Here's a SLV update for those considering buying weakness.
Bottom line for those who want to buy SLV on weakness, Patience.
6 years ago
Monday, October 31, 2011
SLV Update
It seems to have been decided as to whether PM's were influenced by the dollar or were risk off safe haven trades. They've switched between both almost weekly for several months. Today they are effected by the EUR/USD.
Here's a SLV update for those considering buying weakness.
The 1 min chart has worked well this morning with confirmation until 10:45, a negative divergence that pulled price back and now our second negative divergence, which should pull price back a bit, although it's not a very deep divergence right now.
The 2 min chart suggests a deeper negative divergence, so lets see how this plays out, it's still not leading negative but it is negative.
I believe late last week we spotted some early weakness or what at that point looked like a possible consolidation or pullback in SLV, here it is on the 5 min chart, it's a bit deeper then a regular consolidation, but it hasn't seen a LOT of damage today as of now.
The 15 min chart is showing good confirmation on the way up-higher highs in 3C/price, until the sideways action started, this chart doesn't look as bad as many we have seen recently, but it is the one that is most concerning to me and what it does moving forward.
Here's the crossover screen which I will be watching for any sign of a negative signal -it produced a buy signal last week. I am guessing at this point that a pullback would probably hit the yellow 10-day moving average, if this turns in to something worse then that, I would not consider buying SLV and I personally would wait to see what it looks like in that area (so long as things stay on this course which is something we can't have a high degree of certainty of with things as fluid as they have been in the last 48 hours.)
I offered this 60 min Trend Channel as what I saw as the only viable stop in SLV at the moment, that has been hit once it crossed below the red trendline. ADX has also turned down from 50+ which is not a great sign.
Bottom line for those who want to buy SLV on weakness, Patience.
Here's a SLV update for those considering buying weakness.
Bottom line for those who want to buy SLV on weakness, Patience.
Directional Move...
I don't know if you recall this post from late Friday afternoon last week, "Bollinger Bands"
It showed all of the averages in a tight squeeze which generally means a directional move is coming shortly. There was also a triangle formed all of Friday.
I had talked about the triangle earlier and the fact that often these very common/obvious patterns are head faked and a head fake on this one would be to the upside.
That's what happened and we have a directional move now in all of the averages plus the Euro which was also included, so here's what the updated chart looks like now.
30 min Bollinger Band Squeeze on Friday, in white the upside break out of the triangle and at the bottom a Demark-based indicator sell signal. If this gap holds, then we have an island top and a potential breakaway gap, which both would be considered pretty bearish.
In the post linked above, this was also the first BB squeeze of the entire rally.
It showed all of the averages in a tight squeeze which generally means a directional move is coming shortly. There was also a triangle formed all of Friday.
I had talked about the triangle earlier and the fact that often these very common/obvious patterns are head faked and a head fake on this one would be to the upside.
That's what happened and we have a directional move now in all of the averages plus the Euro which was also included, so here's what the updated chart looks like now.
In the post linked above, this was also the first BB squeeze of the entire rally.
SPY Update
Euro on the move?
It's been 10 hours or so and the Euro has held a range, I don't know if this is in response to the MF Global filing, but something just started to break loose.
It will be interesting to see if there are any arbitrage algos running this a.m. and whether the market follows this break (so long as it is not just a blip).
It will be interesting to see if there are any arbitrage algos running this a.m. and whether the market follows this break (so long as it is not just a blip).
MF Global files for bankruptcy
The weekend long marathon to save MF Global has ended in bankruptcy and some odd events.
First, it is being reported that, "CME’s acting like the MF Global thing just happened. They’re haphazardly locking traders out who clear with MF, blocking access to the floor of not just MF Global employees but people who clear through them. As a result, nobody wants to leave the floor and nobody who still has access wants to trade just to get locked out."
That's not very nice.
John Corzine (we all know him politically or financially and as the CEO of MF Global) apparently is getting a $12 million dollar plus severance package, which can't be delivered in case of bankruptcy, but if a low ball deal is struck with a goldman or interactive brokers, Corzine gets the money and the low ball bidder gets the company at a DEEEEEEP discount. I would expect some investigations to come out of this one, especially considering GS ties to MF.
