Wrap up

Is the sky falling maybe but probably not. On days like today I like to look at two charts for a bigger picture. The NYA - NYSE composite and SPWY - Equal Weighted S&P. We put in an outside week in the NYA and reacted off a 160 week sma which could be a major reversal sign but the SPWY is still inside and hasn’t even touched its 8 ema. Both would have to start closing under the 8 ema before we start thinking the bear is back. The market still has an appetite for risk as it is still preferring High Yield bonds to Treasuries so we are likely in a pull back here and not a major reversal.

But you couldn’t tell that by the action of Paper in the pit. Paper sold heavily off the bell and as usual the locals scooped them up. They come into the pit flat each day so regardless of what happed yesterday they are likely to take the other side of the trade off the open so that they get a position on.

If they see the market is too heavy to one side they are quick to reverse and go with the flow (well most of them but some are very suborn). Today, the sell paper stopped soon after the open. Most expected a quiet day waiting for the Fed tomorrow and listening to Goldman testimony. The locals struggled to hold the bid but they are master day traders and market manipulators. The OR held after two tests, one of the lower range and one of the upper. It was a creeper but the locals were long and getting paid. As we all know by now the longer the locals can hold bid above the OR the more likely buy Paper will start coming in. It did and the locals kept laying off in the mini and holding their longs.

They were probably looking at the same target I was which was 11.25. However the market started to roll over at 1208, yesterdays settle. They tried to hold bid but couldn’t and the market rolled over them as well. Once the price traded back to the open they scratched whatever was left and started getting short. Apparently the Greeks didn’t send enough Ouzo because their bonds were down graded to junk and the markets sold off heavily. Paper sellers were aggressive with Swiss bank leading the pack. Chicago Corporation was the biggest winner selling 3000 cars through the afternoon.

Lets see what tomorrow brings. Recent Fed days have been uneventful but we have a Vix close at 22.81!!! If the pit is packed tomorrow on the bell I think we can expect an exciting morning session at least. Cant wait!


Tim Mack