tuesday brainstorming

1. We have reached the crucial levels for the SP future the 1209-14 level and the NQ (NDX100)  2245 – which are gap areas and roughly matching 38% retracements for the ES rather the 50% level.

Our expectation was for a 2-3 day short covering bounce followed by a sharper sell off as we are entering the astro climax pattern for the Euro the next 2 weeks. Target levels for the ES are 1100-20.

My only problem I have is the MA’s of the ISE Index which are very close to a low level and after a quick panic selling a rather expect a very strong bounce thereafter which should last 1 -2 weeks. For now we are about to end month 5 down tomorrow but not a lot of window dressing activity to be expected.

excerpt

ECB Fails To Sterilize Bond Purchases, €9 Billion Shortfall Confirms Euro Bank Liquidity Freeze

Submitted by Tyler Durden on 11/29/2011 – 07:47Bond European Central Bank

Those wondering what caused the accelerated reacquaintance of the EURUSD with gravity on its way to what UBS has just dubbed the “beginning of the end” (report to be published shortly), need look no further than the ECB where the ECB had its first failed sterilization since the expansion to monetize Italian and Spanish bonds was launched in August. As noted yesterday, the ECB had to sterilize €203.5 billion in cumulative bond purchases. Instead, it only got bids for €194.2 billion from a paltry 85 bidders. This means that for the first time, as shown on the chart below, the ratio of Bids to Bonds for Sterilization fell under 1. What is much worse, is that this happened on the day of the weekly 7-day MRO, during which a total of 192 banks took a combined €265.5 billion from the ECB’s weekly 1.25% handout. The amount tops the 247 billion that 178 banks took last week and is the second week running that demand hit a new two-year high. In other words, despite demanding the most amount of money in 2 years, the banks were unable to flip all that cash and “sterilize” monetized paper. This is very bad news as it confirms that the SMP program is coming to a forceful close as banks withdraw in their shells and any further PIIGS bonds purchases will be no longer sterilized above some threshold level, somewhere in the high €100’s, low €200 Bns. Whether this is the final straw that pushes the ECB to print outright remains to be seen: it is surely providing the needed dead cat bounce to the EURUSD as hopes that Draghi will finally do as the banks demand have once again resurfaced.

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~ by behindthematrix on November 29, 2011.

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