Friday, July 30, 2010

S&P500 Technical Analysis (07/30/2010)

S&P500 Technical Analysis Chart:
On chart above you can see S&P500 has made lower high and lower low on the monthly bases in past 3 months. This pattern clearly observed in all major indices. This is a classic bearish formation right out of text book. We had a similar pattern back in 2007, which marked the beginning of very severe bear market. In past 11 weeks S&P500 has moved in a very tight range. We are not going to move side ways for a while. With in next 2 weeks we are going to break out. What you need to pay attention to in coming week would be the violation of 1100 & 1094 levels. as long as S&P500 stays above 1100 bulls would have the upper hand, but if S&P500 closes below 1094 and stays below it for 2-3 days, game over for bulls. On the other hand you must keep an eye of 1120 and 1131 on the up side. If big institutions manage to push S&P500 above 1131 you have no business to be bearish.

In the charts below blue lines show the High and red lines the low, on monthly bases.

DOW JONES Technical Analysis Chart:

NASDAQ Technical Analysis Chart:

DOW JONES TRANSPORT Technical Analysis Chart:

RUSSELL 2000 Technical Analysis Chart:

10-Year Note Technical Analysis Chart:

LIBOR & Ted Spread Chart (07/30/2010)

I post the LIBOR chart every fridays. Just type Libor in search box (it is located on top left corner). You will see all Libor charts.
LIBOR-OIS (USD SWAP) 3M Graph: Ted Spread Graph:

I post the LIBOR & Ted Spread charts every fridays.

Wednesday, July 28, 2010

Market at critical level

We are at critical level. S&P500 must stay above 1100-1094 levels. If S&P500 close below 1094 you should get out of your long positions.
I don't buy the Wall Street nonsense about inflation. We are in a deflationary spiral, price of commodities must come down due to weak global economy. Crude Oil look very bearish I'm seeing the downside action suggested oil is going lower. It hit the $79.69 level and pull back on high volume. I think Crude oil is going to tank to $72 soon. Please pay attention to $78 level if oil gets above it we should witness shortsqueez to $80 or higher. If oil tanks to $75 level it could get a bounce. If $75 level would not hold crude oil could drop by 6.5% from current price to $72 with in next couple weeks.

Crude oil technical analysis chart:

President Mike!

There's a new president in the white house. And he's not taking any $#%&!! from anybody

Tuesday, July 27, 2010

Tony Robbins discusses the "invisible forces"

Tony Robbins discusses the "invisible forces" that motivate everyone's actions -- and high-fives Al Gore in the front row.

Monday, July 26, 2010

New Home Sales (07/25/2010)

New Home Sales chart:
New home sales in June jumped up by 23.6% ,after 36.7% drop in May. The June pace recovered to an annualized 330,000 from a revised 267,000 for May and revised 422,000 for April, note May's record drop was down notably from the initial estimate of a 33.0% decline. This is not a positive data by any measure as you see in the chart above new home sales did not improve. This month data is down 16.7% on a year-to-year basis. The only positive fact is the new home inventory is as low as it was back in 1968. The low inventory means when we get the real recovery home builders have some catching up to do. The main problem with housing market is not too much supply of new housing. Problem is too little demand and big inventory of existing homes. There is a direct coordination between job market and housing market.Until the job market would not improve it's naive to think housing market is on the road to recovery. It's laughable when talking heads in CNBC or Bloomberg talk about "Jobless Recovery". In real world there is no such a thing exist. Many financial analysts including me, believe price of existing and new homes did not hit the bottom. I think they are going to fall 15-20% in coming years; then housing price should move sideway and eventually it would grind higher.

The Europe's banks stress tests was a free pass to banker as anticipated. From 91 lenders from 20 countries only 7 failed! to me it was a big joke. The Europe's banks stress tests, was not so stressful in the first place. They copied the U.S. approached to the insolvent banks and gave them the free pass. The Europeans want to give average investors the mirage that they are going to be just fine.

On the technical aspect, I'm bull as long as S&P500 stays above 1100. We are over extended, but you must pay attention to 1100 & 1113.70 levels in coming days. If S&P500 gets above 1131 it would be very bullish.

Friday, July 23, 2010

LIBOR & Ted Spread Chart (07/23/2010)


Ted Spread Chart:
I post the LIBOR & Ted Spread charts every fridays.

