Prechter: Another Wave Lower Coming -Elliot Wave

Robert Prechter of the Elliot Wave International was interviewed on Bloomberg. Something to look out for.
"On a short term basis I think after 3 months coming into the 11th of June we might have ended the first wave up so we may be in for some correction for a while and if everything goes ideally, which it doesn't always do, we would have a second leg up in the summer and that would probably complete things." (By "complete things" he means complete the counter trend rally).

25,000 XHB $10 January 2010 Puts Traded

Hat tip to Crimson Mind for the information. 25,000 January 2010 $10 puts just hit the tape. Not sure of the exact nature of the trade (hedging, spec short pocketing change or spec buy) but if $XHB (Homebuilder ETF) violates support here it could retest lower levels. It's trading at $11.42 right now. This is looking out 7 months. I will continue to monitor housing data (Housing Analysis June 3 - Housing Starts, Building Permits, Pending Home Sales). Will WCI Communities and TOUSA be the only public building casualties? Unless I am missing one. Also read this after reading the WCI post. I'm wondering when there will be more M&A in this space.

Russia Plans To Sell Oil To China In Ruble



At the recent BRIC meeting Russia and China talked up settling trades in Ruble and Yuan instead of the US Dollar. Russia plans to sell oil to China denominated in Ruble. The USD better get a hold of itself. Survival of the fit only the strong survive....
"June 17 (Bloomberg) -- The leaders of Russia and China agreed to expand use of the ruble and yuan in bilateral trade to lessen dependence on the U.S. dollar a day after they took part in the first summit of the so-called BRIC countries." (Bloomberg.com)

JP Morgan's Lee Sees Recovery, S&P Target 1,100

Thomas Lee, Chief U.S Equity Strategist at JP Morgan spoke at the 2009 Reuters Investment Outlook Summit. Here's a summary and video from Reuters.com.
  • Global synchronized economic recovery taking place (U.S this summer)
  • Consumer will stabilize
  • Employment will improve 2nd half 2010
  • Businesses will rebuild inventory, areas of underinvestment
  • Attractive rates for businesses to lever up again
  • Will either buy companies, stock or invest in capital (expand)
  • Unanticipated wave of innovation will drive both consumer and business spending
  • 2009 S&P Target 1,100

Roubini Sees Deflationary Pressures, Unemployment at 11% and Output Gap

Dr. Roubini at the Reuters Investment Outlook Summit was interviewed at by Dan Burns. Here is the video and a few points he made, he thinks the $GOLD run is premature.
  • Too much talk about green shoots, sees mostly yellow weeds
  • Still sees data showing contraction rather than expansion
  • For next year and a half deflationary pressures will be dominant
  • Massive output gap: Demand falling relative to excess supply/demand
  • Prices will be cut to sell inventories
  • CPI still negative in US and across the world
  • Labor market is a major slack, unemployment will reach 11% in US
  • Slack in goods and labor markets = deflationary pressures
  • Sees inflation problem in 2 years due to Fed monetization of debt
  • Thinks oil and gold are overpriced

Are Blogs Diluting Yahoo's CPM Rate?

Are blogs (like Dvol) diluting Yahoo's advertising dollars per CPM? I'm wondering if they are scooping up independent online video properties? This is an interesting clip I found at BNN TV. Brigantine Advisors managing director Colin Gillis initiated coverage on Yahoo with a SELL and $13 target.
"The supply of pages that are available online is tremendous and it's the supply piece of the equation that we have to be worried about. Ad rates are dropping particularly for Yahoo on display advertising. When they used to get 12-$15 per 1000 page views that has dropped down to $5" continued at BNN.ca.
Check out this chart that compares Yahoo, Google, Bing search traffic from StatCounter. Also below I provided $Yahoo's stock chart from stockcharts.com ($15 at 50d/trend support, 200d just under $14).

Crazy SPY Tick Volume, Bots Taking Over!

Have you seen how $SPY volume hits the tape? On the tick charts below in about a second tick volume increased from 0 to about 40,000 shares (and SPY is trading at 92 so it's not cheap). The volume triangles were so perfect that I made boat sails out of them in MS Paint for your viewing pleasure. It's weird that I didn't see any massive red volume spikes. WTF? The bots are taking over!

SPY Tick Volume (Optionsxpress)

Someone Loading Up on SPY Aug Puts? Or Just Hedging. Don't Break Trend!

Check out the PUT v. CALL volume on the $SPY August option chain. Are traders loading up here for volatility or are these funds getting hedged out of the money. I wish I knew, but it is possible a correction overshoots and these options make some money if bought-to-open by August expiration. $SPY is at 91.73 right now.


SPY AUG Option Chain (Yahoo Finance)

SPY AUG 87.00 PUT , 2 Day (Optionsxpress.com)



 
DON'T BREAK THIS TREND $SPY! (Optionsxpress)

SPY/UUP Ratio to SPY, Jim Rogers Dow 30,000, Market Correction v. USD Bid

If the market corrects here $UUP (US Dollar Index ETF) could catch a bid again. Look at the inverse relationship between the S&P and US Dollar. I specifically charted out the SPY:UUP Ratio vs. SPY below. It looks exactly the same. That's why Jim Rogers on CNBC said the Dow could reach 20,000-30,000 during a currency crisis. The inflation play is all about timing..

SPY:UUP/SPY (Stockcharts.com)


S&P Futures In Backwardation

Source: Barchart.com


More information:
Contango Vs. Normal Backwardation (Investopedia)
S&P 500 futures market and the normal backwardation hypothesis (JEF, PDF)
Contango, Backwardation, and The Futures Curve (InformedTrades Video)

$MAR Implied Volatility, Short Interest and $VIX Update

This is a continuation of my last post, Marriott, Hotel Downturn Analysis - Economist Video ($MAR). I want to look strictly at sentiment. $MAR volatility plunged along with the $VIX, short interest increased 7.7% from 33.28 million shares to 35.82 million shares on June 1, 2009. This gave the short ratio a boost given the lower volume (4.4 to 7.9). Something has to give here... Either $MAR is setting up to crush crowded shorts on better than expected Q2 earnings/guidance OR implied volatility spikes and $MAR breaks down on strong volume to test some levels. There needs to be a volume boost either way to confirm that traders are buying the dull trade (low volatility/green shoots) or selling the re-emergence of fear trade. Get ready! Here's a VIX update by OptionMonster.com.