Feeling better

I finally got back into the saddle again today and made some $. I needed to take a break because I was not in sync with the markets.

I've mistrusted the rally and not done well the last month and a half. I killed in february march, but when we went back into up everyday I couldn't adjust. Today I showed good discpline and shorted when we broke down in the morning. Covered when MD selling dried up around at 1503 on the first trip.

I ugraded to the odds maker and will now look to fade the ranges

M&A continues

M&A news continues to power the markets higher. Today the NY post reports that MSFT might be a buyer for YHOO. Interesting because YHOO has a market cap of 50 billion which makes it a sizeable deal.

The interest rate environment remains very helpful. Clearly the ROW is still adding to US reserves at a substantial pace.

I expect the markets to trade down at somepoint today. Jason says gaps on NFP havent been great buys. I am relctant to hop on until I start to see someone offload 30,000 minis in under 10 minutes.

Trade has been confined to the value areas for the most part. Trade ideas isnt as lively as it has been in days past.

Other interesting stories is HOV which is still having huge problems in housing. The amazing thing about housing is how bad it is even though liquidity couldnt possibly be better.

Downside follow through

News of the day is Rupert Murdochs bid for dow jones. Blah. The PE train moves on and seems to be picking up speed. Money is everywhere.

Markets are mixed. The small caps have had decent follow through, but ar catching a bid the tick is hitting a thousand multiple times and its not going into the sp.

I guess two days is all the dip buyers can handle. Nevertheless, the most bullish faze of this rally is over. Housing is still a total joke.

Freaky Friday

What is going on out in the world?

Macro Man notes the silent crash in the dollar as the Euro hits a new all time high against the dollar. However, it is like pulling teeth to have any kind of volatile reaction.

Overnight markets were a sea of red. Asia was down big and EM's are stumbling. A little discussed story was spanish property stocks took a nosedive earlier in the week. It does beg the question is the global real eastate boom finally cooling?

Over the last month markets have seemed to go back to there methodical ways. Yen down, carry trade on. Buy aussie, kiwi dollars. A couple of things to note. Australia's dollar got hit hard earlier in the week on a slower cpi report. There may be some evidence that the global economy is cooling. Anecdotally, Chicago is still building condo's, but I think there are any new projects coming online. Just finishing existing that started a couple of months ago. Which happened to be the top.

Other signs of possible top forming include. Small caps starting to underperform bigs and the mo trade has returned. So who really knows, maybe we head higher in mo phase for a couple of more months.

These are the charts from this morning.

The nasdaq 100 seems to be holding above yesterdays lows which is giving the rest of the market some support. The dow also got some buying around 930.

Attempting to fill the gap after earnings. Squeeze squeeze squeeze.

Huge Squeeze

A massive short squeeze has developed in the US markets. Because there are so many hf's who use shorting as part of there strategy it creates massive squeezes. Check out amazon or SBCF which I was short and took a beating. Its hard to fight the endless amounts of money. The data comes out bad, but when the crowd gets too bearish everyone gets pummeled.

COF has regained a lot of ground that it lost. Interest rates are still too low.

Overnight

news. TXN reported decent news. I guess any good news is good for tech. On the geopolitical front, 9 US soldiers died in Iraq which will only embolden the dems to call for an early pullout.
I could be totally wrong, but I do think global stability becomes increasingly suspect. The US is t the glue that is holding together the current world order.

I suspect range bound trading. A lot of people think this is the final push before summer gets here. I agree. The mo tape will gets tougher and riskier as it gets longer in the tooth.

COF and a lot of the banks do not act well. The mortagage problems are very real and not going away. There are some regional banks that I suspect are going to blowup after the close.

The week has ended

I just went to yahoo to look at a chart of the SMH so I can see where it ended up, but instead of typing in SMH I typed in semi. This is the chart that came up!! ouch. Wish I was short that one.

Anway, the themes of the week are a weak dollar and very strong global equity markets. I get the feeling the US is more or less piggy backing on the ROW momentum. The DOW was the real winnter in the US markets. Small and midcaps are starting to lag. Could this be the begining of the small big cap leadership change? Call me skeptical.

The continued dollar slide does not seem to be of any concern to anyone.

Brad Sester at www.rgemonitor.com has noted that over the last couple of months the US CA deficit is being financed by the official sector. Read- Asia CB's, EM CB's, oil exporters. A lot of the private sector money is being funneled out of the US and into EM's because the the returns are better and who wants treasuries at 4.7 percent when inflation is running close to 3.5 percent a year!!!

Its all about keeping a global "system" in place, that at the moment is still keeping all the actors happy. However, the dems are turning up there rhetoric against China.

Is there a point when CB's realize that they are the only ones involved with US debt and start to head for the exits before everyone else? Who knows? The dollar could fall to 65 before the finally start to crack. I don't think China has a clue what its doing or how it is growing its economy. Communism and capitalism are two very different animals.

Bonds continue to act to be in a catatonic state. Volume is not great and all the alpha is gone from the market. Alpha is the liquidity of the market. No one can make a move as long as Asia sits around with a boatload of laughably overvalued financial obligations.

We'll see what next week brings.

The strength is overwhelming

And why do we refuse to raise interest rates?

Gold + 8.5

Indexes gap up on incredible oversea's strength. The charts which I think are important are posted.