Thursday, July 22, 2010

SPY Technical Analysis (07/22/2010)

SPY Technical Analysis Chart:
SPY(S&P500 ETF) has formed an Apex. This is a bearish formation, but until SPY would not tank to 106 ,I cannot say for sure if SPY is going lower or not. Quick reminder on S&P500, it could break the downtrend channel today, that consider very bullish. We have apex formation and channel break out, we have to wait to see which one will be the play next week. Meanwhile pay attention to 1100 level. S&P500 must close above it by Friday July 23rd.

On the fundamental aspect, we are going to get the Europe's banks stress tests tomorrow. About 91 lenders from 20 countries have faced the so-called stress tests and the results are due 07/23/2010 at 12:00PM EST. If you think they are going to announce to the world “We have bad news, banks A, B and C are poorly capitalized...” You are out of your mind. Obviously they will give bankers the free pass, as the U.S. did to our insolvent banks. Therefore there is a good chance that big institutions are positioning for good news that would explain these whipsaw moves in stock market. The Europe's banks stress tests result could already priced in. I cannot say what is going to play out tomorrow, that's anybody's guess. I will seat on the cash and wait for the dust to saddle.

Tuesday, July 20, 2010

Market update

S&P500 Chart:
In my previous post, I talked about possibility of a bounce from 1055 level. S&P500 tanked to 1056.88 and we got the short squeeze again. Bond market sends mixed signals, which is in contradict with today short covering rally. It's too early to come to any conclusion, but I need to see if it has any follow up or not. If this rally has some legs, it must get above 1100 & 1130. Today moves brought the S&P500 right beneath the down trend channel. Please note S&P must get above 1100 by Friday. Failure of close above 1100 by friday means we are going to head lower in coming weeks. It would be interesting to see can they send S&P above 1130 or not?

Sunday, July 18, 2010

S&P500 Technical Analysis (07/18/2010)

S&P500 Technical Analysis Chart:
Oh! No, 1100!!! Here we go again! Market did exactly what I forecasted; bulls tried to hit the 1100 level but they failed to penetrate the 1100 resistance and S&P500 did roll over. There is not much to say at this point but if you are a bull you want to see S&P500 takes out 1100 and get above 1130 with in next 3 trading days. The last thing you want to see would be the violation of 1055, if big institutions fail to push the S&P500 above 1100 we will tank to 970-950 in matter of days.
Base on what has happened in last couple days I give only 10% chance to penetration of 1100 and rally to 1125-1130 levels. If S&P500 tanks to 1055-1050 there is a 20% chance of bounce back. If S&P500 drops below 1050, I'm looking for violation of 1010-1015 support levels. In this case I would give 70% chance to S&P500 tanks to 970-950.

Related topics:
S&P500 Technical Analysis (07/11/2010)

Friday, July 16, 2010

LIBOR & Ted Spread Chart (07/16/2010)

I post the LIBOR chart every fridays. Just type Libor in search box (it is located on top left corner). You will see all Libor charts.

Ted Spread Chart:

I post the LIBOR & Ted Spread charts every fridays.

Wednesday, July 14, 2010

On the "Road To Recovery" or "Road To The Great Depression II" ?

Net Loan Losses to Average Total Loans for all U.S. Banks:
Commercial Net Loan Charge-offs:
Assets At Banks Whose Exceeds Their Nonperforming Loans: Charts above speaks for themselves, therefore I make it short and right to the point. If Ben Bernanke the head of Federal Bank of Reserve is telling the truth and banks are on the road to recovery; why do their nonperforming loans exceed their assets? what about net loan charge-offs or net loan losses why doesn't it go down?!
I need to remind my readers that charts above do not show the real picture. Due to relaxation mark-to-market accounting rule, banks no longer obligated to mark their toxic assets to market, instead they used mark-to-model. Therefore the actual data is much worse than they say it in public. Banks are far from "road to recovery", as a financial analyst I think this is the road to the Great Depression II.
Market moves base on pure technical, with no fundamentals to back it up. Therefore I think investors should use technical analysis as the guideline, if they want to be profitable.

Net Loan Charge-offs: Gross amount of loans charged off as bad debt, less recoveries collected from earlier charge-offs. Net charge-offs are computed as a percentage of gross loans outstanding recorded, less unearned income and Loan Loss Reserves for charged-off loans. Poor credit quality loans that are not worth keeping on the books are purged from the loan portfolio, usually monthly or quarterly. A minus sign before the net charge off amount means recoveries have exceeded charge-offs for an accounting period.

