Monday was another Ramp & Camp day: it ramped higher on very low volume and set up a camp site. The volatility was ridiculously low – again. For the vast majority of the session, the ES traded in a scant 3.50 point range despite being up over 35.00 points. All of it happened on Globex.
Above is a 10-min chart of the putrid action.
What caused the massive gap open that eventually stayed still throughout the entire day? More hopium – of course. Late Sunday evening there were reports that Germany would join five other AAA-rated countries to issue common bonds to fund more profligate spending. Odd thing is – Germany DENIED this rumor quickly. Another rumor Sunday evening was that the IMF had a EUR 600bln loan for Italy ready to go, if things got worse in that country. Odd thing is – the IMF DENIED this rather quickly as well.
No matter – hopium is hopium is hopium…and who needs anything else, especially when the market is technically oversold and ready to bounce. Funny how these BS rumors always hit the tape when a short-covering pop is immanent (read: it’s a fix).
What was ignored in favor of the known FALSE aforementioned rumors?
- Moody’s believes “The probability of multiple defaults (in addition to Greece's private sector involvement programme) by euro area countries is no longer negligible.”
- The morning housing data showed that the average new home price drops to the lowest level since 2003.
- A judge tells ****ibank & the SEC that their prepackaged “deal” over fraudulent CDO/MBS sales is bogus and will go to trial. There is a good chance the next judgment will be close to $500million. Will actual justice spread?
- Italy was downgraded by Egan Jones ratings agency.
- After the close, Fitch moved the USA’s rating outlook to “negative.”
- After the close, reports surfaced that S&P may move France’s rating outlook to “negative” within 10 days.
Despite all of this, Hopium prevails. Everything before the open and after the close has been ignored in favor of rumors that were already (read: immediately) denied.
Isn’t a government controlled market just awesome? Trade well and follow the trend, not the so-called “experts.”Larry Levin
President & Founder- Trading Advantage