Let's keep it simple. The drama yesterday was at RTH 41.35 so watch that like a hawk. Pre-market it appears the bulls will keep RTH in their camp. Likewise watch the SPX:VIX ratio 68 level. This is now bearish, under 68, but will likely pop back above 68 at the open. Watch XLF 15.18 and VIX 18.14 levels as well. The NYAD chart pointed towards a bounce and the futures show that bounce to be on tap. Many traders will be anxious to short the rallies so this may actually enable the upside to drift higher. The SPX 1340-1343 level is critical support; trouble is ahead if this level is lost since it repreents the neckline for the H&S pattern. The bulls need to touch the 1364 handle to accelerate the upside. The bears need to push under 1343 to accelerate the downside and more likely open up a whole new downside range. The opening bell is only minutes away.
Note Added 5/10/12 at 10:12 AM: Status quo, RTH well above 41.35, SPX:VIX is 71.26 back above 68 so the bulls are driving the bus again. XLF came up for a high today at 15.15 but short of the important 15.18. XLF now printing 15.09 so watch this closely today. VIX is 19.20 well above the 18.14 remaining in the bear camp. Thus, RTH and SPX:VIX ratio are bull-friendly and XLF and VIX are bear-friendly. XLF 15.18 is the one to watch today. For the SPX, the 1364 handle was touched, and typically you want to see these targets held from seven to ten minutes, but each time the SPX moves above 1364 and even printing a HOD thus far at 1364.58, price has petered out and dropped back below 1364. If price can hold above 1364 for ten minutes the broad indexes should accelerate higher, otherwise, especially if the XLF does not move up, today will probably be a long sideways struggle. Keystone sold PCX for a flat trade, miniscule profit. Will look to reenter today or tomorrow, it remains an attractive long.
Note Added 5/10/12 at 12:45 PM: The status is quo. RTH is elevated. SPX:VIX is above 68 although it teased failure at 11 AM only to recover; now printing 70.45. XLF mounted an attack of 15.18 at the bell but has petered away ever since now at 15.06. VIX remains happily bearish over 19. One of these four characters wil flinch and tell you the market direction. Until then, a sideways stumble is the course ahead. SPX is moving thru 1357-1362 for the last couple hours. The 20-week MA is 1355.11.
Note Added 5/10/12 at 2:30 PM: The beat goes on, no change in RTH, SPX:VIX, XLF or VIX. XLF 5-minute chart is working sideways into a triangle so it may break one way or the other. VIX is inching lower this afternoon but remains above the 18.14 level now printing 18.89. SPX attacked the 1364 level again at 1:30 PM but after a couple minutes fell on its sword once more. The bulls can grab the 1364 but cannot hold it; think of the 1364 as the top of a wall you are climbing but your hands keep losing their grip, slipping away, and you fall back down, only to muster up the strength to try again. You eventually get a good grip and pull yourself up and over and climb higher, or, you fall back, exhausted, and roll over lower.
Note Added 5/10/12 at 3:39 PM: Looks like today was the long sideways struggle. The status is quo. Bulls and bears are exhausting each other but neither side wants to take the ball and run. VIX took a big jump higher at 3:15 PM back into the 19's, perhaps the market bear's are at least making a statement at the end of this sideways day.
Note Added 5/10/12 at 3:51 PM: The SPX followed the VIX's bearishness 25 minutes later dropping from 1360.50 to 1357.00 in five minutes time. XLF now under 15 so the financials prefer the bear camp. RTH at 41.50 fifteen cents above danger. Whoa, look at SPX:VIX tumble, now printing a 69 handle.
Note Added 5/10/12 at 4:00 PM: Late day swoon but no great shakes, the status was quo today with none of the four items above wanting to make a move, thus, sideways markets all day long. Both sides must return to their corners for an evening of rest and it will be picked up from the same place again tomorrow.
Hello KS. I am buried in SRS. IF you have time could you please update your thoughts on this etf. Thanks...dale
ReplyDeleteHello Dale, the SRS daily and weekly charts are very attractive and constructive for upside. They are basing now with universal positive divergence. Price is now testing the prior low from a week ago so this should do it for the basing. The action now is potentially a head for an inverted head and shoulders. Thus, over the next couple months the potential would be head at 27, neck at 32, would be a target of 37.
ReplyDeleteMany many folks say the housing recovery is here. Perhaps a trigger point will be bad housing data that finally gets SRS moving stronger to the upside. But very nice charts and constructive to the upside moving forward thru the days and weeks ahead. Keystone is in this one as well. There was some capitulative selling in late January, and also a week ago, one would think that many of the weak hands are finally gone. This is knife-catching, however, so any outcome is possible.
KS...thanks for holding my hand. At least I feel a little more at ease. I also came up with 37 as a first target. Thanks again...dale
ReplyDeleteTake the pause button off please we got no where today VIX daily looks likely to draw down to the 20 day MA i think well try today again tomorrow perhaps the bulls will pull ahead .
ReplyDeleteNews on JP Morgon not good but will probably not sink us despite the whale.
ReplyDeleteJ. Diamond say its an egregious and self inflicted 800m. 1000m.
ReplyDelete