S&P E-mini Future Update, 1,045 Neckline MUST Hold (ESU10)

E-mini S&P Future (OptionsXpress)
I'm watching the September E-Mini S&P Future trade overnight during the House-Senate Conference Committee - Financial Regulation hearing.  It's still going on at 2:45 eastern time on CSPAN2.  The S&P future could be forming a head and shoulders pattern with 1,045 as the neckline.  It is currently trading at 1,072.  Also read: S&P 500 Past ‘Neckline’ Could Slump to 883: Technical Analysis at Bloomberg.com.  For ETF chart analysis on SPY, DIA, UUP, GLD, TLT, QQQQ and VIX at yesterday's close visit my previous post.

BP Oil Spill Cam Live via PBS Newshour Ustream, CBS News Update on Suicides

Here's the live BP oil cam on Ustream via PBS Newshour. Also, BP's stock made a new low today and a fisherman who lost his business committed suicide (see CBS Video below). Not good.

Greece CDS, New BP Low, Albert Edwards on Recession, EUR/USD May Weaken 20%, XLF Put Protection (#finreg), VIX Upside Calls, Hungary Bond Auction

Greece puts its islands up for sale to save economy - Guardian
Greece Closing CDS: 1126.85bps +192.66 +20.62% (#1 sovereign default risk) - CMADatavision 
One Big Difference Between Chinese and American Households: Debt - Forbes
VIX traders get into AUG upside calls - OptionMonster video
Hungary Debt Auction Misses Target for Second Time - BusinessWeek (h/t fuTuRe_sHOcK)
ChartCast - Market Update - 6/24 - SPY Descending, DIA Below 200-DMA, UUP at 50-DMA - Link
Meet The New Regime: Welcome AUDJPY, Goodbye EURJPY - Zero Hedge
Albert Edwards Sees New Recession By End Of Year, Market Collapsing - Zero Hedge
Gross Vows This Time Different as El-Erian Leads Equities Push- Bloomberg
Guy Adami, Jon Najarian, Steve Grasso and Patty Edwards see lower market - Fast Money
Euro May Weaken 20% Against the Dollar on Deflation, RBS Says - Bloomberg
"Pessimistic options players establishing bearish positions on the XLF (#finreg) - OptionsIntel
Homebuilder Default Swaps Rise as New Sales Fall to Record Low - BusinessWeek (6/23)

and last but not least, BP made a new low today and closed at $28.74.

ChartCast 6/14: SPY Descending, DIA Below 200-DMA (QQQQ, UUP, GLD, SPY, DIA, TLT, VIX Charts)

I went over SPY, DIA, QQQQ, UUP, GLD, TLT and the VIX at today's close on DVtv's Chartcast.  RIMM is trading lower in after hours trading by the way.  These charts are courtesy of FreeStockCharts.com.  SPY is approaching the shelf of judgment again, after possibly forming a right shoulder in a descending triangle. What do you think? It could test the shelf and decide from there, like July 2009 1, 2, 3.  The market could be pricing in a double dip recession or slow down.  I always thought that the June 2009 plateau looked like decent support for $SPY, which is $96, down 10.2% from here.

A Bankrupt BP - Worse For The Financial World Than Lehman Brothers? - Guest Post

Guest post by OilPrice.com

A Bankrupt BP - Worse For The Financial World Than Lehman Brothers?

The BP crisis in the Gulf of Mexico has rightfully been analysed (mostly) from the ecological perspective. People’s lives and livelihoods are in grave danger. But that focus has equally masked something very serious from a financial perspective, in my opinion, that could lead to an acceleration of the crisis brought about by the Lehman implosion.

ETFs Above/Below Their 200 Day Moving Average (*IYR, *QQQQ, DIA, IYT, IWM, FXI, XLK vs. SPY, *XLF, *XLV, XHB, *ITB)

I few hours ago I tweeted "ETFs Above 200DMA: DIA, IYT, IWM, FXI, QQQQ, XLK, IYR, Below 200DMA: SPY, ITB, XHB, XLF, XLV" so I thought I'd chart them out to show you visually.  Some ETFs are testing the 200 day moving average as we speak.  $IYR (real estate etf) is trading 8.8% above the 200-DMA, the highest in the sample.  Housing, financials and health care are the losers and must get back above the 200D or they could pull everyone down. Thoughts?  Charts are courtesy of StockCharts.com.

ETFs Trading Above 200-DMA:

Warren Buffett Testifies About Moody's, Einhorn Says Shut Down Ratings Agencies (MCO)

If you haven't seen Warren Buffett testify on the role of credit rating agencies during the sub-prime mortgage crash, check it out. He also gave his thoughts on the financial crisis.  If you remember, Buffett's Berkshire Hathaway owned 20% of Moody's at the same time they set up a municipal bond insurance entity when AMBAC and MBIA (who were supposed to boost bond ratings by providing insurance) were insolvent.  David Einhorn (Greenlight Capital) on Bloomberg said they should just look at market spreads (credit default swaps, yield spreads). I agree!

