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Daily Quant | 2015 | June
buy essay uk

2015 June

Tuesday, June 30, 2015

Posted by | The Daily | No Comments


Greek failure!

As I discussed in the Market Thunder show yesterday, I believe most analysts are missing what the situation in Greece is really about. The situation represents a sovereign failure of a government who can no longer pay its debts. Most Western governments are seeing increasing deficits and inching closer to their own Greece situation as the clock ticks forward. The Greeks have had to take pay cuts, take extreme taxation issues, and attempt to pay bills that could not be paid down.

Finally, the populace decided enough was enough and they elected a government that would go after the creditors rather than the other way around. Greece is likely to default on payments to the IMF which will kick in several other clauses tied to this debt. The capital controls that they have on the banking system are likely to be on much longer than many expect. If you remember back when Cyprus failed, they put capital controls on. These were in place for two years and were just lifted in the last several months.

But I believe most of the fear in the negative sentiment that we saw across the board was due to the realization that what’s going on in Greece is relevant to the US as well as other Western governments.

The governor of Puerto Rico just announced that they are not going to be able to satisfy $72 billion worth of debt. They are asking for Chapter 9 bankruptcy, which they do not have the rights to do at this time, in hopes to restructure their debt. We’ve already seen multiple cities go bankrupt in the United States and it is likely to continue to expand over the next several years. Most of all of the issues including Greece have to do with pensions and unfunded liabilities. Many of these are not possible to ever satisfy and ultimately some sort of haircut or some sort of debt reduction or forgiveness will be necessary.

Yesterday’s action in the market traded down sharply as we saw the market trade down to the 2056.64 level. As I discussed yesterday, the 2055 level is a major support zone. I expect to see the markets rebound from this level. The way the markets have been trading for several months we have one big day of selling followed by a big day of buying and then we see some backfilling before the market attempts to move back in the direction of the spike. This suggests that we should see a 2 to 3 day rally trading back toward the 2075/2079 level basis the S&P 500.

With today being the end of the month plus the end of the quarter, we are likely to see some squaring of the books that did not get done yesterday. I suspect that some of the selling had to do with quarter end window-dressing as much as other influences from the geopolitical news.

The critical level on the downside today is 2052.15. A penetration of this level would suggest that the market would continue down toward 2046/2039. There is currently only a 30% probability for that to occur. If these levels were reached in just one session I would still expect to see the market reverse and close higher as the support at the 2055 level is substantial.

Once we complete a 2 to 3 day rally, we should see a retest of the lows that are established in this pattern and find out whether or not we are seeing a complete breakdown of the intermediate and long term trends.

With still plenty of news to be digested before Thursday’s close, we are likely to continue to see substantial amount of volatility. Should the 2080.90 level be penetrated then we could see the market move back toward the 2091 level before finding a short-term top.

Yesterday’s decline did cause substantial amount of technical damage suggesting that if the market cannot trade above 2069.30 today then we could see an extension of the downward pressure

The market should open higher, with a 60 percent probability to close higher, should the market remain below the 2052.15 level today.  

Today’s Key Levels

  RX 2080.90
  R3 2075.40
  R2 2069.30
Resistance R1 2063.15
Prior Close   2057.64-43.85
Support S1 2052.15
  S2 2046.00
  S3 2039.85
  SX 2034.40



Monday, June 29, 2015

Posted by | The Weekly Brief | No Comments

Market Overview
2014-08-25 YTD

YTD Performance

Grexit? Is this a Bear Stearns moment? Central bankers are losing control!

There are many questions on what’s going on in Greece, but is becoming more clear that Greece is just pointing out the real issue that exist in most Western economies; A massive buildup of debt that can never be paid back! Remember Bear Stearns was the smallest investment bank, but it was obvious that their problems were everyone’s problems which I believe is the case again.

This situation is affecting market sentiment at levels that the central bankers had not expected. Overnight, China intraday was down over 7% again before finishing down 3.18%. What’s amazing about this number is that the central bank lowered interest rates and lowered reserve requirements to backdrop the market. And yet nobody cared. The market was up early and then the selling came down again to push the markets sharply lower.

