Engdahl, Economist in Germany On Greece Fiscal Debt Crisis, Deficit-to-GDP and Complex Derivatives (Video)

Taking a break from the pop news organizations at the moment, TheRealNews channel on Youtube talked to William Engdahl, an economist/author in Germany, about the Greek fiscal debt crisis, 3% deficit-to-GDP limit, exotic derivatives offered via Goldman Sachs/JP Morgan, off-balance sheet liabilities, the Euro construct, US Dollar, public debt-to-GDP, austerity measures, social issues and Italy. Also read these articles:

Is Titlos PLC (Special Purpose Vehicle) The Downgrade Catalyst Trigger Which Will Destroy Greece? (ZeroHedge)
Wall St. Helped to Mask Debt Fueling Europe’s Crisis (NYT)




Courtesy of TRNN.com (Greek people resist paying for crisis)

Bomb Exploded Outside JP Morgan Branch In Athens, Greece (Links)

There was a blast outside a JP Morgan office in Athens today and sources below said nobody was hurt. I will keep updating with links.  This isn't out of the ordinary.  In September, 2009 a bomb exploded outside the Athens Stock Exchange and in May, 2009 a Eurobank branch was hit "shattering windows and nearby buildings" (NYT link) and in March, 2009 a bomb exploded at an Athens Citibank!  Social implied volatility must be higher than it was 6-9 months ago, but hopefully not.

Bomb goes off at JP Morgan offices in Athens (Reuters)
Explosion outside J.P. Morgan in Athens: reports (MarketWatch)
Blast at JP Morgan offices in Athens (ANA-MPA.GR)
Bomb blast hits J.P. Morgan building in Greece (CNNi)
Bomb Explodes at JP Morgan Offices in Athens (CNBC Video, Reuters)

The underlying issues..

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IYT, SPY, DIA Set To Test 50 Day Moving Average, Gold Was Tell Last Night

The shorts on the risk trade got squeezed this morning. Gold was the tell last night when $XAU/USD (Gold spot) broke above its 50 day moving average and futures were up (I provided charts in comment section showing what happened). Well here we are today and SPY (S&P) is up 1.1% to 109.26, DIA (Dow) up 1.14% to 102.42 and IYT (Transports ETF) is up 1.67% to 71.98.

Below I provided 6 month charts of SPY, DIA and IYT. Depending on economic, financial and sovereign related catalysts ahead, for now it looks like they broke through the recent downtrend channel and are set to test the 50 day moving average. Ceiling resistance levels from late 2009 are right around the 50dma in each case. So today looks sort of like July, 2009.  If you remember the June/July correction it was really a technical mind f--k.  The S&P was riding a 50/200dma cross to the upside. The market decided to break below the 50dma AGAIN and faked a head and shoulders breakdown right at floor support and 200dma. After $SPY broke above 50dma resistance for the second time, it was finally time to load the boat.  Is it different this time!?  So I've learned that sometimes it takes a while for confirmation. Today $SPY's 200dma is at 101.96, 50dma at 110.85 and it's currently trading at 109.32.

Below I also provided the downtrend from 2007 which is another very important resistance level (which actually started this correction).  It hits around $113-114 depending on time.  Also check out the huge volume in SPY on February 5, about 500 million shares traded and formed a bullish hammer candlestick.  All of these charts are from stockcharts.com.

SPY (S&P-500 SPDRS)

DIA (Diamonds or Dow ETF)

IYT (iShares DJ Transportation Average Index Fund)

SPY 3 Year Downtrend

Gary Shilling: Dollar To Hit Parity With Euro, Risk of New Market Low (Videos)

Gary Shilling (A.G Shilling & Co.) was back on Tech Ticker and said he's still bullish on the US Dollar and bearish on the market. Given the fiscal mess in Europe, Shilling is short the Euro and forecasts it could hit parity (1-to-1) with the US Dollar.




In the second video he said there's a 40-50% chance the stock market could hit a new low. He said he'd be long 30-Year Treasury bonds at 4.5% (could hit 3%) and short copper (industrial commodities). Shilling is going against the grain (along side Hugh Hendry, Robert Prechter) betting on deflation.




Here are older tech ticker videos with Gary Shilling from summer 2009. He's still bearish!  Gary Shilling Still Bearish, Expects Deflationary Pressures (July 19, 2009). He was right about the housing bust and recession before it happened. Let the battle begin: Marc Faber/Nassim Taleb/GregorMacdonald/Jim Rogers vs. Hugh Hendry/Robert Prechter/Gary Shilling (who else). Place your bets.

February Minutes From Reserve Bank of Australia (RBA)

Here is a portion of the RBA minutes released tonight..  Continued from previous post:  $XAU/USD (Gold Spot) Trying To Ski Through Downtrend, 50DMA Resistance.

International Economic Conditions

Members were briefed on developments in the international economy. Overall, the recovery from the global recession was continuing. The IMF had recently upgraded its world growth forecast for 2010 to 3.9 per cent, from 3.1 per cent in October. There had been significant revisions for the United States, China and India, but more modest revisions for the euro area. The Bank’s staff had also revised up their world growth forecasts for 2010, though only modestly as their forecasts had already been significantly higher than those of the IMF.

While growth had resumed in the major advanced economies, there was significant spare capacity and measures of core inflation were gradually falling. Labour markets were very weak, although there were some signs of stabilisation in the United States. US GDP had grown by 1.4 per cent in the December quarter, which was stronger than expected. There was a significant contribution from the inventory cycle. GDP data for the United Kingdom were also available, with the preliminary estimate showing growth of 0.1 per cent in the December quarter, after six straight declines.

Growth in the advanced economies was currently being supported by the inventory cycle and stimulatory policy settings. At the household level, there was growth in spending in the United States and Japan, but spending continued to contract in many European economies. Members discussed this trend, which reflected weak income growth and rising household saving rates in some of the larger European economies. The latter appeared to reflect weak consumer sentiment, broader uncertainty about economic prospects, and – in some economies – concern about high public debt levels. Regarding investment spending, there had been a slight increase in the United States in the December quarter, after a decline of more than 20 per cent over the previous five quarters. As yet, there was limited evidence of a pick-up in investment in the euro area or Japan.

Members noted that one particular challenge facing many of the advanced economies was the growth in public debt. From the point of view of long-run fiscal sustainability, this needed to be checked, but tightening fiscal policy at an early stage could undermine economic recovery. Concerns about fiscal issues had recently focused on Greece, which had entered the crisis with relatively high public debt and had seen its budget deficit rise to 13 per cent of GDP in 2009.

The issues were quite different in Asia (outside of Japan), where growth was.... [read more].

