Hot off the press:

The eurozone's annual rate of inflation turned negative in June for the first time since the single currency was introduced in 1999...

Some analysts fear that this is the start of a period of deflation for the eurozone...

Deflation is considered damaging to an economy as consumers tend to delay making purchases until prices fall further. Without consumer spending to stimulate growth, economic output falls...

"At this stage, we expect negative inflation rates for the next six months or so. With factory gate prices falling, wage growth likely to slow sharply and a big amount of spare capacity in the economy, core inflation will decelerate considerably."

Tighten that monetary policy Trichet!

Embrace deflation, it's a necessary part of the cycle (as long as the economic model remains ass-backwards).

Going to get a CT scan asap to see if 'Tanke has pulled a Jedi mind trick on me trying to make me see bullish scenarios. Shark sightings being reported, perhaps downgraded prematurely? [Edit: It was a mind trick :) ]

Out of the eleventy-three scenarios, these stand out the most to me. I've tried to take into consideration time, space,tempo, currency, intervention, shark attacks and CRE pump-post-bailout-guarantee...I then narrowed it down to the ones that made the least sense (bullish). What, you're still applying logic to your analysis? Absent the equation is fundamental considerations, or the lines would all be pointed south. It's never cut-and-dry. Being tomorrow is the end of quarter it will be interesting to see what news flow comes in the few days that will probably set the mood for the market.

One other high probability scenario (not pictured) is chop-central to where we meander between 850'ish to 940'ish in a wedge pattern (similar to white line, but upper boundary contained by descending trendline, resolving around 900 with a 70'ish point move out of the wedge in either direction). Basically a sideways market until the economic data out in August ultimately drives us to the destination. This is going to piss off a lot of people I see setting up for cliff dive down to 550, or a re-test straight away. I'm not saying the market can't or won't go there straight-away but I have a hunch this market will be bought by those favoring the "earnings-before-depreciation-interest-taxation-amortization-credit-writedown-fasb-balance-sheet-magic-after-windfalls-bailouts-month-skipping-backdating-if-u-wish" valuation model. 850 is going to be a tough nut to crack (absent a crisis). Too many boneheads. It will eventually give way and we will go back towards to "lows" (and lower)...just not in the timeframe some have psyched themself up for. However, last I checked the market didn't call me up before the bell and ask what I thought.

Eclipsing 943 would be the squeeze needed for what has to be a massive unwind from the pump monkeys. More than likely they'll upgrade price targets and sell you their shares. I call that doing the Heisman, as they shove you their shares and GTFO of Dodge.

Looks bearish now...if that's a flag (not a given). I drew in one of the eleventy-seven ways to get to the measured move. Currently the technicals are in a bearish formation as well. I would think it would at least make a run to 15.50 before tapping out (if that's the case).

Edit (6/29): Delta neutral at the moment, weird call spread -15,+16,+17s. Just extremely cautious here.

China (the world's largest currency manipulator) is calling for a super soverign currency. Also, Frenchie Trichet says the ECB is considering tightening it's monetary policy. This is adding to the bearish bets on wampum. I would like to remind everyone that kermit is sporting the same batting average as 'Tanke ( \ˈtaŋkē\ ). This is usually what happens about 6 weeks after Trichet postures:

In other news, the DXY (USD) is about 70 cents away from reversing higher (imho). The Short Crude / Long Gold hedged trade I talked about recently is trying to lure me in.

June 26 (Bloomberg) -- Consumer spending in May rose for the first time in three months as incomes jumped by the most in a year, showing government efforts to revive the economy may be starting to pay off.

The 0.3 percent gain in purchases followed no change in April, the Commerce Department said today in Washington. Incomes surged 1.4 percent, the most since May 2008, driving up the savings rate to the highest level in more than 15 years.

Incomes surged? All of this can be attributed to a one-time transfer for seniors as part of the stimulus package. Wages were down. What are people doing with this money? Paying down debt (gee, told you so?) as the savings rate rises at break-neck speed. The data purports the gains in GDP are in fact deficit driven (as Keynesians think maybe, just maybe, they have a chance of being right one time in history). Debt to pay down debt, great. Imho, the personal savings rate will go north of 10% (easily) just to reach a reasonable mean. Therefore you can expect it to overshoot that mean for some time. Put that in your stimulus-pipe and smoke it.

