|If the 1390-80 level (white oval) fails notice the pink line support @ 1363.63|
The markets have remained expectedly soft(quiet) ahead of the Kansas City Fed Jackson Hole economic summit which Bernanke will speak at 10:00 am ET tomorrow.
All signs pointed today to the removal of risk across a large range of assets in including commodities, much of which flowed into the bond market for safe keeping.
The failure of the 1409 level in the SPX this morning was a key area as it was outside of the standard deviation channel we have been chopping around in the past week and a half. Despite the afternoon bid off 1395.25 in the futures, market the sellers came right back onto the tape in the final 15 minutes of trade after cash markets closed. My guess is the goal is to create the illusion of maximum confusion ahead of whatever tomorrow brings.
Tomorrow may bring nothing but the same “hands off” rhetoric… Bernanke may very well save his bullets for a very rainy day, perhaps the day Greece KO’s the euro? In any case, you can expect sellers to try and dominate the tape tomorrow because of the close under 1400 today.
|weekly SPX (notice inverse H&S pattern) SPX 1390 (purple oval) is initial support if we give way tomorrow on the open. below that we have air gaps about ever 10 points down to 1363.63|
Bond markets are confirming the de-risking scenario going on the past week (back to center court)… IF it looks like Ben will be doing some stimulating i would expect a violent rotation out of bonds and into equities and commodities either via options or futures… the HFT will fluff the equities market…
|4 hou TLT|
IF we get nothing.. we might just get the sell off everyone wants initially, but market might just come back under the realization the market can hold and bid and remain liquid without stimulus at this very 10 seconds. Hard to gauge what the school of fish will do when presented with a new variable.
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