I have been discussing on the Market Thunder broadcast for several weeks that I believe that market participants will start to take control of the markets.

By this I mean the circus around the Greece situation has pointed out what little control the ECB, IMF and the Greek government really have over the situation. Folks can talk about the size of Greece and that the impact will be minimal if they leave the euro, but in the end it really signals to everyone that governments can fail and do fail.

It appears to me that the big question here is that the market participants are beginning the process of no longer buying into the central banks’ backstop. It is obvious looking at the size of all of the central banks’ balance sheets that they’ve ran out of bullets and can only hope to talk the markets higher or into stability.

The Treasury market closed at 2.47% on Friday at major resistance. Yet, there continues to be a negative bias on the debt markets. While we could see some flight to quality into treasuries today due to what’s going on in Greece overall the trends are pointing towards yields rising to the 2.68/2.82 levels over the next 6 to 10 weeks.

Looking at the US economic situation, there are several reports that will be released this week that will affect the markets. With this being a holiday shortened week we will see the employment situation released on Thursday, July 2nd. Expectations are that 230,000 new jobs will be created and the unemployment rate to drop to 5.4% from 5.5% reported last month.

Today we have Pending Home Sales. Tuesday there is Chicago PMI, Consumer Confidence, and the S&P case-Shiller HPI to be released. Wednesday has the ADP Employment Report with expectations in line with the government reports to be released on Thursday of 220,000 new jobs. There’s also the PMI Manufacturing Index, ISM Manufacturing Index, and Construction Spending to be released.

All of the above activity from an economic release viewpoint combined with news out of Europe and China are likely to keep the markets highly volatile this week.

By the Box

YTD Performance

2014-08-25 StyleBoxes1

Performance Divergence

2014-08-25 StyleBoxes2

SP 500 for the week of 06/22/2015

2014-08-25 PriorWeek

2014-08-25 PriorWeekLevels

Looking back on last week


Monday began on a higher note as the S&P 500 was able to close up by 0.62%. The NASDAQ outperformed finishing up 0.7% as the markets spent the entire session in the green as investor sentiment was positive expecting a Greek agreement. While our markets were rallying, we saw the bund move up to the 0.88% level and US treasuries move up to 2.36%. It appeared that some of the money leaving the treasury market may have been flowing into stocks as nine of the 10 sectors showed gains. Only the utility sector showed a 0.1% loss.


Tuesday opened modestly higher but spent the entire session trading sideways right around unchanged as the S&P was only able to close up 0.06%. Continued optimism around the Greek situation kept the market stable but it came down to a number of economic reports here in the US that really added the stability. These reports were able to push the S&P higher with a four-point gain early in the session only to see it fade to slightly higher by the end of the session. Most of the selling came in the last hour of trading as industrial and consumer staples weighed on the industry.


Market sentiment was affected by the realization that there was not going to be a deal in the Greece restructuring proposal. All the sudden the markets were at square one and we saw selling across the board as the S&P 500 finished down 0.74%. Market sentiment was also affected by activist investor Carl Icahn as he stressed that the market is extremely overheated and pointing to the high yields and bonds in particular. This pushed the market down to the lows of the session and they continue to trade lower into the close.


The market began the session on a slightly higher note but was unable to hold onto the gains as we saw some selling come in midsession to push the market down for the second consecutive decline with the S&P finishing down 0.30%. Further deterioration in the euro group was obvious as the negotiators walked out of a meeting asking the Greek officials to submit a better proposal. The big news for the day was that the Supreme Court ruled and upheld federal subsidies for the affordable care act which boosted all of the major healthcare providers across the board. With all of the potential M&A activity around these names some of them spiked substantially higher on the news.


The markets ended on a mixed note with the Dow Jones up 0.3% and the S&P down 0.03%. The S&P finished lower for the week as it was down 0.39%. The NASDAQ also finished lower on the week by 0.7%. With little surprise, most of the market sentiment (or lack of) was due to the continuing confusion around Greece. The ECB announced that they would continue the ELA assistance to the Greek banking system until an agreement was reached.

As everybody is becoming exhausted from the news out of Greece, market participants were convinced that they would see a deal on Saturday for Greece to make the June 30 payment. This kept some market participants optimistic about the future.

