The bulls drive markets higher. No matter that the global economic data is weak. The housing data at 10 AM is in line but nothing to write home about. Richmond Fed manufacturing is weak. The data does not matter since the central bankers, especially Japan, controls the markets. The dollar/yen continues higher now at 99.39. The BOJ easing creates the weaker yen, higher dollar/yen and higher equity markets. Early this morning the dollar/yen was at 98.30-ish and the S&P futures were down seven, now the dollar/yen is one point higher to 99.30-ish and the SPX is up 14. Equity markets can be gauged off the dollar/yen. The 10-year Teasury yield is 1.70%, a touch higher in yield, but no great shakes, showing that money is not leaving bonds for stocks but rather the easy money from the central banker printing presses simply pump new asset bubbles in equity markets especially in dividend stocks and other perceived safe havens. YUM is downgraded this morning ahead of earnings this afternoon. AAPL earnings are also on tap after the closing bell.
The 8 MA remains above the 34 MA on the SPX 30-minute chart and the SPX is above the 200 EMA on the 60-minute chart both giving an early read on the bullishness and signaling higher markets for the hours and days ahead. The SPX touched the 1566 handle so the upside acceleration occurs. Keybot the Quant flips to the long side at SPX 1569. SOX 424.15, VIX 14.15 and XLF 17.98 are the key parameters determining market direction right now and all three are bullish. Bears have no hope until one of these three parameters reverse. The SPX is now testing the important and strong 1576 resistance level. This price action forms a right shoulder for the ongoing H&S pattern with head at 1600-ish and neckline at 1540-ish. If 1576 gives way to the upside, 1580 resistance is next, then 1586. SOX 424.15 is very important today.
Note Added at 11:09 AM: Dollar/yen is 99.36 remaining elevated as is the SPX at 1577. The SPX is fighting through the 1575-1577 resistance zone for the last hour. Keystone took profits on both the AAPL and CLF long trades, exiting both positions. Apple will likely drift higher all day as traders warm up to the idea that even if the earnings are lackluster, the sentiment is far too negative. Keystone will sit out the earnings drama and maybe reenter in a couple days. CLF should continue to move higher moving forward. Also, bot SDP, a double ETF inverse against utilities, opening a new long position, however, this ETF is extremely thinly-traded, only 5,000 shares today, so this makes the trade even more speculative. The move in utilities is phenomenal, pumped by the easy central banker money, UTIL has jumped from 439 to 530, a +21% gain in only five months. Utilities are moving higher at a rate of over 4% per month, over 1% per week. The ute charts are negatively diverging while SDP is setting up with positive divergence. A short position can be developed in XLU which is the same idea.
Note Added 11:14 AM: The dollar/yen is 99.35 so the broad indexes travel sideways with some upwards buoyancy. A beautiful spring day occurs in Pennsylvania; time to test the hammock in the oak trees.
Note Added 3:52 PM: Markets bounced this morning and stuck all day moving across the 1573-1579 range. The mini flash crash in the indexes at 1 PM by the fake tweet created drama. AAPL, T and YUM earnings on deck. SOX, VIX and XLF all remain in the bull camp. The 10-year yield is 1.70% flat all day. Crude oil 89.37 moving up away from the key 88 level. The dollar/yen is 99.45 keeping the equities markets elevated all day long. Volume is below average only running at about 70% of a days average expected volume, probably lower volume than yesterday. AAPL closes at 406.67, T at 38.97 and YUM 64.15.
Note Added 4:03 PM: T meets on EPS and misses on top line revenue so it is sold off. T is 38.35 well under the 38.97 close.
Note Added 4:35 PM: AAPL earnings are in line, guidance is weak, but overall it looks to be what everyone expected. These releases have something for everyone, simply grab the flag you want to wave. Buybacks are music to traders ears so that may help the stock price. Apple remains halted but should reopen shortly.
Not a soul just tumbleweeds, what happened?
ReplyDeleteProbably everyone is sick of the market ups and down. In three days, the SPX has moved from 1574 to 1540 to 1597 to 1538 to 1579 printing right now. Wild whipsaw and Zigzag action which guns at stops for bulls and bears alike. This three day move covers 191 S&P points, remarkable. So the SPX has moved over 12%, up and down, in less than three days. The higher volatility causes the erratic action but the VIX drops today, now under 14.
ReplyDeleteMeant to say three weeks, 12% move in three weeks.
Deletehi KS.
ReplyDeleteI've made some research on usd/jpy multiannual chart and guess what?
99.72 is the 50% retracement from the lows! if 50% is trespassed, the 61.8% retracement is 105.43 ... i hope my calculations are right, anyway 50% retracement is 99.72-99.50 and 61.8% retracement is 105.43-105.75 ....
the level where we are right now is strong and important !
I'm sure 99.72 will be passed, but I have serious doubts regarding the 105.5 level - think about the correlations usd/jpy vs. spx! So, we might get a double top or even a new high on spx 500 if 99.72 is cut in the way to 105.50.
Thanks,
V.
100 dollar/yen is the key psychological level, where the robots will kick in, so that will launch an upside move in equities. 102 would probably be on tap and then perhaps higher.
