Kudos to MMs

Quote from Daal:

Fed funds futures for Dec 09 is off 0.03% from its all-time high hit on may 21. There is simply NO expectations of tightening of monetary policy anytime soon. This sell-off is likely demanding more from the fiscal authorities for clarity than from the fed
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I realize this. But generally yield curve steepens when the expectations start that IRs are going to be raised, and the dynamics of lead lag can come from either end.

I will admit that yesterday may have had more to do with convexity trading than IR expectations and that it then fed (no pun intended) on itself. I do take pause at what I saw. Let's let more evidence come in.
 
"FV" ~900.

News: GDP, Corporate profits, Chicago PMI, Consumer sentiment.

IRs: nothing

Oil futures appear to be trading on their own dynamics (dollar isn't worth the paper it is printed on fear ?) instead of being on a leash tied to equities. Gold futures inflation trade continues, and is now within a stones throw of the all time high of ~1050. Patience, when the pig gets fat, it will be that much juicier when it gets slaughtered.

"FV" and SPX have nearly converged to where there is no edge to either direction. Even when there was edge, the market did not give much to the short side (as recent "FV" would have indicated there should be), and your risk always felt asymmetric as the rallies were more vicious than the selloffs. On the other hand, if you sold primo you also made hand over fist over the last expiration cycle.

What a great business to be the government these days - the dollar is worthless, IRs are zero, borrow from fools that are willing to lend at almost nothing. The government smartly is in on the "carry trade" on it's own currency/IRs. Good gig if you can get it.
 
"FV" ~910

News: Personal Income outlays, ISM Manufacturing index, Construction spending.

IRs: 3-month and 6-month auctions, several settlements, some announcements.

Oil futures appear unstoppable to $70. Co-integration with equities appears to have weakened (not mathematically, only trading feel wise), but that is only hypotheses, as oil futures traders may be better at predicting equity futures than equity futures traders themselves.

Gold futures not surprisingly continues its march higher with the dollar continuing to tank. Like I said, patience, and honor momentum first.

At the time of this writing, ES is trading enough above 930 so that level of resistance will likely be broken by SPX on the open. This appears mostly due to uncertainty in the car sector coming to a resolution. The real test is 942 ish SPX.
 
"FV" ~ 925.

News: Vehicle sales, ICSC Goldman store sales, Redbook, Pending home sales index.

IRs: 4-week bill and 52-week bill auctions.

Oil futures: Trading with equities again.

Gold futures pausing with oil futures, even though dollar continues to tank.

942 held as EOD resistance. Interestingly, VIX is holding 30. People, smartly imo decided to buy some (relatively cheap) vola against a nearly parabolic higher market. If we go through 942, we move the poles to 950 as next resistance. After that it is 972 resistance. 930 will provide some support to the downside.
 
"FV" ~900.

News: Bernanke speaks today and tomorrow. Factory orders, ISM Non-Manufacturing Index, Petroleum Inventories. Hoenig speaks.

IRs: nothing.

Oil futures had a spike into the close yesterday. Sometimes when I see these sorts of things it leads me to believe that someone leaked the report ala "Trading Places", but this sort of behavior is so common these days that I don't attribute it to anything unusual.

Gold futures selling off with rest of market, and in particularly the dollar is rising for the first time in several days.

I am writing this when SPX is open for a half an hour already. We are trading at minor support, 930. All the S/R levels mentioned in previous posts stand: 872, 878, 930, 942, 950, 972.
 
"FV" ~ 900.

News: Jobless Claims, Productivity and Costs, Bernanke speaks.

IRs: Lots of settlements and announcements, no auctions.

Oil futures want $70. One needs a factor model at this point (we should always be using one, with the weights of the other variables close to zero), as it is no longer as simple as oil follows equities.

Gold Futures are definitely on a dollar leash, with no reason to go anywhere soon.

Yesterday we had another late rally. People want to attribute it to MSFT announcing that Windows 7 is ready for prime time. I really doubt that is what drove the market higher at EOD.

We seem to be hanging around 930 minor support. There is a small fap fill between 920 and 928 that almost filled yesterday but didn't. Good chance we fill it today.

S/R as in previous posts.
 
"FV" ~910

News: Employment, Kohn speaks, Consumer credit.

IRs: nothing

Oil futures, like most other markets, are trading sideways within their own range. Tops are rarely made slowly....

Gold futures in a holding pattern with the dollar at least temporarily put on the breaks from going off the cliff.

S/R as in previous posts. We are trading above 942 resistance pre market, but what matters is the close. I thought we had a good chance to fill the gap around 920 yesterday, but inflows continue to take the market higher. With SPX not that far from "FV", imo there is no real reason to get short agressively, even at resistance. Wait for a red intraday bar.
 
"FV" ~ 900

News: nothing

IRs: 3-Month and 6-Month auctions, 4-week announcement.

Oil futures: They really don't want lower, but they are not so confident in the face of a hard dollar rally and SIFs looking poised to tank.

Gold futures down $40 from last thursday, and probably at least another $100 overvalued.

FFFs now showing 50% and 75% that the fed moves IRs higher by at least a half by September and November of this year. Dollar screaming higher on the news.

S/R as posted numerous times. Look for the gap fill of ~920. Then we reassess.
 
Quote from nitro:


FFFs now showing 50% and 75% that the fed moves IRs higher by at least a half by September and November of this year.
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Smells like total BS. The fed has never raised rates with rising unemployment, well except for Paul Volcker, and what will be the core CPI by year end, 2% at the most
 
Quote from Daal:

Smells like total BS. The fed has never raised rates with rising unemployment, well except for Paul Volcker, and what will be the core CPI by year end, 2% at the most
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I disagree that it is total BS. Oil futures are showing real momentum, and I am telling you $80 oil will send the consumer running for the hills. Choose your poison.

In any event, honor momentum first, and trade what you see. I don't know what your positions are, but I would be anxious of a close below 920 if long. The gap fill intra-day is very odds on, but the close below is not clear.
 
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