Normally if we are about to see a market correction we get the following pattern. First the commodities rollover bringing the [artificial] bid over to the Fins/Consumers. Once those give way the Nasdaq is always the last man standing. Once the Naz rolls then we see follow-through on the downside in the market (you want to pay attention to fins and the naz). If the cycle aborts (ie: the Naz doesn't roll) what we usually get is a bounce in commodities, starting the cycle over again. At this point we haven't even seen the Fins start to weaken, which hint (but one day a trend does not make) at more upside shenanigans in the market. Things are looking shaky here, massively overbought and falling momentum. It would take a bit of good news to squeeze this higher before correcting at least negative 0.0001 S&P points before the algos smell "fear"

[Note the last time it went up here it took 14 days before the market went down]

Refers to: "Dollar bears watch it" and "A few charts..."

For so long we were hearing the correlation in the market was that if the market was going up, the dollar would go down. Shorting financials and long gold seemed to be in vogue because any rising market would come from a bank bailout (read: dollar negative), right? Otherwise the fins were going to tank along with the indexes, right? WRONG. In fact I was quite convinced we were about to see a break in that correlation when the dollar bottomed. This was usually met with laughter because of "the R-squared synchronicity of the world says this can't happen". I was convinced the Fins, Reits and Consumer stocks would be the new leader. However we have seen this correlation get far-stretched and mean reversion is not unreasonable. A bounce in commodities will lead the indexes higher.

From a previous post titled 'Making the case for HE':

1. First off this is not a ticking time bomb. It has long tic'd it's last toc (been in motion a while).
2. The [bear] market is known to deliver max pain in each direction.
3. A general bias in the market is to go up
4. Green Shroom hallucination
5. You probably hear "CRE Time Bomb" at the local VFW Post #42.
6. They need to raise several factors more in capital.
7. Earnings season
8. The [fraudulent] maneuverability for earnings.
9. The debt holders of the CRE are small banks and large banks alike.
10. Underwriters of the offerings are banks.
11. Bernanke/Geithner
12. HB&B(and oil) underwriter who we all have grown to love: Goldman (pronounced like the Seinfeld, 'Newman'), JPM, etc...
13. SRS-flipping-Stocktwits

I've said this in the past...When the bulk of the market comes to expect something, it usually does not happen until it has destroyed the confidence on both sides of the fence.

Now what? If the EURUSD holds the 1.33 level then an relief rally back to to 1.35 is reasonable. Therefore the DXY would pullback. Otherwise failing to hold the 1.33 level would suggest a move down to 1.32 then perhaps 1.30 even. However with so many cross-currents in currency land right now you might as well throw away the charts. After all, Goldman recommend their clients get long the EURUSD. I guess one day people will catch on to how they operate with these calls. They might be telling the truth but they are on a much different time horizon than they lead you to believe. Basically when they need to put on a large position they will lead people to slaughter each and every time. In this case the prop desk was probably wanting to short the snot out of the Euro and needed some buyers to sell into. It's ok that the research department puts out a bullish call, after all their fine print allows them to get away with such conflicts of interest.






7

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Here is how they operate:

The following was submitted by Wopr & Wopr Capital Partners and Bait Shop, LLC

In my hood we call this Pure Fucking Magic.

S&P 500 Daily, presented without comment (oops, clipped off the price axis). Doesn't mean it can't go higher, just take note.

Some of these correlations should start mean reverting soon?!?

Update1: Added a few more sectors / proxies

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Check out some of the massive volume highlighted below price-points in the ESM10 (S&P Futures). This is not a normal distribution when compared to most days. Almost want to think there was some massive unwinding of futures into the equity squeeze.

This is ESM10 Futures

Hasn't see a reading like this since Oct 2006 - You think this market isn't bipolar?

Somethings fishy here. My conspiracy theory is as follows: Disruption in the force over the weekend. Large caps (heavy weighting in the indexes) are being bought and the remaining high beta names are being sold, which are less of the weighting but there are 3x as many of these). This has created a phenomenon that gives the illusion that TICK is oversold and there are roughly 1,234,567 algorithms that sniff that out. The indexes can go higher with heavy buying in the futures market as well as the SPY, while shorting the underlying on the way up to 1169-1175. Futures will likely be sold (by goldman, for a handsome profit) and the market will take a fast drop for a few days/week or so. Once they play these shorts backwards they will be covered en masse after Goldman walks into the pits (somewhere near 1136, maybe lower) and buys about 1,500 BIG S&P contracts with the soon the be Treasury profits they'll make off of the flight to safety.

You'd be better off being neutral right here.

The scenario I'm currently learning towards is a quick move to 1169ish to close the week (EURUSD 1.385)- Elliot Wavers relabel charts. Early next week I feel we'll get a large down day (1150) with another day of follow-through to around 1136 - Elliot Wavers will relabel charts. Market then starts the leg to 1200 (EURUSD 1.40) - Prechter files for bankruptcy.

Weekly SPDR S&P Retail (ETF)

I don't know about you, but during hard times it certainly makes sense people are going shopping. After all, there was a pundit on Bloomberg saying women are just tired of sitting at home and had to get out of the house (that they stopped paying for about 9 months ago) and go swipe some plastic! To hell with making your house note when you can go buy iPhones/Tablet PCs/Polo Shirts and retreat to a Wynn Resort & Casino.

From a technical perspective its riding bareback on Halley's Comet, with the Sun in the rear-view mirror, on it's way to the aphelion position. Being overbought does not mean it can't go higher but I will be watching (through the Hubble Telescope) for weakness that would suggest a move down to 36.50 (perhaps down to 35). Shorts would want to protect against 42.50/43 which would come in the event of a total capitulation on the upside (which seems highly probable). The real question is whether or not the DXY stays under 80.36 on a closing basis. If so we'll likely see a mini-reflation trade that squeezes the indexes higher with commodity stocks if (There isn't much left to squeeze in the REITS and Retail). I suspect the DXY will ultimately come back to 78.60-79.00 as it recently put in a swing-high at 81.25.

[Update1: Chart updated at close]

I'm hearing "pundits" are calling for a pullback on this anniversary. I guess we're going to find out real soon if these so-called pundits are in fact all-knowing... There is no fundamental reason I can think of that would prove them wrong, but then again there is nothing fundamental about this market either! Therefore I'd be more prone to fade the pundits (as always)

For the last several days we've seen the market going up while TICK is going down. It's almost as if the underlying are being sold and the futures/spy bought (courtesy of the BIG 3). It's not safe to assume this is a bearish posture - what happens if at some opportune time the underlying shorts are covered (kind of like... SOON)?

Anyway, the above indicator is quite perplexing and all I can do here was highlight where it's registered similar readings. Draw your own conclusions.

Video Link

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