US equities, the VIX, oil and copper are bucking against price levels associated with multiple peaks and troughs over the last month. The levels are as follows:
July copper: resistance at $2.32 – 2.35
August oil: resistance at $70 – 71 (BTW, I have been stopped out here and am on the sidelines)
NASDAQ futures (NQ): resistance at 1470-1480
S&P 500 futures (ES): resistance at 915 – 925
VIX: support at 27
These markets are looking short-term toppy, but a push through here would be bullish. Every time the VIX has dropped to 27 it has snapped back up, oscillating around the 30 level for the past 5 weeks. Today’s action should go a long way towards relieving the oversold condition (OTM put spreads, low TICK) that we observed earlier this week).
Divergent action today
It is noteable that bonds are holding onto very nice gains and even pushing higher today, that the dollar is well off its lows, and that precious metals are languishing. We have an unresolved market here. I believe that the bond market is generally the most prescient, so unless treasuries get on board and sell off hard, I’m holding onto most of my reflation-trade shorts with relatively tight stops (with the exception of the CHF short — yesterday’s crash on manipulation news provided a nice exit — I’ll reenter if we get a bounce, as with GBP).
BTW, if anyone hasn’t seen Matt Taibbi’s populist tirade against Goldman in Rolling Stone, it’s a fun and surprisingly decent read for a writer without a background in finance. Zero Hedge posted a scan in its entirety:
http://zerohedge.blogspot.com/2009/06/goldman-sachs-engineering-every-major.html
Unlike Taibbi, I don’t think we can blame Goldman for the commodities bubble (I adhere to the school of market thought that says pricing forces run much deeper than simple manipulation). Also, it was regulation, not the lack of it, that was cause of this depression (government-created monopolies, socialization of risk and moral hazard anyone?). Nonetheless, I was pleasantly surprised to see that a popular journalist had actually caught onto to what a scam carbon trading is.
My own studied opinion (I am a lifelong environmentalist who went to the top grad school for this stuff) is that global warming is 100% BS, just another scam for the bankers, lawyers and bureaucrats. I have met the head of the Chicago Climate Exchange, and there is not fiber of altruism in his bean.
If I am ranting, maybe it’s because I just heard Obama say in his usual righteous tone that the debate is over on this subject.