US Market View

[Pollux]

Banks, Dow weak; NQ tests 1675

30/11/2005 18:57 / YM-10866 / Sharp final 15min decline on this hourly candle adds more weight to the overall short position. NQ-1675.5 / 1675 remains the key level to watch. The bull is still zealous. Banks would tell a subtly different story today. Jury on this pause/pullback still out and about, for sure.

 

[RUDEBOY]

Hello matey. Well it certainly hasn't fallen off any cliffs up to now. According to my lines it's on support (5 day chart) and the most realistic resistance i can muster up should be hit tomorrow, but the price is being sqeezed (which way will it pop out and for how long?). It's at a point where different psychological factors are pulling peoples brains each way. We've just seen it hit LTR with heavy selling but Christmas is comming and there is always the chance of a retest. I'm leaving my short in for now, i'll see what happens tomorrow. Never say never, Matey.

 

[RUDEBOY]

Hello, Pollux. It didn't just come off support today, it positively twanged, and so did the rest of the majors (took a small loss again on NQ). Anyway, it's created new support, that's the positive.

 

[Pollux]

Caveat Emptor 6 Dec 05

Caveat Emptor 6 Dec 05

Many have been surprised by the duration of this rally. By some measures US equities appear as extended as they have been in many months.

Here's our 17 Oct Note at a time of deep pessimism: "For now, we are saying there is potential in this market, short term, we are very alert for opportunities that can take advantage of any rally & we reiterate our view that an excessively bearish market position should be reviewed critically". At the time we compared sentiment then to the prevailing mood in late April of this year. We're glad to report Mike Murphy's doomsday scenario has not quite unfolded as it might have. But zeal & pre-yuletide joy is now rampant. Is this market the real McCoy...or not. Of course that is the question. In a sense it always is the question, But right now with overbought signs everywhere you look, we really do need to see more evidence that this is more than seasonal. Our bias remains to keep a fair bit of powder dry, although we recognise this may turn out to be too conservative. This feels like more than a performance-anxiety induced Q4 rally, but less than the optimal platform for a further move which would guarantee strategic asset allocation adjustments in favour of stocks and in particular US stocks. The latter dictates our neutral NQ position right now, the former increases our confidence that out there, there is a market that not many asset allocators are really focused on. Best case scenario is we're talking of a market that works higher after a suitable pause, and in turn develops its own sustainable internal fuel, & that in turn mandates change at the asset allocation level. So for now, party on, but.....Caveat Emptor.

“Money managers are unhappy because 70% of them are lagging the S&P 500 and see the end of another quarter approaching. Economists are unhappy because they do not know what to believe: this month’s forecast of a strong economy, or last month’s forecast of a weak economy. Technicians are unhappy because the market refuses to correct, and gets more and more extended. Foreigners are unhappy because due to their underinvested status in the U.S., they have missed the biggest double play (a big currency move plus a big stock market move) in decades. The public is unhappy because they just plain missed out on the party after being scared into cash after the crash. It almost seems ungrateful for so many to be unhappy about a market that has done so well. . . . Unhappy people would prefer the market to correct to allow them to buy and feel happy, which is just the reason for a further rise. Frustrating the majority is the market’s primary goal.”. . . (Robert J. Farrell, Merrill Lynch, September 5, 1989)

 

[Pollux]

Pollux to Rude, over?

Hello, Pollux. It didn't just come off support today, it positively twanged, and so did the rest of the majors (took a small loss again on NQ). Anyway, it's created new support, that's the positive.

Rude

Hi fellow NQ gazer!

Dull isn't it? Never mind, no one said it had to be compelling all the time! Now is this lift off time for SMH ce soir...or not? For the more to go crowd: FDX (crikey!); AMZN (same).....huge move though in 10 year today...that'll come home to roost, maybe soon (what you mean the economy could slow after recent spurt of good numbers etc). Best to you RB, D.

 

[Pollux]

Enfin! NQ 1681 as 1675 looms...

NQ 1680 looks to have finally made its first decent move off of the top. As we write volume builds and the 20SMA QQQQ D is being tested. The real test comes of course at 1675, give or take a few basis points. Our shift from flat to negative yesterday may yield something after all...

From yesterday on my blog:

Caveat Emptor II

A rushed view from the City, having attended a superb half day session at Gavekal's annual strategy event. I will report a few key findings from this day in due course. The market action from a limited look points to a shift in sentiment. Retailers are weak, which is not good in front of this key month. eBay's stock alone tells its own story. NDX looks vulnerable again, as it did a week ago before its most recent sharp bounce.