S&P 500 for 06/26/2015


Friday’s action in the markets confirmed a downward reversal on an intermediate basis. On a short-term basis the lower close at 2101.49 suggests that the market will move back down toward the 2094/2086 levels. Based on overnight action the markets could open into this zone early in the session. The question is a will be news coming out of Greece around noon Central European Time which could set the tone for more volatility up or down undetermined at this time.

The 2086/2082 levels continue to be major support as we seen the market trade down to this level with a low around 2079 in the past. We’ve seen sharp rebounds from this level but as I have discussed we get to the lower end of the trading range there becomes a further risk of downside and a penetration of the 2079.55 level will indicate a move toward the 2067/2057 levels.

The overall pattern center unfolding on the intermediate basis continue to point to a structured top in the market being formed. This structure is also evident on the monthly charts. Most of these patterns will take at least another 4 to 6 weeks to form. As we come into the month of July there is a 60% probability that we could see a top formed. This being the case, the downside for the market suggests that there is major support at the 2057.65 level. There is only a 30% probability for it to decline below that level this month. But as long as the market remains below 2120, the probability of risk of a decline below this level will increase substantially as we move into August.

The market should open sharply lower, with a 60 percent probability to close lower, should the market remain below the 2108.90 level today.


This Week’s Key Levels

ER 2145.35
R3 2134.95
R2 2123.40
Resistance R1 2111.85
Prior Close   2101.49 -8.50
Support S1 2091.15
S2 2079.55
S3 2067.95
ES 2057.65

Today’s Key Levels

ER 2116.30
R3 2112.80
R2 2108.90
Resistance R1 2104.95
Prior Close   2101.49 -0.82
Support S1 2098.00
S2 2094.10
S3 2090.20
ES 2086.70

Friday, June 26, 2015

Posted by | The Daily | No Comments


When is a deadline really a deadline?

When we began this week we thought that the Greece deal decision would be over on Thursday. But now Angela Merkel has called a Euro Union meeting on Saturday stating that they must make a decision at that time. Then another deadline on Sunday to meet directly with the Greek government is also scheduled.

Meanwhile, the Greeks continue to claim they are doing everything to try to answer the creditors’ bizarre requests but continue to throw out harsh rhetoric back at the creditors. There appears that there will be no deal this weekend or by Tuesday. There is a several billion dollar payment due so it looks like there is a high probability for a potential default.

While European markets are lower at the beginning of the session, we saw an absolute collapse in China as their markets were down over 7%. Typically in the past these big declines have affected market sentiment, but all eyes appear to be on the European situation.

The only news out today is Consumer Sentiment which is expected to be unchanged. So, there will be very little to affect any sort of sentiment change here in the US based upon fundamentals.

From a market action viewpoint, yesterday’s decline has set the tone for a test of the key 2100 level. Should this level be penetrated, then we are likely to see a decline toward the 2095/2089 levels. It will be interesting to see if market participants take on protection over this weekend due to the Greece situation. This certainly could accelerate downside action.

Market participants have to be wondering how many times we can get above the 2121 level and not trigger a more meaningful event to the upside. This certainly has been one of the more frustrating markets to be involved with this year. Finding value or places to make money have been difficult as the rotation in the market has been very narrow.

The key level on the upside today is 2121. A close above that level would indicate further strength next week. There currently is only a 30% probability for that to occur. On the downside, a close below 2100 will signal a move down toward the 2089/2081 levels early next week.

The market should open flat to higher, with a 60 percent probability to close higher, should the market remain below the 2108.80 level today.  

Today’s Key Levels

  RX 2115.30
  R3 2112.25
  R2 2108.80
Resistance R1 2105.40
Prior Close   2102.31-6.27
Support S1 2099.25
  S2 2095.80
  S3 2092.40
  SX 2089.25



Thursday, June 25, 2015

Posted by | The Daily | No Comments


Is Greece getting ready to sing “So Long, Farewell”?