In Bankruptcy documents MF owes CNBC over $845,000. It should b noted that there were a lot of guests on CNB last week saying MF is fine, including Dick Bove who upgraded Lehman Brothers a few days before their bankruptcy.
You can do the research if you like, but something smells a bit fishy.
First, it is being reported that, "CME’s acting like the MF Global thing just happened. They’re haphazardly locking traders out who clear with MF, blocking access to the floor of not just MF Global employees but people who clear through them. As a result, nobody wants to leave the floor and nobody who still has access wants to trade just to get locked out."
That's not very nice.
John Corzine (we all know him politically or financially and as the CEO of MF Global) apparently is getting a $12 million dollar plus severance package, which can't be delivered in case of bankruptcy, but if a low ball deal is struck with a goldman or interactive brokers, Corzine gets the money and the low ball bidder gets the company at a DEEEEEEP discount. I would expect some investigations to come out of this one, especially considering GS ties to MF.
In Bankruptcy documents MF owes CNBC over $845,000. It should b noted that there were a lot of guests on CNB last week saying MF is fine, including Dick Bove who upgraded Lehman Brothers a few days before their bankruptcy.
You can do the research if you like, but something smells a bit fishy.
Chicago PMI Misses
Chicago PMI comes in at 58.4 (consensus 59 / previous 60.4)
Here's the link to the report
Note at the top left in red letters "Embargoed". This is what I have told you about many times, media gets these reports so they can talk about them right after release, it also creates the ability for someone at the media outlet to make a quick phone call to a "friend" on Wall Street, maybe a friend that is benevolent and charitable.
Here's the link to the report
Note at the top left in red letters "Embargoed". This is what I have told you about many times, media gets these reports so they can talk about them right after release, it also creates the ability for someone at the media outlet to make a quick phone call to a "friend" on Wall Street, maybe a friend that is benevolent and charitable.
Events
I tried to keep you up to speed on weekend events, but they are coming in faster then I could even link them. The most important events other then what has already transpired, include the following:
The EU road map/empty box of dreams, plan, whatever it is, is not doing what it was supposed to do as of yet. The thought was that bonds would immediately get some support and lower borrowing costs for the EU countries in trouble, that lasted 1 day while the German borrowing costs went up. Italy sold more 10 year bonds that priced at a multi decade high yield of 6.153 (higher then before the entered the Euro) until ECB buying brought the yield back down to 6.122%. With Italy being the 3rd largest EU economy and the bond vigilantes still or rather are stepping up their demands on yields, this does not bode well for further contagion as already discussed, the EFSF is large enough to take care of Greece and hopefully head off further contagion, as Bloomberg suggests, it's about 1/3 the size it needs to be (3 trillion Euros) to be truly effective. An Italian default is not within the means of the EFSF.
As for "A" EFSF bond buyer, Japan, they have stated they will continue buying the bonds, however, the pace at which they do will likely slow. That's pretty much the opposite of what was intended in creating the EFSF and "plan".
Get ready for the Greek riot cams as Greece says they have paid out about $8 billion euros in fraudulent pensions and intend on recovering every penny from those that received it. Throw on top of that the pension fund being cut in half roughly via "the plan" and we should see Greek strikes resuming shortly.
As for economic data from the EU, not so good...
German retail sales 0.4% M/m vs est. 1.0%
Italian unemployment 8.3% vs est. 7.9%
Norwegian retail sales -0.5% M/m vs est. +0.2%
The EU road map/empty box of dreams, plan, whatever it is, is not doing what it was supposed to do as of yet. The thought was that bonds would immediately get some support and lower borrowing costs for the EU countries in trouble, that lasted 1 day while the German borrowing costs went up. Italy sold more 10 year bonds that priced at a multi decade high yield of 6.153 (higher then before the entered the Euro) until ECB buying brought the yield back down to 6.122%. With Italy being the 3rd largest EU economy and the bond vigilantes still or rather are stepping up their demands on yields, this does not bode well for further contagion as already discussed, the EFSF is large enough to take care of Greece and hopefully head off further contagion, as Bloomberg suggests, it's about 1/3 the size it needs to be (3 trillion Euros) to be truly effective. An Italian default is not within the means of the EFSF.
