http://finance.yahoo.com/intlindices

http://money.cnn.com/markets/morning_call/










http://www.kitco.com

Energy futures

Currencies/Au/Ag

Off to the races... All Ords +2.9% with big rises across most sectors. Consumer Staples is leading the way, +3.8% followed by Materials, miners and Property Trusts, all +3.5%.

The big miners way up: BHP +4%, RIO +3.5%. Golds are more cautious, Newcrest +2.6%, Newmont -1.7% and Lihir -0.8%.

Oils green: Woodside +0.5%, Santos +4.6% and Caltex +4.2%.

Seems like All Ords kissed the 50 fibo (at 6047) of Nov high till Jan low, then turned down.

The perfect level for this rally to end would be 6200-6250 (az 6210 we have EMA 200 daily and at 6242 there is 62 fibo).

Let see the ratio between SPX and crapbonds. It was rejected right at the trendline, so far so good.

Back in 2006 it made H&S pattern but the right shoulder was not violated. I guess that was a midcycle slowdown. Goldilocks. Kudlow dream. Then the next 4-year cycle started.

I see the broken H&S pattern this year and the right shoulder was broken. Now it's pumping up through the line, the level is critical. Looking at the funnymentals I guess it's not gonna make it. Should go down again and finally break the trendline.

Last time they broke the trendline just days before the first Greenspan rate cut. Then it made a waterfall right into the first month of recession.

This recession already started in December, so now it's time for a nice break. Fed funds are already cut by 2.25% and that should help crapbonds more then stocks.

Another chart illustrating the 2006 midcycle slowdown very well. It' in a triangel right now and will break down to make a long move, a year or two.

Selling energy and going long staples must be profitable, keep this spread for a while. Just IMHO!

The ratio of financial stocks to bonds broke bigtime in July. It was obvious that the economy was in a deep doo-doo.

When the economy is growing at least somehow financials must be doing better then bonds, because they are sitting on top of bonds plus doing some extra profit. When financials underpeform bonds the delta is essentially showing the amount of bad loans they lose comparing to safe investments.

The action dwindled away leaving All Ords +0.7% for the day. Energy took the lead, +2.6% followed by Consumer Staples +2% and the miners came in next, +1.9%. Financials closed down the most, -1.5%.

The big miners did ok: BHP +1.8%, RIO +0.7% with golds mixed, Newcrest +1.8%, Newmont -1.8% and Lihir -3.3%. Juniors also mixed.

Santos, +4.6%, gave the Energy sector a boost. Woodside closed -1.1% and Caltex +1.8%.

Asia on fire: China +6.3%, Sth Korea +3.7%, Honkers +3.1% and Nikkers +2%.


Over to UK/Europe:








http://finance.yahoo.com/intlindices?e=europe

SRS is right at the trendline. Was that a bottom?

roxy,

very nice ratio charts! Tanks!

Tonights mega power boner in China (up ca. 7.5%) came directly at the 38 fibo.

Shanghai A weekly log chart with lin fibo

[attachmentid=95329]

foxy,

Aren't the A Shares restricted to China Mainland Accounts, no round eyes allowed?

"But Google is painting a starkly different picture, asserting that Microsoft will be able to stifle innovation and leverage its dominating Windows operating system to set up personal computers so consumers are automatically steered to online services, such as e-mail and instant messaging, controlled by the world's largest software maker."

http://biz.yahoo.com/ap/080204/microsoft_google.html

Just bite back in the OS world, how hard can it be making a better OS than Vista with a Linux kernel? PC users are sick and tired of Mr Softy and they're craving for a knight in shinny armor to save them, they've even turned to Grapple for God sake! that's desperation written all over it.