Nonperforming Loan: A loan is considered as a nonperforming when it is in default or close to being in default. In the other words when payments of interest and principal are past due by 90 days or more, or at least 90 days of interest payments have been capitalized, refinanced or delayed by agreement, or payments are less than 90 days overdue, but there are other good reasons to doubt that payments will be made in full.

Sunday, July 11, 2010

S&P500 Technical Analysis (07/11/2010)

S&P500 Technical Analysis Chart:
OK! we are above 1070 that I forecasted on July 1st & July 4th posts, now what!
In my July 1st post, I gave two scenarios, one of them was S&P500 could break the 1040 support and hovers below it for a couple days then big institution could squeeze the short and we get a rally to minimum of 1070 & maximum of 1090. I cannot say for sure if we have the bear trap yet, but if S&P500 stays above 1071 it will conform the bear trap. Anybody who went short the S&P500 from June 28 to July 2nd is trapped badly. We technicians call it bear trap, see the chart in blue circle.
We rallied 6.7% from low(1010). I was looking for short squeeze to 1070,but S&P500 could exceed my July 4th forecast and moved above it by 7.96 points (S&P500 Fri close: 1077.96).
I'm in the bear camp and look for S&P500 to roll over soon, but if market send me different signal I'm willing to jump in bull camp. Please note S&P500 must get above 1100 to make me bullish. We are extremely overbought in short term, but intermediate time frame is neutral. What do I mean by that? It means we could move higher as long as S&P500 stays above 1071, everything depends on earnings. It will start with Alcoa "AA"(Monday after hours). If there is a good earning obviously we would move higher...

I give 40% chance of rally to 1090-1100 then we should see S&P heads lower. There is a 20% chance for a bounce back if S&P500 tanks to 1060-1055 . If you are a bull you don't want to see S&P500 moves below 1055, if S&P tanks to 1050, it should free fall to 950 fast. At this point I just give 40% chance of such an event.
Meanwhile pay attention to these levels; S&P500 short term Resistance:

R3:1100 major resistance
R5:1131 major resistance

Friday, July 9, 2010

LIBOR & Ted Spread Chart (07/09/2010)

I post the LIBOR chart every fridays. Just type Libor in search box (it is located on top left corner). You will see all Libor charts.
Ted Spread Chart:
I post the LIBOR & Ted Spread charts every fridays.

Sunday, July 4, 2010

S&P500 Technical Analysis Forecaste For Comming Week (07/4/ 2010)

S&P500 just did, what I forecasted in June 24th. It broke the 1040 and found support at 1010-1015. I'm looking for a side way move or a short covering rally this week. If S&P500 breaks the 1010 this week picture will get very ugly. I think we are headed to test the 1040-1070 before S&P500 tanks to 950.

Related topics:
S&P500 Technical Analysis (06/24/2010)

LIBOR & Ted Spread Chart (07/04/2010)

I post the LIBOR chart every fridays. Just type Libor in search box (it is located on top left corner). You will see all Libor charts.


Ted Spread Chart:

I post the LIBOR & Ted Spread charts every fridays.

Happy 4th of July

----------Happy 4th of July-----------
I have readers from all over the globe, who may not agree with me, but this is for my American fans. Despite the financial crisis, we are still the BEST DAMN COUNTRY, deal with it.(;

In the United States, Independence Day, known as the Fourth of July, is a federal holiday commemorating the adoption of the Declaration of Independence on July 4, 1776, declaring independence from the Kingdom of Great Britain.

Thursday, July 1, 2010

Two Possible Scenarios For S&P500 In July 2010

I will give you two scenarios that I think have a good chance to become reality with in first half of July. As you know S&P500 broke the 1040 support level as I anticipated. If S&P500 stays below 1040 for a couple days it will tank to 1015, and if it would not hold it will tank to 950 or lower. As I mentioned many times before 1100 is a deal breaker. Bears must keep the S&P500 below 1100. I don't see any possibility of such a rally in coming days, therefore I will remain a bear.
On the other hand we could get a bear trap, it means S&P500 could move below 1040 for a couple days, then big institutions buy the future market over night and the S&P500 gaps open higher , if this scenario happens we should witness a big short squeeze; there are some average investors who go short and they usually get nervous as soon as they see some buying, therefore a short-lived rally is not out of picture. If S&P500 gets above 1056 you should cover risky short positions and move to the side line. These moves should last a couple days and would be a good opportunity for professionals to add to their short positions. If we get the short squeeze rally, look for 1070-1090 as possible resistance levels in coming weeks.

Related topics:
S&P500 Technical Analysis (06/24/2010)