Oversold bounce time. Seeing some indicators registering some extreme lows, at least on a VERY short-term basis (can swing from extremes rather quickly). Will chart later. Today is the FOC-ME FOMC meeting and it's a coin toss as to what 'Tanke is going to say. There is a 100% chance that what he says is a lie, unless he confesses things aren't on the "up and up". I expect the groundwork to start being laid now for further stimulus. The arm-twisting will likely come in the form of a shock-and-awe campaign.

Target 1: 912-918

Target 2: 930

We here at Thurgy & Thurgy Capital Partners would like to remind everyone that there is still the outside chance of the SLP shark attack. The senior analyst (and bottle washer) here has downgraded this scenario from Probable to Plausible (BBBB+) with negative implications, citing widespread wilting of green shoots as the cause. However, it is window dressing (end of quarter) time which will likely bring some level of demand for equities by the underperformers and the Johnny-come-lately.

Failing to get above the pivot at 912 and the indices will probably fall off like a prom dress. If that's the case then 845-855 would be the next point of interest with 877 serving as support. Getting above 912 and I pause on the short side to see how Target 2 holds up as resistance.

I don't like it. I've been watching the price action the last week or so and what is arguably the single worst sector is managing to hold it's own near 34. Just a cautionary note if you are short the IYR...Something is awry and it acts like to really wants to touch that 200day at 37. I'll admit though that I haven't been tuning in to any media lately (I prefer to read about events by credible writers), so it's possible that I missed some fundamental good news in that sector (not likely). I suspect it's team REIT promoters (GS and MER) holding it up until the REITS come with offerings number 3 through 5. This index used to swing 5% in either direction with any swings in the market. Now days it's staying flat. Short Squeeze Potential: HIGH . If it is indeed being artifically propped up, the fall will be spectacular.

Video Link Here

[Edit 12:30PM] Someone frontrunning all this? Saw this over at ZH just now: Merrill Lynch In Full REIT Upgrade Mode - The Sequel

You often hear the Bobbleheads talk about how Oil and Copper are the leading indicators into the economy. Oil being the leading speculative indicator and Copper being the barometer. If this is truly the case, then we are back to happy days again (riiiiiiiiight)... Actually, copper is a very good indicator, but the action recently is nothing more than a technical move on the back of China's Economic Facade.

Imho, the action in most commodities right now is a lot of noise and little signal. I periodically check in on Live Cattle to see if people have traded the Spam for Filet Mignons again. When people start to feel better, consumer confidence goes up. When people start to DO better, they eat better. So just how have the prices of Live Cattle been with green shoots, higher equities and booming commodities? About -12% from Jan 1 - Jun 1. The rest of the fleet is up 50+% in the same time.

I would like to see a sustained trend change before joining the recovery bandwagon. Oil and Copper have their merits as far as economic indicators go, but Cattle is also a valuable guage to add to your arsenal.

Someone could make the argument this is a result of the rising popularity in Vegetarianism. If this is truly the case, where can I find Lettuce futures? ALL IN

Shorts might be saying to the market, "Tank you sorry m/f"! (I know I've said that before). However, that is just bad juju. How about putting a positive spin on it instead? "Go Dollar, it's your birf-day!" Basically the same thing .

There is a 30-year auction today that I'm sure most people will be paying attention to. Could be a pivotal day for the dollar, and the markets in general, pending the outcome of this auction. Perhaps the primary dealers (GS, JPM, etc..) , who are already required to bid, will show up with some levered TARP profits to buy some extra 30yr TP to cover the offer. Wouldn't surprise me. If the auction fails, oh no.

[Note] Watch your copper. PCU making new highs with lower momentum. Signals a possible reversal. Copper is targeting 2.50, but is starting to weaken at 2.40. A final burst to 2.50, while putting in negative divergences, would be consistent with a "top". The EUR/USD is going to be bipolar in the near-term until in it hammers out a direction. My personal take is 1.365 from a possible head-and-shoulders top on the hourly. However, there is an upward scenario (1.43) as well if it breaks above 1.417 that has me cautious. If the USD gets sold down (possibly as a result of BerTanke buying more m-BS) then that would set the stage for, what I see as, the final burst in commodities (and the market).