$XAU/USD (Gold Spot) Trying To Ski Through Downtrend, 50DMA Resistance

While I sip on a Red Stripe, I'm watching $XAU/USD (gold spot priced in US Dollars) test a downtrend resistance level and 50 day moving average.  According to this free live chart at fxstreet.com, gold spot is trading at 1105.27 (up 0.55%), the 50 day moving average is at 1109.71 and it's testing the downtrend line as you can see.  I'll do a longer term analysis on gold futures and the $GLD ETF later.  I'll look into gold volatility as well and COT, whatever data is available.  We are at another serious inflection point.  If gold spot can take out this downtrend channel the long side could be in play again, at least in the short term IMO.  If it fails it could see another wave down it looks like.  You can see support from October, 2009 in the near term which hits the triangle vertex point.  We'll see.  I charted out the GLD/SPY ratio a few days ago (1:1), as well as EUR/GOLD which was testing an important low. If the Euro really falls apart here and/or people hit the safe haven ask, will the $USD or $GOLD outperform?

XAU/USD, Gold Spot courtesy of FXStreet.com

Updates: Dubai Debt Fears, Harrisburg Bond Payment, Europe Junk Bonds, Poland Real Estate, Greece, China Growth and Ford (2/14)

Dubai stock market falls on debt fears (BBC)
Dubai Stocks Drop Most in Almost 3 Weeks on Dubai World Report (Bloomberg)
Japan’s Economy Grows Faster-Than-Anticipated 4.6% (Update3)  (Bloomberg)
The Muni Time Bomb Is Set As Harrisburg Contemplates A March 1 Chapter 9 Filing (ZeroHedge)
Europe Junk Bonds Shrug Off Greece to Beat U.S.: Credit Markets (BusinessWeek)
(US) Investors abandon junk bonds (Financial Times)
The New Generation Leaving Ireland (BusinessWeek)
China’s Growth May Top 11% Even as Officials Rein in Lending (Bloomberg)
Greece to resist push for greater austerity (Financial Times)
UPDATE 2-Ford to launch new Mercury small car in 2011 (Reuters)
Investors brace for the next overseas surprise (AP)
Poland shows signs of real estate recovery (Financial Times)
RBS stuck with German portfolio (FT Alphaville)
*Utah Proposes Scrapping 12th Grade; Nevada Rations Diapers; Harrisburg Heads For Bankruptcy; NBA Lockouts Loom (Mish's Global Economics)

$FXE Technical Outlook (Euro Index ETF), Euro/Gold Ratio Testing Lows, 50/200 Day Crosses and Technical Chess

The Euro has been trending lower since the US Dollar broke out on the sovereign debt crisis in Euroland (Greece).  Recap:

Two EUR/USD Outlooks by Mr. Top Step and John Rogue, Charts USDX [2/10]
UPDATES: EUR/USD, Trichet Leaves Early For ECB Meeting, Stiglitz Says No Default For US, UK [2/8]
Quick Look at EURUSD Hourly, Daily and Weekly Charts, 1.3912 (Chart Video) [2/1]

I shall chart out $FXE (the Euro Index ETF) and the $XEU/$GOLD ratio (Euro/Gold Continuous Contract) on this post.  I also provided actionable news links below from tonight.  First is the 6 month $FXE chart.  It is clearly in a downtrend channel which started in December 2009.  Right now the FXE relative strength index (RSI at the top) has been camping out below 30 for a while so IF it breaks above 30 there could be an oversold rally, in technical terms.  Remember FXE is a general look at the Euro so for a more detailed look research the underlying Euro pairs.

What's notable here is the 50 day moving average crossed BELOW the 200 day moving average.  The historical move in FXE has been trending lower and now it's confirmed (imo) by the 50 day historical trading period crossing below the 200 day period [less a massive fake out here].  Going forward the 50dma will act as resistance and the 200day will provide backup foot soldiers.  The shorter the period the weaker the resistance level.  There are many resistance levels ahead including the downtrend channel, ceiling resistance, 50dma, 200dma and the ultimate 151 level.  A technical chess board?!

FXE:NYSE (Currency Shares Euro Trust) Courtesy of Stockcharts.com

Now look at the long term chart.  RSI is testing weakness from 2008 right before the financial collapse.  Today looks similar but less intense.  Both put pressure on the carry trade so far.  You can see the downtrend from a 3 year perspective and it needs to break out of that downtrend.  If FXE doesn't hold here, 132.5 (from early 2007) and 130 are next levels of support.  If all else fails, FXE could double dip to 126-7.

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Elizabeth Warren: Half of Commercial Real Estate Loans Under Water Expiring 2010-2014, Loan Losses Will Affect Community Banks (Videos, Report)

Whether credit spreads, equities, community banks and/or printing press hedges need to price this in or not, the massive refinance wave for underwater commercial real estate mortgages will hit between now and 2014, according to the Congressional Oversight Panel's February report.  $700 Billion ("half of $1.4 Trillion") commercial real estate mortgages are underwater and 2,988 banks are classified as "having a risky concentration of commercial real estate loans".  Also, TARP stress tests only factored in losses through 2010 and only at big banks.  "Commercial property values have fallen more than 40 percent since the beginning of 2007" (85% loan-to-values (LTVs) pushed and bought in mass are now at 140%) and losses at banks could hit $200-300 Billion, according to the report.  Below are videos of Elizabeth Warren, Chair of Congressional Oversight Committee, introducing the COP's February report.

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GLD/SPY Ratio At 1.0, Been Swing Dancing, When Will Spread Widen and Which Direction

If you look at the GLD/SPY ratio it is at 1.00.  At some point the spread has to widen no?  Or GLD and SPY will be joined at the hip because of a lower $USD (real return).  Look at GLD/SPY charts on multiple time frames with trends and moving averages.

1) The GLD:SPY 1 year chart is in a triangle and near an inflection point, just above the 50 and 200dma.  The GLD has been swing dancing with SPY in a 0.20 range since April, 2009.

2)  The GLD:SPY 3 Year chart is in a long term uptrend but is being squeezed in a symmetrical triangle.  If GLD falls hard, SPY spikes or simply SPY outperforms GLD to the upside / GLD falls harder than SPY on the downside, the ratio could test the August, 2009 bottom at 0.90 (also near uptrend support).  Or GLD/SPY breaks out to upside...  The GLD:SPY Ratio is up 10 fold since the beginning of the recession.  I will look at gold, silver, US Dollar and S&P 500 specifically in next post.  Thoughts?

