All eyes are fixated on the television as law enforcement closes in on the second terrorist suspect from the Boston Marathon bombing. One suspect was shot and killed overnight, the other is on the run and authorities are now searching house to house in the area he is believed to be hiding. Both suspects are reported to be brothers, foreign nationals, so the incident is international terrorism. This important drama is dominating all the attention this morning. The second suspect may appear at anytime.
The S&P futures were up over ten on the weaker yen (higher dollar/yen), but now up about seven. The futures move in direct concert with the move in the dollar/yen. Yesterday the dollar/yen was under 98, now above 99, and the weaker yen has pushed the futures higher. The central bankers are keeping the markets afloat with their easy money. The dollar/yen is now at 99.16 down from 99.31 a short time ago. The move down in the dollar/yen accounts for the futures pulling back a few handles over the last half-hour. The market bulls want the dollar/yen above 99 and heading to 100 again. The equity bears want a stronger yen, lower dollar/yen, under 99, preferably under 98 and lower, which will be in concert with the broad indexes moving lower.
The weakness in financials yesterday is very important, and bearish for markets. Watch XLF 17.95 closely today. The bulls must move XLF back above 17.95 to gather upside fuel and mount an upside comeback. If XLF stays under 17.95, the bulls have no hope. Today is OpEx so look for higher volume to start the day and end the day. IBM is down on its disappointing earnings last evening, MSFT is up. GE earnings appear weak. Watch the SPX 50-day MA at 1543.04 today. Watch the 1540 level which is the neckline of the H&S pattern highlighted this morning. A loss of 1540 likely indicates a move under 1500 as the days and weeks play out. The bulls need to move above 1554 to launch an upside acceleration. The bears need to drop under 1536 to accelerate the downside. A move through 1537-1553 is sideways action today.
Note Added 9:35 AM: Two people are arrested at the house where the two terrorist brothers lived. Markets are jumpy and mixed to start the day. GE earnings are not well received with the stock down over -3% today. XLF is 17.92 remaining under the 17.95 bull-bear line. Dollar/yen 99.17. Euro/dollar 1.3102. Crude oil is back under 88 at 87.78. Gold 1399. Copper is weak again. The 10-year yield 1.70%.
Note Added 9:41 AM: XLF is 17.97, above 17.95, creating market strength. The SPX is up six to over 1548. Watch the fight over XLF 17.95 since this will dictate market direction today.
Note Added 11:15 AM: XLF is 18.01 so that brings the broad indexes higher. The SPX is back above the 50-day MA at 1543.85. The SPX is at 1553 now attempting a break out today through 1553-1554 that would lead several handles higher. Here comes the big showdown with the 200 EMA on the 60-minute chart at 1555.83 as highlighted with this morning's chart. Dollar/yen is 99.32, near its highs today so no surprise, the BOJ weakens the yen, the dollar/yen moves higher taking equities higher. Volatility is trailing lower moving markets higher. TRIN is 1.16 on the bear side despite the stronger markets. Keystone took a small profit on the SPXL long trade exiting the position.
Note Added 11:39 AM: SPX is printing the highs for today at 1554.87. The 200 EMA is 1555.84. This is the critical back test of the 200 EMA, bounce up through 1556, or die.
Note Added 2:13 PM: Everyone is glued to the television coverage waiting for the second terrorism suspect to show himself. Authorities are now also searching for a third man that may be involved. Markets are stumbling sideways with the SPX moving through 1550-1555 for the last three hours or more. XLF is printing at the highs of the day at 18.06 providing bull juice. VIX is dropping today but remains above 15. TRIN is 1.19 remaining above one all day and actually favoring the bears. Dollar/yen moves higher to 99.46 right now thus taking equities higher. When the dollar/yen drifts higher to 99.40, 99.50, the markets move higher; when the dollar/yen drifts lower towards 99.20, 99.10, 99.00, the markets will sell off. Equities move in sync with the yen, which moves according to the BOJ easing. SPX HOD is 1554.87 so see if that holds today as a ceiling, or not. The 200 EMA on the 60-minute is 1555.71 and continues to hold so far today as resistance so at this juncture, the bulls are winning today's battle but the bears remain in control of the war.
Note Added 3:45 PM: It took all day long to get there, but here is the test of the 200 EMA at 1555.69; the SPX is now printing 1555.50. Bounce or die at this important inflection point that will impact the days and hours ahead; bulls win if price moves higher, bears win if price moves lower. XLF is 18.08 and dollar/yen is 99.56, over 99.60 a few minutes ago, supplying the bull fuel.
