Some quickie thoughts tonight. The wild market action continues, these markets sure are fun to watch. Futures were blood red this morning and then recovered after rumors that Sarkozy and Merkel spoke on the phone. Rumors were shot down so futures fell again. BNP Paribas gets punched around, down 6%, and then after the damage control folks from France tell everyone that all is fine and the banks are well-capitalized, BNP recovers all the losses plus some, and the broad markets head higher. It is obvious how the markets are reacting in real-time to the Euro news. Throw out all the fundamentals and simply watch Twitter or Reuters, or others, and note the roller coaster moves as the news, or rumors, are printed.
Keystone was most focused on semi's, retail and commodities to start the day. Semiconductors, SOX, did into dissapoint and took off to the upside taking the broad market with them but the day was much about fits and starts. Best Buy left a present in retail's Cheerio's this morning so that put the kabosh on any significant bull move for the broads. Most interesting today was how copper continues in a funk, volatility remains elevated, Keystone's SPX:VIX ratio remains under 35 and financials languish, all bearish indicators.
Talking technicals for the Wednesday session, continue to focus on semi's and retails to note broad market direction. Retail is especially important since sales data hits at 8:30 AM, this is going to set the tone for the indexes since the behavior of retail will determine whether the broad markets go up, or down. RTH is bearish now, only by a sliver of pennies. If RTH stays below 103.03, the market bears will be happy, if RTH moves above this level, the market bulls will run tomorrow. SOX is bullish now, over 363.58, thus, bulls want this to remain as is, but bears want to see this level fail.
For the SPX, now at 1173, the bulls want to touch 1176.41 and the broad markets will launch. Bears want to see 1157.44 and the sellers will enter the market in force. 1177 is key resistance overhead. 1155 is key support underneath. Reference the SPX S/R a couple posts back. Keystone's SPX:VIX ratio is under 35 at 32, so the market bears remain in control of the indexes as the session begins. If the ratio moves above 35, get out of the way since the bulls will be running strong. If the ratio stays under 35, bears will continue to be favored.
The soap opera continues tomorrow with the Paris-Berlin-Greece conference call, global traders will be hanging on any comment from Sarkozy or Merkel and the indexes will react violently on the news. PPI and Retail Sales hit at 8:30 AM and will immediately impact futures. Business Inventories at 10 AM and Oil Inventories at 10:30 AM offer up potential market pivot points. After your sandwich, tune in to the 30-year bond auction at 1 PM, another market pivot area. The markets are parked on a bull-bear line this evening remaining at the mercy of the Euro news flow. In 'normal' markets, traders typically play a quickie long from Tuesday into Wednesday during OPEX week, but this seasonality can almost be discarded considering the circumstances, simply be aware. More wild action ahead for tomorrow. Retail sector will dictate market direction.
Keystone thanks you for the kind comments.
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