A couple of charts from Ron Griess over at The Chart Store that might be worth watching, especially in light of today’s FOMC announcement at 2:15:

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The first is S&P500 Stocks over 50 day Moving Average

spx-over-50-dma-tcs-42409

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The next chart is the S&P500 Index Divergence vs S&P500 MACD
spx-macd-tcs-42409

Graphics courtesy of The Chart Store

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Both of these suggest a pullback is possible; Given how stocks have traded on prior FOMC days, and the Dow up 175, this suggests caution may be warranted here . . .

Category: Federal Reserve, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

88 Responses to “Overbought? Watch FOMC Announcement at 2:15”

  1. Myr says:

    The market certainly feels like it’s primed for a big move…up or down. I think we’re turning down, but the market keeps coming back although it really isn’t making any headway. 876 on the S+P looks like the make or break point for the market and we’ll know after the Fed announcement. It all comes down to whether or not they announce more QE.

  2. advsys says:

    Good to have Barry back from the land of publishing and improving the blog!

    This market is not trading on news. It is trading on expectations. ie, everyone is somehow either going to pass the stress test or they will have fixed their problems by monday with new capital or accounting tricks or whatever. No one cares about the reality of that. ie, dilution of existing shares. Ie, the expectation is that all they really need to do is pass this test no matter how flawed we know it to be in order to be set for growth and profits. So, expectations is more of a dream state but that is not the point.

    Same with today. The market seems to have bet ahead of Fed. So, they are expecting some more in the way of quantitative easing or what ever we are calling it this week. This probably means that unless the Fed really wows us the market will pull back. (first half hour after the announcement is to be ignored)

    Yet, for once it is easy to know how to trade this. 876 is the mark give or take a dollar.
    A clean close on good volume with the then subsequent retest in a couple of days means 920 or more.

  3. gfeirman says:

    Oh man. This market just won’t die. I’m short but what if the Fed announces they will drop money from helicopters in major metropolitan areas Mondays and Wednesdays at lunch time?????

  4. leftback says:

    A wise man once said that you should enjoy a nice round of golf on FOMC day and then take a look to see where the market is when you get home in the evening.

  5. Super-Anon says:

    Oh man. This market just won’t die. I’m short but what if the Fed announces they will drop money from helicopters in major metropolitan areas Mondays and Wednesdays at lunch time?????

    I went into the open today with short positions completely hedged for that reason… I’m waiting for the announcement to decide where to go.

    I think even if we rally to the end of the day I might expose myself to the short side of things towards the close… we’ll see.

  6. Super-Anon says:

    A wise man once said that you should enjoy a nice round of golf on FOMC day and then take a look to see where the market is when you get home in the evening.

    Wise indeed. It’s sad though that sane people can only trade on certain days. What does that say about our markets?

  7. Mannwich says:

    @leftback: Not golfing since it’s raining here (of course!), but am heading out for a lunch meeting. Might extend it for a bit and have a margarita or two while I’m there. Good luck all!

  8. Super-Anon says:

    Interesting that Jim Rogers says he doesn’t have any shorts on right now.

  9. Becky says:

    May 1 and May 2 have been up for the last couple of years.

  10. adavydov says:

    I think it should be clear for all that the stress tests are a facade meant to appease [deceive] the public into a false sense of security. We should go into next week knowing that the stress tests will reveal some banks with some problems (they can’t just put out a clean bill of health because not even a mentally retarded person would believe it; otherwise they would) but these problems will not be so large as to inconvenience any of these institutions, i.e. they will be fixable problems that the government will not have to commit any new bailout money too (i.e. preferred conversion). None of these banks will be forced into bankruptcy or anything else drastic or potentially panic inducing. The stress test, for all intents and purposes, is meant as a confidence building tool (for unsophisticated investors) rather than a true hard line look at the state of the nation’s largest financial institutions. How you trade this is up to you, but know the government will go under before any of these damn banks do!

  11. leftback says:

    “Interesting that Jim Rogers says he doesn’t have any shorts on right now.”

