The SPX is punching higher now testing 1517, new highs. The 1513 handle was touched which set off the further jump higher. This bounce will serve to negate the H&S pattern over the last few days but sets up the current print at 1517+ as a potential head for a new H&S pattern with the neck line remaining at 1495. The 8 MA is about to pierce up thru the 34 MA to signal bullish markets for the days ahead. The bears would need a sharp drop in the broad indexes right now to stop this from happening. UTIL is at 473.42. Bulls need to see 475.49 today to launch an extended market move higher. The key UTIL number next week is 469.78 so watch this closely into the close. If UTIL closes above 469.78 today, that sets up a bullish start for Monday trading. TRIN is 1.00 dead flat so neither bulls or bears are favored today despite the jump higher. The euro is 1.3390, surprisingly, the broad indexes remain elevated even though the euro has lost ground over the last day. One of them are wrong. VIX just dropped a hair under 13.
Note Added 2/8/13 at 11:58 AM: The SPX moves flat across 1517. UTIL is 472.93. TRIN is 1.23; if this remains the case, the broad indexes should drift lower as the day moves along. If TRIN moves down, the broad indexes will maintain these levels. The euro is 1.3365. On the SPX hour and minute charts, the higher high in price is coming with overbot conditions and negative divergence set-ups again. The new head and shoulders pattern has a very flat head from today's action, perhaps a Frankenstein head. The 8 MA pierced up through the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours and days ahead, however, the chart is set up with overbot conditions and negative divergence.
Note Added 2/8/13 at 2:17 PM: Look at that, crude just lost 95.50. Now 95.49....95.45.... Very interesting. Reference this mornings oil chart. Brent is 118.71. A 23.26 spread! The euro is 1.3359. The markets remain elevated. UTIL is 473.52 which is under the 475.49 but this number expires in less than two hours and 469.78 is the UTIL number for all of next week, thus, the bulls are deriving power from the utilities sector. TRIN is 1.24 so market weakness would be expected moving into the close if 1.24 or higher occurs. Markets tend to float upwards on Friday afternoons. However, the new moon is Sunday so weakness would be anticipated now thru the Monday close. Apple is 478; Einhorn was worried about losing money so his pumping is providing a lift to AAPL. In the time it took to type this, crude oil has recovered to 95.67. The 95.50 WTIC level is critical since it likely paves the way to 93, and would be dropping in concert with equities markets. Euro drifts lower and the broad indexes drift higher. One of them remains wrong.
Note Added 2/8/13 at 2:42 PM: The move up in the SPX hourly and minute charts is weak with negative divergence which points to a weak close ahead. However, look at the TRIN now losing altitude at 1.15. A lower TRIN into the close will assure that the broad indexes remain elevated. Bears need to push the TRIN higher. UTIL 474. Crude 95.67. Brent 118.81. Euro 1.3361. The 10-year yield 1.96% (yield has sat here today so money is obviously not leaving the bond market). VIX 13. Gold 1669. NYSE volume is shameful only at a run rate of 55%, a paltry volume day, as many traders are sneaking out the back door, into the snow storm, trying to get home.
Note Added 2/8/13 at 3:00 PM: TRIN is 1.18, bears hanging in there.
Note Added 2/8/13 at 4:16 PM: The SPX printed a new closing high for 2013 at 1517.92 and new intraday high for 2013 at 1518.31. The markets finished erratically but that is no surprise with the vapor volume. TRIN dropped to 1.12 then back up to 1.38 then back down to close at 1.11, all in the last half-hour. UTIL closed near the high of the day at 474.46 which has the bulls firmly in the driver's seat come Monday, unless, of course, something happens perhaps globally over the weekend. It's all going the bulls way. The SPX prints a hanging man candlestick on the weekly chart, with the rising wedge, overbot conditions and negative divergence also in place. Peter Eliades, a noted cycle follower, appeared on CNBC before the close, commenting that today, February 8th, marks a significant market cycle top. If like October 2007, price would roll over moving forward and only in hindsight from a few weeks or couple months ahead will the top be obvious looking back. Peter was asked what he would call the current market rally, if he had to give it a name, he paused for a second, and then comically said, "the bitter end." LOL The Nasdaq is now at a twelve-year high going back to late 2000. The 10-year yield is 1.95% (with the equities markets sneaking higher today, money was actually flowing into notes and bonds at the same time). The low volume today helped the bulls. Things are really getting interesting now.
