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TODAY:

Current Conditions:

Yesterday we saw a 3.55% S&P rally on the European Summit agreement to kick the can down the road. Granted it was a @ $1.4 trillion kick. We used the exuberance to take profits in our long S&P position established at 1225 at 1285 a nice 5% gain. This process is going to be like making sausage, better that you don’t see the details. So we have a plan now we need to see the action. The S&P has closed above the Exponential 200 day average for the first time since the end of July. Normally we would not have taken profits on such a move, however the precarious nature of this rally and its dependence on all of the politics being executed flawlessly, led us to take what could be very unsustainable price level. Commodities were very strong as the US Dollar and US Treasuries were abandoned as safe havens for now.

VIX closed 25.46 down 4.40 

Current Positions:

HG      Long    3.222   Target  3.900

CL       Long    89.30   Target 96.24

SI        Long    32.70   Target  37.00

AU      Long    1630    Target  1850

EC       Short   1.4040 Target 1.3700

Market Behavioral Analysis:

A strong move like yesterday is not easily reversed. The S&P has closed above its 200 day Exponential average and longer term investors will be attracted and this rally may become more than just a short covering rip. As long as news from Europe remains positive we should see continuation. What was agreed to yesterday was a plan. It was voluntary and now the necessary actions must be taken without a hitch. This market remains too fragile for squabbling over the execution of the plan.

 

The bottom line remains that we are in a generational (Kondratieff Cycle) credit destruction, correcting 50 years of over spending and excessive borrowing. The Fed and ECB are and will print fiat until the conflagration burns through all savers wealth.

 

 

Econ News:

 

Personal Income                      8:30am

Consumer Sentiment               9:55am

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