To call the current negotiations between Greece and its creditors negotiating would be an oxymoron. The Greek Prime Minister is using language which would be inappropriate during the negotiation. Using terms like blackmail and other scandalous words toward the IMF doesn’t appear to be the way that you come up with an agreement.

Most market participants and Europe believe there will be a deal.  Maybe a deal that nobody likes is the best deal… The general belief is that any deal is better than no deal. In the end it will be another extend and pretend at best, but will that be enough to convince market participants to move forward.

The Greek banking system has been completely demolished with the ECB continuing their ELA funding adding liquidity into the system. But it appears that massive amount of capital has been removed from the banking system. It is believed that it may not come back regardless of a deal. This event in itself could cause extreme damage to the financial system in Greece and therefore the economy. The Greek populace is continuing to use international sources for banking rather than their own banking system. Cash controls and other extreme elements like we saw in Cyprus is the fear of most.

While many would argue that the activity in Greece has little to do with the US, it is obvious with yesterday’s action that some of the risk assets were sold on that basis. But the market moving down below the 2111 level, yesterday does suggest the potential for further weakness. We will need to continue lower today and close below the 2101.60 level to confirm that a minor top is in place.

Current activity overnight suggests that the markets are going to open higher. If they can hold onto the gains, it suggests there is only about a 30% probability for us to close below the 2101.60 level today.

While just two sessions ago the markets appeared to be in position to move through the highs, yesterday’s action has taken all upside momentum away on a short-term basis. This suggests further sidewise trading with the potential of the downside toward the 2097.90/2094.60 levels over the next two sessions.

However, a close back above 2119.30 would set us right back into position for the market to rally and move higher in the pattern. As we have seen over the last several months, the market has been unable to sustain itself over the 2121 level. We spent two days above this level and then we find the market back below it. As I have discussed before, it appears that this pattern will need much more then news out of Europe, which really does have little to do with our financial system, to move the markets out of this range.

While intermediate and longer-term charts continue do point to us slight upward bias, the market is continuing to structure a major top at these levels. While this being the case, there is still a probability for the market to move into the 2160 level before rendering an ultimate high. The market should open higher, with a 60 percent probability to close higher, should the market remain below the 2119.30 level today.

Today’s Key Levels

  RX 2122.60
  R3 2119.30
  R2 2115.60
Resistance R1 2111.90
Prior Close   2108.58 -15.62
Support S1 2105.30
  S2 2101.60
  S3 2097.90
  SX 2094.60



Wednesday, June 24, 2015

Posted by | The Daily | No Comments


Greek drama continues… deal/no deal

As market participants continue to anticipate a deal, it is becoming more and more evident that there is some serious risk to a failure to arrive at approval in the Greek Parliament. I have heard reports that everybody on both sides hates a deal. They are just trying to throw something together.

Several parties within the Greek community have shown substantial opposition and are pushing back hard. Angela Merkel has given Greece until Monday to get approval by their parliament once the final details are hammered out. The overall view of the deal from the parliamentary viewpoint is very uncertain.

So what happens if there is no deal?

Markets have pumped in roughly a 4.5% gain since Monday’s opening in Europe. The best expectation is that you could see all of that come out along with another 1% to 2%. For our markets, it would most likely mean that we would fall back into the trading range retesting the 2080 level again.

But market participants in the US will be focused on US economic news today with the final revision of first quarter GDP to be released and expected to be revised upward to -.02 from -.07%. This revision is not expected to have a material effect on market sentiment.

From a technical viewpoint, the market is continuing to struggle just around the 2121 level, even though we managed close higher yesterday at 2124.20. It is critical that the market gets above 2127.20 on a closing basis today. This would set the tone for a retest of the historical highs at 2136. Should this occur then the minimal expected range on the upside is 2131/2141.

The problem with the current configuration in the markets is that it is not generating substantial upside movements. There currently is no higher expectations on any of the intermediate or longer-term charts above 2164. So even if the market is able to break above these levels, it does not appear that there’s a lot of room to the upside to run.

On the downside, the critical level is 2111.60. Penetration of this level will indicate a minor pattern failure suggesting a decline back toward the 2100/2097 levels.

