Weekend 10/15/2011

[rhight]

This may help explain what is going on. From Zero Hedge. For full text see,

http://www.zerohedge.com/news/biggest-m ... d-sp-surge

The lead in is a follows : from Zero Hedge

" Over the past two weeks, there is one simple thing that has been bugging skeptical macro observers: namely the paradox of i) just how ugly the European funding and liquidity situations have gotten, on the one hand, confirmed by the blow out in French bond yields (the French-Bund 10 year spread just hit an all time record yesterday) as well as continuing deterioration in credit spreads across core European nations, yet, on the other, ii) the euro, especially in that critical pair the EURUSD, has seen one of its most explosive rises in recent history, which as Zero Hedge pointed out yesterday, has totally decorrelated with the French-Bund spread, to which it had been firmly 'pegged' previously. As a result of ii), equity markets have surged due to legacy correlation arbs, which see Euro strength, and hence dollar weakness, as an empirical signal of equity "cheapness", which in turn leads all algos to treat a rise in the EURUSD as a buying signal. So how is it that even with the interbank liquidity situation in Europe frozen and getting worse, further keeping in mind that European banks are now expected to (or have already commenced - see yesterday's move in PrimeX) engage in widespread asset liquidations, that broad market risk is perceived as cheap? Simple. As the following note by Deutsche Bank's Alan Ruskin explains, the sole reason for the EUR (and hence S&P and global 100% correlated equity risk) surge in the past 9 days is not driven by any latent "optimism" that Europe will fix itself, but simply due to the previously discussed wholesale asset liquidations (as none other than the FT already noted), which on the margin are explicitly EUR positive due to FX repatriation, courtesy of the post-sale conversion of USDs to EURs. Which means that the ever so gullible equity market has just experienced one of the biggest headfakes in history, and has misinterpreted a pervasive European, though mostly French, scramble to procure liquidity at any cost by dumping various USD-denominated assets, as a risk on signal! "

[cougar]

Wow, thank you everyone great charts. the one thing I am afraid of.....we are on the same page, not good.

Good point, BullBear! I am also with “rhight”, when he says: “I don't understand these extreme price movements”…
But I think we are better than Bob Prechter’s “herd”! LOL!
Thus, I’ll try to be more specific with 2 elements of trade: LEVELS & TIMING and I shall exemplify my views on the updated weekly chart:

1. HIGHER LEVELS before a major correction:

first = 129 -130 zone...almost there. On chart, one can easily see its historical significance. This same level was used for the calculations on the “geometry chart” posted earlier this morning.

second = 1253 zone = resistance at MAW[(66)blue]…which has a good track record on the weekly chart.

2. TIMING: here it gets rougher, because short-term we have to consider the OpEx this coming Friday. My working hypothesis is that, before it, we shall have a correction, but not yet the “big B wave drop, of W2” (proposed also on the “geometry chart”). Thus, if it gaps up with a “Pinocchio wave” on Monday and cougar sniffs a drop, I will lighten my long positions without panicking but I won’t buy back the 119 and 118 Oct puts, which I previously sold to open…unless the drop gets really bad - which I do not foresee…My analysis should stop here…because I have no way to know what Da Boyz will cook for the next weekend brunch…

==============

This is only my personal view and my putative trades, which are anyway quite “complex” (LOL!), can change anytime.
Anybody reading this should consider my discussion strictly as entertainment.

[waverider]

Great charts all, further supporting a pullback, the $CPC signal is at the bottom of it's recent range:

Also, Barron's has released it's magazine with a cover titled "time to buy", which probably means it's time to sell. The magazine is on their homepage with an article titled "buy the banks".

http://online.barrons.com/home-page

[cougar]

As I was looking at other SPX charts, I found an additional level that we might consider as target/resistance.
The 1243 zone = 360 degrees on Sq. of 9, top of the Acceleration Band & MAW(165) which was a previous support, in July.

[cougar]

Great charts all, further supporting a pullback, the $CPC signal is at the bottom of it's recent range:

Also, Barron's has released it's magazine with a cover titled "time to buy", which probably means it's time to sell. The magazine is on their homepage with an article titled "buy the banks".

http://online.barrons.com/home-page

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Good Point, "waverider"! Barron’s has a remarkable track record as a contrarian indicator...It also took them a long time to figure out that the market was going UP...They missed the opportunity to give a reasonable "short term BUY" signal, last weekend…and now this! We shall see...

[99er]

Weekly Update

DWCF http://99ercharts.blogspot.com/2011/10/dwcf_16.html

[seekingknowledge]

You all do such super, informative work! Thanks for taking the time to share with us all. I look forward to reviewing your charts each weekend. Quite honestly, some of it makes my head spin as it is above my current knowledge. A special thanks to the Cobra for hosting this site and leading the way!

[heavenskrow]

wow great stuff guys! informative and sexy

[heavenskrow]

I would also advise to keep an eye on the US dollar for this week...We sold off hard last week to test an important trend line....If this breaks, we could well get the inflation trade going on again