Oil beginning to threaten SIFs

Quote from Daal:

What do you base this on?Meredith w has a good point when she says that banks buy things at the top rather than the bottom because on the bottom they are usually capitally constrained. UBS has big problems on their own to go out and bid for 30-1 firms
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That may be the way things are generally done, but there are two glaring differences here than in the past:

1) The EUR/$ makes this deal extremely lucrative to a foreign firm.

2) UBS doesn't think along the same lines as US banks. I wouldn't be surprised if a consortium of Euro-banks bought MER at teenager prices. e.g.,:

http://www.fortis.com/general/fortis_and_abn_amro.asp

nitro
 
Quote from nitro:

This is not a prediction, more of a warning.

Pull up a chart of the week prior to 1987 crash in the stock market [make sure you don't have data past the Friday prior to the crash day so that the chart looks correctly scaled]. Pull up a chart of oil and compare price action this last week in QM to the week leading to Black Monday in 1987 in the stock market.

Beware.

nitro
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$120.00 is the last train for QM. It is in grave danger of going to $110, or even $100.

SIFs rallying, as they should, on massive continued QM weakness. It is taking in stride the MER news. That may be a mistake.

nitro
 
Warning signs. NQ is showing signs of exhaustion.

I would be careful if long SIFs here.

Mild resistance 1292 SPX.

nitro
 
Quote from nitro:

Warning signs. NQ is showing signs of exhaustion.

I would be careful if long SIFs here.

Mild resistance 1292 SPX.

nitro
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Caution still warranged, even more so now. There is tons of support QM 120, and SIFs are finding that out. If that goes, SPX may rally to 1292 first, then we see.

nitro
 
The action this week is strong, with the weak signals, like today, even those are mixed.

However, here is why investors anyway, have to proceed with caution. You always have to mind your seasonality when trading/investing. This is EOM, which means lots of money is being put into play by institutions that essentially have no choice but to buy. Therefore, any conclusions we draw from these few days must be normalized for typical action during this time of month.

Conclusion: If this were some random time mid month, we would weigh the action far more strongly. Therefore, as investors, we continue our discipline of _only_ nibbling at good prices of good companies.

nitro
 
Juicy spread forming ES/NQ. But not so fast!

Notice QM -3.40. That is problematical for this trade. NQ will and should rise on lower expectations of the FED having to raise IRs, and QM down big helps that stand huge. NQ correlation to the subprime mess is only indirect through the financials, as many of these banks are huge clients of 90% of the companies in the NDX.

Therefore, aggressive traders will start to put this spread on, but I would not do it with size this time around, unless QM approaches 120, and holds again.

The really sophisticated traders will put on a spread between all three, but that is beyond this forum.

nitro
 
The weakness in the market with QM -$1 is glaring.

This is a time to be cautious imo if you are an investor. Follow the discipline of nibbling only.

The markets are sending a message today. The FED meetings from here on in until late '08/early '09 will probably be seen as a source of stress. The price action tomorrow before the FED announcement should be weighed even more heavily than the action today.

Imo the FED stands pat on continued weakness in the financial sectors, and says they are worried about inflation. Bernanke hopes there are two or hopefully three dissenters again. That has (some of) the effect of raising interest rates without actually having to raise them. Bernanke loves his dissenters, as long as they don't become a majority.

Imo even more important in the short term is what happens to QM, and how the market reacts if QM breaks $120 to the downside. We may be surprised.

nitro
 
QM breaks $120 level _intraday_.

I don't want to be the spoiler of parties, but it is a _close_ below 120 that makes the this break critical. That said, QM is in grave danger of going to 110 now.

nitro
 
FED action and statement word for word expected. Only one dissenter. Pretty dovish imo.

1292 SPX resistance, but it is minor. SIFs will pause there and pullback, and then may rip if we get in the vicinity. The close will be telling. Also, tomorrow and Thursday has a refunding, so that will be watched very closely. QM benign so far, in spite of a dovish FED.

If you are an investor, keep same discpline as before. Nibble and don't get carried away.

nitro
 
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