The critical level on the downside is 2108.90. A penetration would suggest a move back to test the 2100 even level and the possibilities of trading back into the 2096.50 zones. Currently there is only a 30% probability for that to occur

The market should open flat to lower, with a 60 percent probability to close higher, should the market remain above the 2111.60 level today.  

Today’s Key Levels

  RX 2136.80
  R3 2133.80
  R2 2130.50
Resistance R1 2127.20
Prior Close   2124.20 +1.35
Support S1 2121.20
  S2 2117.90
  S3 2114.60
  SX 2111.60



Tuesday, June 23, 2015

Posted by | The Daily | No Comments


European Markets continued to trade higher in spite of no deal…

Market participants continue to have a positive attitude toward a deal in Greece. But recent reports suggest there may be a further gap than the market action would lead you to believe. There continues to be some risk of failure in the patterns from a technical standpoint when looking at Europe. While economic reports recently coming out of Europe suggest an improvement, it appears that all of the focus in Europe is on Greece, the smallest component exposing the markets to risk of individual European countries, losing focus of the bigger picture.

Yesterday’s action saw the market trade back above the 2121 level closing at 2122.85. The configuration that is currently set up has a much stronger potential for the market to move through the old highs at 2135. However, as we approach the highs the VIX is trading at 12.74 which is at the lower end of the range it has been in. This suggests that even if we do break out of the pattern that the follow through could be limited.

The current Fibonacci expectations from the pattern viewpoints suggest a target of 2131/2141. There are no objectives above that level so this also suggests that a rally will be muted and limited at best. There is a fair amount of economic information due out today with Durable Goods, PMI Manufacturing, New Home Sales, and the FHFA House Price Index which could trigger further buying based on economic considerations. Should we get enough positive news out of these reports today, it could set the tone for moving up into the 2131/2141 levels.

The critical level on the downside is 2108.90. A penetration would suggest a move back to test the 2100 level and the possibilities of trading back into the 2096.50 zones. Currently, there is only a 30% probability for that to occur.

The market should open higher, with a 60 percent probability to close higher, should the market remain above the 2108.90 level today.  

Today’s Key Levels

  RX 2141.10
  R3 2136.80
  R2 2131.95
Resistance R1 2127.15
Prior Close   2122.85 +12.86
Support S1 2118.55
  S2 2113.75
  S3 2108.90
  SX 2104.60



Monday, June 22, 2015

Posted by | The Weekly Brief | No Comments

Market Overview
2014-08-25 YTD

YTD Performance

Greek deal in the 11th hour really?

Is it any surprise at all that the Greeks offered a new deal in the 11th hour? This was after spending time in Russia to scare the European Community into giving them yet more money they can’t pay back. Watching the scenario in Europe continues to be like a Monty Python show. Somebody twists and turns and things don’t make sense. In the end we seen huge cracks in the entire Eurodollar project.

For Greece it’s just another extend and pretend event as the European Union capitulates to hang onto their weakest component. The European ego is at stake. It looks like they’re willing to do anything to save face. In response European markets are up between 2 ¼ to 3% at the beginning of trade. There is a meeting that should occur around the time that the US markets open but no results are expected until later in the evening in Europe. In the end most likely it will come out as everyone expected. There will be some sort a deal that will keep everything going forward and we’ll revisit this down the road only next time it’ll even be worse.

Looking to this week in US markets we have a fair amount of information and reports coming out with Existing Home Sales on Monday. On Tuesday there is Durable Goods, PMI Manufacturing, and New Home Sales. On Wednesday there will be the GDP revision with expectations for an upward revision for Q1. Thursday has Jobless Claims, and PMI Services. Friday’s Consumer Sentiment will complete the week.

One of the key areas to continue to watch will be the treasury market. It appears that it will remain in a volatile mode as these deals in Europe are likely to send shockwaves, positive and negative, through the debt markets. We will see a potential shift in capital in both Europe as well in the US. It probably won’t be until Tuesday and possibly Wednesday until we see the real details of a deal if it happens.

If a deal in Greece somehow fails this would set the tone for some panic selling in Europe that would likely flow over to our market. Expect plenty of volatility but I would put a 60% probability that there will be a deal today.

