DJI breaks out above top end of trading range.... Dollar reverses trend to down on Possible Euro agreement???

The DJI broke above 11600, the top end of its trading range. The dollar reversed its uptrend both current and intermediate to down at the same time. Oil was strong and continued in it uptrend. The Fed clearly does not want lower prices now. This in spite of the bad economy it is inflicting on its citizens. It is more important to support prices now than to put people back to work.

The reason for this breakout was the possible agreement in Europe. You know the agreement that has rallied stocks and the Euro while tanking the dollar for about 10 times. I can hardly wait to see this new agreement but for the markets sake I hope the agreement is a bad one so they can do this again.


I saw in this weeks news that the jobs numbers were getting better in 24 states and still declining in 114 states. It appears that the media is starting to shine a better light on this economy regardless of the reality of it. Of course, what does reality have to do with this game anyway. The one to one inverse relationship to the dollar and stocks is holding study as the central bank holds things together.


The Feds next magic show is to support mortgages by buying mortgage backed securities and thus driving mortgage prices lower. The bad news is that the banks are making it damn hard for the guy on the street to get them. That is no surprise because the guy on the street has had his salary cut and his benefits whacked. This is goes on as corporate America cuts and slashes it way to profitability and the banks trade the hell out of stocks and bonds. Why would they want to go into a risky business such as lending money to someone who can barely pay their bills?  To get money now you have to prove you don't need it.


I have added the Mikey 20 to the blog. It is starting off at an overbought reading of 127 or what it was in Feb of this year. The Mikey 5 is neutral 42 while the Mikey 10 is a overbought 154. This wa options expirations day and the puts dropped to .79 today. The 10 day is at .99 which means there is more time for this rally to continue until the traders believe.  The Mikey LT is a 34, with 20 being oversold and 80 being overbought.   It is not oversold but indicates the traders are still not comfortable with this rally. I suspect they have to believe that Uncle Sugar will support them again before they return, which is exactly what he is doing now regardless of what he is saying. This is now QE 3 until further notice. It just was not formally announced for political reasons.

The intermediate term was upgraded to neutral and the current trend is still up. Bonds are now nearing a current trend down along with the dollar. It is my bet that bond sales are the source of this market rally as the economic news magically turns good on the economy a month AFTER the US governments bond auctions.  Thank God that the then bad economy and the Euro debt crisis allowed the government to borrow at such low rates with the dollar on its highs.

Mikey

Closing Prices

US Stock Indexes
DJIA 11808.79 +267.01  S/P 500 1238.25 +22.86
NYSE Comp 7431.10 +157.20 NASDAQ 2637.46 +38.84
S/P Midcap 861.26 +18.69 Russell 712.42 +16.00
DJT 4813.83 +104.25 DJU 452.66 +7.36
US bonds and interest rates
US Gov rates: 6 mo .0508%  2 yr .2709% 5 Yr  1.063 10 yr 2.22 30 yr 3.26
IEF (US10 yr) 102.70 -.19 TLT (USLT)113.13 -1.21
MUB (NatlMuni)106.13 +.27 CalMuni (NCA)8.97 +.02 
Preferred (PFF)36.70 +.30 HYG (High Yield) 87.92 +1.05
BND Total Bond Index 83.10 -.13
Commodities
Commodities Indexes (DBC)27.18 +.14 (USCI ) 60.68 +.76
Gold 1636.10 +23.20 Silver 31.19 +.91 Copper 3.22 +.16
Platinum 1509.20 +18.80   Nickel (JJN)27.26 +1.22
Oil 87.40 +1.33 RBOB 2.69  Nat Gas 3.62
Grains (JJG) 45.90 -.07 Livestock (COW)31.05 -.19
Cotton (BAL)60.00 -.21 Agg complex(JJA)55.29 -.18
US Dollar Index and World Currencies
Euro 1.3844 +.0113 Pound 1.5831 +.0152 Swiss Franc 1.1120 +.0165
Yen 1.2941 +.0117 Aussie 1.0374 +.0102
Dollar Index 76.63 -.60
World Debt markets
BWX(Intl Treas)60.98 +.38 PCY(EmerMkt) 26.93 -.05 IBND(Intl Corp) 33.67 +.22