DeleteSo, it's earnings day for AAPL. Have we finally arrived at the point where Apple no longer matters? It's not short candidate IMO, but I have a hard time getting too excited about it. I was just checking out the charts and it does look like at some point ---maybe not now--- we got some 320 in the paint.
ReplyDeleteflash crash: SPX dropped from 1578 to 1564 in less than a minute... total recovery now, but WTpeeep....
ReplyDeleteSome candle on the SPX. What was that?????
ReplyDeleterumors of explosions at the white house!?!?!
ReplyDeleteAP twitter account was hacked: ran false headline on obama/white house....
ReplyDeleteKS you mentioned about this crash, good to know ahead, oh God...this business for healthy hearts. should we expect more incidences like this one?
ReplyDeletePeople this shows how FAKE this whole rally is. If they want to, they send this down to no-mans-land before you have wiped your butt clean....
ReplyDeleteArnie, and all, take a look on a 5 min or 15 min chart on that mini-flash crash ... !
Deleteit's a living proof that the algo-bots follow all the informational channels , including Twitter... no living person could have reacted like that in less than 2-3 minutes!
Can you imagine what might happen to this market if a real black swan event appears? My God! ....
First yesterday GOOG with a mini-flash crash, not this thing ... stupid machines!
V.
KS, I followed you're lead and sold AAPL as well at 405.25. Nice $15 gain/share. Not trusting earnings.... Taking profits on this one seems prudent, if earning are stellar there's always time to re-enter, but if earnings are dissapointing it will send it down hard and the whole market with it. So for now; enjoying the money :-)
ReplyDeleteTo KS, all:
ReplyDeletemy opinion and advice (if you allow me to give you an advice): i have a feeling May will be somewhat a "flashy-crashy" month .... first GOOG, now this thing....
My advice would be to keep in cash more than 50% and be prepared to action immediately after the crash is done - -great opportunities might appear.
V.
better advice: be short during the flash-crash IF it happens; then turn on a dime to go long. Why make only money on one side, if you can make money on both. That way you have more cash to buy more longs!
Deleteyes, if someone is so fast to move almost with the speed of algo-bots, yes, of course!
Deletemy advice was for the folks that might be caught by such a move. anyway ... holding long at this levels is an action with a poor risk-reward. Can bring money, but has a poor risk-reward.
V.
arnie, are u adding shorts today?
ReplyDeleteyes i did,
Deleteyep, the flash crash was interesting, more of these incidents will likely occur. Do not forget the mini flash crash in DAX, CAC and FTSE last Wednesday morning as well. So they are adding up. The events are quick but if paying attention, who knows, a good price may be had. The May 2010 event was a mess, they cancelled orders, honored others, so who knows what the future may hold. Forgetting about the HFT aspect, today shows that the geopolitical risk is not fully priced into markets.
ReplyDeleteApple reported an 18% drop in earnings for its second fiscal quarter on Tuesday afternoon, though the results came in slightly ahead of Wall Street's estimates. For the period ended March 30, Apple AAPL +1.87% reported net income of $9.5 billion, or $10.09 per share, compared to net income of $11.6 billion, or $12.30 per share, for the same period last year. Revenue grew 11% to $43.6 billion. Analysts were expecting earnings of $9.97 per share on revenue of $42.3 billion, according to FactSet. Apple's gross margin for the quarter was 37.5% - at the low end of the company's forecasted range from January. Apple's shares were halted in after-hours trades, as the company also announced a raised dividend and share buyback plan.
ReplyDeletesoft, soft, soft... who's buying products these days, and why is the market at all time highs??? something is not right...
Apple bosts the buyback, that typically helps to bounce the stock price. Typically, however, in general, stocks are usually lower three months after buybacks are announced. It will be interesting to see how it trades when it reopens.
ReplyDeleteWhat happen? AAPL trading up 4.9% after-hr to $426/share. Is this because they up the dividend and of course boost the buyback?
ReplyDeleteNot to fast... investors call is over now and see what we have: "Apple Inc. AAPL -0.31% gave back all of their after-hours gains by the conclusion of the company's conference call to discuss its second fiscal quarter results. The stock initially jumped more than 5% in after-hours trades following the report, which included a large boost to the company's dividend and buyback plans. But during the call, most analysts focused on the company's lower gross margins for the March period and a disappointing margin forecast for the June period. On the call, CFO Peter Oppenheimer said "we are managing the business for the long-term. And are willing to trade off short-term profits where we see long-term potential."
DeleteBunch of hot air...
arnie, what is your EW count after today's action?
ReplyDeleteYep, on Apple, the big 5 to 6% pop reversed on the news of lower sales expected in the next quarter. And new products until late this year or into 2014, a long way off. The buyback is an instant stock boost, which occurred as soon as it started to trade. The key item, however, is the screen width. Europeans dislike the skinnier screen as compared to a nice wide Droid (about one-half inch wider). It was thought that Apple would capitulate since the majority of folks prefer the wider screen. Apple, however, is surprisingly digging in basically saying we are sticking with our skinnier version, like it or lump it. On that news, is when the stock plummeted from over 420 down to fall under the closing price. Seems like everyone knows that the wider Smartphone's like Samsung and Droid phones is what is wanted, except AAPL.
ReplyDelete