Note Added 4:05 PM: Bulls were pushing higher into the close with dollar/yen 99.57 and XLF finishing near the highs at 18.07. The SPX closes at 1555.25 under the 200 EMA at 1555.69 by 44 pennies. The bears won the late session battle keeping the SPX under the 200 EMA signaling bearish markets for the hours and days ahead. VIX dropped under 14.90 but remains elevated. The markets are usually bullish this April OpEx week so some of that bullish seasonality helped the long side today. Note the large intraday and day to day point swings this week occurring due to the elevated volatility. The dollar/yen (BOJ actions) and XLF 17.95 will be important again come Monday morning, as well as VIX 14.30-ish level.
Note Added 4/20/13 at 6:10 AM: Keystone's 30-minute chart shows the 8 MA moving above the 34 MA signaling bullish markets ahead. The 60-minute 200 EMA cross signals bearish markets ahead so both of these will return in sync, one way or the other, early next week. Note the obscene parabolic spike in utilities, UTIL now at a nose-bleed 528. Folks like Aunt Martha are taking their life savings and placing it into perceived safe haven and divvy stocks. They will be crushed. The weaker yen staged the market comeback yesterday and the G-20 appears unconcerned over the BOJ devaluing their currency, so equities will likely move higher as long as the BOJ eases (yen weaker, dollar/yen higher, equities higher).
Arnie, are you now thinking that we'll reach at least mid 1560s if this is the start of the B to the A that went from 1597 to 1537?
ReplyDeleteKS, how come you don't work with EW? Or are you a super expert at that as well and just don't want to steal Arnie and Vs thunder?
Thanks, BK
@ BK:
DeleteI am not an elliotician, I use this method among others.
As every method it has it's flaws and weak points, uncertainties ...and you know that, don't you ? :)?
I use a mixture of elliot, gann, and intermarket relations (fx versus commodities versus stocks index)...something like a tutti-frutti, you know that italian juice :) ...trying to use all in a holistic, unified way.
V.
Keystone is jack of all trades, master of none, only knowing enough to be dangerous with it all. LOL The e-waves are followed but more from a general standpoint and not as detailed as presented here by everyone else. That is why the levels and various scenarios are interesting to study, to see the more detailed levels for the ewaves.
DeleteBK, remember that EW is NOT the holy grail and able to predict everything correctly. (if it were EVERYBODY would be using it and making tons of money... on the other hand everybody would be on the same side of the trade then... making trading impossible... cause if everybody is long it can only go down... catch 22 huh!?) I prefer to use it as my main "market direction" indicator, but classic TA should NEVER be ignored. I am pretty sure KS knows a thing or 2 about EW, and can be dangerous enough to identify a 1st, 2nd, 3rd or 4th wave etc.
DeleteRight now the market is in a in between stage IMHO and EWT either has it go down to 1530s for a finishing final wave, or abc it to 1580s... So stay tuned. That's the best I can do. I am currently all cash and wait it out. However, I am pretty sure we'll see further downside first before any upside (new highs, if any... cause there are now 5 waves down from the 1587 high...)
I have a feeling that during the last 5 minutes before the closing of markets we might see a strong move one way or the other... it's too close to hourly 200 ma and too ...still , let's say.
DeleteI incline to an up-move at the end of the day.
Of course, it just might not happen. But I have this feeling about it ...
V.
As usual thank you all for your massive knowledge experience and perspective. Especially the humble speculator. BK
ReplyDeleteWho is kidding who here? I guess it is statistically possible but the DOw should be down more and how can the spx be upwith this slide? Opportunity? http://stockcharts.com/h-sc/ui?s=IBM
ReplyDeleteIBM, GE and MCD are all Dow components and are getting hit today, as you show, IBM is bludgeoned today, down 17 points, -8%, big move in this favorite darling. Use a rule of thumb of eight for each Dow point to gauge the index, so MCD is down a couple, GE down one, so these three negative stocks today are down about 20 points causing about -160 points of Dow damage. However, the Fed and BOJ money continues to pump the divvy bubbles and perceived safe havens, and these stocks, have reported earnings in line, all Dow components, PG (staples), UTX, VZ, BA and AXP, so these five are up a couple bucks or so each, that is about 12, so about 100 positive Dow points, which, combining all these components, account for the Dow slightly negative. The financials, XLF, above 17.95 is carrying the day for the bulls as well.
ReplyDeleteGoog is up 4%. Crazy
ReplyDeleteEarnings that provide encouraging guidance are rewarded (like MSFT and GOOG) strongly while those that hint at weakness are crushed (GE and IBM). Big figh tfor the 200 EMA at 1556 into the closing bell.
ReplyDelete