In this wedge on the SP500 futures…you can see some overthrows which don’t occur on its cash market brethren. The futures market has probed breakouts to the down side which have consistently failed. Now that the fed must act to prevent the political catastrophe it has created by manipulating the newly created money provided to the large banks and primary dealers into “Risky Assets”, as Mr. BURNanke has said, supposedly “…to generate wealth and spending…” JP Morgan’s and many others off-balance sheet margin calls and, most likely, fraudulent “Hedger” position limit exceptions in Silver, Copper and many other commodities that will be classified as very “Risky Assets” indeed. They threw the world into turmoil…temporarily propped up balance sheets and will create a huge liquidity drain. Price collapses in inflationary assets not squeezing the big bank balance sheets should not do anything to help the situation as all that newly printed money simply goes “POOF”.

Great job Mr. BURNanke….now what are you going to do to try to save JPM & Co? Thinking of raising rates Ben?

 
for a more detailled look at the above chart click here.

I hope everyone is having an enjoyable President's Day weekend…this holiday is an interesting reference point for the market. Usually, if the market has been able to rally into President's day, especially closing near the highs…that's a marginally bullish sign for the outcome of the year. However, this time around things are a little more interesting. First of all, we are trading on abysmal volume at EXTREMELY stretched prices…during EXTREMELY unpredictable times.

In the past history, when we have traded this strongly into this time of year that has bode well for the rest of the year…except when we do so on paltry volume and over extended prices…in both of those cases…in 1937 and in 1931…the results were spectacular and resulted in over 40% declines for both years. The average return for entire year in which we trade into Presidents day strongly is 14.46%. We are currently up 7% for the year…that leaves us a potential, if the internals for the market were strong, of another 7% gain by the end of the year…or alternatively the potential of a 55% decline, as in 1931, if the market internals are a masquerade.

Here is an interesting chart…

Additionally to this, we have the Nasdaq 100…which I am re-posting in this blog entry (not inspired by Steven Colbert Colbuffington Re-post) with additional markups on the chart and comments because some people seemed to not understand that the significance or my the markings on the chart. The two red trendlines are exactly the same number of points. This indicates a classical type of market symmetry in that the bounce from 2003 is almost exactly equal to the bounce from the 2008 low…additionally, there is minor but not insignificant time symmetry also which is indicated by the comparison at the top of the chart. Markets love to behave symmetrically and this one on the Nasdaq 100 is a very strong pattern indeed.

for high resolution views of the above charts you can click on: SP500 Analysis or Nasdaq 100 Symmetry

I thought that it would be pertinent to post some interesting activity that seems to be coming to a conclusion imminently…yes, I know its been a rough slog for the bears…but the Nasdaq which has been a leader of the entire move off the lows and also was the harbinger of the biggest bear this side of 1980…has now completed a very symmetrical pattern. There is both time and price symmetry.

Markets love symmetry…and these levels definately have it!

The irony is that though this market has been pushing relentlessly there are these pretty significant road blocks…not the least of which are the 80 year trendlines on the DJ and the 30 year trendlines on the SP500…below are some things I think that should be kept in mind at this as the market seems to capitulate at these levels. (the SP and DJ monthly charts are from yesterday)

In addition to some of these longer-term trendlines…the DJ Utilities look like they are starting to rollover after a lengthy and rather unimpressive retracement.