Wednesday, August 11, 2010

So Much For All That!

Yesterday I stated that the SPX was still in bull hands as the up trend from the early July rally was still in place. That any break off the uptrend will see significant selling.

Yesterdays action.

Well today is a different story. Futures were weak coming into today's action. They tried to rally this market a few times but those rallies were very feeble. The sellers just reloaded every time the bulls got traction.
What happens tomorrow? Don't have the faintest of clues, but I wouldn't be surprised of a big move either way.

This clearly looks a break of the uptrend but we have to be cognizant of the fact that after huge moves like this we have seen buying the next day. Tomorrow brings the weekly unemployment claims and if that figure prints above 480K, it could be a tough day for the bulls. Many will talks about the Fed today but I believe the weakness is more of an issue with the trade balance figure which was an unmitigated disaster. This will lower 2nd QTR GDP down close to 1%, which is devastating for the Obama Administration.

It doesn't help that the Dollar was flying today gaining almost 2% across the board as again Treasuries rallied and yields hit new lows. The Euro got clobbered because the ECB executed swap lines with the Fed today. They have not done that in over a month. This caught the market by surprise. There are some rumors going around that GS is being a little prickly towards their prime brokerage accounts. Hedge funds send over letters to wire out money from GS, but it seems GS has asked them not to. HMMMMM.

We have to watch how the Nikkei fares tonight. The index is below 9300 and any sell off nearing 9100 has to be watched as that is currently support. You would think the BOJ would come in here soon to stabilize the Yen as it moves towards multi generational highs vs the USD. If they don't come in to stem the Yen's strength the Nikkei will be on the verge of seriously breaking towards 8500.

I am pretty sure Asian markets will get throttled across the board tonight.

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