    If we ever see SPX 975-1000 again during this rally I would be short with maximum leverage with every penny I have plus whatever I could borrow. I just don’t feel that SPX 875 is that kind of level. If it was that critical, I think that the multiple H&S formations we have seen forming would already have led to a breakdown.

    With all of the intervention, helicopter drops etc. I am happy to sit on the sidelines.
    Market will be there tomorrow.

  12. Marcus Aurelius says:

    We all know what’s coming, and why. What we do not know is when. Too much mendacity.

  13. I-Man says:

    I-Man is l0ng the QID here, playing the 34 double top on the Q’s…

    Long some FAZ too to short the double top that may be playing out on XLF.

    Not paying attn to the Fed, only the lack of volume on the advances as the Q’s, SPY, and XLF all approach stiff resistance. Naz at the Oct highs, SPY at the Jan highs.

    This tape smells alot like the one from May of last year…

    Good to be back at TBP, Hope yall are all doing well.
    Peace,
    I-Man

  14. pigpen says:

    “One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It is simply too painful to acknowledge — even to ourselves — that we’ve been so credulous.” — Carl Sagan

    Dr. Sagan, thank you, your voice from the cosmos is heard. The big bamboozle that we need to painfully acknowledge, if only to ourselves, is that somehow we have been duped into believing that our leaders know what they are doing. Perhaps we could kindly call this “hero worship,” but it is more accurately described as the tyranny of the experts. Our culture is infatuated with heroes, and blinded by the fact that our leaders claim to be experts, but that in reality know nothing and are consistently wrong.

    Bill King echoes Sagan’s brilliance in his discussion of the soon to be released stress test of the country’s largest 19 financial institutions. “A major problem with the ‘stress test’ is it depends on modeling and it’s the precise practice responsible for much of this economic and financial mess. It’s extraordinary that so many people believe that the Fed and Treasury, after missing the financial disaster, housing debacle, recession and derivative implosion, can now extrapolate economic conditions and resultant financial affects from its models. How did all that rocket-science modeling for subprime defaults and securitization workout? Yet many people already forget or ignore this reality.” They don’t know what their doing with these models, they don’t represent the real world, but they are going to go by them and pretend that they’re not WRONG.

    So, who are these tyrants, and why do we listen to them at all? Why do they have so much power when they are consistently wrong? Its because we citizens, the body politic, fail to call them out when they are categorically, unqualifiedly, and are consistently wrong. The list of tyrannical experts is innumerable so we will direct our attention on Ben Bernanke, Timothy Geithner, and Hank Paulson.

    Denial is our new national religion.

    http://www.thebarricadeblog.com/?p=875

  15. hopeImwrong says:

    @i-man volume does not look bullish. Thanks.

  16. leftback says:

    Overbought it be, but that don’t rule out this market becoming more overbought, do it?

    @I-Man: Respect, bro’.

  17. DL says:

    I am increasingly warming up to the idea that just one more gut-wrenching plunge will be enough to end the bear market.

  18. hopeImwrong says:

    Still think reaction to FED will be painful up move before going down. Could be wrong, but there is just too much risk to short here. With these low volume levels, it won’t take much selling to drive the market down fast. And then of course, we get the uptick rule back as they blame the short sellers.

  19. hopeImwrong says:

    @DL – end the bear market. Hmmm. That’s optimism.

  20. hopeImwrong says:

    Of course, with these volume levels, it won’t take many buyers to send the market up fast. Risk is high.

  21. harold hecuba says:

    the financial system is broken. once again the goons in charge brought down the financial system with completely flawed models. the goons in charge have not changed their mindset. the goons in charge are trying to fix a model that is broken and not coming back. the economy or whatever we call it continues to be on lifesupport from a gov that has backstopped or guaranteed just about every aspect yes i do believe they are behind equities as well. the goons are crowding out private capital. private capital would never do some of the bond deals that have been guaranteed by the FDIC. i suspect a meltdown in CRE that no one can fathom just like they could not fathom the 2007 residential collapse. just another point….do you realize not one bad asset has been removed from a bank balance sheet and things continue to deteriorate. thank god for getting rid of mark to market. i suspect this is the eye of the hurricane and things will get substantially worse come end of summer.