You wrote a really great article. Have you seen this site. He has good stock trading advice.
ReplyDeletehttp://tinyurl.com/investing006
KS, weekly SPX needs to close red for bears. When will mr market start to get worried about sequestration?
ReplyDeleteChina data helped copper and commoditites. And utilities stay elevated, and volatility low, so the bulls are cruising. Sequestration should come front and center but look at the geopolitical stuff, the Middle East is falling apart and no one is paying attention there either.
DeleteKS, What number are you watching here? Typo. "If UTIL closes above 49.78 today, that sets up a bullish start for Monday trading."
ReplyDeleteThanks for all you do and take care in this storm. Rich
Yep, typo, it was corrected.
DeleteAnon,
ReplyDeleteMr. Market has been living in willful oblivion for a while now. I doubt he wakes up anytime soon.
Is AAPL taking off already? Or is that just a fakeout?
ReplyDeleteYep, Apple pushed up into the gap to start filling it. The news about AAPL putting its cash to use, or at least unlock its value, provides this goose. Charts only know everything up to the minute so that news has to be digested. Apple now at 477. The top of the gap is 481.50 so price may want that. Also 478 would want to lead to 482. The move may very well send it up for a while now. These type of shenanigans makes it an easy one to avoid trading. See if the buoyancy stays thru the close today, or not.
ReplyDeleteyeah you guys have it pinned. Overbought. Yep. Right now i would say. My tin can garnage lid indicator would seem that since we have rocketed up, we may be looking to go down here, genius...
ReplyDeleteYou know your blog is successful when it gets a steady following of trolls.
DeleteProbably just irritable from the storm washing him out from under his bridge.
DeleteSPX is coming up to 1518 to match the high earlier today and look at the 2-hour, 1-hour, 30-minute, etc... charts, it may be an interesting close.
ReplyDelete(Negative divergence)
DeleteKS,
ReplyDeleteWhat is your view on CZR? up 60% this week and 32% today.
For CZR, you have to decide for yourself. It finished the week up over 80%, holy smokes. As a rule, that train already left the station, you were either on it, or standing at the platform, hat in hand. It is only a one year old and now has made a round trip. It has momo so it will tweak out some higher numbers but the money was already made on it. It may come back for a handle for a C&H in the coming months. There's far better stocks to look at than that.
ReplyDeleteKS, what is your comments on Jeffrey Hirsch,Stock Market Historian Warns of a Rough 2013?
ReplyDeleteHe views that 2013 could be a bear market.
http://bottomlinepublications.com/content/article/wealth-a-retirement/stock-market-historian-warns-of-a-rough-2013?utm_campaign=_BRFPzwB8wrIFuw
Interesting stuff on Hirsch, his family has been tabulating seasonality factors for decades so his insights are valuable, however, the seasonality stuff is only a gauge of the background current of the market, the near term events always override everything.
ReplyDeleteThe article focuses on the 4-year cycle, also called the Presidential Cycle. This typically runs a pattern where the first two years of the cycle are on the weak side but the third year is the strongest as the money flows like water since politicians want reelected and they start to pass out all those big cardboard checks and get their picture taken. The economic push typically continues thru the fourth year, like last year in the markets, now we are going back into the first year of the cycle, so the back ground current over the next year or two would be more agreeable with the bears than the bulls.
Also, rallies typically last from 2 to 4 years, the 2003-2007 rally was rare since it lasted 4 1/2 years, and this rally since the 2009 bottom is now at four years, very long in the tooth.
The most reliable cycle is the 18-year cycle, the market swoon thru the 1970's into August 1982 that marked the bottom. Then 18 years to the market top in 2000, and now currently in the secular 18 year bear until 2018. This is of interest since the markets would be expected to pull back to finish the 18-year cycle, now only five more years remaining. Add it all together and the broad indexes could very well be weak three or more years, or more, out of the next five. Then after 2018 and thru the 2020's is when the Dow 20K plus will occur, SPX over 2K, gold at 3K to 5K or more, but first, over the coming years, the markets will likely want to move down to test the 2009 lows.