In my younger days I played Rubgy, a drinking party with a little sport thrown in to make it legit. I don’t know if it’s still so, but back in those days, when the parties (always with the opposing side, much more civilized than American football) reached a certain level of inebriation, someone would start up with some limericks. Who knows why…
They were always off color, often hilarious, and sometimes even made sense in spite of the fact that the guy delivering it was, by then, completely arseholed. There were no less than a dozen variations on the Longfellow poem There Was a Little Girl.
There was a little girl,
Who had a little curl,
Right in the middle of her forehead.
When she was good,
She was very good indeed,
But when she was bad she was horrid.
One of the cleaner variations finished with “and when she was bad she was incredible.”
As I watched the news roll in over the past 12 hours, I couldn’t get that poem out of my head. Got an economic boo-boo? Not to worry, the Fed will kiss it and make it all better. We’re all so conditioned to that idea that no one bats an eye when it’s reported like as did CNBC:
Frankly, I’m surprised they even threw in the word “possibly.” It’s probably only because, as Cramer assures us, this enormous GDP contraction from the previous quarter was a “one-off” event.
More details on the report — the first negative quarter since 2009 — shortly. But, the chart from Briefing.com clearly illustrates a lower low to go with the Q3 lower high. Sorry, folks, but that’s a trend that points downward — especially when you layer in a sequestration and tax increase coming up next quarter.
Of course, this horrid economic news pales in comparison to the importance of the Blackberry 10 launch. Which, of course, will hopefully distract our attention from the craptastic AMZN earnings report — which, almost got the stock back to where it was two days ago…imagine if they’d had two positive footnotes in there! — and Boeing, the future of which is sitting on tarmacs in the form of fifty 110,000 kg paperweights (with another 800 on order.)
The market’s reaction to all this? Off a whopping 3 points on SPX and 20 on the Dow. Oh, well, I suppose it could be up 10. I’m taking on odds on how many minutes it takes for the BB-10 launch to replace the GDP headlines on CNBC.com…
continued for members…
There are still some important Fib levels just above yesterday’s short, and SPX might give it the old college try. I will maintain the core short until further notice, but might add in a little intra-day long if the market rallies with the FOMC announcement.
UPDATE: 1:20 PM
DX has sold off below our target area on continued euro strength, but it appears to be an short-term move that will likely be erased by EOD. Note that the index has dipped below the white channel that’s guided it since April 2011 but should find strong support at the .886 of 79.241…
…while the daily RSI has reached strong channel support: the bottom of the white channel and the red mid-line.
The EURUSD, likewise, has overshot its upside target — showing little reaction at the bundle of Fib levels reached yesterday.
UPDATE: 2:18 PM
FOMC announced no changes. New voting member Esther George dissented, officially taking up the hawkish mantle. The market is now free to decline — if it’s ready to.
I remain comfortable with being short at this time [see: yesterday’s 3:40 update], with the understanding that the upside risk is probably no higher than 1518.
Keep an eye on the dashed red trendline, and after that the white and purple channel lines.
continuing…