Loan market reels after Harrah’s upset

The leveraged loan market is beginning the week in “disarray” following the collapse of efforts to syndicate $14bn of the debt used to finance the $27.8bn buy-out of Harrah’s Entertainment, bankers say. The group of banks backing buyers Apollo Management and TPG are having trouble selling on the LBO debt to third parties, and with most of the debt remaining on their books, the banks are sitting on a sizeable loss. The freeze in the debt market means they now face larger potential losses on other big buy-outs, such as BCE and Clear Channel Communications, and will be more desperate to get out of financing commitments on those deals. Banks are already saddled with more than $150bn of unsyndicated debt, most of it LBO-related, according to S&P data. Harrah’s has $6bn of equity, making it less highly leveraged than many other buy-outs, which is one reason Goldman Sachs’ mezzanine fund swooped in and bought $1.2bn of Harrah’s bonds. Separately the FT’s Henny Sender examines Goldman’s role in the deal.

http://ftalphaville.ft.com/blog/2008/02/04...2%80%99s-upset/

Except that volatility was trending down the whole time until last July. The collapse of Dealer capital is what caused the increase in volatility, not overtrading. The opposite is true. The more they traded, the smaller the spreads and arbitrages until huge chunks of their capital began to disappear and the Fed didn't step in to the breach.

"European producer-price inflation accelerated in December to the fastest pace in a year, boosted by surging energy costs.

Factory-gate prices increased 4.3 percent from a year earlier after gaining 4.2 percent in November,"

But wait, there's 'good news':
"The so- called core rate of producer-price inflation, which excludes energy and construction, also rose 0.1 percent on the month."

http://www.bloomberg.com/apps/news?pid=206...refer=ecalendar

I think we'll see negative Core numbass in contrast with wild non-core stuff in some months.

ECB expected to walk the talk:
"ECB policy makers convene in Frankfurt this week to decide on interest rates. All 55 economists in a Bloomberg survey expect the central bank to keep its benchmark rate at 4 percent this week."

Hard to make a case for a Dollah bottom against the Euro at current levels given expected changes in interest rates.

I would like to congratulate the New York Football Giants and Giants fans the world over on their glorious victory over Bill BellyCheck and the New England Patsies.

As the old saying goes, winners never cheat. I guess BellyCheck got his comeuppance yesterday. I was glad to see him devastated. It gave me hope, that at least in sports, in the end there is justice, and crime really doesn't pay. I wonder if that is an omen for society as a whole, which by and large has lost any understanding of the difference between right and wrong.

When the NFL wins, that's bearish, right?

Big column in Gloomberg yesterday says that the leading European currency strategists are bullish on the dollar because lower interest rates will mean faster growth in the US relative to Europe. Charts say they may be right. We'll see.

Yesterday, someone posted comments using an abbreviation that I did not understand. As I recall it was FB or FR or something.

I ask everyone to please keep the use of jargon or arcane abbreviations or symbols to a minimum. If I don't know what they mean, chances are neither do the majority of our readers.

Many tanks.

A little more housekeeping.

Upon being notified of potentially defamatory posts on the board, I have consulted with legal counsel and upon his advice have edited certain posts on M2M over the weekend.

Generally speaking, even with regard to public figures the statement "He is lying" or "he is a liar" could be considered libel and defamation, and therefore we can't use that statement. It would be legal to say, "I believe he is lying", and give reasons.

Just FYI.

Many tanks!

I suppose, taken to the extreme we could never say anything negative about anyone.

Good Morning!

Welcome to Intraday Stool! Thanks to aussiebear for her daily opening!

You can join the discussion by registering (PG rated user names only, please) and posting here as well.

Registration is easy. Just click the Register link above, enter your email address (which you have the option to keep confidential), and enter a user name. To keep out spammers and scammers, I'll send you an email with a few Monty Python type questions. Just reply with your answers, and I'll approve your registration as soon as I receive your reply.

If you have questions about how to register and post, use the Help link in the menu bar at the top of the page.

If you know others who might be interested in joining us, use the email to a friend link above the thread.

Many tanks for joining us!

Doc


Try the Professional Edition risk free for thirty days. If, within that time you don't find the information helpful, I'll give you a full refund. It's that simple!Click here for more information.

Subscribe to the Wall Street Examiner Professional Edition Precious Metals Daily, just $39 quarterly. Try it risk free for 30 days!

Get this indispensable daily analysis and support the Stool!

In case you missed it yesterday, there's a new podcast posted with Russ Winter over on http://radiofreewallstreet.fm, along with a 10 minute free preview.

3 day cycle projections spx 1409 and dow 12825. qqqq was projecting 46, but 3 and 5 day cycle indicators have edged to the sell side. So we'll have to see if the trend is still intact. The indicators while on the underside of their signal lines, have not broken down yet. The QQQQ would need to break the 3 day cycle MA at 45.61 and the 5 day at 45.51 to signal a downturn. the 8 day is also rising, at 45.20.