The backward looking nature of these credit ratings agencies allowed John Paulson and other forward looking thinkers to short subprime CDOs (Abacus CDO 2007) with reference obligations rated one notch above junk before the downgrade occurred. The business model doesn't work when there's volatility and credits get taken advantage of easily.

$GLD at Very Important Support Level (Dec 2009 High/2010 Uptrend) - UPDATE

GLD is testing December 2009 floor support, uptrend support in an ascending channel since Feb and a near term ascending triangle using May as ceiling resistance.  It's hard to put it in words.  $119.50 is where the December 2009 high and 2010 uptrend cross, which is an important level to hold.  I added two more charts to show the ascending triangle.  With GLD trading in an ascending channel and ascending triangle it means near term ceiling resistance is magnetizing buyers, but the next breakout/breakdown decision point is imminent.  I'm going to chart out more ETFs tonight, it looks like there's appetite for Treasuries.  As always, protect yourself from breakdown risk.

Bernanke Leaves Fed Funds Rate at 0 - 0.25%, June 23, 2010 FOMC Statement

DJIA's 200-Day Moving Average: Will the Dow stay above or below this demarcation line?

May New Home Sales Down 33%, ITB Fades Data, Months Supply Up 46% to 8.5 (From April)

May New Home Sales (Census.gov)
As I said in my post last night on existing home sales, the lumber contract and Home Construction ETF ($ITB) could have been pricing in the poor housing data after the April 30 tax credit expired.  After today's new home sales release showed a 33% decline in May over April, ITB made new lows but rallied back into the green.  Watch the downtrend line for a potential breakout (or continuation) on the chart below.  ITB is currently up 1.19% to $11.95.  Below is the New Home Sales Data with a table snatched from Census.gov.

May Existing Home Sales Down 2.2%, Market Eyeing New Home Sales Data, Lumber and ITB Moving in Tandem

The existing home sales number knocked down the market today (I believe).  Here's a Bloomberg Vid explaining what happened.  Get ready for the New Home Sales number tomorrow.  The Bloomberg survey (average economist estimate) sees new home sales down 17.4%.  With the price of Lumber down 42% from its peak in April, it could be pricing in lower new home sales, construction permits and housing starts going forward.  I'm not sure which data point tracks lumber directly, but I threw up a 6 month chart of Lumber and $ITB (Dow Jones Home Construction Index ETF) and they pretty much moved in tandem. 
  • Existing Home Sales (SA) -2.2% vs. last month (unexpected), +19.2% vs. last year (not bad)
  • Existing Home Inventory -3.4% vs. last month, +1.1% vs. last year
  • 8.3 Months of Existing Housing Inventory, -1.2% vs. last month, -14.4% vs. last year
  • Median Sales price +2.7% vs. last year
  • Average Sales Price +3.8% vs. last year

Energy Analyst Urges New Approach In Egyptian Offshore Production - Guest Post

39 Conduit Cancellations, Henderson Land Update (0012, HLDCY)

Distressed Volatility (仿旧波动):  Here is an update on Henderson Land Development in Hong Kong.  The company trades on the Hong Kong Stock Exchange (HKG:0012) and in the U.S as an ADR (OTC:HLDCY).  It appears that the record breaking $57 million 39 Conduit unit sale back in October 2009 was canceled!  In total, 20 of the 24 flats were canceled.  Were the transactions used to prop up prices or were people thinking Florida 2007 (or just saw Jim Chanos on TV).  The Hong Kong Government is investigating the cancellations.

In November 2009 a Tomson Riviera unit in Shanghai broke a record as well.  Keep an eye on the Hang Seng Property Index and the important 30,000 resistance level (chart below).  Below are articles and charts of Henderson Land Development and the Hong Kong Property Index.  For your viewing pleasure I also embedded a Google Map (street view) of 39 Conduit Road so you can visit Hong Kong.  Is Jim Chanos about to be right regarding China's property bubble?

I-Shaped Lumber Recovery Turns Into Upside Down V-Shaped Crash ($LUMBER, $ITB)

Lumber Contract
Remember lumber was going parabolic in late April? (link: Lumber Contract In I-Shaped Recovery, Up 91% On Year).  Housing stocks were breaking out left and right, riding that tax credit to the moon.  Here are housing posts on my blog from March to May 2010 sorted by date to see options activity and various predictions by Meredith Whitney, John Paulson (Paulson & Co.) and Whitney Tilson (T2 Partners).  If Paulson hasn't changed his view, he expects 8-10% housing price gains in 2011 and sees a V-shaped recovery.  Whitney Tilson went public with a research report on May 20 giving reasons to short $ITB (Dow Jones Construction Index).  ITB was at $13 at that time.  Guess where it's at today people, $12.  Tilson made you 7.7% in a month on the short side.  Back to lumber.  Lumber went parabolic and as you can see from the chart below, the I-shaped recovery turned into an upside down V-shaped crash.  It lost 42% from the April peak and wiped away all of 2010's gains.  I'll be watching for support, which looks like $170.

