Market Recap: Called Today’s Action On The Money Almost Literally
August 27, 2008 4:04 PM
I mentioned pre-open that the trade should be long but real strength may take some time. It took about an hour and we really got going to the upside. I also mentioned at the open that we HAD to clear 1285.50 on the futures to move any higher than that and to avoid it there. It hit 1285.25 late afternoon and tried to clear it twice, failed and shot down all the way to 1276 before getting back to 1281 right before the close.
I also said 15 minutes into the open to “buy all checkdowns” and we would “have to clear 1270.50 to cause any problems”. That early call was good for an easy 10 plus points to the upside and gave a FIRM number to avoid that also proved to be one tick below today’s high. Charts “do not matter” (as some believe) but i called that before the market opened. Pure luck yet again - apparently.
Thats about as close to being correct as I can get.
Market Update: My Note On Caution at 1285 Has Proved Correct Thus Far
August 27, 2008 11:39 AM
It is possible that we may have already seen today’s high, but not certain of it. I do not like long near 1285 for certain. If we clear today’s low, especially late in the day, we may pressure yesterday’s low. But this is clearly undecided as of right now.
Real Strength has come after time as I expected. But 1285 area may be a BIG problem. If we clear 1285.50 on the futures we should test 1290-1294.
2:18 Update: 1285.25 was a lid, thus far as i warned. This is still in doubt however….
Market Open 1272: Trade Should Be Long Checkdowns, But May Take Some Time For Real Strength
August 27, 2008 9:30 AM
Opening in the 1272-1273 range is actually good to be long. An open much higher would likely be sold. Be careful up top near 1285.50. We would have to clear that in order to make a run at 1302. I doubt we will challenge 1285 today, but anything is possible. The early action may be a grind until the SMA’s catch up.
Morning Call: Futures Move Higher On Durable Goods
August 27, 2008 8:36 AM
Durable Goods just came out and were strong and the futures popped up. The futures charts are clearly better to have continued strength than yesterday. We have both yesterday’s low and 1260.50 as a backstop to the downside (1263 and 1261 cash market). To the upside be VERY cautious in the 1285.50 on the futures. We HAVE to clear that number to have any chance of making a run higher.
The big issue with the Durable Goods number is although it was up 1.3%, is that it is driven by business and government spending not consumers. Business spending has been holding up because of the weak dollar and exports. This has little or nothing to do with the real problems in the country and that is real incomes for consumers here continuing to fall. But for now, it is what it is.
45 Minutes before the open we are at 1275 and change. If we open much higher than that be very careful that the gap may be sold, especially if we open near 1280.
Oil may cause some concern if it spikes much higher. it is currently up almost $2 as concerns about the hurricane gain steam.
Market Recap: 1261 Held once Again
August 26, 2008 5:13 PM
Sometimes I make this far more complicated than it needs to be. What did I say before the open? The trade is long unless we clear 1261 and cannot immediately reverse. Period. Today’s low? 1263. Once again the KISS principle should have come into play. KEEP IT SIMPLE.
I was long early on once I saw 1263.25 hold on the futures but was surprised when it backed off 1275.75 and never challenged it again. It did, to some extent as it ran back to 1272 and reversed. Then I knew 1272 was an issue to the upside. It ran up to 1271.75 and I warned it HAD to clear 1272 to be long up there. It ran all the way down to a new low off that number.
Tomorrow we have Durable Orders before the bell. It will be same story different day. 1261 (cash market) HAS to hold OR immediately reverse if cleared or we will be heading for a retest of 1200, which I have long felt is coming anyhow. Theoretically (my theory anyhow) 1200 is NOT the low on the SP. I will stick to that view until proven correct, which I believe I will be, eventually.
I need the Grasshopper for this post as I obviously need to learn from my own comments.
Market Update: Market Was Bought Early, 3:00 EST Is Likely Key
August 26, 2008 2:08 PM
The market was bought above 1261 early as I thought was very likely. It rallied to 1275 and change. If we clear 1260.50 to the downside after the release of the number of banks in trouble at 3:00 EST, we will either IMMEDIATELY reverse or we will close at the low of the day. I would guess the latter is FAR more likely.
2:20 Update: They released the list already for some reason. 117 banks in trouble, up from 90 last quarter, but based on the size, no huge banks can be on the list. This “may” save the market today from a big selloff, not sure.