Dow and SPX were bumping into resistance Friday at the close at the level of the earlier high that day. Levels they need to clear for a breakout would be 12768 and 1396. Premarket high on the Qs Friday was 46.04.

TNX had gapped higher on the open, and 3 and 5 day cycle indicators have turned up. TNX trading above the 5 day cycle MA at 3.616 and the 8 day at 3.628. resistance around 3.66 and 3.70.

I posted this on MTM Sun. but not many people were around.

I have a theory about why the Fed has been draining money from the system. I think the Fed is trying to deal with a hedge-fund based market. If it weren't for the hedge funds, they could have gradually cut interest rates & also added enough liquidity through the treasury-related method and kept the market going sideways for years. However, hedge funds don't do "sideways" or "gradual." They either sell everything in sight because they have margin calls, when a decline is happening. Or else they buy everything in sight because some little rise in the market is happening. As someone on this site once pointed out, hedge funds can't ignore a rise and sit out . Because then their performance could lag the S&P, something hedge fund managers could get fired for (vs. poor performance in a down market, which apparently they do not get fired for.)

So the Fed couldn't do "gradual" to the market. The best they could do was wild swings, which, over a year's time or so, would amount to going sideways. So they let the crazed hedge fund managers buy every little rise N the market, up to a crazed Dow 14,200 last year-- and they drained liquidity the whole time, knowing that when the stool hit the fan (i.e. bad news surfaced that could no longer be covered up), the market would zoom downward. So there was no reason 2 put liquidity into it before then. (Think about it. The world credit market is frozen, & the Dow is bubbling up to 14K anyway. R U going 2 inject more liquidity?) Once the stool hit the fan, just recently, the Fed apparently came to the rescue with big interest rate cuts. However, they still could not inject a bunch of liquidity into the system. Because, given the hedge fund mentality, injecting liquidity would result in ridiculous & completely unsustainable bubbles in which hedgies would bid the Dow up by 1000 more points every single month-- not to mention bidding gold up $100 each month and oil $25 each month.

Unfortunately my theory does not lead to clear conclusions about what is next for the markets. Hedgies will keep bidding it up, every time it starts 2 rise some, of course. But then if more extremely bad news surfaces that can't be covered up, it's LOB again.

What do folks think of my theory?

Cap

i might add:

it isnt the case that currency rates are only determined by interest rate differential. In the long run i even go so far to says that this plays a minor role. Just look at a USD/JPY long term chart.

Also it is to a good part priced in in the EUR/USD rate that the US will have for the time being a relativly loose dollar policy. Traders looked a few weeks how Ben behaves after he came in office then saw that he does the same ploicy as Grünspahn, so they kept going on selling Dollar and buying Euro.

Not that i have many fundamental reasons to be bullish on the dollar. It is just like tiime for a good sized countermove. When EUR/USD was at 0.85 there was almost no reason for it to go up. EVERYONE was convinced it would go down more, a lot more.

spx and dow are on the verge of 3 and 5 day cycle indicator sell signals on any extension of the early downtick. Support areas are the 3 day cycle MAs at 12763 and 1385. As long as they hold, the trend remains up. 5 day cycle MAs are at 12600 and 1375.

qqqq sitting on 5 day cycle MA at 45.52.

capitall,

I think the Fed has its hands full with back room operation dealing with capital destruction. The stock market is only important in the sense that it's also capital. Second, there's the threat of foreign banks repatriating dollars, which, as Bernanke says, is a Treasury problem, but he might have instructions from them.

No way to prove any of it, so you can put this, and most opinions, right next to your favorite conspiracy theory.

Your theory is a little complicated to get my brain around, but seems consistent with how I see things.

DJ Fed Accepts $18 Bln In Overnight RPs

Type of transaction: Overnight RPs
Total accepted: $18 Bln
Total submitted: $55.25 Bln

Agency Collateral Operation
Total accepted: $18 Bln
Total submitted: $28.4 Bln
Stop-Out Rate: 3.3%
Weighted Average: 3.31%
High-rate submitted: 3.31%
Low-rate submitted: 3.15%

Treasury Collateral Operation
Total accepted: None
Total submitted: $9.7 Bln
Stop-Out Rate: N/A
Weighted Average: N/A
High-rate submitted: 2.68%
Low-rate submitted: 2.45%

Mortgage-Backed Collateral Operations
Total accepted: None
Total submitted: $17.15 Bln
Stop-Out Rate: N/A
Weighted Average: N/A
High-rate submitted: 3.35%
Low-rate submitted: 3.15%

(Data was provided by the New York Federal Reserve Bank).

