The Cyprus drama is reaching the climax right now. The vote is ongoing that decides if the depositors are on the hook to have their money taken from them. If the vote fails, that means Cyprus is moving towards default. The major problem is keeping the banks and markets closed since this will only breed more fear and worry each hour they stay closed. Greece banks have reopened and they are crushed from 8 to 16%. European markets are closing and trailed off in the last hour. The business channels are running live feeds of the Cyprus parliament drama which only heightens the fear. The euro is breaking down and under pressure, now at 1.2879 recovering from the lows. The SPX drops from 1554 to 1542 in 45 minutes, now printing 1544. So the angst from the Cyprus drama caused the SPX to lose a point every three minutes for 45 minutes time. For now, the broad indexes are stabilizing sideways awaiting the Cyprus decision.
Housing stocks were higher today with the positive Housing Starts but they have lost their gains. Energy is weak today. Copper is weak. VIX hit 15 a short time ago, now at 14.95, smack-dab on top of the bull-bear line in the sand. The bears just had the markets in their grasp and it slipped away. Serious market selling will occur if the VIX stays above 14.95 and Keybot the Quant will likely flip short. Market bulls are fine if they keep the VIX under 14.95. SOX is 426, with a LOD of 424, inching near the 421 bull-bear line in the sand which will cause market turmoil. The 10-year yield dropped to 1.91% this morning so that was an early indication of lower equities today. TRIN is 1.24 so bears will maintain control today if the TRIN remains at these levels and higher. The SPX 30-minute chart shows the 8 MA remaining under the 34 MA forecasting bearish markets for the hours and days ahead. The 60-minute chart, as previously posted, shows the SPX above the 200 EMA forecasting bullish markets ahead. Thus, use these two charts as a push-pull indicator to see which side, bulls or bears, have more gusto moving forward.
Note Added 3/19/13 at 12:56 PM: The euro is testing the lows now at 1.2857. The 10-year yield is 1.90%. VIX is 14.87 only eight cents away from where market turmoil would begin. SPX is 1543. All eyes are on Cyprus, a little island determining the fate of world markets. The answer will arrive within the hour. Cyprus citizens are protesting in the streets, peacefully, so far.
Note Added 3/19/13 at 2:04 PM: Keybot the Quant flipped to the short side at SPX 1540. As always stay alert for a whipsaw. VIX is 14.97, back testing right now. Watch VIX 14.95 closely moving forward. SOX is 424. Keystone took profits on ERY and will look to reenter.
Note Added 3/19/13 at 2:33 PM: The 56-member Cyprus parliament votes with 36 voting against the depositor confiscation and 19 abstaining. Not one vote was for the plan. Cyprus is now in a quandary since this sends them towards default. The Cyprus parliament adjourns until Thursday leaving uncertainty behind. The SPX is recovering now at 1546. VIX is 14.48 well off the highs and back under the 14.95 bull-bear line now helping the bulls.
Note Added 3/19/13 at 3:27 PM: Keep your hands in the car and seat belts fastened, this is a wild and bumpy ride. Rumors on ECB or IMF involvement to bailout Cyprus occurred catapulting the broad indexes higher, now leaking lower again. The guy who started the rumor probably wanted to exit on the highs. VIX is 14.74 on the bull side of 14.95. TRIN is 1.28 saying the bears are in control into the closing bell. SPX is 1544. Keystone bot MCP opening up a new long position in this dangerous and speculative rare earth play. MCP is showing attractive positive divergence on weekly and daily charts.
Note Added 3/19/13 at 3:52 PM: SPX 1548. VIX 14.49 leaking a little bit providing the market lift. TRIN 1.17. Keystone added more MCP.
Note Added 3/19/13 at 4:07 PM: Quite an insane day at the circus today. Markets are pulled one way then the other. Perhaps some Cyprus-Russia drama will occur this evening as well as sorting out fact from fiction. The SPX ends at 1548.34. VIX is up again today closing at 14.39 but remaining under the 14.95 bull-bear line supporting the bulls during the last hour or so of trading. SOX has a 426 handle and was down to 422.90 today only a couple points from causing serious broad market negativity at 421. The 10-year yield is 1.90%, use this as a bull-bear line for equities tomorrow. Equity bulls win if the yield moves to 1.91% and higher. The market bears win if the yield falls through 1.90%. ADBE earnings are a beat. In the final minute of trading, look at the wild orgy spike in ADBE to 42.80. In the AH's, ADBE is 43.16. Looks like the inside traders knew the results one minute before the closing bell.
Note Added 3/19/13 at 4:31 PM: CTAS earnings appear in line although the operating income and net income numbers miss. The stock is trading down 3%. If the overall recovery was going like gangbusters, especially the manufacturing sector, CTAS's income should be exploding higher. Looks like the economy remains in a funk and like most other companies, accounting techniques or simply laying off some workers is an easy way to meet the EPS. The top line says that the use of uniforms by companies is steady at best.
