Friday, February 11, 2011
Closing Update
AAPL's Flash Crash-sort of...
Yesterday AAPL saw a mini flash crash. Whenever I see these I try to document them as I think they'll be more and more common.
AAPL shows the exact same characteristics as ever other Flash Crash I've documented, there's 3C distribution right before (I'm guessing HFT's are getting short) and then they fall. Detecting them is almost impossible when there's 10,000 different assets, but dealing with them is another matter. I've noted that they generally recoup "most" of the crash, which means don't sell into a flash crash, but wait for the recovery which I suspect is the other side of the trade going long at the bottom as they cover, they drive prices back up. The other lesson is, having a stop in place with your broker means it's likely you'll get taken out and won't be able to recoup the losses.
So keep those two findings in mind-don't panic and try not to have a stop on the books if at al possible.
So keep those two findings in mind-don't panic and try not to have a stop on the books if at al possible.
Watch out for Transports
They've had an uncanny rally the last two days, it looks like it's losing steam as we head into resistance.
SPY
This is curious... thoughts?
EGPT ETF
Power transitions are not always smooth and as I've been saying, the Egyptian regime is not Mubarak, it's the military. Note that the vice-president made the statement. I wonder what happened last night, if the military took Mubarak and pulled a Sug Knight wen he hung Vanilla Ice out of the 10th floor window by his legs until he signed Sug's contract?
In any case, anyone with thoughts or ideas on this one, feel free to email me.
In any case, anyone with thoughts or ideas on this one, feel free to email me.
Market Update 3C 1 minute
There's a lot of seeming confusion
SPY showing negative divergences
USO with a slight negative divergence, more shell-shocked looking then anything else.
AWho am I to say inflation is rising?
Someone who shops! Someone who looks inside the ISM reports, but I'm not MIT
Take a look at MIT's project
Be sure to choose USA in the drop-down if you don't see information on the charts.
Take a look at MIT's project
Be sure to choose USA in the drop-down if you don't see information on the charts.
Did You Get EEE?
I know a few of you did, if you are using 3C, then check out last night's post, it's a classic setup before a move
looks like the next leg up. Even if you are not using 3C, the charts were a bit obvious, check out that post.
Apparently I'm not the only one thinking this way
Or maybe it's just too obvious?
From ZH
By the way, short term which is what is important, the SPY has a negative divergence forming
From ZH
By the way, short term which is what is important, the SPY has a negative divergence forming
A lot of USO requests
Like I said in recent posts, clarity will be difficult as Wall Street tries to digest events. What appears to be a good thing for oil may not be and knee jerk reactions are bound to continue until Wal Street forms an opinion and moves toward discounting it. The bullish longer charts won't matter too much until then.
Here's the short term.
There may have been some front running Mubarak's fall as you see a 3C negative divergence right before he announced he's stepping down. We've seen the longer term accumulation which leaves Wall Street in a pickle as they probably can't afford oil dropping on highly leveraged trades.
Knee jerk reaction, but it's stabilized pretty quickly.
Here's the short term.
Analysis
The market is consolidating, you might expect the uncertainty that has been lifted, in some manner, to rally the markets. The truth is, the regime is still in power in Egypt as the regime has always been a military regime since Nasser. Mubarak asked the military to take control of the country? Probably with one of his most trusted general's with a gun to his head-I'm serious about that.
So we may expect the market to rally, in the short term Egyptians are of course happy, one woman on Al Jazeera said she now feels like "anything is possible", however the structural and inflationary problems that sparked unrest in Tunisia and then Egypt have not abated and the military won't be able to change that.
What is more significant is whether and/or when the market realizes that there are a doze or more countries on the brink of becoming the next Egypt or Tunisia and this victory over Mubarak may inspire them to rise up in protest. Not all of these countries have the underlying stability of the military regime, thus some of the next protests nd movements could take a much different turn. This is not a democracy revolution, that is not what sparked it, although democracy was the face that was quickly painted on the movement.
If the market reacts badly, and it may be several days or so before that happens, then you can probably rest assured that it is thinking about this revolution spreading and while two have gone down semi-peacefully, it in no way suggests that model will continue in further unrest.
As I said yesterday, this is the start, not the end.
So we may expect the market to rally, in the short term Egyptians are of course happy, one woman on Al Jazeera said she now feels like "anything is possible", however the structural and inflationary problems that sparked unrest in Tunisia and then Egypt have not abated and the military won't be able to change that.
What is more significant is whether and/or when the market realizes that there are a doze or more countries on the brink of becoming the next Egypt or Tunisia and this victory over Mubarak may inspire them to rise up in protest. Not all of these countries have the underlying stability of the military regime, thus some of the next protests nd movements could take a much different turn. This is not a democracy revolution, that is not what sparked it, although democracy was the face that was quickly painted on the movement.
If the market reacts badly, and it may be several days or so before that happens, then you can probably rest assured that it is thinking about this revolution spreading and while two have gone down semi-peacefully, it in no way suggests that model will continue in further unrest.
As I said yesterday, this is the start, not the end.
Market Update will be delayed until we see some clarity in 3C
Events just took on a Black or maybe white swan event. As I said last night, the military would have to choose within days if not hours, they choose and the military regime since Nasser remains intact.