Charts courtesy of Stockcharts.com

Put Option Activity in ZION and XHB, Plus $LUMBER Contract (Charts)

Today had interesting option activity in ZION (Zion Bancorp) and XHB (Homebuilders ETF). First here are articles for more detail:

Unusual Options Activity: S, OMX, ZION, STI, PALM, AIG, NVDA & PEP (TheOptionInsider)
Thursday Options Update: S, ZION, GDX, PBR, BSX, AIG & PEP (Andrew Wilkinson)
Large put buying in homebuilder ETF (OptionMONSTER)

The activity that stuck out was the 12,500 put spread on the April $17-$13 puts. Also around 5,000 traded on both the March $20 call and $17 March put which was interesting. Regarding XHB, 6,500 traded on both the June $16 puts and calls and 10,695 June $14 puts traded (w/6,439 open). Again, read the articles for better analysis on the trades.  ZION closed at $18.17 and XHB, $15.76.

So here are the charts. First, ZION tested $20 for the 3rd time in what looks like an ascending triangle from April.  If weakness prevails here it could fall to trend line support and the 200dma, but above $20 resistance looks like a decent hedged long.  Does Zion Bancorp have viral CRE exposure?

ZION Chart Courtesy of Stockcharts.com

The XHB chart looks like an ascending triangle as well.  A long would be above previous resistance at $16.20.  You can see the tight inflection point coming.  XHB has been trading at the same level for 6 months now so wait for something to happen imho.  XHB closed at $15.76.  The 200dma is at $14.26.  There are a lot of people bearish on housing given the overhang of inventory, foreclosures and people don't have jobs or access to credit.  Also, the Option ARM reset wave is hitting this year.  I'll find a chart and post it, or Google Whitney Tilson housing report.  Also what is up with the lumber contract?  It is testing 2007 and 2008 highs.  I guess watch all housing data (inventory, sales figures, home prices, lumber).

XHB and $LUMBER (Random Length) Courtesy of Stockcharts.com

Also if interested, I just did a post on Chicago housing, including the S&P/Case Shiller Chicago Index, a video from Crain's Chicago giving analysis and foreclosure data.  Analysts don't expect a real recovery until 2013.  I embedded the video.

Soros Interview at Davos 2010 On China Overheating, Gold Bubble, Bank Regulation

For the archives, here is a video of Soros being interviewed at Davos by BloombergTV. He talks about bank regulation, China overheating, bubbles, unstable markets and more.

Or click here (Bloomberg.com)

Next, according to this article at Telegraph.co.uk, George Soros said "the ultimate asset bubble is gold". So will gold peak at $1,225 or $5,000?

Check Out The BigDog and PETMAN Robots by Boston Dynamics (Videos)

Before I get back to regular programming, I saw this link from @moorehn pointing to TheAwl.com which had a video of BigDog, a military robot built by Boston Dynamics. They explain it in detail here.  I dug a little deeper and found a PETMAN robot walking on a treadmill.  You can push these robots over and they regain balance.  It is insane.  Also GM and NASA just unleashed humanoid robots (Robonauts) that work on ergonomic tasks on an assembly line.  We already have have robots controlling the Federal Reserve vaults, conducting symphony orchestras, controlling the stock market and robot substitute teachers, chefs and receptionists.  Soon we will have Johnny Cabs too.  Is this the end of human work?

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Dow 2010 vs. 1930 Rally, Tariffs Put Fuel On Fire, What Could Do It Now? (Chart Video, News)

First off, I compared the Dow bear market rally in 1930 to 2009 (August, 2009) and it's been a very popular post (top 3 on the "popular pages" widget).  I compared both charts and dug into the Smoot-Hawley Tariff Act of 1930 which ultimately led to the Great Depression.  Go to the post here.  So what is going on today?  The Dow corrected at the 2007 downtrend (charts) which was actually a 50% rally from the lows. It could be a normal 10% pullback in a new bull market, as Wharton Professor Jeremy Siegel believes, but in this crazy world you never know wtf will happen next.  Look at what's going on a year after the biggest bailout in history: 9% unemployment, sovereign debt crisis, protectionism, currency conflicts, geopolitical tension etc..

China says U.S. protectionism jeopardizes trade ties (Reuters)
China, U.S. Friction on Trade Issues Is Escalating, Zhong Says (Reuters)
S&P Sees More Defaults in Middle East (WSJ)
UK businesses threaten to pull out of China over protectionism (Telegraph)
Trade war is no option (China Daily)
Ahmadinejad warns Israel against any military move (Reuters)
China Army Urges Treasury Dump, ADEDY Strike In Greece, Iran Anniversary (DVLINK)

Looking specifically at price action, Adam Hewison at MarketClub looks at the 1929-1932 chart, 50% correction, 2007-2009 similarities and potential psychological implications.  The video is free, go here:  Is It Déjà Vu All Over Again for the Dow?.  For FTC compliance I'm an affiliate of MarketClub.  I will chart out the S&P, Dow, US Dollar and gold tomorrow.  SPX looks like it's testing downtrend channel resistance. Also, Marc Faber (Gloom Boom Doom Report) thinks China's economy is slowing and will hurt industrial commodities in the near term.  China Economy Will Slow, Hurt Commodities, Faber Says (Update1) (BusinessWeek).

Screenshot from video

Bernanke Testimony on Fed Exit Strategy 2/10/2010, Compare To London School of Economics Speech on 1/13/2009

It would be interesting to compare this statement to his "exit strategy" speech at the London School of Economics on 1/13/2009 (link).

Chairman Ben S. Bernanke
Federal Reserve's exit strategy
Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C.
February 10, 2010

Statement as prepared for delivery. The hearing was postponed due to inclement weather.

Chairmen Frank and Watt, Ranking Members Bachus and Paul, and other members of the Committee and Subcommittee, I appreciate the opportunity to discuss the Federal Reserve's strategy for exiting from the extraordinary lending and monetary policies that it implemented to combat the financial crisis and support economic activity.

Broadly speaking, the Federal Reserve's response to the crisis and the recession can be divided into two parts. First, our financial system during the past 2-1/2 years has experienced periods of intense panic and dysfunction, during which private short-term funding became difficult or impossible to obtain for many borrowers. The pulling back of private liquidity at times threatened the stability of major financial institutions and markets and severely disrupted normal channels of credit. In its role as liquidity provider of last resort, the Federal Reserve developed a number of programs to provide well-secured, mostly short-term credit to the financial system. These programs, which imposed no cost on the taxpayer, were a critical part of the government's efforts to stabilize the financial system and restart the flow of credit.1 As financial conditions have improved, the Federal Reserve has substantially phased out these lending programs.

Second, after reducing short-term interest rates nearly to zero, the Federal Open Market Committee (FOMC) provided additional monetary policy stimulus through large-scale purchases of Treasury and agency securities. These asset purchases, which had the additional effect of substantially increasing the reserves that depository institutions hold with the Federal Reserve Banks, have helped lower interest rates and spreads in the mortgage market and other key credit markets, thereby promoting economic growth. Although at present the U.S. economy continues to require the support of highly accommodative monetary policies, at some point the Federal Reserve will need to tighten financial conditions by raising short-term interest rates and reducing the quantity of bank reserves outstanding. We have spent considerable effort in developing the tools we will need to remove policy accommodation, and we are fully confident that at the appropriate time we will be able to do so effectively.

