pebblewriter

Tag: greece

  • Close, but no Cigarro

    Well, the Greek election came and went and, oddly enough, the world is still turning, the price of gas is still too high and (sadly) Mrs Eastwood & Co is still on the boob tube.  The election result was in the middle range of possible outcomes and, as such, has satisfied neither the bulls nor the bears.

    Friday’s initial follow-through after the IH&S completion only slightly exceeded our June 1 forecast target, and this morning’s dip came very close to our downside target [see: Mixed Signals.]  These were adjusted this past Friday to 1342 on the upside and 1334 on the downside, as seen from this chart posted Friday morning:

    So, did this morning’s dip to 1334.46 complete the IHS back test?  Mind you, I don’t object to immediate gratification; but, I think not.

    continued…

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  • The Spanish Fly in the Ointment

    Today was one of those kumbayah days when even lousy housing data, consumer confidence and Dallas Fed data couldn’t depress equity prices.  The market spent all day reinforcing my faith in our forecast.  Ah, those were the hours…

    As everyone knows, the euro zone whack-a-mole game has been focused on Spain lately.  So, the print-our-way-to-happiness bunch was understandably enthused when Spain announced they would truck $24 billion in Spanish sovereign debt over to failing Bankia — Spain’s second biggest bank — which would then exchange said debt to the ECB for something worth the paper it’s printed on.  Presto chango, ipso facto… the boo-boo’s all better.

    A perfect plan — except for one small detail:  the ECB wants nothing to do with it.  According to the Financial Times, the ECB wants Spain to implement (stop me if you’ve heard this one) a serious austerity plan and start living within its means — maybe even inject some real live capital.  (more…)

  • A Most Lenticular Market

    Looking at the markets these past few days, I’m reminded of the prize that comes in a box of Cracker Jacks.  Not a real prize, mind you — but one of those cheap little pictures where the image changes as you shift the angle from which you’re viewing it.  It’s called a lenticular image.

    Despite the uncanny accuracy of our forecasts these past couple of months, the road ahead seems to shift a little with every fresh look.  I can’t remember the last time I agonized over a forecast for an entire three-day weekend.

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  • Charts I’m Watching: May 3, 2012

    NOTE:  New on the MEMBERSHIP>MY PROFILE page, a sign up area that will allow subscribers to be texted whenever a new post is added or added to [note:  additions don’t seem to be generating additional texts — working on this].   I tested it last night, and it took only 3-4 minutes for a SMS text advising me of a new post to appear on my mobile.  It doesn’t appear to handle non-US cell providers, so I’m looking for additional vendors that can accommodate those outside the states.

     

    UPDATE:  1:15 PM

    Be cautious with this smaller pattern, though.  The 60-min chart shows a distinct possibility of a bounce at the neckline (as happened with the larger pattern.) Focus on the bold, yellow TL on the RSI below.  I would suggest anyone considering piling on shorts protect themselves, as always, with tight stops.

    UPDATE:  12:30 PM

    Over on the right shoulder of the Head & Shoulders pattern we’ve been watching is a… H&S pattern.  It would complete somewhere just below 1394 and targets 1372 — the (wait for it…) neckline of the larger pattern.

    Ever get the feeling the market is just toying with you?  Seriously, though, this fits rather well with the RSI indicators, which as I posted earlier, support the idea of another test of the neckline.

    If we get crazy positive non-farm payroll numbers in the morning, all bets are off.  Barrons is reporting consensus estimates of 165,000 (below), while Briefing.com estimates 140K.

     

    UPDATE:  12:30 PM

    Non-manufacturing ISM numbers confirm the economy’s slowdown.  Recall that the recent national numbers for manufacturers inexplicably showed an improvement — in stark contrast to the regional numbers and most other economic indicators I watch.

    The services sector (the larger share of the US economy) confirms what I suspect was a bad print a couple days ago.  We see worsening in the overall index (from 56 to 53.5 and vs expectations of 56.5) and in the categories of business activity, new orders, employment and prices (the largest drop of all.)

     

    ORIGINAL POST:  11:00 AM EST

    The RSI channel we analyzed (in excruciating detail) yesterday is holding so far.

    If we can break that last little fan line (k-4) things should accelerate a little to the downside, probably to test the k-5 line, which I believe will correlate with the H&S pattern neckline.

    It seems like the market is waiting for a sign of some sort for any serious downside to develop — which will likely come from Europe, China or MENA.  Why?  If good economic news drives the market up, and bad economic news increases (even falsely) the odds of QE, then it stands to reason that only an exogenous shock — one over which the Fed has less control — will drive prices lower.

    Having said that, the entire economic picture has the feel of a triangle pattern.  We careen from good news to bad, euphoria to despair — all the while drawing closer to the (IMO) inevitable day of reckoning where the mountain of debt shakes just enough to unleash a major landslide.

    We see a preview of the effects in places like Greece, Ireland, Portugal and increasingly Spain.  Total debt to GDP is much too high in these countries, but the US tops them all.  Official reports put acknowledged debt/GDP in the US at 101.5%.  But, as this Zerohedge article points out, the contingent liabilities such as the NPV of unfunded pension and health care drive our true debt/GDP to well over 300%.