Closing Update: We held 1261 on the cash market and moved up above that. The banking release helped the market into the close because apparently no big banks on the list (they do not list names, just asset sizes). That was a relief to the market and prevented a big selloff.
Market Open: 1263.25 Early Low
August 26, 2008 9:43 AM
I mentioned yesterday that 1263.25 was likely the next level to hold. It is the early low. We need to reverse off this low with some force and take out 1272.25 to the upside to possibly put in a low as I see things.
I am long at 1268.50 early on, but we have to clear 1272.25.
Morning Call: Futures Flat, New Home Sales At 10:00, FOMC Minutes Late
August 26, 2008 8:53 AM
The futures are flat 45 mins before the open. We have New Home Sales and Consumer Confidence at 10:00 EST. A bigger market mover may be the FOMC minutes at 2:00. Not sure what they could have said that may move the markets other than financial concerns which clearly exist anyhow. But it may reinforce the idea that a “second wave” of financial crisis is coming. Consumer debt and prime mortgages is the second wave and is clearly coming, IMO.
People continue to be shocked by this. But as I have said for month after month, it is the result of declining real incomes NOT by the initial crisis related to subprime. The crisis was simply masked by massive borrowing via the housing bubble.
At any rate, if we clear 1261 on the SP we HAVE to reverse. If we cannot reverse and go positive we will likely close at or near the low of the day. Opening flat is going to make the call more difficult as either can happen. if we opened up 10 or something and then cleared it, we would obviously be in trouble.
If you want to be long, the trade is long here above 1261. If it clears then you will have to know what you are doing on an intraday basis.
Market Recap: My Gap Rule Ruled The Day
August 25, 2008 6:47 PM
My gap rules once again ruled the day. It also outlines why I strongly dislike trends. I mentioned early on that the trendline was in the mid 1270’s. It tried to hold 1275 area and once that cleared down she went. In retrospect it should have been an easy 8-10 point day to the short side and then just “leave it alone”. Once we cleared 1282.75, which was the gap low from Friday, my theory suggests that the gap should fill. Therefore, we should have gone to at least 1277 area before “possibly” reversing. That is another reason I thought 1275 or so would hold. 1260.50 (1261 cash) did hold as I said in an intraday post was a MUST hold today or there likely would have been a massive panic down.
Tomorrow is a different story. 1260.50 is still critical, but is not an absolute must hold. It depends when it clears and the market reaction if and when it clears. If we open higher, I would be skeptical and today’s high should be a lid. If it clears todays high, then Friday’s high woul be the next test. If we open lower and take out 1260.50 early, the market may reverse in the 1257 area - or it may not.
Keep in mind that I have said repeatedly that I do NOT believe we have seen the low on the SP regardless of what everyone has been saying on TV. They are wrong, IMO.
Market Update: 1261 Should Hold - If Not We May See Panic
August 25, 2008 12:05 PM
We should not go much much lower here or there could be a big, big problem. 1261 on the cash market HAS to hold today I believe and it should. If not, I believe panic will set in.
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Recent Commentary
- Market Recap: Called Today’s Action On The Money Almost Literally
- Market Update: My Note On Caution at 1285 Has Proved Correct Thus Far
- Market Open 1272: Trade Should Be Long Checkdowns, But May Take Some Time For Real Strength
- Morning Call: Futures Move Higher On Durable Goods
- FDIC Report: 117 Financial Institutions In Trouble, One Big Problem, I Do Not Believe It
- Consumer Confidence Up? This Is Clearly An Indictment On Public Education
- Market Direction: While The Chart Still Says Long….
- Market Recap: 1261 Held once Again
- Market Update: Market Was Bought Early, 3:00 EST Is Likely Key
- Market Open: 1263.25 Early Low
- Morning Call: Futures Flat, New Home Sales At 10:00, FOMC Minutes Late
- Market Recap: My Gap Rule Ruled The Day
- Market Update: 1261 Should Hold - If Not We May See Panic
- Open: 1285, 1282.75 Still Important
- Morning Call: Decision Time
- Market Update: Typical Trend Day Higher Early As Predicted, Now The Outcome Is Clearly In Doubt
- Market Open: Watch The Gap Reaction
- Morning Call: Futures Up, Long All CheckDowns Early Should Be Play
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