Liquidity Programs
With the onset of the crisis in the late summer and fall of 2007, the Federal Reserve aimed to ensure that sound financial institutions had sufficient access to short-term credit to remain sufficiently liquid and able to lend to creditworthy customers, even as private sources of liquidity began to dry up. To improve the access of banks to backup liquidity, the Federal Reserve reduced the spread over the target federal funds rate of the discount rate--the rate at which the Fed lends to depository institutions through its discount window--from 100 basis points to 25 basis points, and extended the maximum maturity of discount window loans, which had generally been limited to overnight, to 90 days.

Many banks, however, were evidently concerned that if they borrowed from the discount window, and that fact somehow became known to market participants, they would be perceived as weak and, consequently, might come under further pressure from creditors. To address this so-called stigma problem, the Federal Reserve created a new discount window program, the Term Auction Facility (TAF). Under the TAF, the Federal Reserve has regularly auctioned large blocks of credit to depository institutions. For various reasons, including the competitive format of the auctions, the TAF has not suffered the stigma of conventional discount window lending and has proved effective for injecting liquidity into the financial system.2

Liquidity pressures in financial markets were not limited to the United States, and intense strains in the global dollar funding markets began to spill over to U.S. markets. In response, the Federal Reserve entered into temporary currency swap agreements with major foreign central banks. Under these agreements, the Federal Reserve provided dollars to foreign central banks in exchange for an equally valued quantity of foreign currency; the foreign central banks, in turn, lent the dollars to banks in their own jurisdictions. The swaps helped reduce stresses in global dollar funding markets, which in turn helped to stabilize U.S. markets. Importantly, the swaps were structured so that the Federal Reserve bore no foreign exchange risk or credit risk.3

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Joseph Stiglitz and Hugh Hendry Debate About Greece Bailout (Video)

Economist/Professor Joseph Stiglitz and Hugh Hendry (Eclectica Asset Management) debate about a Greece bailout on BBC.  Hugh Hendry thinks Greece should default on their debt, take a haircut and start over.  Stiglitz says give them aid and they will bring down the deficit.  Two very different perspectives.  We all know there's no chance of default (or is there...). Also watch Marc Faber, Hugh Hendry and Nassim Taleb debate at the 2010 Russia Forum.  Stiglitz recently said there was NO WAY the U.S, Greece or UK would default. By the way unions are striking in Greece: Berlin Considers Greek Bailout as Unions Strike (Spiegel).

I originally found this at Business Insider.

Updates: China Army Urges Treasury Dump, ADEDY Strike In Greece, Taiwan Drops Submarine Request, Iran Anniversary and Something Out of Moscow

Geopolitics never sleeps..

Greek unions vow to fight austerity cuts (AFP VIDEO)
Greek unions launch 1st assault on austerity plan (AP)
Greek public sector workers strike as spectre of bailout looms (GUARDIAN)
Greek Strikes Defy Papandreou’s Bid to Stop Crisis (BLOOMBERG)
*Taiwan drops request for U.S. military subs: source (REUTERS)
China PLA officers urge economic punch against U.S. (REUTERS)
Iran anniversary 'punch' will stun West: Khamenei (AFP)
Italy Says Iranian Militia Attacked Its Embassy (REUTERS/NYT)
Moscow says U.S. missile shield aimed at Russia (REUTERS)
Chinese Reserve Managers Notified That Any Non-USG Guaranteed Securities Must Be Divested (ZERO HEDGE)
Revolution day will put Iran's disunity on show (REUTERS)

*GSEE union plans to strike on 2/24/2010.

RBS Bob Janjuah Sees 3rd and Final Leg of Bear Market (February, 2010)

A Bob Janjuah RBS report was released yesterday morning. You can find the full text at Zero Hedge. He is riding wave C!

"I now think we have begun the 3rd and final leg of the multi-yr bear mrkt which began in 2007 and which SHOULD, hopefully, finish late this yr, but which COULD (hopefully not) drag on deep into 2011. This new bear leg SHOULD see S&P trade sub-1000 this mth. After which we can bounce a little (back up to 1080/1100) over late Q1/early Q2. However, this I think will then be followed by a move down at least into the low 800s in Q2/H2 10, and depending on how policymakers behave, potentially down towards/to New Lows." (read full text)

Two EUR/USD Outlooks by Mr. Top Step and John Rogue, Charts USDX/EURUSD

Arbing information here from premium financial media. Here are outlooks on EUR/USD by Mr. Top Step on OptionMonsterTV and John Rogue on Tech Ticker.

In the short term Rogue thinks the Euro rally could fail here and make a new low at 1.30. Same goes for DXY (US Dollar Index) on the other side of the trade. In the long term Rogue thinks the US Dollar Index is headed lower and mentions the 200 week moving average. "The DXY is right at a downward sloping 200 week moving average". I charted out the 200WMA and trends below. This video comes courtesy of Tech Ticker.

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Greece Will Not Default (Stiglitz), EU Bailout? Germany Loan Guarantees? EUR/USD at 1.378

Joe Stiglitz (economist), on Bloomberg, said there's no default risk for Greece.  Sovereign debt interest rate risk is another story.  Stiglitz Sees No Greek Default as ‘Speculative Attacks’ Persist (Bloomberg).  He thinks their plan will work.  Greece’s Papaconstantinou Unveils Tax Overhaul to Boost Revenue (BusinessWeek).  So will provide aid to Greece.  From Bloomberg:

"The European Union dropped hints that a summit this week will offer an aid package to financially- stricken Greece as officials seek to prevent its budgetary woes from eroding confidence in the euro.

“We are talking about support in the broad sense,” Olli Rehn, the EU’s new economic affairs commissioner, said in an interview in Strasbourg, France today. Michael Meister, financial affairs spokesman for German Chancellor Angela Merkel’s Christian Democratic Union, said in an interview in Berlin that aid would come “under strict conditions and if the Greek government undertakes far-reaching state reforms.” (Full article at Bloomberg)

Also this was a headline on WSJ just now.

"Germany is considering loan guarantees for Greece and other troubled euro partners, but a final decision may not come this week."

Below is the video of Joseph Stiglitz talking about Greece on Bloomberg.  EUR/USD is trading at 1.3780 and I provided more news links.

2nd UPDATE: Germany Working On Possible Greek Aid Package (WSJ)
European Governments Agree to Help Greece: Source (ABC/Reuters)
Treasurys Down On Reports Of EU Aid To Greece, 3Y Auction Looms (WSJ)
UPDATE: Almunia: Greece Must Pay Price For EU Support (WSJ)
EUR/USD, Trichet Leaves Early For ECB Meeting, Stiglitz: No Default For US, UK (yesterday)

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Marc Faber, Nassim Taleb, Hugh Hendry at Russia Forum 2010 (Video Link)

At the 2010 Russian Forum, Marc Faber asked Nassim Taleb (Black Swan), Hugh Hendry and other panelists how they'd put $100 million to work in the next 12 months.

