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Brian's Wednesday Recap: The Dragon Lives, Opportunity For Gold, No Wishes With The Devil

Brian Shepard

Collective Intelligence!
Overnight the ECB’s Asmussen reiterated Draghi’s comments from Monday, that the central bank was prepared to act further if the economy worsened with the caveat that it was not an ‘all purpose weapon’. We also got more details from the Portuguese government about yesterday’s EUR 3bn syndicated bond issue, with a reported EUR 10bn in demand, 86% of which from international investors. Also, both Chinese trade and German production data beat expectations.

The Dragon lives and the recent data points to a resuscitated patient. However, the life support cannot be taken completely away. There remains doubt that the figures presented last evening are not the reality of money flows. Exports reportedly rose by 14.7 percent, while imports expanded by 16.8 percent. Both figures were better than expected. Economists, however are quick to point out that a financial Chinese checkers is being played. Exporters are trying to game the currency markets. They are overstating their business to bring funds in clandestinely to avoid capital restrictions. Importers on the other hand, are involved in the importation of capital to speculate and invest in the country. This is something the government feels will increase inflation.

Unless one has lived under the sea or in a coma, the headlines are shouting Dow 15k. Another milestone without signs of a meaningful pullback. In fact, some on the Fed board are saying that inflation is too low at 1 percent and more stimulus is needed. There is only one dynamic needed to trade equities-close your eyes and buy. The Fed’s have now pushed the baby boomers into accepting risk that should be shunned at this point in their lives-posted by Stanton Analytics.

Don't look at the U.S. economic calendar - not much U.S. economic data coming out next week, thin to win? Maybe I should check with www.mrtopstep.com ;). I have always believed that volume = validity - posted by Tony LaPorta. 

Top Notch (07:00a.m. CT) 30 Year Bond- 146.09 pivotal / upside target of 146.27 / support @ 145.24, 145.09, & 144.28. William Blount (09:16) 1627.78 NOW IN CASH-- if the bulls convert those T's, bears are in trouble again Top Notch (09:17) s&p - is it on its way to weekly fib of 1627.80? William Blount (09:17) top notch it is also r2 on the daily, 1627.5 = r2. PivotBoss (09:18) Match 1627.5...that's my primary bull target for the day.. 24 was first level target in ES... Roger Volz (09:19) 1624.25 works first convergence dailies...overhead has 1638.50-42 major major for daily OB.

This could present a good opportunity for a gold short that I spoke of yesterday. Once can look to sell in this area of 1465-1468 with an initial stop above Monday's highs at $1478 ish. This presents a large downside profit opportunity with fairly limited upside risk because we will know very quickly if we are wrong. 20 day EMA here as well - posted by Matt Z.

Total US oil demand increased 6.4% in the latest week, a rise of 1.16M b/d, to 19.1M b/d, the highest level since Dec.14, EIA data show. But the devil is in the details. Some 900,000 b/d, or 78%, of the reported jump occurred in "other oils," a collection of lesser used oil products that is estimated each week. Demand for the two main oil products--gasoline and distillate fuel (diesel/heating) was virtually flat, ticking up a combined 29,000 b/d, while jet fuel use rose 107,000 b/d. Excluding other oils and propane/propylene, demand for core products rose just 1% on the week and lagged the level hit two weeks earlier. (david.bird@dowjones.com)

Putin keeps John Kerry waiting for THREE HOURS during his visit to Russia for meetings over Syria as relationship between the U.S. and Russia remains frosty. Read more: http://bit.ly/10bumQP

