Collective Intelligence! Deja Vu! Both today and yesterday the indices traded unchanged to modestly lower throughout most of the session after opening right on that 1780 level in the December contract and converting that level to resistance on the retest(s) throughout the midday/afternoon from the underside. william_blount posted: the most bullish segment NEAR TERM of Elliott Wave PLAYERS will try to jam a lesser 4th wave into the drop from the Mirabella while realizing they have to ‘run the table’ from here to the FED ANNOUNCEMENT. **In plain terms they believe that as long as yesterday’s low holds THEN price is headed to ALL TIME HIGHS and that the origin of the yearend rally was yesterday. THE BEARS see YESTERDAY as 5 down from the high on Monday and that 5 down is a larger 1st wave drop, so they will be fine with a BOUNCE to add to their shorts. THE CRITICAL price to both camps is of course 1794 SPOT. SIMPLE language: both camps were fine with a rally today – cash did not make new lows at the double bottom on futures – bears are fine all the way to the 1794 spot before they get creepy feelings - this is ALL ABOUT NEXT WED - break 1764 everyone get discombobulated in the BOVINUS CAMPUS … WSJ economists survey: When will Fed taper? Dec 26%, January 33%, March 37%, later 4%.
Money Pouring Out of Bond Funds: Bond funds are on track to have another -$20b outflow in Dec, making for -$172b over the past 8 months. Given the $1.3T that poured into bonds over the past five years, there’s lots more to go. This could be a lift for equities in 2014.
In Asia, 7 of 11 markets closed higher: Shanghai Comp. -0.31%, Hang Seng +0.12%, Nikkei +0.40%. In Europe 6 out of 12 markets were trading modestly higher; DAX -0.09% / FTSE unch. In today’s RTH session the December S&P 500 futures gapped 5 handles higher to 1780.00 -1778.70, traded a high of 1780.50 before deteriorating through the early morning session and grinding sideway to lower, printing a low of 1772.00 – in a choppy trade.
OPTIONALERT (09:31) [SPX] – EXCLUSIVE CONTENT Over the first hour 185,852 contracts have traded in SPX today, 1.65x the recent hourly average, with 45,772 calls and 140,080 puts trading as the index trades near $1774.62 (-0.88). Front term atm implied vols are near 13.2% and the CBOE VIX is currently near 15.49 (-0.05). (Trade Alert LLC)) [$1774.64 -0.86 Fwd]. [VIX] – EXCLUSIVE CONTENT First hour volume in VIX totals 71,816 contracts, 1.00x the recent hourly average, with 37,647 calls and 34,169 puts trading and the index currently near 15.49 (-0.05). Front term atm implied vols are near 78.3% and SPX is currently near 1774.62 (-0.88). (SPX Crowd) [$15.48 -0.06 Fwd] – Fred Ruffy. Richcanlione (09:39) SPX Settling through “mean reversion ” on 2 stranded deviation daily 1784 / 30 day Avg (2 days in a row ) holding 2 day back to back double bottom in SPX 1772.28 / 1772.45. Retest of “mean reversion ” (Normality) on a SPX bounce would validate back to back double bottom in SPX 1772.28 / 1772.45 and project 1784.68 in cash. Bottom line, the markets are struggling to find some balance during the rollover, in front of the FOMC decision/presser, The to or not to Taper in December EVENT next week and the December expiration.
POP goes the crude … BDUN (12:19) Iran quits nuclear talks protesting US blacklist move http://yhoo.it/1bLtoAD
By 2:00 the VIX was backing off as the December S&P index was trading 1776.50 area when (14:00) MrTopStep MiM Closing Imbalance was showing a small 70%, $176M to the sell side. At (14:20) the MiM was showing 66%, $189M to sell while the index … by (14:40) the MiM showed 67%, $216M to the SELL side and I rubbed my eyes three times and said “tell me it ain’t so”… as the 1780 rejected the late day rally! By 2:47 the imbalance shrank to $55M to sell. On the cash close the December futures traded 1775 area, before settling at 1774.70, down .2 handles on the day – as we come into one of our favored patterns – the low trade made the Thursday or Friday the week before the expiration.
Good interview w/ Art Cashin on 2014: If money gets velocity, look out http://cnb.cx/19mC7J1
Coming events: http://www.investing.com/economic-calendar/ China flash PMI for Dec Sun night 8:00CT followed by Eurozone flash PMI 3:00amCT, U.S. Empire State manufacturing 7:30, U.S. flash PMI 7:58 followed by U.S. industrial production at 8:15CT.
Know thy Fed speakers: http://graphics.thomsonreuters.com/F/10/scale.swf
POMO = Permanent Open Market Operation http://bit.ly/19mBezZ
POMO Schedule: http://bit.ly/1fqTRnu
Homework 9. Interesting study, performance on each day of the week http://www.linnsoft.com/homework/
Posted yesterday: Fred Ruffy (11:02) [VIX] ticks higher, attracts big call buyer. The index is up .12 to 15.54 and hit its best levels in nearly two months this morning after ticking to 15.84. The top options trade in the VIX pit, which is also the biggest print across the entire options market so far Thursday, is a 40000-lot of Apr 22 calls for $1.28. Sources on the floor say the crowd thinks it’s a buyer and the position is opening. [$15.60 +0.18 Fwd, IV=77.4% +3.0] – Fred Ruffy, Trade Alert LLC. **Footnote: Seems like a bit of money but to a P.M. of a state pension fund (perhaps a couple of basis points against total return) well worth the risk given 2 day Fed meeting on 12.17.13 and potential “Risk to Growth” language change ….. based on recent slew of positive data – richcanlione.