Taleb said to short S&P-to-Gold ratio, use way out-of-the-money options betting on hyperinflation (gold, silver, treasury puts) and short US Treasury Bonds. Hugh Hendry talked about UK interest bets and the next "Paulson" trade which would risk 1.5% for 75%, he claims. Hendry is long US Treasuries (and I believe bullish on US Dollars), taking the other side of Faber and Taleb. Hendry thinks the US interventionists (monetary/fiscal) will fail to spark inflation so he is betting on deflation. You know where Hugh Hendry stands on China. Marc Faber thinks "self sufficiency" will one day be important (living on farmland) and water is a concern. Hendry considers agriculture a risk asset at the moment. This was a very interesting panel, I suggest you watch it. They also chat about Japan, China, geopolitical risks etc. Click here or the pic.

EUR/USD, Trichet Leaves Early For ECB Meeting, Stiglitz Says No Default For US, UK

News was jumping tonight on sovereign debt issues.  A catalyst is coming soon for Greece debt, CDS and the Euro. Whether the ECB (or someone else) steps in or not, watch the Euro trade against the US Dollar. On 2/1/2010 I looked at EUR/USD using a Screenr video when it was trading at 1.3912 and it looked like it would hit 1.35 support without an upside catalyst. It hit 1.358 yesterday and since then rallied up to 1.366.  Is Euro weakness priced in or just getting started?  We'll see.

EUR/USD (Freestockcharts.com)

Trichet Leaving Sydney Early to Attend EU Meeting (Correct)(Business Week)
Trichet leaves early to attend crisis meeting (ABC)
Greece Says Call for Aid Would Send ‘Worst Signal’ (Update1) (Bloomberg)
The Ever Increasing Parallels Between AIG And Greece... And The CDS Puppetmaster Behind It All (Zero Hedge)
Goldman Sachs’ response to The New York Times article on AIG (Goldman Sachs)
Euro ‘January Effect’ May Signal Drop, MIG Says: Chart of Day (Bloomberg)
Euro Near 8-Month Low Against Dollar on Greece Fiscal Crisis (Bloomberg)
Australia Sovereign Risk Nears 9-Month High on Greece Debt Woe (Bloomberg)
Stiglitz: It's Time To Go "Sparta" On Evil Greek Speculators (Business Insider)
No Exit in Sight for U.S. As Fannie, Freddie Flail (WSJ)
Ayatollah Khamenei: Iran Set To Deliver Punch That Will Stun The West (Business Insider)
Stiglitz Says U.S., U.K. Default Is ‘Absurd’ Investor Notion (Bloomberg)
Portugal, Greece, Spain default worries rise (Market Watch)
Two Hedge Funds One Bank? Is There A Concerted Effort To "Destroy" Greece? (Zero Hedge)
Pimco’s El-Erian Says 2010 Will Be About Sovereign Risk (Business Week)

Take Off Your Dow 10,000 Party Hats For Now, Need A New Keg

The Dow 30 is at 9,964 as I type. The same number we hit in March, 1999.  Today a value manager on Tech Ticker (Vitaliy Katsenelson of Investment Management Associates) said we will trade around 10,000 for the next 10 years! I have great vids on this post:  Partying Like It's 1999 Again, Dow Hits 10,000 (3/29/1999 CNBC Video) (10/2009).  Tech Ticker video below.

(Chart courtesy of FreeStockCharts.com)

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GBP/USD Pierced Floor on Weekly, Riding Downtrend On Hourly, Is Action Based On Yield, Growth or Sovereign Risk (CHARTS)

It appears that GBP/USD pierced through a floor from October on the weekly chart and is riding a downtrend channel on the hourly. If the Pound doesn't want to see the 1.40s, or perhaps double bottom, it needs to get back above that yellow line. Or in other words, the Dollar needs to "consolidate gains". Currencies in Europe are trying to sober up after the newsfest last week out of Greece, Portugal and Spain.  Here is a look at EUR/JPY last week.

GBP/USD (British Pound/US Dollar) Hourly Chart

GBP/USD Weekly Chart

(Charts courtesy of FreeStockCharts.com)

Forex: GBP/USD dips to a fresh 8-month low at 1.5530 (FXSTREET)
Dollar climbs as debt concerns linger (MarketWatch)
Dollar May Consolidate Gains (FXSTREET)
Debt problems weigh on equity markets (Report) (BHF Bank/FXSTREET)
2/5: British Pound May Remain Under Pressure As Yield Outlook Diminishes (DailyFX)
2/4: Morgan Stanley: Even We Can't Believe How Fast The Euro Has Unraveled (BusinessInsider)

Watch GM/NASA's Robonaut "Humanoid Robot" Work On Assembly Line (Video)

Doesn't Robonaut "R2" look like a 1984 Terminator? Check out these videos. Engineers will use the GM bot to automate "dull, repetitious or ergonomically difficult tasks as well as to test software, sensors" etc. (DiscoveryNetworks video). Soon they will do dishes, laundry, cook and play baseball outside with your kid. The videos come from Gmblogs, Traclabs and Discoverynetworks on Youtube.

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Chicago Housing Market Bottoms In 2013? S&P/Case Shiller Index, Foreclosures and Futures (Video/Home Price Chart)

This continues from my previous posts on the Chicago CTA, Illinois financials and 2010 commercial real estate outlook. I found a Chicago housing article at Crain's Chicago (video below). Burns Real Estate Consulting and Fiserv said the Chicago housing recovery was years away, perhaps 2013, as underwater mortgages, the tight lending environment, high price/income ratio, foreclosures and high unemployment put pressure on upside momentum.

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Chicago CTA Volatility, $95M Budget Hole, Service Cuts, 1100 Laid Off (Video)

CTA services will be cut on Sunday with 1,100 workers laid off.  The video below is from ABC7 Chicago. They have a $95 million budget shortfall. I guess the 25 cent fare increase didn't help the situation. This is a disaster for Chicago workers and commuters.

