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ES and the Great POMO Rally
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ES and the Great POMO Rally

  #341 (permalink)
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I posted this comment a while ago about the 1min opening range. The opening today is almost a copy conform of what i described here (clickme). I like to use the 1 min range as in many cases, it serves as a good area of support or resistance later on in the day.

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  #342 (permalink)
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Asset correlation = dollar destruction?

Note the close correlation between the ES and the CL today.

Does this mean that everything is just trading inversely to the strength of the dollar?

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  #343 (permalink)
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Zondor View Post
Note the close correlation between the ES and the CL today.

Does this mean that everything is just trading inversely to the strength of the dollar?

The $ is the quote currency for index futures and commodities. So there is always a positive correlation induced by its strength or weakness. Sometimes you think that you trade index futures, but in reality you trade the dollar index.

Below a small chart showing correlation over a longer period. Typically index futures are topping prior to commodities. This is due to the larger cycles. When the economy is overheating, the FED or the other Central Banks lift interest rates, which puts an end to the stock rally and also depresses the bond markets. Inflation tends to be higher and investment flows shift to the commodity markets. History then takes it course, stocks will decline and the general recession will eventually lead to lower commodity prices....

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  #344 (permalink)
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Speaking of the USD, it's getting real close to 2009's low of $74.21. At this rate, we should hit it by tomorrow or early next week. There was a nice bounce in energy and metals related commodities today. Crude appears to have found support at it's weekly S2 level which was also right on it's supporting trend line on the daily chart interval. Silver is continuing it's run straight up as is Gold. The ES has continued it's round top formation and is danger of slipping back into the Abyss.

I'll be looking to start establishing a short position in ES should this continue from here. Today the ES had a nice bounce however, the next few days could prove crucial for the equities market but I'm thinking the game is up at this point. We'll see though, I'm not one for market predictions. I just react to what I see on the charts.

Cheers,
PB

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ES and the Great POMO Rally-2011-04-14-usd.jpg   ES and the Great POMO Rally-2011-04-14-silver.jpg   ES and the Great POMO Rally-2011-04-14-gold.jpg   ES and the Great POMO Rally-2011-04-14-cl.jpg   ES and the Great POMO Rally-2011-04-14-gas.jpg   ES and the Great POMO Rally-2011-04-14-es.jpg   ES and the Great POMO Rally-2011-04-14-bonds.jpg  
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  #345 (permalink)
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tigertrader View Post
The only thing that's got me worried is that everybody and their brother is looking for the same thing we are. I would feel much better, and would be a lot less circumspect, if the sentiment was a lot more bullish. Even Bill Gross wrote a bearish article.

Below is the link to the Bill Gross article. It's not one of his best articles, but is compelling nevertheless, not because of the content of the article, but because of the implication of why he wrote the article. Gross, the penultimate establishment insider appears to be hedging himself in front of QE2 ( s/b Titanic2). While the article tells me that things may be far worse than I had imagined, it is still a glaring example of another player positioned the same way we are.

Im still more on bullish bias as of right now. It seems like the /ES is just consolidating trading within a range. I will be bullish until the 200 mva breaks and the trend breaks. However I don't see it going much higher at 1400 i will definately be a bear a polar bear.

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  #346 (permalink)
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If Volume Is the Weapon Of The Bull, Then....

ran across this today...take a look at the volume chart. I know it's no revelation here but interesting to see it over a few year period

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  #347 (permalink)
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thx kbit

I'd be interested to see how tigertrader, privatebanker and others interpret that.

L

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  #348 (permalink)
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kbit View Post
If Volume Is the Weapon Of The Bull, Then....

ran across this today...take a look at the volume chart. I know it's no revelation here but interesting to see it over a few year period

I think the answer to this is simple. This is my reason for starting this thread. The Fed has found a way to successfully goose the stock market all the way up to where it is today. Their POMO is a back room agreement between the Primary Dealer banks (PD's), the U.S. Treasury and of course, the Fed. The Treasury issues bonds/notes, the Primary Dealers go in and buy them up and immediately turn around and sell them to the Fed (at a premium + commissions at the tax payer's expense). The cash received by the PD's are then used to buy high Beta stocks to goose the stock market up. Then the High Frequency Trading churn bots step in trading the same shares back and forth to themselves while not really taking a net position. See the attached chart from Zero Hedge.

I think many "Average Joe" retail investors are long gone or far less involved then they were in recent years. Many high net-worth investors and institutions are now having a lower percentage of their portfolio's dedicated to equities and are utilizing other asset classes to provide equity like returns with lower standard deviations. This explains the far lower volume IMO.

So, the entire POMO is nothing more than another financial game created by the Fed that has successfully manipulated the stock market higher providing an endless bid because of their liquidity injections. If this were to stop, we would see an immediate correction in prices.

Cheers,
PB

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  #349 (permalink)
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KonQuistador View Post
Im still more on bullish bias as of right now. It seems like the /ES is just consolidating trading within a range. I will be bullish until the 200 mva breaks and the trend breaks. However I don't see it going much higher at 1400 i will definately be a bear a polar bear.

There is a good summary of the situation here:
---
"We're starting to see companies passing along their costs to consumers, and that's going to be an ongoing concern," said Bruce McCain, chief investment strategist at Key Private Bank.
---
Clark said investors are setting up for next week, when more than a fifth of S&P 500 companies will report their quarterly results. "Earnings are going to be positive overall, and that's going to be bullish for the market until the summer," he said.
---
source:
Market Report - Apr. 15, 2011 - CNNMoney.com

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  #350 (permalink)
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I just found this thread, some great commentary in here. I'm looking forward to following it in the time to come.

-Lornz

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