Update

Above we see several types of negative divergences in the Q's, SPY and DIA and a curious positive divergence I've been watching in UUP (proxy for the dollar index).  The Euro is headed down a bit but not enough to explain these divergences, especially UUP's. I'm wondering if UUP and the dollar index are being bought into weakness?

Part two of the Bond Charts

PIMCO has been reducing their exposure to government debt recently, as I mentioned earlier they've been buying up MBS.

Here's a recent article 

Treasuries Topping

As you can see, treasury bond funds seem to be topping out, negative divergences at all of their recent highs with 2 in solid leading negative divergences.

LLNW Request

I believe (although not confirmed) that LLNW reports today after market. I was asked how they look.

MACD looks good, RSI looks good, the price moving averages including the pullback look good.

Here's the 10 min 3C chart, which has a positive divergence, I doubt it has much to do with today's market gap as it is a longer timeframe and the divergence started yesterday. So in my opinion, I do not see anything here that suggests that there's trouble brewing, I see what appears to be an orderly pullback as I mentioned I thought we'd see last week and apparent accumulation meaning the pullback is probably close to ending.

I also can't say that I see the signs of tell-tale insider knowledge on the earnings front, I just see a chart that looks pretty good. Not all charts show insider leaks, the ones that do are usually very pronounced-I don't see that here, but I also don't see anything very bad either.

Just How Influential is PIMCO

 Irish Bonds plunged-there's no bid for them as all know they WON'T be able to pay their debt themselves, yet the Euro moves higher... My guess is Bill Gross has a lot more weight then most of realize, yet again the question remains, why is PIMCO long MBS on margin if that is his belief. In the last several weeks we've seen fund managers pumping and pushing only to find out their funds, which were on the brink of massive outflows as they reported quarterly results, we're more or less saved by their pumping the market. Is Bill Gross setting up a position short the Euro? OR some other plan in which he wants to see the dollar higher?

I'm no economist so I can't comment on the range of trades that PIMCO could benefit from with a little well timed information right as the Fed starts their meeting. One thing I'm pretty sure this is not about is the election.

Macro Economic Views

This is a chart of the Dry Bulk Index, which is the cost or shipping rates for ocean going bulk ships. A drop in prices shows the macro economic view or demand for shipping.

As you can see, recently we've seen a downturn n the dry bulk rates meaning there is less demand as rates come down. The primary trend for sometime has been down. Just another piece of the puzzle.

You can find the link at Trade Guild for "Baltic Dry Bulk Index" or here http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

Some movement in 1 min 3C DIA

Again, the early gap negative divergence led to some downside, now it's moving closer to a negative leading divergence. At least there's some movement here.

UPDATE

Right now the market is dead-just range bound. As for 3C the Q's look the best, the DIA looks the worst, but even right now they do not seem to be very in sync with the dollar trade, they are just kind of lying flat.

The banks are under pressure again today, so that may show up in the SPY and the DIA much like it did for awhile yesterday intraday.

Personally I feel the EUR/USD pair hasn't moved too much and the market right now probably has more to do with that then it does the election. Also the Fed meeting I'd think is largely been priced in over the last several weeks so it seems currencies, based on Bill Gross' comments last night are running the show.

I had a request for the long term 3C charts so here they are.

If these long term charts turn out to hold true, it will make some sense as recently we've seen a lateral classification in the trend table which is where accumulation and distribution often occurs. Keep in mind these are long term charts and rarely reflect short term changes, like today's gap up-this is the overall trend so when you see the indicator higher several weeks ago, it's comparing now to several weeks ago, a confirmed trend would see the indicator move up with price as I showed you in several individual trades last week. When prices are higher and the indicator is lower, this is our negative divergence. You can see the QQQQ and SPY have seen pretty dramatic deterioration in this trading range we've seen lately with leading negative divergences.

AM UPDATE

We have some minor 1 min negative divergences that are probably contributing to the slight negative bias in price. Really nothing much more then that has developed at this point. There is a possible topping process going on in the EURO 5 min chart as is has made several lower highs/lower lows. We'll see, but I think intraday the EURO's direction will have a lot to do with the stock market's direction.

Why the Markets Gapped Up

There's all kinds of stories out there, the Fed meeting starting, the elections, I believe this is the real reason ...

5-min chart of EUR/USD -the red arrow is where the stock market closed yesterday, the Euro has put on a strong showing last night and here's the reason why....

PIMCO's Bill Gross article released last night....


The question remains though, if Bill believes this, why is he going on margin to buy up MBS and not on margin to buy equities?


This wouldn't be the first time we've seen big shot fund managers releasing news to move the market in their favor, the question is, "Is that what Bill is doing?" which might just have the opposite effect when all comes to pass as BILL IS SEEMINGLY VERY WELL CONNECTED AT THE FED.