  22. Super-Anon says:

    I-Man is l0ng the QID here, playing the 34 double top on the Q’s…

    Long some FAZ too to short the double top that may be playing out on XLF.

    TWM and TZA look like they would be nice in a rollover too.

  23. DL says:

    hopeImwrong @ 1:08

    If we can get down to 675 again, I’ll probably be afraid to be short at that point.

  24. leftback says:

    @DL: No, no, no. Plunges involve minimal pain simply because they end almost as soon as they begin. Plus it would be too easy for shorts to make a killing. Crash, collect.

    Bear markets don’t end that way, they grind relentlessly lower on day after day of low volume trading and end with the bulls whimpering into their pillows for their mommies and swearing solemnly that they will never ever buy a stock again. Finally the volume is so low that even the shorts cash out and leave the market to fester.

    We’re not even close yet although Jan and Feb were a preview of the grinding to come.

    hh is right, eye of the hurricane. The sun is out, flowers are blooming. Why be short???

  25. karen says:

    look at a chart of gsk if you think this market can’t go higher… one of hundreds that were so oversold and undervalued..

  26. Super-Anon says:

    RUT solidly through 490…

  27. I-Man says:

    @ Super-Anon:

    Just to be clear, not advocating anyone put on my trades…

    I fully expect to be wrong… that way I’m happier when the trades work out, and dont get too pissed when they go against me. :)

  28. leftback says:

    Karen, this is true, and there are many many others. Hence, long the real economy and short the FIRE economy.
    But as Jack McHugh’s post points out, this market goes where the XLF takes it.

  29. zot23 says:

    Can’t wait to see what the market makes of all this data, you know, as soon as the govt lets it exist again…

  30. karen says:

    LB, disagree that the market goes where XLF takes it, but XLF is in a defined uptrend and it is NOT overbot…

  31. DL says:

    Leftback @ 1:20

    “Bear markets don’t end that way, they grind relentlessly lower on day after day of low volume trading and end with the bulls whimpering into their pillows”.

    Well, that’s not exactly the way that the last bear ended. There’s also the one that ended in 1974. I’m thinking something similar to one of those.

  32. some_guy_in_a_cube says:

    Remember what the big boys say: Sell in May and go away!

  33. karen says:

    WOW. $wlsh 4 pts from 9000.

  34. hopeImwrong says:

    I do expect, once the extreme volatility dies down, months and months of boring down days in the market. At least 6 down for every one up. Maybe for 18 months. Minus a half a percent here, minus a quarter percent there. The phrase “the market can’t go down every day” will seem to have been wrong. Eventually it will end, but look at Japan, really. We aren’t Japan, but this is a modern example of a large economy, and what can happen over the long term.

    BTW – I’d like to short, I just think risk is too high here. Any rational person would be thinking about shorting this market. I’m just not gutsy enough to do it big, and I won’t “let it ride.” Tight stops only.

  35. cjcpa says:

    Just added qid and srs to the shorts. We are in it for a trade. Not our forte.
    Up past 10% short. I think we’ll stand put here.

    Growth is negative, growth stocks are up. Yippee!
    I too suspect gov’t backing and such is at work, but expect a market move today anyway.

    The site operator’s last published stance, I recall, was moving from 75% long to 25% long.

  36. “the eye of the hurricane” captures it brilliantly, harold hecuba, everyone knows, the calmer and bigger the eye, the more powerful the storm.

  37. bubba says:

    leftback says,

    “If we ever see SPX 975-1000 again during this rally I would be short with maximum leverage with every penny I have plus whatever I could borrow.”

    just how many kitchen sinks have ya got? LOL

  38. leftback says:

    DL: The last bear only ended in 2003 because of the Fed, or you can argue that 2003-2007 was just a rally.
    I am definitely thinking about the real big ugly brutal bears, like 1974, like Japan, like the 1930s.

    Tight stops here. Live to trade another day. Schadenfreude Asset Management likes capital preservation.

