FUD is killing the markets, $ES_F 1280 if we can’t get some clarity. $study

Around the Globe

    Asia – CLOSED

  • Shanghai (China) +1.39%
  • Hang Seng (Hong Kong) -0.31%
  • Nikkei (Japan)+0.86%

Europe as of 7:24am EDT

  • DAX (Germany) -0.78%
  • FTSE (UK) -1.19%

Today’s Economic News:

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Decent numbers out of Japan, nothing out of Europe except the Spanish auction which went off ok.  Jobless claims numbers out of the USA  and Philly Fed numbers will establish some USA sentiment.

Quote of the day:
A man is rich in proportion to the number of things he can afford to let alone. – Henry David Thoreau

 

Current Allocations from our room:

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Performance Month to Date from our room:

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Current Breadth Readings:

 

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Our breadth chart today is the Zweig which now sits 3 days oversold.  It should be very turbulent as the bears and bulls battle it out in here.

 

ES SP500 Futures Comments:

 

Yesterday we called for a multi-day bounce.  We did get a multi-minute bounce and then the same old afternoon selling that we thought based on a return to mean need for our sentiment indicators would not happen.  It did and we closed on the lows of the day.

 

We did like the underlying bid to the auction however as we saw for the first time in a long time buyers willing to show their hands and step in around that 1320 area.  We are below that as of 7:30am ET.  We still like the looks of a bounce.

 

What we can’t control is the news flow which has injected Fear, Uncertainty and Doubt. FUD.  The number one enemy of bull markets.  The premise of investing is that you can get a picture of the future and believe in it.  The integrity of the European system is under attack right now and until that paints some picture of stability or some of the fear and uncertainty can be removed we should continue to have money flow out of the markets into bonds and other safe havens.

 

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Since we were wrong on a bounce yesterday we thought we would pull the charts back a little bit and look for a downside target which we have now at 1280 area.  That would be a 10% correction from the highs.  We are currently down about 7%.  Our run up from October was about 34%.

 

We are trading as I write around 1317, which makes our 1280 target 37 points down.  We still like the idea of a bounce call and have an upside bounce target of 1346 and 1360.  That is 29 points up and 43 points up.  So our call’s risk reward ratio is about 1:1.

 

The markets are very fragile and the 1280 if it comes with come very swift indeed.  We will be looking closely at the bid today to see if it will hold and buyers step in.  If it is there we will be shooting long.  If not we will join the crowd for the ride down.

 

So for today we are being stubborn and leaving our cash buy area in this 1320 region with a short target at 1346 with the condition that our Bid/Ask line in real-time looks as good as it did at yesterday’s cash close.

 

This is front running some very weak breadth indicators that are screaming doubt rallies.  Play it as you see it.

 

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US Dollar DX Futures Comments:

Watching reaction to 82. image

TLT Twenty Year Bond EFT Comments:

If there is one chart that shows the fear it is the TLT which is now just 2 points away from the highs. image

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