Gold Decoupled from US Dollar Index During June (Futures Charts, GCZ10, DXZ10, UUP/GLD)

I was watching the Gold/US Dollar relationship recently waiting for a divorce (see posts on 6/2 and 6/3) and since the beginning of June they decoupled.  The December Gold Future (GCZ10) broke out of an ascending triangle to the upside and the December US Dollar Index Future broke below an uptrend (ascending channel) to the downside.  Since May 21 ( over 1-month), Gold is up about 8% and the USD is unchanged.  You don't see it on the chart but the US Dollar Future is approaching its 50 day moving average which could act as support.  The Sep S&P E-Mini Future (ESU10) is up 1.51% (16 points) tonight on breaking news regarding the Chinese Yuan and a lower US Dollar.  September Crude oil is up 1.79% to $80.60.

Stocks, Commodities, U.S. Futures Rally as China Lets Yuan Gain on Dollar - Bloomberg
Yuan Climbs Most in 18 Months as China Signals End to Peg; Forwards Jump - Bloomberg

Gold Comex December 2010 vs. US Dollar Index December 2010 (OptionsXpress)

Gold Move is "Reserve Driven", Euro is Doomed Currency - Dennis Gartman

Hat tip Miss Trade for this Bloomberg video featuring Dennis Gartman (of the Gartman Letter). He's still bullish on gold in non-US Dollar terms, thinks the Euro is a doomed currency and Gold's move is strictly "reserve driven" (currency driven), meaning Central Banks could be diversifying out of Euros, Pound Sterling, Yen or US Dollars (eventually?) and into Gold. For recent posts on Gartman, click the label.

Chinese Yuan Peg In Play, BP Spilling 100,000 Barrels, Mich Unemployment Rate Drops, Chavez Battles Prices and Venezuela CDS Tops Default Percentage, Elliott Wave Thinks Dow Going Below 1,000!

Chinese Yuan peg in play!!!!!  Links for Sunday Night 6/20/2010:

Nouriel Roubini on Chinese Yuan (Saturday June 19): - "China's decision to move away from its currency peg might mean the yuan weakens against the dollar instead of strengthens as Washington wants" - Reuters

Beijing Move Threatens to Shake Up Its Neighbors - WSJ (h/t @FLYiR)
Dollar Weakens as End to Yuan Peg Signals Confidence in Global Recovery - Bloomberg
Yuan Forwards Strengthen After Central Bank Signals End of U.S. Dollar Peg - Bloomberg
China Turns Tables on AAA Time-Bomb Nations: William Pesek - Bloomberg
Asia Company Bond Spread Gap Shows Battered Junk Debt May be Set to Rally - Bloomberg
BP estimates oil spill up to 100,000 barrels per day in document - Reuters 
Chinese Yuan Under Scrutiny Before G20 Meeting - CNBC (Reuters)
US Treasuries retreat after China's yuan move - Reuters (h/t @alea_)
Hugo Chavez Spearheads Raids as Food Prices Skyrocket - CNBC (Reuters)
Venezuela Using $1B Of Reserves To Meet Dollar Requests- WSJ
Venezuela 5-Year CDS at 1242.4 bps, default probability at 55.16% (6/18) - CMA DataVision
Venezuela Has No Plans to Lift Currency Controls, Chavez Says on State TV - BusinessWeek
Michigan’s unemployment rate drops to 13.6% in April - Crain's Detroit Business
Rahm Emanuel expected to quit White House - Telegraph.co.uk
Wall Street's cues differ in looking at historical and technical trends - MarketWatch
Gold Bubble? What Bubble? - Zero Hedge
US manufacturing crown slips - Financial Times (h/t @upsidetrader)
Elliott Wave predicts triple-digit Dow in 2016 - MarketWatch

Michael Pento: Double Dip Recession Assured, US Never Healed (Debt/GDP 370% and Rising)

Click for Bloomberg TV Video
Going back a week here.  Michael Pento (Delta Global Advisors), who called the recent gold run in 9/2009, was on Bloomberg TV on June 9 saying a double dip recession was "virtually assured". He's betting against Ben Bernanke's positive stance given his poor track record and would rather take cues from oil, Treasury prices and "Dr. Copper".

Pento also mentioned a Debt/GDP statistic:

Yale's Shiller: Significant Risk of Further Declines in Stocks, Housing, Also Case Shiller Home Price Index ETF Coming Soon

Click for Bloomberg TV Video
Yale Economics Professor and MacroMarkets LLC Co-founder Robert Shiller was on Bloomberg TV on June 11 talking about the chance of a double dip recession.  He first brought up the savings rate.
"The saving rate in the United States, the personal saving rate, has been declining since the early 1980s.  We used to save 10% of our income, it got down to zero or negative, and so I think we were in an abnormal state, it wouldn't surprise me if we returned to something more like a normal saving rate and I think that would be a good thing in the long run, maybe not the short run."
"The short run fear is it will be a depressant on the economy".
Robert Shiller on the stock market and housing: