Friday, April 27, 2012

Keystone's Midday Market Action 4/27/12

GDP lays an egg at 2.2% but the uber euphoria and complacency in the markets carries the broad indexes higher anyways. Traders are sniffing out further QE on the way and trading on that thought while ignoring the fact that prior QE only provided a GDP of 2.2%.  The SPX received the two points of upside after the open to print above 1402 so a few more handles of upside should be explored today. SPX now printing 1403.  Overhead resistance is 1406, 1404 and 1403.

The dollar is weaker so commodities, copper and equities are higher.  JJC is well above 48.10 and other sectors of interest such as RTH and XLF are moving to lofty levels.  The semi's, SOX, is printing 413.28, actually down today.  This is the status quo outcome for markets mentioned in last evening's missive since copper remains elevated helping bulls but since the semi's are not moving higher, the market upside should be limited.  AMZN explodes 16% higher which boosts the tech sector but surprisingly, tech is not leading the broad markets higher, the indexes are coincidental today, now actually the broad markets are leading tech upwards, thus this hints that the market upside may be limited today. The Apple is red. 

Consumer Confidence at 9:55 AM, only minutes away that should create a market pivot point. Watch the semiconductors.

Note Added 4/27/12 at 10:25 AM:  The Consumer Confidence number was better than expected but the markets pivoted downwards. The markets are trading erratically and are highly unstable currently.  The GDP number should have spanked markets lower, instead the markets rally, the sentiment number should have bounced markets, instead they sold off. Combine this with the uber bullishness in the markets, with complacency very high, and you have very unstable markets.  Semiconductors remain weak, copper remains elevated, so the market move is sideways.  Note that the VIX, volatilty is moving up today, even before the markets started to leak lower. Utilities moving up this week has helped support the bullish case. The Nasdaq and SPX are moving in the same percentage moves today so this promotes a sideways move for markets. SPX 1399 is key S/R. As the markets stumble along sideways on what may be a lazy Friday trade, perhaps the vegetable garden now requires more attention than the markets. JJC and SOX remain key.

Note Added 4/27/12 at 12:19 PM:  JJC is at 48.80 well above 48.10, bull-friendlySOX is 415.32 well below 418.50, bear-friendly. Markets stumble sideways, SPX testing 1403 R right now.  HOD is 1404.64, which is also the high for the week so watch this number the remainder of the day. SPX 1406 is strong resistance. Either copper or semi's should decide who wins going forward. For now, the lazy Friday action idles along. The SPX has moved thru the tight two-point range of 1401-1403 for an hour and one-half.

Note Added 4/27/12 at 2:19 PM:  SPX came up to test the 1406 R and received a spank down with negative divergence showing on the minute charts; see if the 1406 reisistance holds, or not.  That would be a big feather in the bull's cap.  If not, price will move back down to test 1403 support. SOX moved up to the high 416's but then pulled back printing 415.96 now.  JJC is at 49.  Probably more sideways perhaps thru 1401-1406 into the weekend. VIX is under 16 helping pump markets higher.

Note Added 4/27/12 at 4:04 PM:  Markets stumbled out sideways into the weekend. Copper closed at the high for the day and week.  Dr. Copper enjoyed a quick recovery this past week taking markets higher.  The AAPL and AMZN strength, along with the doctor, accounts for the bull fuel. Tech led the broad markets today but semi's ended flat. Thus, copper and semi's will face off again on Monday. Utilities are up 2% this week and are another force lifting the indexes. VIX ended the day on the plus side.

10 comments:

  1. SOX daily chart is lovely two recent oversold RSI readings w/the macd histogram below zero we'll be seeing that up shortly give it time to think LOL... Baring a glaring reason to step in I got spooked into taking my profits on the GDP report down blip from over night trading e-minis buying the dips. Love the inter-market analysis provided here thank you for all your hard work. What I have learned here has helped me tweak my system.

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  2. Hello MCAP, that is good to hear, looks like the SPX is currently deciding whether 1399 serves as support or resistance, it is a very strong level so the side it chooses carries clout. SOX has to go higher or the bulls got nothing. Markets are very unstable currently. Quite a wrestling match thus far today.

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  3. I think if the market drifts sideways/up for a month the plunge will come around the second week of June...very curious to see if the S&P high can be taken out.

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  4. This rally is nothing but a dead cat bounce. 1.Jobless claims is on the rise 2. GDP is going down and 3. europe is out of control!
    doug

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  5. Actually, this rally makes sense as the worst the economic data gets in EU and US, the better the chances of another round of QE. Its quite perverse but thats where we are now, i.e. bad economic data, rallying markets.

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  6. printing money is getting very unpopular and feds will not touch it till after the 2012 elections. bulls can't sustain this rally and will crash..
    doug

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  7. Hello all, all those ideas sound good. Sun did hit on the market quandry currently. It used to be that in trading if you had good economic data and earnings, markets will go up and visa versa. Master of the Obvious type stuff. But now, with all the Fed easy money meddling, the markets are hooked on QE and the price highs are based on the pumping not from an actual solid foundation. So traders react bullishly to weak data since that brings the Fed closer to easing. That is the perverse relationship and why the markets are very difficult to trade nowadays.

    CRB 280 and lower should serve as a good guide, however, when QE3 will occur, so we are not near there yet, thus, markets have plenty of room to sell off moving forward. Another twist to things was the LTRO QE starting in late 2011 which was a goosing instituted before markets had sold off, which added confusion into the mix as well. So here we are going into the end of Operation Twist, and the LTRO's appear to be spent, so it would be a logical place for the pull back, then when markets sell down, Chairman Bernanke can step in with QE3. Of more concern now is where the top is at. The sideways triangle the other day had the upside target of 1406 which was just tagged.

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  8. The problem with the crash scenario is, "what ya gonna do with the money?" S&P yields almost 2%...10 yr 1.90%...corporations have proven they can run the business profitably in a slow economy...eventually there will be inflation and you want corporate profits instead of interest. Probably means a crash this afternoon, but you should probably is it for buying.

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  9. How long can governments try to manipulate the market with QE and LTRO instead of resolving the main issues. I believe europe will be a big problem if they stick to the same currency, it hasn't worked and will never work. 2nd week of may will be interesting to see what greece and france election results will be...

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  10. Interestingly, 5/6/12 is the France and Greece elections and that is Sunday. So traders will have to place bets, or move into cash, next Friday, ahead of the weekend drama, since Monday morning the die will be cast. Next Friday 5/4/12 is also the Jobs Report.

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