...& the first Caveat Emptor note from Tuesday...Caveat Emptor 6 Dec 05...

Many have been surprised by the duration of this rally. By some measures US equities appear as extended as they have been in many months.

Here's our 17 Oct Note at a time of deep pessimism: "For now, we are saying there is potential in this market, short term, we are very alert for opportunities that can take advantage of any rally & we reiterate our view that an excessively bearish market position should be reviewed critically"... when we compared sentiment then to the prevailing mood in late April of this year. We're glad to report Mike Murphy's doomsday scenario has not quite unfolded as it might have. But now zeal & pre-yuletide joy is now rampant. Is this market the real McCoy...or not. Of course that is the question. In a sense it always is the question, But right now with overbought signs everywhere you look, we really do need to see more evidence that this is more than seasonal. Our bias remains to keep a fair bit of powder dry, although we recognise this may turn out to be too conservative. This feels like more than a performance-anxiety induced Q4 rally, but less than the optimal platform for a further move which would guarantee strategic asset allocation adjustments in favour of stocks and in particular US stocks. The latter dictates our neutral stance right now, the former increases our confidence that out there, there is a market that not many asset allocators are really focused on. Best case scenario is we're talking of a market that works higher, and in turn develops its own sustainable internal fuel, that mandates change at the asset allocation level. So for now, party on but.....Caveat Emptor.

 

[Pollux]

19:52...NQ 1679 / no decent bounce here would tell us more about the nature of this new 'break'. As mentioned on the blog yesterday, retailers are very weak. Not good in front of the holidays. Also, a ten year yield plunging can't be ignored. We had the CPI/PPI/BlackFriday inspired rally, now the reality confronts the market around the corner. Some retailers do 50-60% of their sales in these few weeks. Not a great business...

Aside from the main show, Gold, a mere sideshow, pumped by Mid East & China profits with few investment options: ie first the $, then Euro, Gold, ...a punt on copper! Talking of macros, Yen should rally hard once technical selling done, and this might correlate with a pause in gold. Scarcity of viable asset classes, $1tr in restless, agnostic performance pools of capital (often termed hedge funds...useless description, frankly), copper & basics may ease a lot in 2006 as China cools....where's all this leading? Bull. Market. US. Not out of the question is it?

 

[strewthmate]

US market update

From Dane Halling (Pollux)

12/12/2005 19:11 / NQ’s snapback of sorts from the 1675 level has been achieved on light volume during market hours, and small volume outside of hours. Today’s peak so far was close to the high from Thursday, made after some sharp swings in sentiment as the market tries to figure out the numerous cross-trends right now.

Very short term we have corrected some of the recent excess, but the fact remains we are barely off the top from the intermediate move which kicked off 13 Oct.

We’ve got a few things going on right now which make us pause to think: first, as we said last week, the retail group has stuttered since 25 Nov. RTH 98.31 topped at precisely 100 which makes near term analysis easier. Underneath current levels there are clear technical levels that will provide graphical clues about likely near term direction. A major –BE D (Bearish Engulfing Daily) tells us you need to see a strong base and breakout above 100 for it to have much credence.

Looking a little further out on the spectrum, a large cluster of psychological data provide for a tough barrier for the market. Not impossible to overcome, especially after this week’s options expiration. Noteworthy is a very big shift in large trader index futures short positions. Some of this can be explained by this market’s persistent move off the extreme bottom when all was gloom and doom in mid October. But it’s unlikely all of this huge position can be explained by this.

DJIA hasn’t had a decent session since 23 Nov, save a short-lived spurt into resistance. Expiration week muddies the waters so we have little option but to sit out and wait for clearer flowing water.

Dane Halling -

 

[Pollux]

Market Note #006 2212051713: From where we sit, SMH 37.50 needs a little more energy on the hourly chart and we may be on for that much-anticipated year end rally. Positives today: BBH 203.97 - an impressive recovery; housing, telco, internets all better. Also the fact that EBAY, QCOM & other major names have not sold off further is good.

Crude is stable which is a net positive. The trouble is as the 2005 hours ebb away any 'rally' will become less and less relevant to more and more participants. And a good thing too. January 3rd or 4th will be with us before we can blink!

Here's the light crude oil chart: http://www.truenorthmarketdiary.com/2005/12/_true_north_mar.html

Market Note #005 2212051400: The super little QQQQ D window we were eying on Tuesday proved the pivot point of sorts for a two day rally attempt. Now the jury 'has returned', so to speak, we would re-focus on the internal action in several key areas: one to highlight is SMH 37.23, which we highlighted intra-day on Tuesday as it fell through the gap to the 37 level. Once there at the 37 level, we picked up on the radar a pretty fine +HVBE Q 2012051500.

