts and other tax breaks scheduled to expire at the end of the year.

Leaders in both chambers are discussing whether to propose a catch-all bill that would delay the automatic cuts, fund the government through March or later and temporarily extend the George W. Bush-era tax cuts and other tax laws, said the House aide and industry officials, who asked to speak on condition of anonymity.

These SOB's in Congress just don't get it. the more you delay the worse it will get.

AmenRa said...

new thread

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