I'm a bear, but I must assign more than just a 'Plausible' to this scenrio due to the intervention. A failure of 928 would likely lure in quite a few shorts but COULD setup a final squeeze by Team SLP to the high-end of the box shown here. This will likely be on the back of the USD pulling back, fueling higher commodities. There is also the possibility BerTanke buys another few 'hunert billion in MBS toilet paper to try and keep the 10yr in check (ha ha), which would also fuel the market (for nonsensical reasons) and weaken the dollar. Thurgy thinks the USD will soon again reverse going higher though, just as it did at the end of last week. *Probably around EUR/USD 1.417

I just wanted to point out this possibility because the market is at an inflection point. All I can do is stay neutral at the moment, but have harvested long-side profit for the most part (or protected). Either join them, fight the tape or sit on the porch. At this juncture, I'm on the porch (for the most part). as the risk/reward isn't there. 100 up, 300 down? When things turn down there will be plenty of time to get aggressive on the short side. I am holding onto the longs in CLF, PCU and UNG as my only remaining material/energy names (all are in spreads now). Utility holding is SO. I have a little short bait in the water right now, nothing major. One thing seems apparent to me...they've put more thought into this coordinated jam-job than they have an actual recovery plan. However, they are playing "Beat the Clock". Let's see how the market performs once they take off the SLP training wheels. Like I said, it is what it is, so don't mistake this for whining about manipulated markets..

If you still do not believe intervention has/is taking place in the markets then you must be one of those who sees those Green Shoots. TARP money has been put to work into equities and commodities, it's no secret. A higher stock market boosts consumer confidence, helps the pension funds, allows companies to raise capital, and in general is perceived as happy days. However, things are being propped up. It is the final gambit in the playbook to avoid the inevitable deflation that must take place before any real recovery is to be expected. In the meantime we must play by their rules and pretend those upticks is smart money coming into the market and not really GS/JPM/MS "machine gunning" every down tick with all those 5000 share lots on the SPY. How much "confidence" in the markets are we supposed to gain from all the levers being worked?

Question is, does Geithner want to oversee the SEC to catch the Madoff's, or to protect those making off?

SLP Brokers Taking Their Role Not Too Seriously, Others Gunning Market

Intraday SPY Indication Of Interest Update
Proudly Gunning Every Market Upswing Since TARP

Goldman Sachs Principal Transactions Update: 1 Billion Shares!
Goldman Sachs Principal Transactions Update: 741 Million Shares
SPY Block Trading Update
"You've Got Computers Doing All This Buying"
Goldman Sachs Principal Transactions Update: Collapse In Agency Program Trading Volume

In closing, I leave you with a visual of 70% of our GDP:

[Edit 11:23am] Going with the standard image without the EW blather. Same projections

Natty gas needs to stay above the lower trend line. It is below all moving average, which still is considered bearish. I am anticipating a reversal, perhaps. I would like to see a decent move higher, like today :) However, I do have the 15 calendar spread so I am protected. If it does take off I will buy back the Jun 15's. The weekly MACD (not shown) has been rounding up nicely. We've seen a positive momentum divergence on the daily charts for quite some time, but that didn't stop prices from cratering. Last summer UNG sat at a lofty 62.50. One year, one commodity bubble burst, overcapacity and a possible supply glut slammed this puppy down below 12.50. It is the later issues that has kept a lid on the price of natty gas even while every other commodity has doubled.

I would like to see the MACD cross the zero line it short order. It would help if Goldman Sachs would lease some natty gas storage and upgrade the sector (tongue in cheek). I'm guessing there just isn't enough secondary offerings to be had in that area, therefore less fees for them when they underwrite the offerings after announcing they are on the convinction buy list. Sort of like they did with REITard Simon Property Group just before they tapped the market with not one, but two, secondaries. Any guess who was underwriting those offerings?

Disclosure: Calendar Spread UNG 15 Calls Jun/Jul

Disclosure 6/10: Bought back Jun 15's for 50% gain

Reason? Increased demand and falling supply! I'm crapping you negative. Let me get this straight. Goldman leases a supertanker to store oil. They then recommend people short PBR puts. Now they come out today saying oil could reach $85. Wtf? Petro in storage is at a 25 year high and floating storage is at an all-time high. Yes, it can reach $85, but the tactics are absurd. Had this behavior took place one year ago, when oil was at $150, they would have all been bitch slapped by regulators because everyone was on a commodity speculator witch hunt. This level of speculation affects everyone with an implied tax. All so GS can reap the gain. Good job GS, you're predicting oil retraces to the FIRST fibonacci retracement from the peak. Thanks for that info [Edit: first fib on e-mini continous, 2nd fib on /CL]

Paging the CFTC/SEC. It's simple, we can not allow companies who's core business does not involve energy consumption to speculate at this size. Speculating is fine, but banks leasing supertankers is over the line. We have to impose limits on position sizes (delivery or not) and not allow this manipulation to continue. And no, Goldman, you can not buy a gas station to be considered an energy company. What's next? Contract the Pirates to steal the oil? Lease and fill Panamax ships with the soybeans that I shorted? Drive up the Baltic Dry Index and put out buy ratings on all the material names?