Bus union official: CTA cuts will be 'horrific' (ABC7 Chicago)
No deal to save CTA from service cuts (ChicagoTribune)
CTA: Plan trips as service cuts take effect (JG-TC Online)
CTA bus barn shut as bus, train cuts loom (ChicagoBreakingNews)
Illinois Insolvency, Chicago Commercial Real Estate Outlook [Warehouse Vacancies Hit 12.1%]

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Weekend Reads On Credit Default Swaps, CDOs, AIG/Goldman

Read this post at "The Market Ticker" blog by Karl Denninger, You Had Better Cage The Monster CONgress (AIG/GS/CDS).  For more on CDS and CDOs go to this post with links to Tavakoli Structured Finance. Here are other interesting articles:  Testy Conflict With Goldman Helped Push A.I.G. to Edge by New York Times (h/t @deepakshenoy) and Dear Senator Corker: Meet The HVol 4 And Basis (Prop) Trades That Destroyed Merrill Lynch, Guest Post: AIG's Banks - Market Makers Or Flippers Of CDOs? by Zero Hedge.  CDS n' CDOs son...

January Option Trades Timed Sell Off Perfectly Using Cheap Volatility (IWM, SPY, IYT, UUP, SLV, SRS)

When the S&P and Dow knocked up against long term downtrend resistance I thought there was a decent chance of a sell off so I started watching put action in detail.  If $SPY corrected at a minor downtrend resistance level in July, 2009 why wouldn't it at the ultimate 3 year downtrend? With the volatility index ($VIX) making new lows (16) and traders chasing market upside on breakouts it was hard to pinpoint the exact top. I'm sure that's why traders were buying, on a net credit basis, out of the money VIX options in November expiring in December.  The VIX futures curve was also steep.  The market broke out yet again during the Santa Clause rally.  In the beginning of January the Transports, Industrials, Russell 2000 and S&P 500 Indexes all ran out of breath right at downtrend resistance.  During this time I saw interesting option trades.  For example, $SRS (Inverse Real Estate ETF) April calls, IWM (Russell ETF) February puts (with a put/call ratio spike), IYT (Transports ETF) February puts (extremely low put/call ratio but rising short interest) and UUP (US Dollar ETF) June calls were active.  In December, SLV (Silver ETF) February puts, SPY (S&P ETF) puts, IWM puts and UUP calls were active at higher premiums.  Traders in January timed their speculative or protective positions perfectly using cheap volatility.  Protective meaning hedging a long portfolio of ETFs which was, in this case, a decent kicker.  The FEB puts expire in two weeks (2/19).

January 2010 Action: (Expirations 2010 except one Jan 2011):

1/5/2010: SRS APR 7 call $1.36 to $1.69 (+24%)
1/6/2010: IWM FEB 60 put $0.92 to $1.63 (+77%)
1/12/2010: UUP JUNE 23 call $0.58 to $0.90 (+55%)
1/13/2010: IYT FEB 75 put $2.10 to $6.10 (+190%)

December 2009 Action:

12/30/09: SLV FEB 15 put $0.23 to $0.46 (+100%)
12/30/09: SLV APR 15 put $0.53 to $0.96 (+81%)
12/15/09: UUP JAN 2011 24 call $1.00 to $0.96 (-4%)
12/14/09: UUP March 23 call $0.55 to $0.66 (+20%)
12/11/09: IWM, SPY Put Positioning (noted volume on ISE)
12/11/09: SPY Exotic Way Out Of Money Dec 55 put $0.60 to $0.43 (-28%) 
12/2/09: SPY MAR 110 put $5.20 to $5.46 (+5%)

Coppock Curve on S&P 500 Predicts Bottoms On Monthly Chart, Similar to MACD on Daily

Anyone notice how the "Coppock Curve" and S&P 500 converged before the March lows and diverged all throughout the massive rally?  It looks similar to the MACD.  Here is the definition from Wikipedia:

"The indicator is designed for use on a monthly time scale. It's the sum of a 14-month rate of change and 11-month rate of change, smoothed by a 10-period weighted moving average.  "Coppock, the founder of Trendex Research in San Antonio, Texas, was an economist. He had been asked by the Episcopal Church to identify buying opportunities for long-term investors. He thought market downturns were like bereavements and required a period of mourning. He asked the church bishops how long that normally took for people, their answer was 11 to 14 months and so he used those periods in his calculation.  A buy signal is generated when the indicator is below zero and turns upwards from a trough. No sell signals are generated (that not being its design)......" (Coppock Curve on Wikipedia)

First, I used it on the daily chart and saw higher lows and a 0-line cross to the upside right after the S&P March bottom. Thereafter, I saw lower highs on the Coppock Curve from March to January, 2010.  The curve just made a new low below the zero line at -9.48.  Not sure if there is structural significance.  Just saying it could have been sensing the recent sell off like the MACD.

Chart courtesy of FreeStockCharts.com

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Moody's Warns US on AAA-Rating, Peter Schiff Update on Sovereign Credit Risk, California

I wanted to hear what Peter Schiff had to say about today's events. He talks about the sovereign debt crisis in Greece, the US and it's derivative California. Also Moody's warned that the U.S AAA-credit rating was at risk of downgrade because of deficits and Congress today raised the Federal debt limit by $1.9 trillion to $14.3 trillion. A lot going on in public finance land.

US credit rating at risk, Moody's warns (Telegraph.co.uk)
Congress Approves $1.9 Trillion Debt-Limit Increase (BusinessWeek)
Taleb Says ‘Every Human’ Should Short U.S. Treasuries (Update2) (Bloomberg)

Watch S&P Get Smoked Into The Close, Down 3.1% ($SPX Video, 2/4/2010)

Watch the S&P get smoked today into the close.  It ended down 3.11% and took out 1072 floor support. It looks like 1040 is the next support level and ultimately the 2009 summer highs at 954.  We shall see folks, whatever the algos want to do. Hopefully you are riding cheap index puts from early January. Recap on the day:

Greek Union Strike, Spain, Portugal CDS Widen, Sovereign White Knight Needed (Blog Post)
Initial jobless claims at highest level since mid-December (MarketWatch)
Productivity, Jobless Claims Rise (WSJ)
Congress OKs $1.9 trillion boost in debt limit (CNNMoney)
From yesterday: U.S. May Lose 824,000 Jobs as Employment Data Revised: Analysis (Bloomberg)
New York sues Bank of America over Merrill Lynch merger (CSMonitor)
Get Ready:  PREVIEW-US Jan payrolls seen +5,000,jobless rate 10.1 pct (Reuters)



Chart/FreeStockCharts.com, Instrumental/Who Shot Ya

Greek Union Strike, Spain, Portugal CDS Widen, Sovereign White Knight Needed?

Euro aid coming? Who will be the sovereign white knight.

