Before the Open (Nov 2)

Posted on by Jason Leavitt

Good morning. Happy Wednesday.
The Asian/Pacific markets closed mixed and with a bearish bias. Indonesia gained more than 2%, and China, Hong Kong and Singapore gained more than 1%. Japan dropped 2.2% and Australia dropped 1.1%. Europe is currently mixed. Austria is down 3.6% and Amsterdam 2.8%. Germany is up 1.1%. Futures here in the States point towards a positive open for the cash market.
We’ve gotten lots of selling pressure the last two days. Twice the market has gapped down, and no legit rally attempt was made either day. The market deserved a break. October 2011 was the best Octobers in 25 years and one of the best months in two decades. The move off the early month low was unsustainable. Throw in proximity to resistance, and for us traders, the risk/rewards were not great. The news that shocked the market yesterday was convenient in that it hit at the “right” time. I’m still of the opinion the trend is up, and I still believe this dip will get bought. But this doesn’t mean I stay long and watch my profits disappear. You have two choices. 1) Ride out a dip or 2) Exit and look to re-enter. Anyone who has been reading my material for any length of time knows I fall into the second category. I exit and take profits and then sit tight and wait for a good opportunity to re-enter. This causes me to miss moves from time to time, but I also sleep well at night during these times.
There is an FOMC meeting today. Either traders don’t care or it’s obvious what the Fed will do and say or the situation in Europe is so much more important that no one is talking about it. In any case, it’s here. They’ve already said rates won’t change, but their statement will be closely dissected.
As I stated yesterday, I’m laying low until the dust in Greece settles. More after the open.
headlines at Yahoo Finance
today’s upgrades/downgrades
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Nov 2)”

  2. usa running $1 trn/yr deficits per year ad infinitum. now euro zone is joining the party with a trillion euros. that’s probably just a down payment on what it will end up spending. since there are no other serious, large enough currencies around, what is the obvious choice? anything “real” basically. to keep it simple, just buy gold. esp if we get big selloffs like we just did. $2K should just be unecentful milestone in its march towards the $3k-$5k range. gold is hard to find and very expensive to extract these days, so miners are lagging big time. but at gold above $2k, miners that can get something from under the fround, even at high costs, should explode. so mining stocks should also be bought here. don’t be fooled by the bond rally, 4th quarter is almost never good for fixed income. wait for the new year to buy and the third quarter for an explosive rally, if the conditions are ripe for one by then of course. best of luck.

    1. kunta kinte – thanks for the comments. You should share your thoughts more often. I’m assuming you see gold as a paper currency alternative that will rise whether inflation or deflation occurs in 2012. Based on the weekly charts, I’m not sure there won’t be a better buying opportunity below the recent 1535 low.
      I find your bond comments very interesting as I’m a Treasury bond bull on the 10 & 30 yr bonds. I’m thinking more sideways to slightly higher yields for the remainder of the 4th Q may get the technicals lined up for early 2012. Do you have thoughts on the U.S. Dollar, as both bonds & the $ (risk off) have been moving opposite the stock market (risk on?

      1. thanks PeteM. i want to be a dollar bull because the world we are entering is typically great for the US$ and treasuries. but my question is, dollar against what? it will probably suffer against commodity currencies (canadian, aussie, nz dollars), but rise against the euro. it will pretty much collapse against real assets, but so will all currencies. given usa’s debt burden that is getting unbearable fast, the only solution seems to be to give up the reserve currency status and just let the dollar collapse. that will allow our real debt to collapse as well, making it easier to pay it off or at least service. of course that will be the beginning of a new world economic and financial order, where usa cannot borrow a trillion bucks a year anymore. so that nuclear weapon cannot really be used until our budget is close to balanced. it will have to be used when our debt burden is truly calamitous but we don’t need as much foreign capital going forward. when that day of reckoning is, it’s anybody’s guess really. needless to say, commodities will also collapse at that point. but they have a spectacular rally in front of them first as the dollar is debased and completely destroyed to get out from under the debt burden.

        1. If I read you correctly, your’e expecting deflation first in the U.S. to be followed by inflation. If so, that’s how I’m looking at it. I think that scenario leads to what you see, i.e. a new financial order. I think we end up with some sort of new world reserve currency backed by gold. The question is, how do you and I survive what’s ahead and maybe profit from during the transition. I’m probably older than you, and I worry about my children/grandchildren’s generation and their ability to understand and deal with it.
          I hope you’ll comment more and share your trading ideas.

  3. By the way, does anyone see a gap in the SPX hourly chart in the 1250-1255 area? I’m thinking that it may have to be filled followed by at least a retest of 1215. But first, if SPX can hold the 1226-1227 area and reverse from there, I may want to go long witha tight stop looking for a retest of today’s high at least.

  6. nothing has changed to the pos start of the down
    we had a consolidation inside day
    whilst these days can be followed by either direction–however the euro is still weak
    and the world is scared of my holloween bear suit i just got

  7. The inability of SPX to get through 1240 as the last i/2 hour of trading came, led me to take profits at 1239. I guess I’ve now become a daytrader, for the time being at least. As RichE said, it’s not like I’ve become a pagan. Tomorrow is another day.

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