We'll see how the market reacts as the obvious outcome is not always the correct one and it may change several times before there's clarity.
We'll see how the market reacts as the obvious outcome is not always the correct one and it may change several times before there's clarity.
TRADE BALANCE
Nothing too exciting in the trade deficit, however looking at this chart, does this tell us something about the American middle class?
Imagine the imports represents American's spending power, well then it's declining.
Exports are trending well. Could it be said that the American market is topped out as far as American corporations are concerned and now they have turned their profit plans toward outward expansion. This chart, taken out of it's intended meaning, to me, looks like a sign of the times. And if the lobbies in Washington have much to say about it, the American consumer will become increasingly marginal and the government's concern about re-establishing a robust middle class will take a back seat to corporate America's greed an that of the politicians. They've milked the cow at home, it's not worth the cost to try to reestablish the middle class. Look at $2.3 Trillion dollars of quantitative easing and what do we have to show for it? A manipulated print from the BLS? I seriously doubt unemployment dropped from 9.8% to 9% in a month and I seriously doubt it's even close to those low figures.
And in case you didn't know or forgot, the Federal Reserve is as Federal as Federal Express-in modern day terms, it would be no different then Congress giving Bank of America exclusive rights to print and control money. The Fed IS A FOR PROFIT ORGANIZATION COMPLETE WITH SHARE HOLDERS, NOT A GOVERNMENT AGENCY-AT LEAST NOT A TRUE GOVERNMENT AGENCY.
Exports are trending well. Could it be said that the American market is topped out as far as American corporations are concerned and now they have turned their profit plans toward outward expansion. This chart, taken out of it's intended meaning, to me, looks like a sign of the times. And if the lobbies in Washington have much to say about it, the American consumer will become increasingly marginal and the government's concern about re-establishing a robust middle class will take a back seat to corporate America's greed an that of the politicians. They've milked the cow at home, it's not worth the cost to try to reestablish the middle class. Look at $2.3 Trillion dollars of quantitative easing and what do we have to show for it? A manipulated print from the BLS? I seriously doubt unemployment dropped from 9.8% to 9% in a month and I seriously doubt it's even close to those low figures.
And in case you didn't know or forgot, the Federal Reserve is as Federal as Federal Express-in modern day terms, it would be no different then Congress giving Bank of America exclusive rights to print and control money. The Fed IS A FOR PROFIT ORGANIZATION COMPLETE WITH SHARE HOLDERS, NOT A GOVERNMENT AGENCY-AT LEAST NOT A TRUE GOVERNMENT AGENCY.
Euro Down/Dollar Index UPP
I am leaning toward the collapse of the euro within the next year or so. Europe's structural problems are creating contagion that threatens to hurt and is hurting the most productive economies. All of the sudden, the Euro-zone doesn't make sense for those that are doing well as those that are not are pulling down the rest.
Here's the long and short tern trends, I remain bullish on the Dollar Index specifically (UUP as well) as it's composition is weighted with the Euro accounting for 50% of the makeup of the Index. The dollar on it's own is a different story.
This is a long term trade, you need patience, a little bit of a wider stop as the fear cycle will continue from risk on/risk off, but the long term trend looks stable.
Bernanke! Here's Your inflation!
And this excludes volatile food and gas prices-Cotton just hit a new record high .
Clothing-we all need that most of the day, right? Unless you live in Key West where you have some options. Consider clothing manufacturers just saw a 100% input price increase in 6 months, and who supplies most of the clothing in the world-C-H-I-N-A
Don't forget our China Short: FXP
Clothing-we all need that most of the day, right? Unless you live in Key West where you have some options. Consider clothing manufacturers just saw a 100% input price increase in 6 months, and who supplies most of the clothing in the world-C-H-I-N-A
Don't forget our China Short: FXP
This is why we don't follow the Crowd
Sometimes when you see an opportunity, it takes time for that opportunity to emerge-like the bearish stance I've had on emerging markets for several months now.
We just found out we're in record setting territory for Emerging Fund Withdrawals and my favorite, EDZ should be on the way toward it's target, which is near $70+ so there's still plenty of room left in this trade
Here's an article and here's a snippet from the article
"In the week to February 2nd, however, emerging-market equity funds shed $7 billion, or 1% of their total assets, as events boiled over in Cairo. According to EPFR, which tracks such flows, this was the third-largest withdrawal on record, and the first of any size since the crisis. "
Here's EDZ- a favorite leveraged ETF here at Wolf on Wall Street
and Here's the most recent analysis
We just found out we're in record setting territory for Emerging Fund Withdrawals and my favorite, EDZ should be on the way toward it's target, which is near $70+ so there's still plenty of room left in this trade
Here's an article and here's a snippet from the article
"In the week to February 2nd, however, emerging-market equity funds shed $7 billion, or 1% of their total assets, as events boiled over in Cairo. According to EPFR, which tracks such flows, this was the third-largest withdrawal on record, and the first of any size since the crisis. "
Here's EDZ- a favorite leveraged ETF here at Wolf on Wall Street
and Here's the most recent analysis