COF reported last night and the results were not good. Anyone who thinks that the housing market is not affecting the economy is just wrong. There are problems with consumers and in CDO's MBS. These are not going to simply fade into the night.

The semi's are trying another breakout and 36 SMH is key for tech in general.

I guess the world has come to the conclusion that rates will never go higher. The ROW has no interest in selling bonds.

Slowdown

About an hour everything came to halt and some selling kicked in. However, nothing really extreme.
The semi's are of interest for a lot of people because the SMH has stalled at 36 a number of times. I haven't seen any kind of money flows going into semi conductors, although Dr. Brett has noted that intel is getting some love.

What are my thoughts on tech? In a weak dollar environment I think tech is a joke. It still has too much capacity and a weak dollar is going to attract weak dollar plays. oil, gas, gold, silver etc. If small caps, which are more speculative by nature, start falling out of play why would chips suddenly be the place to be? They are even more speculative. Nevertheless, if they rally I will respect the price action.

NO FEAR!

Remember those tee shirts. I think thats what best describes market participants attitudes. I really believe that market players are becoming more comfortable with the fact that NOTHING will slow down global economic growth. Wars, terrorist attacks, high oil etc. Everything just bounces back and thats when it is time to be more cautious. Everything I read from Dr. Brett and jason at sentiment trader says that we should have bought the dip and they were correct, but is a V shaped recovery what we want to see? I would prefer a long slow base and then move higher. Sell in May and go away! Maybe.

Stocks gapped down this morning, but dip buyer immeadiately came in to scoop up bargains.

The yen had a decent move overnight and I was long 5 futures, but covered because it just never seems to get legs.

So the banks are possibly putting in a double bottom from earlier in the month. As Dr. Brett noted on Monday, a huge momentum day developed and momentum always wanes before price, thus its not surprising that we are having continued, but slowing follow through. The smalls and mids did not look good at all today. I don't believe that large caps will all of a sudden lead. They could after another correction, but they wont just magically start charging forward.

Global markets seem to be stuck in a perpertual cycle. Foreigners by US debt or IOU's with there savings and recycle it back which keeps rates low. This has created a housing bubble that went out of control and is now only starting to cause any real pain. Now because rates are still low, PE is coming out gangbusters and the risk profile is getting higher. see SLM.

The bottom line is cheap credit continues to drive everything and is causing inflation to rise. The ROW, especially China, doesn't care or understand the amount of risk they are forcing the private sector to take in order to get some kind of a return. If rates dont rise, and they could if the dollar becomes an issue shortly, then MA and PE will almost without a doubt wind up in a blowoff housing top. Stock buybacks continue to rise because debt is still so cheap to add. The US and a lot of corporations and consumers are getting the ability to refinance. That will not change the long term outlook of too much debt, it just puts it off longer and adds more leverage until there is an accident.

Semi's

Maxim is leading the semi's higher. I also noticed on my watchlist that nsm is gaining six percent. Thats what happens when price get so constricted. Nevertheless, semi's havent really gone anywhere. Its almost impossible to short anything because wall street will defend it and global markets are strong. The strong price action the last couple of days make me real worried that we are going to have another leg down or crash sometime in the next month or so. The banks are getting bid up on subprime is overblown. The markets move so much faster than the real world, thats why the builders and banks are still ok. Are housing or consumer credit getting better? No, but its easy to gone stuff higher. Its kind of like day trade the economy mentality.

Also of note is the small caps and mids seem to be lagging the big caps and em is weak and seems to be stalling.

The yen has probably bottomed. I just dont see how it can continue to fall.

End of the day

Volume seemed to trail off as we got further into the day. A couple things that bear watching are in the following charts.

The sox is going to do something soon. Higher or lower and the yen may have found a bottom again.

Index momentum

seems to be keeping things going, but underlying price action is a little slower than yesterday. Strong momentum has returned which makes me wonder if we go another two months and run this thing up 50 more points or sometime soon we have a real crash that makes last month look like a walk in the park.

I think participants are becoming more and more convinced that the system is impervious to any shock because everything comes back.

Whats going on?

1. The dollar continues to be underpressure against the ccountries who don't manipulate the crap out of there currencies. The yen and RMB are a total joke. Although there is some talk again of japan raising rates because core inflation is rising in japan jsut like everu where else.

2. Bonds are up and getting a decent bid. Only thought is that we could be due for another feb event. The mo mo player are back again and when they return in mass its time to be defensive.

Now thats some buying. Momentum always preceeds price.

The bulls arent resting

I was wrong with my earlier trades. The tick trade didnt work, buyers immeadiately stepped up to the plate.

Global markets look unstoppable and the longer this system goes on the more scary it becomes.

I fully expect inflation to continue roaring ahead. food, water, and gas are going to force the US to come to grips with the fact that no one wants to stop money printing.

Short term overbought

According to sentiment traders models we are now overbought. Does it mean that we are goiong straight down? No. What it does mean is that we are at risk and this isnt the best time to buy.

Added 10 NQ and 10 ES. What am I thinking? After 1030 the strong tick bounces started to end and just a couple of minutes ago we had two -700 ticks. Our trend day is now in trouble.

Horrible tragedy strikes VA Tech

Stocks are roaring around the world, but the country is going to be different after this incident. I remember I was sitting in my dorm room during columbine.