As for "A" EFSF bond buyer, Japan, they have stated they will continue buying the bonds, however, the pace at which they do will likely slow. That's pretty much the opposite of what was intended in creating the EFSF and "plan".
Get ready for the Greek riot cams as Greece says they have paid out about $8 billion euros in fraudulent pensions and intend on recovering every penny from those that received it. Throw on top of that the pension fund being cut in half roughly via "the plan" and we should see Greek strikes resuming shortly.
As for economic data from the EU, not so good...
German retail sales 0.4% M/m vs est. 1.0%
Italian unemployment 8.3% vs est. 7.9%
Norwegian retail sales -0.5% M/m vs est. +0.2%
Risk Off or Euro/$USD Correlation?
The S&P is currently down by about 1.45% in early trade, if you saw my posts from last night then you know it was a bust night in FX land and FX, especially (rather almost exclusively) the EUR/USD has moved trade the last several months and through 2011 at large, I'll have more to say on this in another post.
The question now is a "which came first, the chicken or the egg?" type question. Is the market trading down because of the Euro trading down or is this a real risk off trade?
I'll be bringing you more, but the most obvious clue to the answer is to be found in these 2 charts.
The EUR/USD which took a major fall last night would seem to be the answer. However, for the last 10 hours the Euro has traded around the $1.40 area.
This is ES overnight and the last 10 hours in white, it has traded sequentially lower while the Euro is stuck moving sideways. So the answer as of now is however this started, MF Global, Yen Intervention, not so great EFSF news over the weekend or all 3, it now seems that the market is in risk off mode as the Euro has been lateral for 10 hours and the ES has been down.
The question now is a "which came first, the chicken or the egg?" type question. Is the market trading down because of the Euro trading down or is this a real risk off trade?
I'll be bringing you more, but the most obvious clue to the answer is to be found in these 2 charts.
Unbelievable Night in the FX Markets
You saw my last post on what was happening with the EUR/USD, literally about 5 mins after that, the Japanese intervened in the currency market as the USD/JPY hit new post World War 2 lows last week. The resulting rally in the USD/JPY went 7 standard deviations higher with about a 400 pip rally and a 450 pip rally in EUR/JPY.
In fairly short order, as the last Japanese FX interventions have gone, over 38% of the move was retraced, however, as would be expected (ES Futures would rally), ES future continued lower instead.
As Japan warned, they would continue intervening until they were satisfied, they apparently went in again after the retracement to $77.684 and sent the USD/JPY up again this time to $79.3505. For the last nearly 2 hours, the Japanese have managed to create a new peg in currency as the USD/JPY hasn't moved more then a pip or two off $79.20. It seem they are buying any offer below $79.20 to maintain this peg. Have fun explaining this action at the G20!
USD/JPY move up, retracement, and another intervention and holding flat as they soak up any offer below $79.20- a currency peg.
Here' the EUR/JPY-it didn't help ES futures AT ALL! Unlike the Dollar/Yen peg, the EUR is sliding a bit lower against the Yen.
And the EUR/USD continues to move lower.
This is ES (darker area is Friday market hours) which is now trading solidly below Friday's lows.
As of now, the Dow Futures are off by 84 point/ -.69%; the S&P are off 9.55 or -.75%, the NASDAQ 100 are off by 17.20 or -.72% and the Russell 2k -6.50 or -.86%
Something tells me though this is not going to be a quiet night from here on out.
In fairly short order, as the last Japanese FX interventions have gone, over 38% of the move was retraced, however, as would be expected (ES Futures would rally), ES future continued lower instead.
As Japan warned, they would continue intervening until they were satisfied, they apparently went in again after the retracement to $77.684 and sent the USD/JPY up again this time to $79.3505. For the last nearly 2 hours, the Japanese have managed to create a new peg in currency as the USD/JPY hasn't moved more then a pip or two off $79.20. It seem they are buying any offer below $79.20 to maintain this peg. Have fun explaining this action at the G20!
As of now, the Dow Futures are off by 84 point/ -.69%; the S&P are off 9.55 or -.75%, the NASDAQ 100 are off by 17.20 or -.72% and the Russell 2k -6.50 or -.86%
Something tells me though this is not going to be a quiet night from here on out.