All Markets Current Trends

World debt markets

US Bonds: 10-12 current trend neutral

US Natl Muni Markets:: 10-21  current trend neutral
Intl Treas Bonds 9-9 current trend down

Intl Corp Bonds 10-18  current trend neutral
Emerging Markets Debt: 9-21 current trend down
US High Yield 10-21 current trend up
US Preferred Stocks 10-14 current trend neutral

Commodities

Commodity index (Broad based) 9-12 current trend down
Gold: .9-23 current trend down  
Silver: 9-22 current trend down
Copper 8-8 current trend down

Platinum 9-19 current trend down
Palladium 9-7  current trend down

Nickel 8-8 current trend down

Grain complex 9-19 current trend down   
Sugar 10-21 current trend neutral
Cotton 10-21 current trend down
Livestock 9-27 current trend up
Coffee 9-21 current trend down

Lumber 9-23 current trend down
Agg complex 9-16 current trend down

Oil 10-18 current trend up
Gasoline 10-14 current trend up
Natural Gas 7-28 current trend down

World Stock markets

US Stocks: 10-11 current trend up
Europe 10-14 current trend up
China: 6-3 current trend down

Brazil 7-1 current trend down

Japan 10-12 current trend neutral

India 8-2 current trend down

Russia 8-4 current trend down\
Emerging Markets: 10-18 current trend neutal
Total world markets 10-12 current trend neutral 

Currencies markets

US Dollar Index 10-21  current trend down
Aussie Dollar 10-14  current trend neutral  
Euro 10-21 current trend neutral
Brit Pd  10-21  current trend neutral
Swiss Franc: 9-2 current trend down
Jap Yen 10-21 current trend up
Canadian Dollar 8-8 current trend down

Mexican Peso 8-3 current trend down
Brazilian Real 8-9 current trend down
Indian Rupe 8-9 current trend down

Trend changes:

World Stocks:
Currencies: Dollar to down, Brit PD to neutral, Euro to neutral Yen to up
Commodities: Sugar to neutral, Cotton to down
World Debt : High yield to up

Intermediate Term Trends
Changes 10-21 Dollar to down and US stocks to neutral

Oil: Down
Gold: Up correcting
Silver: Down
Commodities: Down
US Bonds: Up
World Bonds: Down
Emerging Debt: Down
Emerging Markets: Down
Dollar: down
World Stocks: Down 
US Stocks Neutral


US Stock Market Trends

Mikey Short term up  10-13 11478

Mikey Intermediate Trend: Neutral   10-21 11808
Mikey Long term Neutral 8-4-11 11779
NYSE 10-14 Current trend up 

NASDAQ 10-11 Current trend up
DJ Utilities: Current trend up
Transports:10-14 current trend up
Russell 2000: 10-14 current trend up   

IBD :10-12  Market in confirmed uptrend 11518

US markets short term technical trading indicators:

Mikey5 +42 Mikey10 +154 Mikey20 +127(-125 OS, 0 Neutral,  125 OB)

VIX (OB 10 - OS 40) 31.32 ,VXZ 65.00
Mikey Int OB/OS index (80 OB 20 OS)+34
Put/Call Ratio .79  10 day average .99
Ratio Put Premiums to Call Premium (.34 to 2.5) 1.04 10 day ave .95
Mutual Fund Purchase/Redemptions ( 1.5 to .66) .92
Stocastic Fast D 10 day 88.67 Weekly 43.66
Bulls 35.8 Bears 41.0   Bull/Bear ratio .87
Daily DJIA MACD  +113.85  Rising/ Positive cross 10-6
Weekly MACD --190.04 Rising/Negative cross 5-16