  39. Super-Anon says:

    @ Super-Anon:

    Just to be clear, not advocating anyone put on my trades…

    I fully expect to be wrong… that way I’m happier when the trades work out, and dont get too pissed when they go against me.

    Yeah… my philosophy is that trading is like going off to war because you think it’ll be an interesting and entertaining thing to do. In general I would advocate certain trades like I would advocate laying in the middle of the road for excitement – people have t0 make their own decisions about that.

    I’ve always stated to everybody in my personal life that asks me about trading that I expect to ultimately lose everything in my trading account.

    Also it’s foolish to follow somebody else and put on a trade – there’s no guarantee they’ll tell you when they take off the trade and that’s where the money is actually made! (Or preserved for that matter.)

  40. Super-Anon says:

    “the eye of the hurricane” captures it brilliantly, harold hecuba, everyone knows, the calmer and bigger the eye, the more powerful the storm.

    Haha… just remember the last “eye” lasted about 4 years from 2003-2007.

  41. DL says:

    leftback @ 1:37

    “The last bear only ended in 2003 because of the Fed…”

    As we’ve seen, Bernanke is Greenspan on steroids.

  42. The Oracle of Kypseli says:

    Best bet based on risk/reward ratio at this moment is SRS. 3000 shares will make you a millionaire when the unraveling starts. I suspect that GS and friends will jump on it at the exact downturn moment to recover their REIT bets which are doomed. (Think conspiracy if you must)

  43. Super-Anon says:

    TZA looks soo tasty right now… I wanna pet it but I’m too scared.

  44. HCF says:

    For the benefit of those of you living outside the New England area, I think this NESN ad is a good summary of what I think is lurking around the corner…

    http://www.youtube.com/watch?v=n_jhxFigCAI

    HCF

  45. leftback says:

    I share the enthusiasm for SRS and if you miss the first 5-10% of the move there will be plenty more. If last year was the year of SKF, this will be the year of SRS.

    You have to figure that there will be an infinite number of Hail Marys for the money center banks because of their deposits and their central role in the economy, but seriously, do you see the Congress approving bailouts for Vornado and Simon Property Group? Sorry.

  46. hopeImwrong says:

    I expect shorts with tight stops will be hit before the end of the day, or tomorrow. Very tempting right now, but post FED announcement, stops will be triggered.

  47. dead hobo says:

    No, this bull rally will end and nobody will notice for a while. Too many participants have a vested interest in sustaining their disbelief. They will play hot potato with each other in much the same way that idiots traded mortgage backed paper they knew wasn’t worth much. Just as the market fell in 11-07, this one will decline eventually.

    I suspect a few suckers are bringing in new money, but not many are from the retail trade. Since most people in the markets are down significantly from 11-07, few are stupid enough to jump back in on the first little green shoot. Some professional money managers are stupid enough to jump in for any rationalization, and they are the new money. Optimistic shorts are the balance, all trying to catch a knife at the apex.

    The market will deflate when nobody pays any more attention to it. This means earnings season will be over and the excess of buyers over sellers disappears.

    DL, please note that a 10% fall in FAZ is only about 90 cents. If the market were to tank next week, the rise would certainly be greater than 10% due to the leveraged nature of the fund. It’s all mathy. At this level, tight stops should work well. A decent fall in the S&P would trigger a massive rise in FAZ, and thus I spoketh of my sure thing belief. So, the only way you can lose is if the market never falls again.

  48. DL says:

    leftback @ 1:51

    “…do you see the Congress approving bailouts for Vornado and Simon Property Group?”

    Bernanke could buy up all the debt that is backed by their properties.

  49. HCF says:

    @leftback:
    >this will be the year of SRS.

    To back up your point, on Investor’s Business Daily, the relative strength rating is 1 right now for SRS, meaning 99% of equities have performed better than SRS. What the hell? That’s pretty much as detached to reality as I can think of. I’m seriously thinking of taking the plunge in, too…

    HCF

  50. DL says:

    dead hobo @ 1:54

    “So, the only way you can lose is if the market never falls again”

    I do own some FAZ. But I’m starting to think that the market will never fall again.

