Jumping right back in to it, overnight the Chinese central bank , PBoC (People's Bank of China) gave the market a bit of "stimulus" in lowering the non-bank deposit reserve ratio to zero which in turn caused the market to do what it always does and hope for more because a stimulus addicted market knows nothing else than stimulus.
Has anyone written a book that deals with, instead of P/E multiples, Annual Dividends, PEG Ratios or technical indicators; the merits of Liquidity Injections, rumors of liquidity injections, hope for liquidity injections and hope despite the end of liquidity injections that this time is really different and there WILL be more liquidity injections because we now live in a world in which asset prices for the first time in history can only go up? Perhaps such an author borrowed Obama's campaign motto for its title...HOPE?
Well if not, I'd suggest one of you, a more succinct writer than I, get to it! If you really want to get rich, you need to write a book about why the market will never fall because central banking liquidity is a one way street; you may have trouble documenting that historically; in fact there will be some inconvenient truths you'll have to smooth over, but people will believe anything when it comes to hope... Obama got re-elected ( sorry, that was a low blow).
In any case, the Shanghai Composite closed up +2.77%
Speaking of hope, I think Japan's crazy man of QE, PM, Abe is hoping he's not washed away in an uprising called the "Japanese Spring", like the "Arab Spring" after he became the first Japanese leader to preside over the LARGEST DROP EVER in Japanese wages on record after the overnight session revealed that not only did Industrial Output decline, but more importantly in the recession stricken country (the 3rd largest economy in the world) and the country plagued by years of spiraling deflation, the overnight also produced Japanese Inflation data with Core National CPI Slowing for November combined with eighth consecutive drop in Real Consumer Spending since Abe's Tax Hike (on a y.o.y. basis), for example Core Real Spending on Housing has dropped -20.3% on a y.o.y basis.
Real Disposable Income of household's declined again, this time another -3.9% for October (y.o.y. basis), but at the center of it all Real Nominal Wages (total cash wages & overtime pay) collapsed thus Real Wages (Nominal less CPI inflation) printed at -4.3% y.o.y. as the decline widened with Nominal wages, thus Abe-enomics has produced the largest drop in Japanese wages on record.
There are some other interesting developments between China and Russia with direct currency swap trading beginning Monday and Putin signing a new military doctrine naming the US and NATO as the most grave threats to Russia and test fires an ICB missile.
However for our purposes, today is the first day of the "Traditional" Santa Claus rally. You may remember that part of my theory with regard to this recent move up that was posted a week ago last Friday was that it coincide with the Santa Rally which is the week of Christmas (day after) through New Years, and the possibility if not probability that traders would be lulled in to the rally as they believe it's a near God-given right that MUST occur, with any sudden drop during this period likely to cause some intense downside action/pain. so it will be an interesting time moving forward through New Year's.
However, this is also year end Window Dressing, the biggest Window Dressing of the year, The Art of Looking Smart, in which managers get rid of under-performing holdings and buy the hottest stocks of the last quarter or year so when the January prospectus comes out, it "LOOKS" like the fund's manager had all the right stocks and none of the wrong ones, even though they may have only owned them for a few days, it doesn't matter, they'll close out the quarter and the year with this new list of stocks going down for those less prone to do investigative digging around, awestruck by what great stock pickers these managers are, which is why we call Window Dressing at month's , Quarter's and Year's end, "The Art of Looking Smart".
Officially however, we are at the last day for this type of window dressing (not including broad market performance for the year's end) when you consider the T+3 Rule or "Settlement", stocks or rather trades settle in T+3 which means "Trade plus 3 days", so with 4 trading days left in the year, Trade = today + 3 days for settlement.
The Index futures have an interesting look to them near term... Note the difference between ES, TF and NQ (SPX, Russell 2000 and NASDAQ100 Futures).
The 1 min charts....
So we go to the longer charts and the 5 min chart that has been so key for me...
And the tie breaker again, NQ 5 min...
Which has taken a break from a larger negative divergence and fallen in line!
Still the highest probability near term resolution is still marked by the 7 min charts which have stayed pretty negative.
So now I suppose its up to leading indicators and the divergences in the averages which we should be able to see just about now being the first hour of a.m. Tom-Foolery is about over.
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