NYSE New Highs 58 (12/7-10 429) New Lows (8-8-11 1345 ) 5
NASDAQ New Highs 39 (12-7-10, 352 ) New Lows 26 ( 10-4-11, 755 )
Advance/Declines

Daily NYSE Advance-Decline +2222 Nasdaq Advance-Decline +1366
Daily Mikey A/D line NYSE (7-7 37567) (8-8 19199) 29829   
Daily Mikey A/D line NASDAQ (2-18 10095) (10-3-10-15390) -8858
5 day AD NYSE +1685 NASDAQ -282 NYSE..(OB +4000 OS -4000)
10 day AD NYSE +7699 (6000 OB -6000 OS)
% above 200 day ave  28%

below 50% indicates intermediate trend down

Days to option expiration 0

DJI Moving Averages

5 day 11586  up / Price above
20 day 11263 up/ Price above

50 day 11250 up/Price above
90 day 11651  down/Price above
200 day 11965 Flat / Price below

20 week 11661 down/Price above
50 week 11865  up/Price below
90 week 11280 Flat Price/above
200 week 10633 Flat/ Price below

Daily comments for last 30 days:

9-19 Recent $ strength eating away at commodities markets

9-20 The DJI was up 7.65 but most indexes and indicators were down today. Their story is still negative and I think they are pressuring law makers to "do the right thing. this reminds me of 2008 before the Congress pasted the 800 billion bailout. If they balk then the market will teach them that they must comply with the powers that be.
9-21 I mentioned some time ago that the best return is zero interest and in dollars. That trade is clearly outperforming the risk trade and the risk traders still have not figured it out. They will when Gold and Silver joins the party. Silver is poised on the edge of a cliff now and the crowdmentioned some time ago that the best return is zero interest and in dollars. That trade is clearly outperforming the risk trade and the risk traders still have not figured it out. They will when Gold and Silver joins the partyst return is zero interest and in dollars. That trade is clearly outperforming the risk trade and the risk traders still have not figured it out. They will when Gold and Silver joins the party. Silver is poised on the edge of a cliff now and the crowdmentioned some time ago that the best return is zero interest and in dollars. That trade is clearly outperforming the risk trade and the risk traders still have not figured it out. They will when Gold and Silver joins the party. Silver is poised on the edge of a cliff now and the crowd is yelling jump,jump. IBD went to uptrend under pressure today. I think their uptrend call was ....errrr a reach.
9-22 Gold -66.40 and Silver -3.89 joined the party and the market retested the lows at the 200 week. 30 year rates fell to an incredible 2.80 today as the price hit  the 2008 highs. This is truly shock and awe now and you wonder if anyone is driving this runaway truck.
9-23 Gold and silver bugs get nailed with Gold 1639.80 -101.90 and Silver 30.10 -6.48. Copper dives another .20  to 3.28. That means that Copper is a cool 31% off of its April highs, Silver is now 40% off of its highs and Gold is 15% off of its high. Gold has a long way to go to catch up with the other commodities. A 30 % correction would put Gold at 1347 and as I said earlier this week I forecast Gold to 681 beforesilver bugs get nailed with Gold 1639.80 -101.90 and Silver 30.10 -6.48. Copper dives another .20  to 3.28. That means that Copper is a cool 31% off of its April highs, Silver is now 40% off of its highs and Gold is 15% off of its high. Gold has a long way to go to catch up with the other commodities. A 30 % correction would put Gold at 1347 and as I said earlier this week I forecast Gold to 681 before it is all over. Gold is now a source of funds for other depreating assets. The risk trade is unwinding and that is exactly what they want.
9-26 The DJI held the 200 week for the forth time since August 8th and ralliedalliedralliedallied 272 points.  I think the shorts have to make a decision here to cover or hold. The talk I have heard leads me to believe that the lows are going to break. The market rallied with the announcement in EUROPE on a deal to bailout the banks similar to the TARP agreement.
9-27 Stocks and commodities rallied as some air was let out of the recent dollar rally. We are at the end of the quarter and this rally maybe just the window dressing the system needs to show the 401K plans that things are not that bad. This happened at the end of last quarter. Bonds along with the dollar took it on the chin today. The trend is still down on all asset classes. The dive into the end of the quarter would have been a good thing if you are looking for a low