  51. leftback says:

    Bubba asked: “just how many kitchen sinks have ya got? LOL”

    I have more kitchen sinks than you have neurons, Bubba.

    “…do you see the Congress approving bailouts for Vornado and Simon Property Group?”

    DL said: “Bernanke could buy up all the debt that is backed by their properties.”

    Surely not. That would be the kind of thing that only happens in banana republics, where the Government exists only to serve the business interests of the ruling class. Hmm…… I guess you could be right.

  52. cjcpa says:

    FWIW, we have a toe in the SRS.
    If the (market levels of the) past 3 months are revisited, it should pay off.

    It is our thesis completely lacking in mathematical backing is that we will revisit the feelings of the last three months.

    Thus, we are exposed to this risk/opportunity.

  53. cjcpa says:

    I heard on the radio that the fed dropping interest rates to near zero encourages risky behavior. Which is what got us into most of this mess.

    The difference is that this time, I am participating in the risk taking. If I could get 5-8% real return, I wouldn’t be chasing shorts.

  54. urbandigs says:

    Watch EEV for a surprise play if the next wave down comes. Got some SRS and MZZ too, but its getting to point that its a bit painful to add more. This rally can easily have a few explosive upside days before rolling over

  55. HCF says:

    @cjcpa:
    > I heard on the radio that the fed dropping interest rates to near zero encourages risky behavior. Which is what got us into most of this mess.

    If heroin is killing you, just up the dosage. That does the trick =) If that’s not the solution, add crack-cocaine. I’m pretty sure that’s the Fed’s prescription.

    HCF

  56. dead hobo says:

    On the other hand, banks are making most profits by trading now. Since they have the most money, they are now in the stock market bubble business, rather than the real estate bubble business or the mortgage backed paper bubble business or the oil bubble business.

    In other words, this may be the beginning of the next big bubble and it has a long way to go before the next collapse. Just as oil made it to $147 due to a concocted demand cover story, this market may be on the way to higher highs based on new lies that everyone wants to believe. Hedgies have enough cash to sustain the fraud and be victimized by it. The big banks, I suspect, are the instigators in this one.

    Obama and crew will likely be gullible enough to look the other way because of their foolish assumption that a rising market, for any reason, takes the heat off of them for a while. A rising market for the right reason — sustainable economic growth — is a great reason for a market to go up. A rising market due to the fact a deniable fraud can be performed is not a good reason for a market to go up.

    I think Uncle Stupid is about to be snookered again and more personal savings will evaporate as a consequence in a few months, after the new stock market bubble collapses.

  57. leftback says:

    Never mind stocks. Watch the 10-year and gold, that is where the real action is here.

  58. karen says:

    You better recheck the charts on SRS… looks like 2008 might have been the good year for SRS as well as SKF. no matter what happens this year, which is already 1Q over, i doubt SRS will see high 200s again. double or triple from the 20s is more likely.

  59. bubba says:

    Lefty retorts:

    I have more kitchen sinks than you have neurons, Bubba.

    Touche, Lefty. Must be that English wit I’ve heard so much about. The next time Mr Market takes a nosedive just after you’ve thrown all them sinks in, do remember to remind us of your brilliance. here’s rooting for ya.

  60. karen says:

    i mentioned buying the beaten down mex stocks monday or tuesday… look at amx today… up 11%

  61. “Haha… just remember the last “eye” lasted about 4 years from 2003-2007.”

    If this one lasts that long, you can bet there’s gonna be a hell of a price to pay when the eyewall hits.

  62. dead hobo says:

    Just as I railed about the oil ponzies a year ago, I think I’m going to pay close attention to the stock ponzies running the stock market today. A little undeserved stock market euphoria is a natural thing. When it continues and surges every time bad news is announced, then something else might be running the show. I think the trading techniques that caused oil to make it to $147 have been adapted and/or are being adapted to the stock market. This baby will go to S&P 1000 or more.

    DL, you might be right about the market not going down. In an honest game, it would. I’m not sure the stock market is an honest game any more.

    Hedgies and money managers will have to join in and add fuel to the fire. Logically, they have no alternative. They will be the suckers in this bubble, and their customers will be the victims in the wealth transfer from the funds to the bgig banks.

