China PMI is better than expected. The actual companies that have to report actual numbers, bellwethers such as CAT, DE, FDX, YUM, all report weakness and decreased activity. Which do you believe? German manufacturing data surprisingly contracts. The machine that is supposed to pull Europe out of the mud is stuck in the mud. The European manufacturing data remains weak. The U.S. and Japan currency debasing is taking the manufacturing and export activity away from Europe. The euro just fell through 1.29. The ECB says they will stop the Cyprus ATM-stocking on Monday. Cyprus banks are scheduled to reopen Tuesday. The Cyprus crisis concern grows. Business payrolls will need to be met in Cyprus, especially as the month ends in the days ahead. Things get ugly when folks are not paid and at the same time they cannot withdrawal money from the bank. Merkel (Germany) is now involved in talks to help find a resolution to this escalating situation. Meanwhile, Italy continues to try and form a government, this mess has taken a back seat to the more critical Cyprus mess.
The futures are flat to negative. ORCL stumbled last evening and is creating weakness in the tech sector today. The tape remains very jumpy. Markets remain unstable and erratic. Volatility is the key. The VIX has the strongest impact on market direction currently. VIX starts today at 12.67. The bulls will not have a care or worry as long as the VIX stays under 14.90. If the VIX moves above 14.90, the bears receive another bite at the apple. The low VIX and low CPC put/call verify the strong complacency in the markets. The Fed has trained traders well; traders fully expect markets to go up indefinitely regardless of copper, shipping and construction machinery weakness. Note the out performance by the Dow Industrials. The bubbles in the blue chips, divvy stocks, REIT's, utilities, high-yield corporate's, and other perceived safe havens, caused by the Fed's easy money policies, are expanding to popping proportions. For the SPX starting at 1559, the bulls only need a couple points, to touch the 1562 handle and the all-time closing high at 1565.15 will give way in quick order with the SPX moving higher towards the 1576 all-time high. The bears need to push under 1549 to accelerate the downside. A move through 1460-1560 is sideways action today. The 8 MA remains above the 34 MA on the SPX 30-minute chart so the bulls are in control.
PMI manufacturing data is important this morning. Jobless Claims are 8:30 AM. The housing sector is buoyant this week with strong LEN earnings and better than expected Housing Starts. However, the Mortgage Applications continue to weaken week after week. KBH earnings will provide more input today as well as the FHFA House Price Index at 9 AM, and Existing Home Sales at 10 AM. Leading Indicators and Philly Fed also hit at 10 AM so expect a market pivot point. Natty Gas Inventories are at 10:30 AM. NKE earnings will impact the retail sector. WTIC crude oil is 93. The 10-year yield is 1.96%. The direction of yield tells you the direction of the equity markets. Copper is positive. Overall, markets are flat in a wait-and-see mode.
Note Added 3/21/13 at 8:47 AM: Jobless Claims are a yawner, popping a small amount instead of falling. KBH blows out earnings; the home builders are kicking butt and taking names this week, however, are at bloated valuations. KBH is a surprise since they are typically gloomy. Despite the strong results, the prices are elevated in housing, and playing the positive divergence set-up on SRS is much more attractive (inverse real estate).
Before I am accused again of being a troll, I wonder how many readers here actually know this about Cyprus and the BS that is going on. Greeks lost the battle of Cyprus and Turkey has owned the north side of the island since then. The Russians now rule the finances behind the scenes as they control the Turks somewhat. The BS is the Cypriot banking problem could recreate the uncertainty like the Greek exit from the eurozone, another BS "noise" propaganda UFO story.
ReplyDeleteBUT, as always, like with North Korea (the chess piece for the Chinese) the Russian control (Dmitry Rybolovlev a major shareholder) of the Cypriot banks means Russian loans from private investors and Russian governments to the rescue if anything EVER really tried to go astray. So please STOP with the Cyprus BS as a way to scare the selloff. And does anyone who respects KS, and at the same time likes to question the logic and accuracy of the keybot have to be accused of being a troll? If that makes me a troll then you are all Oni, ready to devour and feed on anything that will bring the market down, when you just don't know the facts on one issue and really rely way to heavy on algorithms for the others. KS, your best work comes from your divergence calls. You are A Bugganne of sorts. Helping people out.
As long as you say intelligent things you are not a troll. All opinion's are welcome, especially ones that disagree, that is the best way to find the path forward.
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ReplyDeleteI find the diversions comments to be relevant at best annoying at works. I have preached several times that diversions does not move price price causes the virgins and have proven it but I am not going through the math again since no one seems to care.
However, Mr. Kay's brilliance lies in the Input variables that the outcome of the model. He has made me aware of several there are goals that I have not considered. Yes, he is wrong many times, but Sulamyd. If he broadens my scope of awareness and then it is time well served.
The bottom line is that he takes the time to provide the
Anon, you have to practice your English writing a little more but you are getting there. There is no need to always understand in detail how something works; divergences in trading are key and perhaps the most important tool in technical analysis, the price action simply shows how they work over and over again. No need for fancy white papers or other academic pontification. Look at things in more simple terms. Look at the full and new moon effects on trading (up markets at the full moon; down markets at the new moon). Humans are not advanced enough as yet to understand the true metaphysical reasons as to why the technique works, and to measure it most importantly, but likely will in a couple or few decades ahead. Meanwhile, simply use things that work and are repeatable.
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