Massive deficit in Greece and Portugal threatens banks (Sydney Herald)
ECB chief says Greece takes steps in right direction (MarketWatch)
REFILE-UPDATE 1-IMF would help Greece if asked -Strauss-Kahn (Reuters)
UPDATE 1-Greece not planning to seek IMF help -minister (Reuters)
IMF chief-Spain's Zapatero in tough spot on pensions (Reuters)
IMF calls Greek austerity program 'appropriate' (AFP)
Greece's Biggest Union Sets Strike; Tax Collectors Stage 48 Hour Walkout (Benzinga)
Greek taxmen kick off wave of strikes against austerity (Reuters)
Greece’s Biggest Union Sets Strike, Threatens Cuts (BusinessWeek)
Greek debt woes spread to Portugal and Spain (FT.com)
RBS's Cailloux on Greece, ECB (Bloomberg Video)
Spanish Borrowing Costs Jump at Three-Year Note Sale (Bloomberg)
Portugal and Spain CDS prices at fresh high (FT.com)
Portugal's CDS prices at new high (FT.com)
Fears of 'Lehman-style' tsunami as crisis hits Spain and Portugal (Telegraph)
European Stocks Fall Most in Two Months as Portugal, Spain Sink (Bloomberg)
Portugal stocks slide amid debt worries (BusinessWeek)
Greek Strike Deepens Debt Crisis Fears (ABC News)
Trichet Says ECB ‘Confident’ Greece Can Cut Deficit (Bloomberg Video)
Greek officials start walkouts over cuts (Digital Look)
Crisis in the currency club (EuropeanVoice)

To escape the madness visit Lagos and Ponta de Sagres, Portugal, é muito legal na minha opinião.

Source:  http://www.alvarocarnicero.com/

Ashraf Laidi: If Yen Stronger Than Dollar and Dollar Stronger Than Euro.. (Video)

Ashraf Laidi of CMC Markets gives an update today on currencies, gold and oil.  Below is a one year chart of EUR/JPY (Euro/Yen). 117 looks supportive.

Freestockcharts.com - EUR/JPY

Jim Chanos Presentation Video On China, Shanghai 200DMA Chart ($SSEC)

Short seller Jim Chanos (Kynikos Associates) has been bearish on China for a while now.  Below he makes his case in a 57 minute presentation. I first found this at Big Picture.  I also put up a 3 year chart of the Shanghai Composite ($SSEC) below which is trading 2 points above the 200 day moving average.  Below that level, if confirmed, would be bearish with heavy overhead resistance. I looked at $FXI and $SSEC a week ago and provided different views of China's economy. Chanos thinks "there are classic pockets of overheating and overindulgence".  It is not a secret that China is tightening a bit. Is it already priced in or is there more adjustment ahead?

China Banks Tightening Standards for Loans To Property Sector (iMarketNews)
Shanghai equities at lowest since Oct (People's Daily Online)
Economic fears pull US copper futures below $3/lb (Reuters India)
China curbs companies’ capital raising (FT.com)
Tightening fears give rise to China 'buy' opportunities (FT.com)
Chinese Tightening Unlikely to Cause Copper Collapse (WSJ.com)
Chinese mortgage rates rise as loan clampdown bites (Reuters)

There are also geopolitical tensions going on between China the US about Obama's Dalai Lama visit, internet censorship, Yuan pressure, trade and arms sales to Taiwan.  So interesting times folks. Jim Chanos correctly shorted Moody's while Buffett was buying in May 2007. Today he is taking the other side of "BofA Merrill Lynch, CLSA Ltd., Morgan Stanley and Macquarie Group Ltd." who believe that "Chinese equities may soon rebound." (BusinessWeek, 2/3/2010).

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June $UUP 23-26 Call Spread Up 52% In 20 Days (Net Debit .52 to .79)

To those of you who despise $UUP, I present to you a trader who is up 52% (net debt .52 to .79) so far on a $UUP June $23-26 call spread initiated a couple weeks ago.  At that time UUP held on to 50dma support (22.63) and it closed at 23.40 today, up 3.4%.  The USDX (US Dollar Index) move from December is another story, you can thank Jim Rogers (Jim Rogers Betting On US Dollar Rally, Would Buy Gold At $1000).

Chart courtesy of freestockcharts.com

Waiting For $SPY Catalyst, Afternoon Reading, Video, Chart (2/3/2010)

Waiting for a catalyst.

 (Chart courtesy of freestockcharts.com)

Goldman May Lose Record Profit to Bid-Ask Spread: Chart of Day (Bloomberg)
Spain’s Tax-Cheat Landlords Add to Rising State Debt (Bloomberg)
Pimco Says California Yields May Revisit 2009 Peak on Deficits (Bloomberg)
Pimco's El-Erian Sees `Bumpy Journey' as Economy Resets (Bloomberg Video)
Italy Seizes Bank of America, Dexia Assets Amid Probe (Bloomberg)
Greek Bonds Advance as Almunia Says EU Endorses Deficit Plan (Bloomberg)
U.S.'s LaHood News Conference About Toyota Recall (Bloomberg Video)
Manufacturing Way Ahead Of Services As ISM Index Misses Expectations Due To Weak Employment (BusinessInsider)
Payrolls Show First Job Creation Since 2008 For Medium Businesses... (BusinessInsider)
February 2010, Monthly Newsletter From Sundaram BNP Paribas Asset Management (ZeroHedge)
Portugal Bund Spreads Even Wider Following Substantially Reduced Bill Auction, Yield, CDS.. (ZeroHedge)
Pfizer 4Q Net Doubles; Earnings View Below Street (WSJ)
Volcker Plan May Reverse Bank Recovery: CRA (HousingWire)
U.S. May Lose 824,000 Jobs as Employment Data Revised: Analysis (Bloomberg)
Rosenberg: Forget The "Flat" Pending Home Sales Number, Here's The Real Disaster (BusinessInsider)
Gasoline rises after unexpected supply drop (AP)

Paul Volcker Testimony Before Senate Banking Committee (Text/Video)

Paul Volcker testified before the Senate Banking Committee today on the proposed "Volcker Rule" which would ban hedge funds, private equity funds and proprietary trading inside commercial banks.

Full Video at Banking.Senate.Gov

Here is a portion of the prepared testimony:

"Third, I want to note the strong conflicts of interest inherent in the participation of commercial banking organizations in proprietary or private investment activity. That is especially evident for banks conducting substantial investment management activities, in which they are acting explicitly or implicitly in a fiduciary capacity. When the bank itself is a “customer”, i.e., it is trading for its own account, it will almost inevitably find itself, consciously or inadvertently, acting at cross purposes to the interests of an unrelated commercial customer of a bank. “Inside” hedge funds and equity funds with outside partners may generate generous fees for the bank without the test of market pricing, and those same “inside” funds may be favored over outside competition in placing funds for clients. More generally, proprietary trading activity should not be able to profit from knowledge of customer trades.


I am not so naive as to think that all potential conflicts can or should be expunged from banking or other businesses. But neither am I so naïve as to think that, even with the best efforts of boards and management, so-called Chinese Walls can remain impermeable against the pressures to seek maximum profit and personal remuneration." (full testimony)

Doesn't it all come down to risk management?  Small banks are failing just because of bad loan portfolios.  How do you regulate greed, giddiness and flawed risk models to prevent any of this from happening again in 2088?