    Uncle Stupid will just let it happen too.

  63. hopeImwrong says:

    my indicators are showing srs is a crowded trade. Continued short squeeze is likely in CRE. The blowup in these scenarios is usually fast and furious, hard to predict, and hard to catch. Big volatility is expected even on the way down. Really scary to me to be long srs right now. Some are losing interest, but not too much give yet on my radar.

  64. OnlineBrokerReview says:

    No additional treasury purchases announced by the Fed. TLT is dropping like a rock and well under 99 now. This could get ugly.

  65. hopeImwrong says:

    I don’t like this action post FED. No big move. This is scary.

  66. leftback says:

    EWT up 13% today, a little irrational exuberance, perhaps? Likewise the FXI.
    Still just watching for now.

    “The next time Mr Market takes a nosedive just after you’ve thrown all them sinks in, do remember to remind us of your brilliance”

    Not quite clear what your issue is, Bubba. My kitchen sinks would be on the short side. I have no need to remind anyone of my brilliance – although I did call the bottom at 666.79 within about ten minutes of the 3/6/09 low.

    Now if you wouldn’t mind, Bubba, please go and play on the motorway.

  67. dead hobo
    On the other hand, banks are making most profits by trading now. Since they have the most money, they are now in the stock market bubble business, rather than the real estate bubble business or the mortgage backed paper bubble business or the oil bubble business.

    Makes the most sense of all the theories that have been chucked against the wall, thus far.
    Get your big board out and
    catch a wave, spring has sprung.

  68. Mortimus says:

    Odds on bizarro “Just For Men” Pisani coming out behind the curtain cheerleading on the floor: “After a Fed decision sideways is a victory for the Bears”

    I can dream can’t I?

  69. constantnormal says:

    For me, buying gold has been a lot like sticking my hand into the disposal to dislodge whatever is messing it up.

    Yes, that’s the disposal with the flaky power switch.

    I find myself wondering, given the large fraction of money that is (justifiably) cowering in fear on the sidelines, where are the sales going to come from to create another plunge in the markets? The banksters using the bailout money to short their own shares? Goldman Sachs in the emperor’s booth at the market coliseum (a.k.a. the Circus Maximus), standing to give a thumb’s down to Mr Market?

    I suppose it’s all relative, given the reduced trading volumes it doesn’t take much selling to drive things lower.

  70. hopeImwrong says:

    stops just hit

  71. hopeImwrong says:

    stops just hit (the really tight ones)

  72. franklin411 says:

    Nice Fed statement. Is it still considered impolitic on this board to say that it looks like something good is happening in America?

  73. Pat G. says:

    FOMC says they expect inflation to remained subdued. Really? Remember, this is brought to you by the same clowns who indicated that there was no impending mortgage crisis, then that it was contained and finally, that banks were all well capitalized. Fool me once, shame on you. Fool me twice, shame on me. Fool me thrice, everyone should begin to realize that nothing reported by this government is reality.

  74. I-Man says:

    I’m inclined to fade the shit out of this… Anyone else?

  75. leftback says:

    @franklin 411: the only good thing here is that Bernanke refrained from intervention, for once.

    [In addition, there are chicks who can pull off the 1940s pin-up look. That's good too.]

    “where are the sales going to come from?”

    trading desks don’t make money unless there is volatility, so if there is none, they will make some.
    Over at 85 Broad there is a big red button marked SELL. “Shall I press it now, Mr Blankfein?”

    @I-Man: the first move is usually a head fake, right? Even some profit taking here would start a move down.
    As if there were no other reasons.

  76. I-Man says:

    @ Lefty:

    Dunno… I-Man doesnt usually trade fed days… but it just doesnt feel bullish. Very muted reaction IMO.

  77. Whammer says:

    @lefty, where does Franklin find those 1940s pin-up chicks? Chipotle?

    Too bad I’m not single……… ;-)

  78. Whammer says:

    Oh, while I’m at it, props to Ben22 for his “take a look at MTW” from a couple of days ago.