Can someone remind me as to why we repealed Glass-Steagall again?

... and now Energy?

Saw this over at Ticker, which links to a Bloomberg article.

Speaking of excess liquidity.....

June 3 (Bloomberg) -- JPMorgan Chase & Co., the second- largest U.S. bank by deposits, hired a newly built supertanker to store heating oil off Malta, shipbrokers reported, in the company’s first such booking in at least five years.

The bank hired the Front Queen for nine months, according to daily reports from Oslo-based SeaLeague A/S and Athens-based Optima Shipbrokers Ltd. David Wells, a spokesman for JPMorgan in London, declined to comment.

Thurgy: Morgan Stanley and Citigroup did this in January, Goldman recently and now JPM.  Petro in storage is at a 25 year high and floating storage is at an all-time high.  When America looks up from watching Dancing With the Stars and sees the price of gas going up they just think it's Exxon ripping them off again.  Hey, but Obama put money in 95% of working American's paycheck!  Now you can fill up your gas tank with the extra money that will be sent overseas (after miniscule state/federal taxes).  Who knows, maybe you just filled up your tank with some 93 Octane Goldman Sachs Petro, courtesy of your TARP dollars...Anyway, sooner or later this supply has to hit the market.  If the dollar gets repatriated (read: Eurozone takes a digger) they might want to consider looking to extend the leases on those supertankers.

[Update 6/4/09] Let me get this straight.  Goldman leases a supertanker to store oil.  They then recommend people short PBR puts.  Now they come out today saying oil could reach $85.  Wtf?

Some levels to watch for in Gold (not GLD) are 950, 936 and 918.  Also, be on guard for Copper (and pcu) for a false breakout.  A pullback in commodities will yank all of those names back into the Milky Way Galaxy.  So tempted short RSX or EFA straight away.

With respect to bonds, I haven't a clue. Bernanke bends me over in the few times that I mess with them.  Weird volume recently in treasuries and it wouldn't surprise me if TARP money is starting to buy them up here, per Bernie's instructions, before he announces some surprise, or the Supplemental Liquidity Providers turn off the switch, thereby driving people back into bonds.  This way banks can score more record profits in the fixed income market (tongue firmly planted in cheek).  I do think the Gov has realized there is this piggy bank (the market) they can use to fund the banks by way of commodities, equities and bonds.  As of late, the shorts have donated the most (it even has a few of my dollars in there).  The men behind the curtains will be busy for a while.  Lure them in...squeeze them out.  Pay back TARP, redistribute, rinse, lather and repeat.

I am long TLT at 91 though, but not because of this conspiracy theory (mostly because I'm a tard).  I'll say the long bond probably wasn't the best place to be when FCB's are dumping long in favor of shorter duration.  Who in the hell wants 30 year brand toilet paper?  I ventured outside my domain and will likely be shown the door.  I was more on the 'flight to safety' logic.  They say to stick with what you know.  I'd like to meet They, because they seem to know a lot and it gives me the redass :)  Part of growing as a trader is to recognize, accept and learn from the mistakes.  I look forward to my next lesson in a few minutes.  One day I will amass the knowledge of Cramer.  2000 stocks is a lot to put in your head; heaven forbid he tries to fit options chains in there...

[Edit: 7:35am] Jihad damn, did I pass 2nd grade?  That's why it says incoherent blather up top.

[Edit: 10:53am] If you ever see a post here that is both coherent and without grammar mistakes, call the police.

Don't make me say Uncle.

[edit] Awesome, this comes out the same day. I'm seeding the clouds to rain now.  Also applying for TARP assistance.  Goes to show just because something is overbought it can keep on going.

The report, which said the U.S. soybean stockpile estimate has been reduced by 20.0 million bushels to 165.0 million bushels, didn't disappoint soybean buyers who rushed to secure positions on the oilseed crop in anticipation of tight supply. Prices on the popular oilseed have been trading at two-month highs in recent days, aided by greater interest in U.S. soybean exports from China and because Argentina's crop has been negatively affected by hot, dry weather.