Business, Finance and Investment News for 2/2/2010

Bullish News Corp result buoys Murdoch (ABC News)
Toyota U.S. sales reel from crisis; GM, Ford surge (Reuters)
Possible loan from China bank keeps high-speed rail plan alive (LasVegasReviewJournal)
Microsoft's Bing will make money: executive (Reuters via Yahoo)
Pragmatic Capitalist Evening Reading (PragCap.com)
Ford China January Passenger Auto Sales More Than Double To 30,759 (WSJ)
European Online Retail Sales Up (New York Times)
GM Core brands have 40.6% gain (DetroitFreePress)
Japan indexes climb, with oil shares advancing (MarketWatch)
Twitter Under Phishing Attack? (Mashable)
Reserve Bank of Zimbabwe Defaults on Redemption of Bonds Issued to Gold Firms (VOAnews)
WRAPUP 4-US pending home sales edge up, vacancies rise (Reuters)
Home buyers' negotiating power gains: Zillow (Reuters)
Iran: We can live with U.N. uranium deal (MSNBC)
Moody's Sees US Rating Under Pressure After $3.8 Trillion Budget (ZeroHedge)
Unemployment rises in most metro areas (AP via Yahoo)
Digital doomsday: the end of knowledge (NewScientist)
Rupert Murdoch needs to be convinced Conan O'Brien can make money for Fox (LATimes)
Banker caught on TV looking at topless girls instead of charts (Youtube) h/t @WeeklyTA
Palestinians: 3 hurt in IDF strike in southern Gaza (ynetnews.com)
PNC to Repay TARP, Sell $3 Billion in Common Shares (Bloomberg)
Build America Subsidy Cut May Spur $150 Billion Taxable Munis (Bloomberg)
Volcker defends bank rules (FT.com)

Wharton's Siegel Thinks Market Will Like Oil below $70 (Video)

I've been monitoring what Wharton Professor Jeremy Siegel's been saying on Bloomberg TV since the beginning of 2010. First off here is his 2010 outlook that he gave on Bloomberg. Before the bank prop trading ban was proposed by Obama, Siegel thought we would see a mid-year correction when the Fed started raising rates. He said equities would rise 10-15% in 2010. Today Siegel still thinks we are headed higher (post correction) and if oil breaks below $70 to $65 it will be positive for equities.  Below are quotes from the video. He also mentioned that a stronger Dollar could affect equities in the short run but is good for the long run.

"A strong dollar is good in the long run for the U.S but it can give the stock market problems in the short run, and that strengthening Dollar does make our exports less competitive, does lower the Dollar value of revenues coming from abroad. The little bit of portfolio re-allocation that comes so.."

"Now the good aspect of that is it's bringing down oil. I'd love to see oil under $70 I was disturbed when it was $83. We get oil under $70, $65, bring those energy prices down I think that will be a base for the stock market."

For more info on oil technicals, Adam Hewison at MarketClub sees a potential sell off. Here is the free video. Also if interested in Gold they have a 2 part video series on the Gold super cycle (1, 2). Full FTC disclosure, I am an affiliate.

Video: Obama Answers Q&A at Republican Retreat in Baltimore, Full Speech

This was an interesting Q&A session. President Obama was in Baltimore at the House Republican Conference and answered questions from Rep. Mike Pence of Indiana, Rep. Paul Ryan of Wisconsin talking budget and spending, Rep. Shelley Moore Capito of West Virginia and many more.   FYI: The Senate approved to raise debt ceiling by $1.9 trillion to $14.3T and Obama proposed a $3.83 Trillion budget.  Videos below from CSPAN.

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$SPY Near Term Uptrend Channel and Long Term Downtrend (Charts, 2/2/2010)

SPY is riding the uptrend channel again.  It is above the 100 day moving average and testing October ceiling resistance.  The 50dma is not that far away either.  Waiting for decisiveness... Keep an eye on the long term 3 year downtrend as well (2nd chart).

SPY (SPDRs S&P 500) Courtesy of FreeStockCharts.com

SPY Testing 100DMA, Is Correction Pricing In Soft Patch Or Just Market Dynamics (SPY, DIA, RBA Leaves Cash Rate, AUD/JPY, AUD/USD, US ISM, FXI, SSEC)

This is a continuation from my previous post about the March S&P E-mini future testing its 100 day moving average.  The e-mini right now is trading just above the 100DMA (1081.68) at 1083.25. It is down 2 points or 0-.18%.  Below is trend and 100dma analysis on the S&P ETF ($SPY) and Dow ETF ($DIA) with charts.  Tonight the Reserve Bank of Australia kept its cash rate unchanged at 3.75%. Economists were expecting 25bps according to the Sydney Morning Herald. AUD/JPY just died in a sea of red, down 1.21% to 79.92.  AUD/USD followed (chart below).  Today we also saw decent US ISM numbers ("ISM hits 58.4%, best since Aug. '04" - MarketWatch).  If I recall, China's December PMI hit its highest level since 2004 and a few weeks later the Shanghai Composite and $FXI (China ETF) both were under their 200 day moving average!  Were we just massively overbought or are these corrections pricing in a global soft patch?

SPY is currently testing 100DMA resistance in an immediate term downtrend channel but is riding a longer term uptrend.  The immediate term downtrend and longer term uptrend will force SPY to make a decision at some point.   107.23 is the next support level if it rolls over.  DIA is right on channel support and just above the 100DMA.

DIA 1 Year Chart (Courtesy of FreeStockCharts.com)

SPY (SPDRs S&P 500 ETF) 6 Month Chart

AUD/USD After RBA Announcement, BOOM

Quick Look at EURUSD Hourly, Daily and Weekly Charts, 1.3912 (Chart Video)

EUR/USD is down tonight after a nice rally today with the equity markets.  The situation in Greece could be putting pressure on the Euro.  I'm waiting to see how it gets resolved and who gets bought and sold.  EUR/USD broke the hourly downtrend but it looks like a disaster from December, 2009 to Feburary (big legs down).  If it doesn't hold here, 1.35 looks supportive imo.  I didn't show you this in the video but on the monthly chart it is just under the 20 month moving average.  Go to FXStreet.com for this live streaming forex chart.

Chart courtesy of fxstreet.com

News links from today:
EUR/USD capped by 1.3930 (FXStreet.com)
Forex: EUR/USD, expected to bottom at 1.3300 in 4Q - Rabobank (FXStreet.com)
Euro: Can the ECB Make Conditions Even Worse for the Currency? (DailyFX)
Euro Remains on Track Lower Below 14000 (DailyFX)
Euro Finds Limited Support From Risk Appetite, As Correlation Weakens (DailyFX)