Oil beginning to threaten SIFs

It's a new year and the tax selling has been done.

I hear pundits saying the first half of 2008 will be much like the second half of 2007. I don't see it that way.

Remember when 911 occurred, for months if not years thereafter, every time a new terrorist threat occurred, markets would swoon. There came a point when markets simply took it in stride. They became cautious, but they no longer sold off in fear.

I think the financials situation is getting close to becoming saturated as far as their effect on markets go. I think we are close to the point where, for example, C cuts the dividend by some percent, and it rallies on the news.

$100 oil may work _for_ the markets instead of against them. As energy gains in percent of value of SPX, the more higher oil prices will support markets. Strange but true.

1450 SPX is a value area imo, and in the short term markets are oversold. To me, very little has changed. We buy until 1400 SPX gets taken out.

nitro
 
Moment of truth is here. We are a stepping stone from 1400 SPX. Therefore bull investors are in a precarious situation.

That said, look at the volume on ES. While it is heavy, I would not call it panic volume.

My guess is this market closes on it's lows and nose dives towards 1400 because no one wants to be long the weekend into this. Only the most disciplined bulls will buy shares off the paniced hands, right or wrong.

nitro
 
Fasten your seat belts. 1400 SPX will be tested today. The close of the day is all that matters. If we accelerate towards 1375, buy hand over fist, at least for a trade.

If it closes below 1400, all we have left is 1375 SPX for support, and then it is Armageddon.

nitro
 
1400 SPX goes. All that is left is 1375 SPX support.

A strong shift to defense is now warranted, and only trades make sense to the long side. The shorts now have the upper hand. Short term, NQ has been desomated, so we may pop, but there is chart damage now, so beware.

nitro
 
Too bad, the market didn't give me a layup at 1375 SPX. I had size bid ESH8 a handle above it. Not to be :(

This close can put some doubt in bears mind.

nitro
 
This market is now next to impossible to trade on the intra daily time frame imo. There is chart damage, which cautions long, but it seems the FED is now on a dovish tone. So a .50 may be coming in Jan 30, and if 1375 SPX is taken out before then, an emergency rate cut may even happen before the scheduled meeting, so shorting is an extremely dangerous proposition too, at least anywhere near 1375 SPX.

1420 - 1425 SPX is the range we need to break to the upside to give shorts pause. But as I mentioned in a post a bit back, SIFs are now "superconducting", making this market as close to as hard as it has ever been to trade. If you want a precedent, look at early 2003 markets. This is even wilder than that imo, but it is a good time frame to tune your models against.

nitro
 
This action is horrendous for bulls. SPX could not close above 1420, and alll rallies that look like it would start to form a base, were batted down within a day.

A test of 1375 SPX seems imminent. I am going to buy there come hell or high water, but I suspect I am going to lose $ going long.

If a < 1375 SPX close occurs, well, fasten your seatbelts.

nitro
 
This market is now in the emergency room. It narrowly escaped the open, but it is the close that matters.

1 3 7 5 S P X

nitro
 
1 million ES contracts may trade before 9:30 CST. This could be a volume record day.

Edit, the stock CME - $16.xx. Volume is only going to go up in this environment, and futures are the premium hedging instrument (along with options). The very aggressive trader will look at CME and nibble to the long side for a good 1/4 earnings number...

nitro
 
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