It's hard to get a clear sense of what's going on in Cyprus. It's not a good sign when the finance manager offers to resign and they won't let him. Most of their ideas that I've heard so far are frankly horrible.
ReplyDeleteWe will know one way or the other in the short time ahead.
ReplyDeletekeystone,
ReplyDeleteyour key resistance guide 16th March, below 1543 leads 1531?
huge gap there is.
Yep, the 1543 ruptured but only for about one-half hour, then recovered. But that is a big gap and may be important for tomorrow.
Deletelower lowers and lower highs, seems like the tune of the market has changed. scaling into shorts (sds) last week is paying off mighty nice currently.
ReplyDeleteI did the same thing last week. I was down a happy meal at first, but it looks like it's coming around.
DeleteArnie, is this perhaps an occasion where we put away the trailing stops on our shorts and just let this play out? Even with the FOMC conclusion tomorrow?
ReplyDeleteWeaver, good question, hard to answer. It all depends on how comfortable you are with no stops and what your targets are. I had a trailing stop on AAPL and it kicked me out at 451 today... I was long since 422. So it's a great way to protect profits, but it can also be a great way to not get max profits.
DeleteUsing the trailing stops, I may not get maximum gains, but I get more consistent gains, while minimizing my downside loss. The deal I made with myself along time ago was that I have to look at the amount of money that I made. If I start looking at the mount of money that I could have made (but didn't), I'd just drive myself nuts and end up taking on too much risk. I'm comfortable with that sweet spot in the middle. Very seldom do I get the exact bottom or the exact top, but I get amazing sleep at night (and that's priceless).
DeleteShane! Couldn't have said it better! If you can catch 70% or so of a move, you're doing very well indeed! In fact, after Weaver's question, I played with a trailing stop on my shorts, and low and behold I was kicked out at the corresponding SPX level of ~1545. That translates to about 15 points gain. Now we'll have to see what happens next... The move from 1564 to 1539 could have been wave a of a large 4th wave, and wave b may have started. B-waves can end anywhere, but often don't exceed the 1.382x extension of wave a... Then c down to? Time will tell.
DeleteI strongly believe that the up-trend didn't finished, we are just experiencing whipsaws.
ReplyDelete2 resistence pivots still to be seen until 28 March 2013: 1576 (75% sure) and 1614 (25% sure).
Such a stong up trend never finishes lik that, I have to see a final capitulation up move (sign of exhaustion of trend). I didn't saw that yet so who's got shorts.... better watch your back!
V.
The parliament in Cyprus rejected Tuesday a controversial plan to impose a tax on bank deposits
ReplyDeleteWhat does that mean? no bailout , bankruptcy or not so fast?
Cyprus has had a huge impact on the markets, and I saw a UFO today, and freaked out. It was just a ballon. PLEASE do not give Cyprus anymore attention than more smoke and mirrors to sell off a bit and by back. Remember the fiscal cliff, greece, oh what media pigs you all are.
ReplyDeleteOne of Keystone's favorite songs in the repertoire, "....my hands felt just like two balloons...."
DeleteWe'll sell off in the morning and then recover as we near Helicopter Ben's latest effort to keep his bulls comfortably numb...
DeleteA lot of times the markets will assume a flat position until the decision now changed from 12:30 PM to 2 PM. So the markets may make a jump, or tumble, at the opening bell, then perhaps sideways until the fireworks. The Fed may be boring tomorrow. They have to be concerned over the damage they are doing to the markets and some rumblings are heard that the Fed may prefer to reduce the amount of juice, not end it by any means, just pull back the 85 billion a touch. But, we will have to wait and see. Now its time for a slice of pie and time to practice the Pink Floyd.
DeleteVery wild and crazy day today. No one knows what is going on, folks are running in different directions then running back the other way and bumping in to each other like 'The Keystone Cops'. VIX 14.95 is the most important number. The bulls will recover tomorrow if they keep VIX under 14.95. The bears will send markets lower if the VIX moves above 14.95. If the SOX then loses 421, the SPX will be testing 1525 in short order. There will probably be news on a Cyprus-Russia meeting this evening so that will affect markets. Also, any clarification on the ECB and/or IMF stepping in to help Cyprus out. Cyprus has no plan, the banks are closed, the markets are closed, people are in the streets. This will fester if a solution is not reached and oddly enough the parliament is not meeting until Thursday. Tomorrow will be interesting. Keybot the Quant is short now but in these markets who knows what happens next. The SPX parked itself in the middle of today's 1538-1558 range at 1548 so tomorrow watch 1538 (bears win) and 1558 (bulls win).
ReplyDeleteKS, SOX is getting pretty close to 421 today at 422.90, it is time for SOX to roll over.
ReplyDeleteIf the VIX moves above 14.95, and the SOX drops under 421, the bears will be doing a jig of joy as the SPX collapses towards 1525. Bulls will destroy all bear hopes if they keep the VIX under 14.95.
ReplyDelete