  79. ben22 says:

    Whammer,

    Thanks for the shout out. That was a nice trade for anyone that jumped on.

    I’m still thinking it might be too early to go short. I have seen a lot of people discuss the higher levels of bulls, low put/call, etc which we should all expect but it’s not mania level to me. 59% bulls in the Barron’s survey isn’t the type of stuff I’d think I’d see during this rally, I think it should be higher, like 80-90% bulls. Plus, lots of big money names are still selling the rally.

    I notice lots of the commenters on here that I follow, with the exception of Karen, have been very skeptical of the rally so I still think the direction is up.

    Here is a thought:

    My thinking is that this rally will end and stocks will peak right around the time you hear that the govt has done enough and they don’t need to do anything else. Investor confidence would be closer to the levels we saw back in October 2007, not today’s levels. It would be a feeling of we made it out of a terrible recession and look, things aren’t so bad anymore. Then I think another crash will come. I caught an early glimpse of this just this morning during the normal silly discussion on CNBC when crazy Karl made a comment along the lines of “maybe if that happens the government can get out of some of these programs it has set up” when a panelist was saying how a second half recovery could develop.

    We still seem to be in the early stages of credit deflation (not regular deflation, there is a difference) and as long as that continues the larger trend is down. We can just have some awesome rallies in the meantime, I think this qualifies as one of those.

    Would love to see AT’s views at the close.

  80. ben22 says:

    Franklin,

    Something good is happening here, the personal savings rate is going up. This is a fine development IMO. Of course, this might not be what you were referring to.

  81. ben22 says:

    was anyone long TBT going into today?

    I’m curious to hear some views on the 10 year. The charts are getting interesting there.

  82. ben22 says:

    RE: SRS

    I’ve tried twice now to make that trade and both times I got stopped out quick.

    I’m staying away, everyone is bearish on CR which means it’s probably not going down short term. Too many people making the same call.

    There will be a time for that I suppose but I agree with Karen, 08 might have been the year to be trading SRS.

  83. ben22,

    see: http://quotes.ino.com/chart/?s=CBOT_TY.M09&v=dmax

    10-yr looks like it could go to 120 easy, ~116 as 2nd stop..

    would be interesting to see how those #’s square w/ what AT sees..

  84. dead hobo says:

    So, whats the S&P going to do tomorrow?

    Another leap to celebrate the recovery and draw in some true believers?

    Or a sucker dip to draw in some shorts?

    You know, I’d love to put real cash into this market if I thought it were honest. Naked shorts aren’t honest on the down side. Well meaning govt support for phony market bubbles are even more insidious since they sucker innocents into putting cash into a market with false values. A few more percent like this and headlines such as “Obama Using Stock Ponzies To Pay For Socialism” will start to appear.

  85. ben22 says:

    Mark,

    thanks for the link. I had made a quick trade late last year in TBT, thanks to Karen’s keen eye on the price point, she almost called the exact bottom in TBT on it. I haven’t gone back to it since.

    I think treasuries are the biggest bubble ever but it’ll be a long slow grind IMO.

  86. ben22,

    no problem, seems if TBT breaks above ~50, it could sprint..

    the USTreas bubble makes the RE bubble look tiny.. with that, many forces in line to attempt protecting it.

    as always, tight stops are the best bet..and, remember, shorting Puts pays you to go Long..

  87. matt says:

    ben22:

    You asked about treasuries. I think that if you want some inside baseball, go to acrossthecurve.com. JJ knows more about U.S. sovereign fixed incomes than most people will learn in their lives.

  88. sixmil says:

    For me, the S&P 500 76 day moving average is currently a better gauge, but it still shows pretty overbought (1.67 times the standard deviation). Nasdaq composite 31 day moving average is 1.69, and NYSE composite 32 day is 1.87.

    But, what I am buying is SRS, which is the most oversold Proshares ETF (-2.23 times the standard deviation from its 30 day moving average). We all remember from math that two standard deviations from the mean account for 95.45% of the sample. I buy 100 shares a day, but sell the whole lot whenever it is in the green to avoid getting my face ripped off as Denninger likes to say.