Sunday Evening Post & Morning Audibles

Good Evening Capitalists,

I've actual written this yesterday because I'm on Galveston Island this weekend celebrating my oldest daughter's 13th birthday. Life moves quickly!

The short term bullish DXY count is 'hanging on by a thread,' with 82.60 being key near term support. A break down below that level would mean several days of congestion back to prices as low as 81.40 for next week. This would be consistent with the near-term bearish view on Ten Year notes.

The S&P futures ricocheted sharply off of the last line of support (1036) identified last weekend. This market looks headed higher this week. New bulls should use 1054 and 1037 and first and second levels of support for new length.

We remain 20% short S&P futures--it's amazing how relaxing trading is when you don't 'trade,' and just hold a core position.

We remain 40% long the DXY, but will reduce the position back to 20% on a break below 82.60, taking profits on the "double down" from a few weeks ago.

Hope everyone had a great weekend!

Market Update 29 Aug 10

MONDAY MORNING UPDATE (by CV)

Overnight, the yen had been weaker in anticipation of a FX move by the BOJ... Alas -

(from Bloomberg:)

The Bank of Japan expanded a bank- loan program, stepping up its monetary stimulus for the first time since March after the economy’s recovery weakened and the government pressured the central bank to act.

The BOJ will boost the amount of funds in the facility by 10 trillion yen ($116 billion) to a total of 30 trillion, the bank said in a statement after an emergency meeting in Tokyo. Governor Masaaki Shirakawa led the gathering after cutting short a U.S. trip in the wake of increasing calls from politicians for the BOJ to help stem a surge in the yen to a 15-year high.

Today’s decision reflects rising concern about growth in advanced economies that sent global stocks tumbling in the past three weeks. Federal Reserve Chairman Ben S. Bernanke three days ago signaled a willingness to implement further steps if needed to avert another U.S. recession, in a speech that triggered a gain in stocks and the dollar.

“The BOJ’s additional loosening alone may not be sufficient to reverse the market’s trend, but it could make it easier for the Japanese market to ride the waves of a global market recovery,” Takuji Aida, senior Japan economist at UBS AG in Tokyo, said before the announcement.

The bank-loan program that the BOJ is expanding was set up in early December in response to a November climb in the yen to the highest level since 1995. That mark was breached this month, when the currency hit 83.60 per dollar.

The yen recouped some of its losses after the announcement, trading at 85.55 as of 12:19 p.m. in Tokyo today. Any moves in the currency market today may be exaggerated by a U.K. holiday, closing the world’s biggest market for foreign-exchange trading.

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Monday is undoubtedly going to be difficult to handicap... Piled on to this is the fact that London is closed today and that tomorrow is the end of the month (headed into a 3 day holiday in the US next week)...

Expect the markets to be somewhat schizo... In other "more subtle" news, McHugh posted that there had been a 5th Hindenburg Omen triggered on Fridays action... This was later disputed by some H.O. purists... CV is not a "purist" by nature... I'm more like Al Davis "JUST WIN BABY"... In any case, barring semantics, there was the "spirt" of a H.O. on Friday... That makes a cluster of 5 in a period since August 12th...

Bulls will be looking to extend the rally started on Friday... Failure to do so will snatch the ball right out of their hands... In the end, this may turn out to be a big 'ol sideways moves (with scary breakouts and breakdowns all along the way)...

Kind of reminds me of August-Sept '08...