The soap opera picks up at VIX 18.68 this morning. At 18.62 right now, under 18.68, the bulls will float markets higher. If VIX moves above 18.68, the bears will growl strongly. RTH 41.90 and NYA 7754 require watching as well. RTH is above the level shown creating market bullishness while the NYA is below the level shown creating market bearishness. Any change will send markets in that respective direction. The NYAD spiked lower to -2300 yesterday which begs for a market relief move to release the negativity. Today we see if the buoyancy all day yesterday relieved this stress, or not. The TRIN spiked to 6.4 which is uber extreme selling pressure, but, oddly enough, rebounded intraday to close at 0.85 which is very bullish, even printing a low at 0.73, so it would appear that the stress was relieved and the markets return to jump-ball status.
China PMI overnight was better than expected but remains under 50 showing contraction. Copper bounced on the news. House price data and the Richmond Fed may bump the needle at 10 AM. The 2-year auction is at 1 PM. Earnings are key today with heavy-hitter AAPL after the bell. Look for any weakness in iPhone sales that will place a damper on the tech sector. DD earnings will show if chemicals, the building blocks of any global recovery, are in demand, or not. Monitor the T results to note the iPhone subscriptions. The telecom sector is very important. Traders are chasing into and fueling the ongoing Dividend Stock Bubble so the T earnings importance is on par with Apple's earnings. Another key bellwether for the global economy is UPS earnings since shipping makes the world go 'round. WHR will provide insight into the housing sector using appliance sales as a proxy. TXN guidance disappointed last night which creates a negative vibe on tech.
The SPX begins the day at 1350 with both the bulls and bears each needing a 12 point move in their respective direction to create an acceleration in that direction. Otherwise, the SPX moves sideways thru 1339-1361 today. As the chart last evening shows, the 200 EMA on the 60-minute at 1347.53 is uber importante as the bell rings. The critical SPX 20-day MA is 1351.26, watch this like a hawk since bulls are in command above, bears below. The 100-day MA is 1359.62. The 20-week MA is 1358.19. Key SPX S/R is 1366, 1358 and 1341. If VIX spikes higher, watch Keystone's SPX:VIX ratio, now at 72.53. If the ratio loses 68, the markets are in big trouble with triple digit Dow Industrials losses on tap. If the ratio stays above, the bulls are on easy street. Watch BPSPX, now at 59.60. The peak a day ago was 61.20-ish. A six point reversal will confirm ongoing bearishness but the move lower is only 1.60 thus far. If the BPSPX does not reverse six percentage points, which would be to the 55-ish level, the bulls will be happy and markets will continue floating upwards. If the BPSPX drops under 55, this will confirm continued market bearishness ahead.
Note Added 7/24/12 at 8:23 AM: UPS laid an egg, missing earnings and lowering guidance, which creates weakness in the broad markets. If packaging and shipping is weak, that tells you the global economy is stalled and verifies all the weak top line revenue numbes reported each day. Companies are beating the EPS since they simply can fire a few workers to meet any EPS number desired. Sales are sales, however, and the top line is not as fudgable. T earnings appear to please since it is up pre-market. Keystone's short T trade is hanging in there but still no big flush in T as yet. The search and thirst for divvy stocks by traders continues to keep T buoyant. Watch the T 20-day MA at 35.31, above, and T bulls are in biz pumping the Dividend Stock Bubble higher, below, and the T bears should finally get their way.
Good morning. I think the starting point is 1350...not 1362.
ReplyDeleteBut as hot and humid as it is, probably should just sit in front of an air conditioner.
Yep John, Keystone will have to edit that to 1350, he must be delerious from the action. The bears needed 12 under 1350, bulls 12 over 1350 which is the 1362. Bears won dropping under 1338.
DeleteKeybot shorting any solid Dividend flyer is not a good idea. What "bubble" bursters forget is the magnitude and "insiderness" of companies like these. There is nowhere left to go for the mom and pops, the government and big business know this. In a illusionary corrupt system broken system, these companies will do nothing more than "grow" and their numbers will be supported by the government. It is not free enterprise it is corporate welfare and the dividends will remain in place and stay the same or rise, as if they go the entire ship will go down. The government and big corporations cannot have this. They will make sure of it. What would the investment firms and loco gurus do for the mom and pop investor if the dividend bubble happened? Teach them to to read charts and short stocks on their lunch breaks? Never will happen. I think KS you are great, and appreciate all your work but think about this.
ReplyDeleteWell said, all good points. In the Great Depression cash was king and no stock was trusted no matter what it was.
DeleteKS, do you have any targets for a potential bounce here, now that 1341 has given way? I am thinking we may bounce here off the 50-day MA at 1331, maybe only for a few hours, maybe longer, before resuming the slide. Your thoughts would be most appreciated.
ReplyDeleteCurrently playing catch-up due to storms. SPX now printing 1330 so you have to figure the strong 1226 is on tap only four handles away.
DeleteIf they want to take us into a tightening wedge over the weekend...we could bounce for a couple days here.
ReplyDeleteVery observant Zig. Perhaps lots of ups and down ahead. If the markets continue selling off, however, and the CPC moves up over 1.2, that would negate the wedge vibe.
DeleteThanks, KS. I would guess the Bulls will defend the 50-day MA at 1331 but eventually I see a test of the lower bollinger around 1319.
ReplyDeleteCharlie, the strongest support levels are at 1329-1331, then 1326, then 1314-1316. SPX now fighting for its life with the 50-day MA at 1332.50-ish. Failure of the 50-day MA and 1326 is likely.
ReplyDeleteAnother moving average that not many follow, only the old-timers on Wall Street, is the 10-month MA which is now 1324.59, so give that consideration as well.
watching the tick another day in paradise.
ReplyDeleteWell I took a long position at 1324.50 on the ES and will try to hold for a couple days - but if AAPL misses in any way I am bailing lol...
ReplyDelete