9-28 Oil and Gasoline looks like it could cave in. Copper Silver and Platinum are the most recent casualties of the dollar rally and the soft world economy. Stocks today dropped 179.99 and resumed their decline and I believe at some point have another leg down. My indicators are slightly oversold but puts ran at a hefty 1.30 today and the VIX was over 40. Normally when the VIX runs at 40 either the sell off is over or we enter a crash phase. The path of least resistance is still down.
9-29 Good GDP numbers released and the market rallied. I will not comment on those numbers or any other because they are not only subject to revision but they make them up. I have learned that figuring out the real economy is just a pain in the ass. It will not make you any money and just cause you to attach to the wrong thing which is the story. Keep focused on the price if you want to trade and not the Alice in wonderland numbers they system makes up. Today was an up day for what ever reason and the trend is still down. Apple (390) looks very toppy to me and many of the leadership stocks have been nailed a move to 340 would not surprise me.
9-30 End of Qtr closes down 240 near long term support.
10-3 The averages closed right on the edge of the cliff today. The support of the 200 week is at 10662 and the DJI closed at 10655. The brokers and banks are acting just like they did in Sept 2008 when we had the credit meltdown. Long term US bonds closed higher that they did in 2009 and yields are at their lowest levels at 2.74. The market is now at a 52 week low and has wiped out QE2 and is working on QE1 from June of 2010 which started at 10300 in July. That is the result of fake money being pumped in by the Fed to save the banks and corporations. Gold and silver was also aided by this pump and its day is coming too.
10-4 The risk trade awoke today just in time to save the DJI from breaking down. Its a good thing for the market makers because there have been a lot of puts bought and they would have been on the hook. The truth is that 95 out of 100 of these the puts lose just like they did today. They must first make this 10600 level unimportant and then it can break. The threat to the puts is the Fed and Bernanke was out rattling the sword today. The municipal bond market took a hit today with the National fund and the California funds trends turning for up to neutral. Keep your eyes on these trends because the way the banks and brokers are trading credit quality may be a concern and these markets could get ugly with out Federal support.
10-5 The 200 week is the line between a long term uptrend and a long term downtrend. It is an important line and the traders are watching it. The shorts got too excited this last week and the "risk traders" (you know who) pulled it back above the line. The market internals still show an oversold market and the puts got some religion today with Put/Calls running at a calmer .86. It looks to me that they want to stair step this down trend a little at a time.
10-6 Stocks and commodities edged higher on the lower dollar today. The 50 day average on the DJI is at 11262 or about 30 points above the current close. The average is falling so the odds favor the market meeting resistance in that area. The intermediate trend is down and for it to turn up the DJI would have to get above 12000.
10-7 Jobs sell off
10-10 300 point fix Europe rally dollar tanks but gold rallies
10-11 Nearing the top of a trading range. Current trend changed to neutral

10-12 counter trend rally continues IBD calls market in uptrend
10-13 Daily MACD turns positive
10-18 The central banks held the line at the 200 week average over the past 2 weeks and once again the DJI is at the top of a trading range. The support area is now the 50 day average at 11215 which contained the yesterdays sell off. The 20 week is now the resistance area at 11649
10-19  The top end of a trading range and the lower end or breakout in the dollar are holding at these levels. The Mikey 5 is just above the zero line and the Mikey 10 is still an over bought 114. This indicates some near term weakness in creeping into this last 2 week rally..
10-21 The intermediate term was upgraded to neutral and the current trend is still up. Stocks break out above the top of their trrading range of 11600 close at 11808