By the Box

YTD Performance

2014-08-25 StyleBoxes1

Performance Divergence

2014-08-25 StyleBoxes2

SP 500 for the week of 06/15/2015

2014-08-25 PriorWeek

2014-08-25 PriorWeekLevels

Looking back on last week


The market opened lower in reaction to events concerning Greece and European market risk that was affecting sentiment early in the session. The market was able to recover about half of the downside with the S&P 500 finishing lower by 0.46%. The lack of progress on a Greek deal kept the markets guessing throughout the session.


Markets opened slightly higher and continued to trade with a positive tone throughout the session as the S&P was able to add 0.57% on the session. This abeyance was after the market had tested the support at the 2072 level on Monday. The market moved higher throughout the session and finished back above the 10 week moving average. There was progress between the European ministers and the Greek government which kept sentiment positive. All 10 sectors finished higher on the session with consumer staples leading the way up 1.1%.


The market was able to open higher but drifted lower midsession as apprehension set in prior to the FOMC meeting minutes release. Markets were able to rally after the release of the Fed minutes as well as the conference call by Janet Yellen. This pushed the market higher into the close with the S&P finishing up slightly, showing a 0.20% advance. Very little came out of the Fed meeting as they continue to keep interest rates at the same level and the forward-looking guidance remain unchanged as well. Janet Yellen talked for an hour attempting to convince the markets that tomorrow would be yet another free beer day.


The market started on a stronger note and rallied sharply into midsession before stabilizing to close up 0.99% basis the S&P. The NASDAQ was leading the way as it was able to set a new intraday record high at 5143.32. Many market participants believe that the CPI report was not as hot as expected as it showed only a 0.4% versus expectations of 0.5%. This seemed to be enough to cause continued short covering which helped the markets to finish higher across the board.


Friday’s action showed once again that there was very little interest by market participants to own the market above the 2121 level based on the S&P 500. Most of the selling was due to the uncertainty related to Greece as the market was able to finish lower by 0.54% but higher on the week by 0.75%. While the week ended up in a positive tone most of the action was recovering from the previous week’s declines. All 10 sectors ended the day in negative territory as we saw across the board selling.

S&P 500 for 06/19/2015


Friday’s action displayed more of the same as we traded up to the 2121 level to see the market back off the level to trade and close at 2109.99. While this action appeared to set the tone for lower prices into today’s activity a reversal of that has occurred as we are seeing the potential for a sharply higher opening due to the activity around Greece. The configuration suggests that if we can close back above 2121.45 then we will see a move toward the 2131/2142 levels that I have been discussing for the past several days. Should we get a close above the 2135.75 level, then it’s likely we could see the markets move toward the minimum objectives of 2154/2169.

Several times in the past we have gotten up to this higher level and watched the market trade back toward the bottom end of the trading range at 2080. It’s possible that a deal in Greece will set the tone for the markets to move higher. I’m not sure other than fear of economic collapse that there is enough to push the market over the hump. But with this week’s economic news there is some possibility that there will be a glimpse of economic activity that might trigger the market to move higher.

The real feature in this market from an intermediate viewpoint is just the lack of any momentum to push the market either way. We continue to trade in this flat line with the S&P tagging behind the NASDAQ and the small-cap indices. The long-term monthly graph continues to show an adequate momentum that could carry the market into new highs. The projections on the upside remain somewhat muted with the lack of momentum being generated from the intermediate and short term charts.

The critical level on the downside today is 2100.80. Penetration of this level would suggest that the market will decline back toward the 2095/2091 level. There currently is only a 30% probability for this to occur.

The market should open higher, with a 60 percent probability to close higher, should the market remain above the 2100.80 level today.


This Week’s Key Levels

ER 2154.40
R3 2143.95
R2 2132.20
Resistance R1 2120.50
Prior Close   2109.99 +15.88
Support S1 2099.50
S2 2087.75
S3 2076.05
ES 2065.55

Today’s Key Levels

ER 2128.40
R3 2124.05
R2 2119.20
Resistance R1 2114.35
Prior Close   2109.99 -11.25
Support S1 2105.65
S2 2100.80
S3 2095.90
ES 2091.60

Friday, June 19, 2015

Posted by | The Daily | No Comments


Mystery buyer from Belgium again?