Harmonics from Kathy at http://structuraltrading.com
Kathy (09:40) ES tgt hit 1624.5, premkt chart: http://screencast.com/t/1shucQjK , current chart: http://screencast.com/t/9L4CEL97
Note, it's one thing to breach the upper portion of a zone, it's another thing to hold above it, a hold above it has 1628.25 tgt, a hold below 1624 implies retracement mode.
Kathy (09:49) NQ testing Bearish Butterfly PRZ, premkt chart: http://screencast.com/t/m7lR2VUQ current chart: http://screencast.com/t/k1Bh5a0It
Kathy (10:37) CL forming a bullflag type consolidation, hasn't quite been able to reach ideal target for bearish Gartley at 96.28, premarket chart http://screencast.com/t/AuGRp64R current chart http://screencast.com/t/jjwWWF9y
Kathy (10:40) 6E has formed a new BC leg of larger emerging pattern (bullish butterfly), currently forming C pt with help of emerging bearish Crab, premkt chart: http://screencast.com/t/hwTyuGPMh1 current chart http://screencast.com/t/gzdZRzKlY
Angelo D (10:50) nice chart. thnx. 6e working 4 me today, $, thank u.

Real Traders webinar - Kathy is part of this event for real traders May 9th 11:00 to 4:00CT http://www.realtraderswebinar.com/mts-live-event/ Going to be a great event - sign up early to reserve your spot.

Today’s S&P 500 trade started with 200k ESM and 1.1k SPM traded on Globex, trading range was 1621.90-1617.00. Tuesday’s regular trading hours (RTH’s), pit session trading range was 1621.60-1612.20 before settling at 1620.60 up 7.2 handles. Chinese trade and German production data beat expectations. German and French Central Bankers / Finance ministers last day of two day meeting in Berlin. At (08:29CT) John Monaco posted the NYSE opening imbalance was 70% Buy SIDE ON THE OPEN. Tomorrow could be interesting with AAPL ex.

The regular trading hours opening range was fractionally lower, 1619.50-1620.30 traded a low of 1618.70 before stepping higher, printing a series of new intraday, contract highs. redliontrader Nasdaq was taking the lead in our peloton now leading the pace-line on the highs of the day and a reminder for looming support observation from Gary (08:55CT) POMO today. Marketwatch noted; The Financial Select Sector SPDR Fund [XLF] +0.26%, which tracks financial stocks in the S&P [SPX] +0.07% , was up 0.1%. J.P. Morgan Chase & Co. [JPM] +1.05% was up 0.8% and was the third biggest gainer in the Dow. Bank of America Corp. [BAC] +0.81% was up 0.6%, making it the fifth biggest gainer in the Dow. Citigroup Inc. [C] +1.08% was up 0.75%. Goldman Sachs Group Inc. [GS] +0.57% was up 0.1%. Morgan Stanley [MS] +0.75% was up 0.2%. redliontrader (09:41) 321 new highs.. boy this chairlift is riding up a tall mountain.. over the next rise? Calls added in the OEX trade -1:7:1, bullish as the [NYSE] 351 new 52 highs trading range today +8 handles, 1618.70-1627.50 as 3.5KPM, contracts per minute were trading. Roger_Volz (10:00) ES 60 min OB closer to 1633.00-1633.50 & 1627.50 / 1629.75 convergence next ledges above ES60. 1629.75 the line for 15 min / 5 min OB, overbought. The grind’em higher did not have much of the way of a fade until a high of 1627.50 printed at 11:07. The high was retested at 11:23 with a 1625 low & the 12:09 retest / rejection saw a low of 1622.50 area by 1:50. Well, that didn't take long - the SPM bounced back to retest 1627.50 by 2:23. redliontrader (14:07) 484 new 52 week highs, 2.2KPM light - followed by 500 new highs (14:37). The 1628 area was trading when the closing imbalance showed a huge $1.1Bil. to the buy side. The SPM future traded 1628.80 area on the cash close before printing a new high of 1629.50 and settling at 1628.70, up 8.1 handles - just over 10 handles off the intraday low.

Brian Shepard is a 20-year exchange member of the CME Group.
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DISCLAIMER: The information and data in the above report were obtained from sources considered reliable. Opinions, market data, and recommendations are subject to change at any time. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any commodities or securities. {jathumbnailoff}

 

 

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