It's thurTard back again claiming the dollar is going to reverse, forcing profit taking in the reflation (commodity) trade.  Yeah, I've said a couple times last week that this would be the week it would reverse, but so far USD continues to be used as TP.   I'm not calling for a bull run in wampum, just to look out in the near-term as I suspect the buck will catch a bid soon.  $85 stands out if a $82.50 is taken out.  Outlook is unclear beyond that, but Eurozone has it far worse that we do.  You'll have to ask Cramer for a long term view.

Disclosure: Long SO

Here is the price channel in what I believe Lazlo might have been referring to when I joked about his projection.  Plausible, not Probable given that time frame.  Frankly I'm in no place to shoot down any theory in this market, but I think whomever believes this scenario will play out so soon is the Turkey.  What I'm saying is that the only way I see equities at this level is with a dead dollar.

Warning: This stock can be a heart breaker.  Just as soon as you think you hit that home run, POW, right in the kisser!  Either get in and get out, or protect your profits. Anyway, I've shown the daily and weekly charts above.  What I find interesting is the confluence of, what appears to be, a bull flag (non-confirmed) and the .764 fib retracement  from the Jan high to the Mar low.  12.26 is a 38.2% fib retracement, and 12.29 happens to be part of the measured move.  14 would be  a 50% retracement, 14.50 would be part of the flag, and the 50 week xma is coming to that area.  I have drawn and circled the weekly areas of interest on the daily chart (orange horizontal lines).

However, it has a lot of work to do, evidenced by the smoothed RSI and what-not.  First it must hold the 50dxma or else the 20day comes into play.  Second, it needs to break above 11.75 to the 12 area for me to believe it.  We over here at Thurgy Capital and Bait Shop are not giddy just yet.  The stock could just as easily turn down.  

[Edit 11:20am]  Legged into a spread, short the Jul 11's @1.50 to match the Jul 10's @.80.  Will look to adjust tilt of trade based on strength going forward.

[Edit: 6/3/09 10:30am] Yes, this means I never have to look at the trade again and make a profit.  Part of the advantages to not starting things in a 1:1 spread (providing the trade goes in  your favor) is the higher premium collected from the short side.  If I have an equal basis on each side, I'm happy.  I short on the way up, or at once when I feel the stock is at/near a target and might pullback.  But this all depends the plan in place before the trade.  I prefer to keep this trade alive right now to have another look.  Of course I could have sold half the position, but collecting the premiums for the short sells is the same thing to me.   Each trade is different.

I got short too quick, but this thing has gone too far, too fast.  I would expect that if it's going to make a run to the 50% retracement it should pullback and consolidate the recent gains.  Be careful if you are long all these emerging markets.  Looks for signs of distribution in EWZ

No two bear markets are alike. This market is hyper-extended right into ludicrous speed. The major disconnect notation is pointing to the fact that the smoothed RSI is not above 50 and the _rbi indicator is just about done. This outlines for potential weakness very soon. It is possible for us to back and fill to work off these overbought conditions, but it is my opinion that time is actually the enemy to the green shoots theory (as it relates to stocks maintaining this level). Irregardless, things will reverse soon due to the hyper-extension.

[Edit: Notice I said a crisis can be replaced with another. I did not say bubble with a bubble. If the Fed choses to do so they can create a currency crisis if they continue to follow the path chosen. I'm not sure it's possible to blow a large enough bubble anytime in this generation. It normally takes two generation's to become as stupid forget the mistakes of the past.]

Through the Freedom of Information Act I was able to obtain video footage of Obama and Bernanke discussing the "Now is a good time to buy stocks'', "Supplimental Liquidity Program" "Economic Recovery!" plan in February, and possible dollar implications. Stocks have gone Plaid, overshot the bears and put stocks in a vacuum. The cinche would be to announce a ban on short sales or the modified uptick rule right here! It's all green dood.

In order to run people back into Treasuries they will have to slow it down. Anyway, intervention in the markets never stick and sooner or later things come to stop.

Link Here

Copper Looks to be breaking out.  PCU is my favorite proxy, however, when both Copper and Gold start hitting, FCX is the best bang for your buck.  I just long/short PCU when I'm on copper and GG if I want to get long/short a gold miner.  Just a personal preference.