Classical Wednesday

30 minute atr

daily pivots

weekly pivots

upside retracements

downside retracements

regression channels

price support and resistance
The 2 charts below, on different time frames, show the importance of the 1.27% retracement level. Both targeted 135’09 as the high. The actual high? 135’10.

240 minute retracement

30 minute retracement
On the economic calendar:-
 
07:00 MBA Purchase Applications
08:30 Housing Starts (Consensus 0.965 M v Prior 0.907 M)
09:15 Industrial Production (Consensus 0.4% v Prior 0.6%)
10:00 Atlanta Fed Business Inflation Expectations
10:30 Petroleum Status Report
14:00 Beige Book
POMO:-
 
10:15 – 11:00 Outright Treasury Coupon Purchases between $0.90 – $1.15 billion
 
Speaking today:-
 
08:30 Jeremy Stein
12:15 Janet Yellen
13:25 Richard Fisher

 

Nasdaq Red Moon

The Nasdaq future (100) moved up enough to trigger a buy signal at 3463 and raced through the first objective. Quickly, the market reversed back through the Sell point at 3447 and is melting into the downside objective of 3394.

The price action is ringing in calls for a major market and economic contraction. The present reality is the market has returned to Feb. levels in a hard seasonal round trip. Traders continue to embrace the notion that the Naz Leadership is a harbinger of bad things to come. We are unconvinced.

A major theme of our understanding of QE is the higher elasticity of capital market prices to economic activity. A world focused on high speed trading has increased the link between markets and activity. Economic lags continue to be well behind the 400 millisecond capital investment. The other “analysis” we hear is the rising 10 year note price must mean something bad is coming. This myth was heavily hyped in the sub-2 % spike. Contrary to the “This must be bad” thinking, the economy bottomed and improved from that point.

As we mentioned in a note last month: Equity market gyrations are over analyzed both up and down. Behind the apoplexy, a 2+ economic advance struggles for traction and something faster. Certainly, tanks and shirtless egomaniacs complicate confidence but deep down Americans focused on missing planes and celebrity club hopping have little room for the Ukraine. We continue to believe markets have been “loose” from the underlying reality for some time. There’s less going on regardless of direction.

Classical Tuesday

30 minute atr

daily pivot

weekly pivot

price extensions

price retracements

regression channels

price support and resistance
On the economic calendar:-
 
07:45 ICSC-Goldman Store Sales
08:30 Consumer Price Index (Consensus 0.1% v Prior 0.1%)
          Empire State Manufacturing Survey (Consensus 7.50 v Prior 5.61)
08:55 Redbook
09:00 Treasury International Capital
10:00 Housing Market Index (Consensus 49 v Prior 47)
11:30 4 Week Bill Auction
POMO:-
 
10:15 – 11:00 Outright Treasury Coupon Purchases between $1.75 – $2.25 billion
 
Speaking today:-
 
08:45 Janet Yellen

On Drugs

This is a primer on medical treatment, drugs and by connection the health insurance roll out. Gilead bought the maker of the experimental Hepatitis C drug now called Sovaldi for $11 Billion. According to the SF Chronicle, over 3 million people in the US have Hep-C and 140 million worldwide.

The drug will CURE over 90% of cases with a 3 month pill regimen of 2 pills per day. The cost in the US is $84,000. Compared to long term kidney problems or a $500,000 transplant the number is not insane. In fact, other drugs, with lower efficacy, can cost twice the amount. The key here is the potential volume. Under full coverage in the US the take for Gilead is $252,000,000,000 not a bad return on 11B. Express Scripts and the big carriers are fighting back on the cost of the pill.

The same treatment in the UK would cost roughly $60,000 and in Egypt a paltry $900. Clearly, the dysfunction in the US is leading to exploitation. Biotech, R&D and the confusing weave of health care in the US just got much more complicated.

Classical Monday

30 minute atr

daily pivots

weekly pivots

price extensions

preice retracements

regression channels

price support and resistance
On the economic calendar:-
 
08:30 Retail Sales (Consensus 1.0% v Prior 0.3%)
10:00 Business Inventories (Consensus 0.6% v Prior 0.4%)
11:00 4 Week Bill Announcement
11:30 3 Month Bill Auction
          6 Month Bill Auction
POMO:-
 
10:15 – 11:00 Outright Treasury Coupon Purchases between $0.90 – $1.15 billion