king dollar..notes for monday

 Seems to me that the dollar is still the dog and other markets remain the tail. The dxy(dollar index) has bumped up against a down slopping trend line at  79.71.  This is a trendline that connects a series of daily highs beginning on july 25th. At this point there is no reason to abandon a longer term thesis that the dollar is still in decline. Conveniently, that theory still fits in nicely with both the s+p and nasdaq futures. Nqz2, after having broken the neckline of a distinct head and shoulders pattern , has met the downside objective of  2675(trading below it to 2660) and bounced. At the same time the s+p(esz2) traded down to well defined support at 1420ish..What im trying to say is that nothing has happened to cause any alarm, and equities should now resume uptrend.. Also supporting this theory is that open interest declined  in s+p minis after fridays trade, suggesting long liquidation, not new short positions...
  The obvious question is what are we supposed to buy as overall markets recover?. There are a couple of ways thatwe are considering playing it. The fact that long end treasuries essentially ignored fridays sell-off suggests serious reluctance to add to long treasury positions. If equity markets begin a risk-on phase treasuries could be hit hard. We may buy otm calls in tbt or puts on the cme ten-year. Banks have held in well and as market recovers probably should out perform. I have bac and will consider adding on a trade above 9.61. Still like the homebuilders and have hov and ryl on.  Im not sure how sensitive homebuilders are going to be to short term swings in overall market but it obviously cant hurt..
  Tonight should be a big night on tv and if the bears win...wait...i mean if governer romney continues to gain momentum that could add to markets tailwind..I will try to watch both events mostly because if this is the moment in our nations history where i debate erupts into fists, we dont want to read about it second hand...enjoy...
  As always, if you have questions re; managed futures, hedge fund allocations or assitance with overlay strategies please contact us jiuorio@tjmbrokerage.com

notes for wednesday

    We are at a critical point in equities, weakness into today's close will make me believe that the correction has begun. This downturn should be standard and ordinary for two reasons; firstly, this rally has been characterized by lack of participation which lowers the likelyhood of a deep selloff. In other words, bear markets are generaly caused by a move from strong confidence to mistrust. The point here is that we lack any realsense of confidance, therefore we lack the fuel for a broader downward move. Secondly, there has been rampant talk of the evils of hft's and algos' increasing the potential for a flash crash. It seems to me that flash crashes can only occur if they catch the market completely off guard, and this is clearly not the case. A close below 1430.00 in spx should be the confirmation of weakness. In this case the objective becomes 1387.00..
   It seems odd to sight global economic worries as the reason for the downdraft as we have drawn that arrow from the quiver many times before.  Sometimes it just is what it is. Recent numbers out of China suggest a slowdown and this should be cause for some alarm. If we agree that China tends to cook the books, (I hope that doesn't get me in as much trouble as Jack got into...) perhaps signs of a little weakness means there's really a lot. Global barometers like CAT and Alcoa are flashing warnings. Two shorts that I currently have are Intel and IBM.
  The dollar should strengthen as the stocks correct, but all pairs shouldn't behave uniformly. I am interested in shorting the Aussie vs the Canadian dollar as China weakness should drag down the Aussie.
   As I've been typing, the S+P has lost a couple handles making the above scenario seem more likely...stay tuned....As always, if anyone has questions re; managed futures, hedge funds or information on using options to protect your portfolio or goose yields contact me through the tjm website www.tjmbrokerage.com