Key reversal

i dont have stats but a guess would be that(end of month window dressing) works about 9 1/2 out of 12 months

 

Thanks ammo. Pretty lackluster morning.

Nice charts.

 

% wise you are right but than you need to breakdown what they do in a bull market and bear market because bull markets are a bigger % of the time. i would talk about low volume but its been low volume for years haha i remember the sell on the earnings but last few quarters seem to be buy the earnings report. its a really weird market. we are playing the same game too we played at higher levels now with big down than come backs than down again.

 

The "reversal" is basically over and anything past this point is a new trade. SPX tried to test support around 1550 and rebounded. TSX dropped 8% mostly on weakness in mining stocks, but has rebounded 3% of that. Technology took a hit today that is worth monitoring. Significant buying on quality mining companies late in the week.

My feeling, anyone forecasting any economic turmoil would be better off investigating the crushed mining stocks in Canada then trying to short the SPX long term. Look for quality companies that won't be awash in red ink if Gold/Silver keeps dropping, ones that can shutter their worst mines and still be fine. Longer term the quality miners in Canada seem to respect certain price ranges, with the odd exception like Kinross that made bad business decisions.

 

Yeah the red ink is gonna leave a few bargains in the miners at some point.

The trading in SPUS today brought us back to neutral. Next week we could go either way and if it wasn't a holiday week a straddle would be a decent play again although the volatility probably wouldn't match the FOMC so it's easier just to swing and daytrade. Today was a low volume, low volatility affair.

 

Out of control ?

By printing money
it is hoped to:
–Replenish bank reserves
–Hold interest rates low,
to moderate interest payments on treasury loans,
and to encourage home purchases
–Raise the stock market.

By keeping rates low
and paying interest on bank reserves
the banks have been successfully induced
to withold commercial loans
thereby holding the economy in check
and so, in spite of printing,
holding money velocity low
and so, keeping some pressure on inflation.

http://britefire.wordpress.com/2013/06/30/out-of-control/velocity-2013/

But,

Jun 27, 2013
"the Treasury sold $35 billion in five-year notes
to the lowest demand since September 2009,
with a bid-to-cover ratio of 2.45 times."

"The April TIC report showed
a shocking drop in foreign ownership of US government debt."

"the selloff [in the bond market]
has now reached the status of the worst ever bond market selloff
(of 90 days or less)
in percentage terms.

"Since May 2nd 2013,
10-year yields have risen from 1.626% to 2.609%,
a 98.3bp selloff
which means that yields have risen 60.5%
in less than two months"

http://britefire.wordpress.com/2013/06/30/out-of-control/10-year-yield/

Considering:

--"There are more than $12 trillion paper dollar assets
(stocks, bonds and cash)
held by foreigners outside the U.S."

if this is the start of 'recognition'
rates will substantially rise

also, as

--"the global derivatives
have increased in size from $100 trillion in 1998,
to $1.2 quadrillion today."
and the majority of those derivatives are interest rate swaps
and that the banks have sold the fixd rate,
and hold the variable rate

the effect of rate rise, on the banks,
on which the world economy relies,
will be catastrophic,

and the expense to the treasury
will be far greater than tax income will cover.

Except for a miracle
this implies immanent western world
deflation on bank collapse
or hyperinflation on attempts to print
to cover bank or treasury payments
or simultaneously, both.

 

I agree, but when is the question.

 

Marc Faber said something like:
"You hold your dollars
and I'll hold my gold
and we will see whose asset goes to zero first"

But, he didnt say when.

I would say
when foreign dumping of treasuries
becomes the vogue.

 

I do not believe we'll collapse this year, so on to next week.

Neutral close friday makes the markets subject to be news driven.

Severe short covering in the metals portend a possibly positive market into 4th of July weekend

 

Boy I usually don't spend so much time studying the markets but all I can say is at present the SP500 is confusing.

I do know this: Metals will rally for the week and that metals and equities have been negatively correlated for a while now.

We end up for the year with a bad Sept. In between a lot of sideways choopy action with some downdrafts.

Next week I expect to be choppy in equities with a probable downward bias.