I don't think GOOG can hold 500

or 400

it's a wealth destroyer on steroids

I don't think that most hedge funds operate in the manner you are describing. Although some may bet the farm, many are attempting to exploit tiny mispricings and other types of arbitrage between various instruments. The Fed hasn't been able to pump in liquidity because it seems to be behind the curve in lowering interest rates. See the latest Fed Report in the WSE Pro for a complete description.

$6 billion add. Check out the spread between the bids on Treasury versus Agency and MBS. I wonder why they took only Agencies at a rate so far above target?

Damn, missed another entry at $98.

[attachmentid=95330]

It would be ironic if the dollar reverses up just as (if) the Iranian oil exchange opens. They're been out of the dollar for two months now. The only thing the Iranian policy does is leave dollars in friendlier hands. The exchange could have the same effect.

I dont think it makes much difference if oil is priced in dollar or euro. Key is what the oil producing countires DO with their dollars. It is important that they invesmt in the US. So even if oil would be priced in euro but saudi arabia still would invest much more in the US than in europe where should the problem for the US be?

Bucky feeling for a bottom.

Special Weekend Edition - ARE THE BANKS OUT OF RESERVES?

Let me preface this by saying that I'm not at all certain I understand what I'm looking at here correctly.

I've been fighting with this all weekend, and don't wish to alarm.

But perhaps "alarmed" is exactly what we should be right now.

Reference? Right here


http://market-ticker.denninger.net/2008/02...nks-out_03.html
Doc, would you comment on the Denninger piece?

If we get one more down day, selling could resume in earnest. Although today is probably just a profit taking day as many indicators went to extreme overbought. But, the market is not as strong as most pundits seem to imply.

The newest mantra is the return of MA and insider buying. I think we go sideways up until OpEX and then down into PEI bottom in late March.

linrom,

what means PEI?

Martin Armstrong's defunct Princeton Economic Institute cycle.

[attachmentid=95332]

very few users here and also only the usual suspects. Top must be near. Although: Didnt bear market rallies last 4-6 weeks in the past? Maybe some meandering in feb, then hard down in march, a downmove which will be called "The 2008 easter massacre".

Need some pumping?

http://www.livewithoscar.com/

btw, Jerome Kerviel will VERY soon have a new well paid job at a Hedge Fund. You can bet your ass on that.

key shport levels to watch here 12633 and the 5 day cycle MA 12609. spx 1382 and 5 day cycle MA 1377.


qqqq is pushing at the 8 day cycle MA at 45.24.

I'm as much amazed by Armstrong's past accuracy as anyone. However, notice the 2007 top was supposed to happen about 8 months before it actually did. So if we are around 8 months out of sync with this cycle, the bottom he refers to is not going to happen until Nov. 2008-- or even later.

It's too long?

Truthfully, I almost never have any time to read the work of others. And if it's longer than 3 paragraphs, it's out of the question.

We have talked about the drop in free reserves here and on Radio Free Wall Street. I have suggested that it is related to the banks taking SIVs on to their balance sheets. That spiked their assets, causing free reserves to plummet. That's where the Fed came in with the TAFs to replace the disappeared fictitious free reserves with borrowed reserves. The level of the borrowed reserves should track the TAF.

That's my story and I'm sticking to it.

Is it a good thing? Of course not. Is it the end of the world? Nope. Japan kept dead banks on life support for a generation until they could repair their balance sheets. Foreign central banks and sovereign bagholder funds are likely to do the same in this case.

Can the US do the same thing as Japan over the long haul? Not by itself. Japan is a nation of savers. They were able to internally finance the propping of their banking system. So this isn't the same thing. The US financial system will need a lot of help from its rich uncles in the Far East and Middle East.

I won't go into any more detail here, because so much of this is covered in the Professional Edition Daily Fed Reports, and the Macroliquidity Report which I will be posting this afternoon, and the Radio Free Wall Street podcasts.

Fx, you need to figure out how to loose a few billion of your employer's money. It is a real career enhancer.