(OK...for new readers this is shorthand for a bullish (+), higher volume (HV), bullish engulfing pattern (BE), on the 15min chart (Q for quarter of an hour), at that point in time: 2012051500 UT or GMT or ET-5).

This +BE turned out to be good for a .60 move. We always pay lots of attention to these patterns. We alert them and comment about them in our Skype conferences which we open up on active or interesting days (big mistake thinking every day is an equal day, ie turn up every day mechanically, come what may. The art in successful trading is to know when to turn up, and then take action).

On the SMH move, yes, it's nice to trade some of that we agree: however, much more important is the job of micro-analysing the action at potential pivot points.

So far the market has answered, through SMH and its brethren, that there may still be a rally, but not before some indecision & volatility. Bullish sentiment is still sufficiently high to return, even at this late stage in 2005, to provide one more kicker .

21 Dec 05

No comments

20 Dec 05

EBAY -BE D, although volume did not accelerate and we're quite close to reasonable support.

QCOM 44.28 closed under 50MA but no real volume.

EFA 60.32 closed on a -BE D on modest volume. Worth watching for sure if this sell-off develops.

DHI 36.93 closed on 10m shares and broke a recent window. We took a speculative short intraday on DHI, as housing and sentiment progressively soured.

SMH 37.57 points to a bounce either at the gap or the whole number.eve 191205_ ec 05
M 49.02 / -E D / an early flag but note several similar patterns in the
19 Dec

TXN 33.07 / forget all the other indicators: that's as clear a barrier at 34 as you're likely to see

QCOM 44.95 / 26m share day confirms the reversal / 50MA 44.35 an obvious level

EBAY 45.94 / prints wide range day / good performance versus the weaker NDX tape

AAPL 71.11 / factors to watch are the 20MA, the action near the 02 & 14 Dec hammers & the 01 Dec WRB support zone

IJR 58.81 / holds at foot of 01 Dec WRB (wide range bar) / rally-sceptics will observe the rising downside volume

BBH 200.25 / closed weak on rising volume / 50MA 198.69 key level

XLE 51.07 / year-end profit booking and mixed technicals weighing on the group / 50MA trend has barely moved and is still mildly negative

SMH 38.04 / ignore the -BE D at your peril...'it's triple witching related and volume was low' I hear them say...

 

[Pollux]

Greenspan over & out.

Stepping back from the relentless ebb & flow in short term sentiment, as well as the volatility always seen during reporting season, what do we see? Powerful signs of a cyclical bull market in global markets, that may eventually transform itself into a secular bull market. Remember how we have previously characterised this potential phenomenon: wave upon wave of short term bull phases eventually accumulate into a recognisable secular shift. Once this occurs, assets are inexorably drawn to this movement, as inexorably as the tides across the globe move in predictable waves.

So the key question today is whether this is finally occurring. The evidence is strengthening. But now we are significantly overbought near term. So as we have added to our core long exposure, we are watching for signs of a short term top. Whether this is the vanguard of a sustainable market uptrend or not, we are more than likely close to some form of corrective action. At least, historic precedence, common market sense and one or two signs of speculative excess would tell us so.

In the active side of the portfolio, having traded SMH to the downside with some success, we rather watched from the sidelines last week despite some striking moves in major names such as MSFT, SNDK, AAPL & PD.

Today we reduced our cash further with new small core positions in PowerShares WilderHill Clean Energy (PBW), PowerShares Water Resources (PHO) & PowerShares Value Line Timeliness Select (PIV), and a new trading long in Sandisk (SNDK), bringing cash down further to 19%.

The Greenspan era is all but over. On a personal note, it’s 19 years since I came into this business, just a few months before Greenspan took over at the Fed. If the next few years are as good, on balance, as this era just that is just ending, we should all be pretty happy. Despite the major issues that are out there, there is room for optimism for this next era. Recall 20 years ago, just to mention one major difference, two large countries were pointing tens of thousands of warheads at each other. Puts the Iran thing into some perspective. And contrary to the revisionists who claim they knew all along that the Soviet experiment was bound to fail, hence the risk was never that high, I say wrong.

It’s so easy to be wise a decade or two after the event.

 

[Bid A-Tool]

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[strewthmate]

erm

mods could you delete this. How can he post when he's banned?