Yesterday’s rally was a typical buying stampede. It appeared to have a similar characteristic to what we’ve seen in the past where there’s just steady buying all day. The last time we saw such activity there was rumors of a mystery buyer out of Belgium.  So is there a proxy for the Federal Reserve out there to make sure that they perpetuate their asset bubble further?

I’ve continued to think about Wednesday’s conference call with Janet Yellen, with her semi-coherent jabbering, purporting that 0% interest rates accommodate economic recovery even if it fuels financial speculation. She went into a rant about how their policies virtually affected everything on Main Street. Even down to the part-time hot dog dealer on the street and the rate at which ambitious jobseekers elected to part their current employers for greener pastures. Really?  It’s clear that she actually believes what she is saying.

With her arrogant Keynesian ideology, she appeared to be claiming that the Fed can manage right down to the microscopic details of an $18 trillion economy. As I flashback it’s just amazing to me what the current class of academic engineers think. They think they can run everything from the economy to social environment. And they are representative through the central banks as well as the political hierarchy of the Western world.

The reason why I discuss this is that I think these are the signs of the final highs in the markets. While I continue to believe that the market could run to new highs, it appears that this type of rhetoric and cash flow around it appears to be approaching a complete lunacy stage. The Fed has taken the mandate from Humphrey Hawkins way to serious and now believes that it can micromanage just about everything.

Several months ago on the Market Thunder show, I remember discussing that maybe the NASDAQ had to make a new high before a market top could be signaled. We’ve now achieved this and the cross over pattern on the monthly S&P chart that’s been unfolding for several months is now about 2 months from completing the pattern as it looks very similar to September 2007.

While my expectations are that this secular bull market in stocks will end over the next several months, for now it still lives. Yesterday’s action and close over 2121 suggests once again that we can rally toward a minimum objective of 2156 with extreme objectives now of 2170/2179. It will still take a close over 2135 to confirm these objectives.

On the downside today, the critical level is 2111.50. Penetration of this level would suggest a retest of the 2101.80 level. There is only a 30% probability for this to occur.

Two times before the market has managed close over the 2121 level on a weekly basis and failed. So a close over this level today will raise the probabilities for higher prices as they have once again signaled a retest of the historical highs and most likely a move toward the objectives listed above.

The market should open flat to higher, with a 60 percent probability to close higher, should the market remain above the 2111.50 level today.  

Today’s Key Levels

  RX 2140.7
  R3 2136.1
  R2 2130.95
Resistance R1 2125.85
Prior Close   2121.24 +20.80
Support S1 2116.65
  S2 2111.5
  S3 2106.4
  SX 2101.8



Thursday, June 18, 2015

Posted by | The Daily | No Comments


Is the Federal Reserve still relevant?

After watching Janet Yellen’s press conference yesterday I am not sure they are. It just left me wondering “What is it that the Fed is doing?” We know their continuing to reinvest all of the pay down’s with the mortgages and treasury interest earned off their 4.5 trillion dollar portfolio which represents about 20 billion a month.

The Fed is doing the same thing the rest of us are doing; watching the economy. It was brought up several times during the conference call that they want to normalize yields. It was interesting to me that no one asked her what the Federal Reserve believe normal yields are. Does that mean that the Fed funds would be 1%, 2% to 2.5% and long-term rates would be in a typical 3 to 3 ½% spread above that?

It is amazing to me that nearly 7 years after the crisis the Fed is still referencing issues from 2008. One has to ask did they really think that those issues could be solved by expanding debt? Is it just me or does this all seem a little bit crazy. It also continues to boggle my mind that they do not want to be audited. They are there one of the largest financial institutions in the world and no one can get in to see what’s on the books… a little scary if you ask me.

I continued to expect that the credit markets will take on a life of their own over the next 2 to 3 months. We are likely to continue to see rates rise gradually until we get above the 3% level when at that time I believe we will see an acceleration. This will ultimately force the hands of the Fed.

Discussions about the US dollar were also interesting as it’s almost the taboo subject to talk about. The notion that the dollar would move into its next leg of its bull market were downplayed with expectations of stabilization.

