I have never understood why anyone would want to live in a place where the high temperature passed 80 on any regular basis. I have spent this Labor Day weekend in Dallas, where even at midnight the stagnant air is in the 80s, and where in the daytime it is 100 degrees in the shade. And don't even get me started on Phoenix, where the temperature is always in the triple digits. Why on God's scorched Earth would someone want to subject themselves to such unrelenting misery? Give me Palo Alto or, God willing, a place like Seatlle where I can live out my days in the solace of damp sogginess.
Anyway.
It's heartening to see the ES slipping this evening, although The Powers That Be are making it a little too obvious that 1397 (which represents a 100% premium over fair value, but I digress) on the S&P is a floor that are trying to defend. We have challenged the deepest levels set by the cataclysmic Bear Market of August 31st, which lasted upwards of 12 seconds by my reckoning. {Update: well, it's Monday morning, and the ES is in the green as of now – – what a surprise).
Looking at the daily chart also provides some modest encouragement for the bears. The analysis of the Bernanke speech on Friday appears to be that he did everything except absolutely guarantee QE3 on September 13th. Given that, it's interesting that the market has turned completely flaccid. I thought the centrally-planned economy that Bernanke has crafted was supposed to guarantee never-ending ascent in asset value. It appears to have hit an air pocket.
The NQ likely remains breakout-free, having tried to reach escape velocity a couple weeks ago and instead putting together a pretty decent-looking diamond pattern instead.
I presently am about 53% committed to the market (47% in cash), all of which are small short positions, and many of which are in and around the commodity sector. Crude oil looks to be threatening its intermediate-term trendline.
I find what the bonds are doing to be especially interesting. They have powered past what was a pretty decent resistance line, and they are looking like they might even take out the lifetime highs established in the summer. This suggests that maybe the bonds are being smarter about the market's future direction than stocks are.
It's all become kind of ridiculous that we're living in a world based on little more than Central Banker Action. There will come a day when we all laugh at ourselves for doing what we're doing (some time after Facebook is a low-single-digit stock and Zynga and Groupon have long-since been delisted). Until then, let's just hang on to each other and continue to muddle through this insane crap.