I believe the dollar is in a secular bull market and is currently consolidating the gains of the last year and a half and it will start moving higher sometime in the next 2 to 3 months as the treasury market continues to see an increase in yields. As I have discussed on the Market Thunder show many times, it appears that the treasury markets and the US dollar are going to move together to the upside while the stock market begins the process of forming a secular high.

While many of the trends that are out there have been in place since 2009, we are starting to get at a point where the business cycle is long in the tooth. Economic expectations are likely to be overstated in forward-looking statements by economists, corporations and the Fed. It always seems to me that when markets start to trade in the historic values as well as economic output and job creation hit levels we’ve not seen for years that it’s just expected to continue. Very seldom is this the case. This sets the tone for yet another big surprise decline.

So what does all this mean for the stock market? In the short term, more of the same with market remaining between the 2121 and the 2081 levels. There continues to be no new fundamentals that are likely to drive the markets in either direction at this time.

As I have discussed in the past, I think you’re going to see the action in the treasury market tell you more about what’s going to unfold than what you’re going to find in the stock market at this time. The treasuries are expected to remain in a range between 2.24% and 2.44%. Once they move above the 2.44 level on a closing basis then we should see a move higher to the 2.85% to 3% levels over the next 2 to 3 quarters.

It is my general belief that we are setting up the final stage in the stock market that is likely to continue to consolidate for at least 2 more months before will see the beginnings of a substantial decline that will last between 12 to 18 months into the election in 2016.

The patterns in the S&P 500 suggest that the market will need to get above the 2115 level to signal a retest of the pivot number at 2121. At this stage there is the potential to go to the upward objectives toward the 2031/2041 which would represent a retest of the historical highs. There is currently only a 40% probability for this to occur.

The market should open flat to higher, with a 60 percent probability to close lower, should the market remain above the 2109.10 level today.  


Today’s Key Levels

  RX 2117.80
  R3 2113.75
  R2 2101.10
Resistance R1 2104.55
Prior Close   2100.44 +4.15
Support S1 2096.35
  S2 2091.75
  S3 2087.20
  SX 2083.10



Tuesday, June 16, 2015

Posted by | The Daily | No Comments


Fed meeting begins but does anyone care…

Yesterday’s action saw a sharp decline as it traded down to last week’s low at the 2072 level. Ultimately, the market rebounded to close lower on the session at 2084.43. The action yesterday was based upon continuing rhetoric out of Greece. They are not interested in conceding to any sort of deal. It would appear that the Greek government is trying to create enough turmoil so that they can negotiate and potentially set the tone for an agreement or at least a pretend and extend kind of deal.

While the FOMC meeting will be going on for the next 2 days all eyes will be focused on Thursday’s meeting in Europe with Greece. At the end of the day, my expectation is that the markets will continue to see further downside pressure for at least 2 more sessions but then rebound back toward the 2100 levels.

The configuration suggests that we could trade down as low as 2062/2048 on the S&P 500. There is only a 20% probability that the market will decline below that level at this time. The short-term pivot number is at the 2081.40 level. A close below that level today will set the tone for a move down toward the 2062/2048 levels over the next 3 to 5 sessions.

On the upside, the critical level is 2100. A close above this level would suggest that we could trade back to the resistance between 2111/2121. There currently is only a 30% probability to close above this level at this time. A new trading zone is likely to set up between the 2062/2105 levels for the next several weeks.

Should this pattern unfold, one of the effects will be to cause further deterioration of the momentum on the intermediate basis. Consequently, it will set the tone for further declines more likely into July and August.

As I’ve mentioned many times over the last several weeks, I do not believe that the Fed will have much to do with market activity at this time, in spite of whatever they come out with on their monthly meeting.

The market should open lower, with a 60 percent probability to close lower, should the market remain below the 2087.90 level today.


Today’s Key Levels

  RX 2099.00
  R3 2095.60
  R2 2091.70
Resistance R1 2087.90
Prior Close   2084.43 -9.68
Support S1 2080.95
  S2 2077.15
  S3 2073.30
  SX 2069.85



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