Case-Shiller data continues to show big jumps in house prices, the largest gains in years. Speculators trip over each other to buy any outhouse that comes on the market. Bubble-prone cities are in bubbles again. PFE and MRK beat by a penny but revenue and guidance are not impressive. COH is taking the pipe -6% so this will hurt the retail sector today. SAVE thwacked -6% so this may hurt the Trannies. Fertilizer and potash stocks are pole-axed, relentlessly beaten, POT crashing -26%, AGU -10% and MOS -30%. Whoa, that is intense. Copper is weak today, oil and commodities are sold off. As usual, however, gravity does not exist, and the S&P futures are pointing to a +5 to +7 pop at the opening bell. Traders are likely ignoring all bad news this week since the central bankers will be handing out candy to everyone.
Keybot the Quant is long but wants to flip short. The weakness in semiconductors, watch SOX 471.15, created the market downside yesterday. If SPX falls under 1682, Keybot should flip to the short side. Alas, futures say up not down. If SOX moves above 471.15, the bulls are back in business without worry. Watch VIX 14.26 and GTX 4785, both causing market bullishness. Any move to the bear side for these two will send markets strongly lower. GTX may be affected by the commodity negativity mentioned above. If bulls move SOX back above 471.15 and VIX and GTX stay bullish, the SPX will be moving towards 1700 again.
For the SPX starting at 1685, the bulls need to move above 1691, and hold it for a few minutes, and an upside acceleration will occur pointing the way to 1700. The futures indicate that this test at 1691 is on tap at the open. The bears need to push under 1682 today to accelerate the downside. A move through 1683-1690 is sideways action. The 8 MA is above the 34 MA on the 30-minute chart signaling bullish markets for the hours ahead. FOMC meeting begins today but the announcement is tomorrow afternoon at 2 PM EST. Consumer Confidence is 10 AM and will create a market pivot point so the initial market direction is not too important until 10 AM. Watch SOX 471.15, SPX 1691 and the 8/34 cross on the 30-minute to determine market direction.
Note Added 10:12 AM: Markets pivot to the upside after the 10 AM pivot. Consumer Confidence remains above 80 which is five-year highs. SOX jumped above 471.15 at the opening bell. Say no more. Bulls are back in business and trying to push through 1691-1692 so they can start the move to 1700. SOX is pushing towards 474 which will provide bull fuel today. VIX is on the plus side at 13.46, by pennies, but up nonetheless so with the SPX up and VIX up, one of them is wrong today. TRIN is 1.14, bearish, and creates negativity making the bulls work to move higher. The sideways behavior continues as the markets decide on the path ahead. Above SPX 1692 and the bulls should start running higher. Watch SOX 471.15 and GTX 4785 today, both creating market lift. Time for a snooze in the hammock under the oak trees on this clear summer day.
Ladies and gents,
ReplyDeleteMy intuition tells me that a massive short-squeeze up to 1705-1707 is possible today.
Let's see if I'm right.
Maybe not, or ...
GS guy
If SPX punches thru 1691-1692 you are likely right GS. SOX above 471.15 places the bulls back on easy street.
Deletestill chewing bull and bears around 1690-1692.
Deletebut this market is prone to bust the bears through it's minute 3 of minor 5 - today or tomorrow, or after the FOMC minutes.
do you really believe that after last message of Ben he will announce out-of-the-blue "we're tapering" ? With sub-target inflation and employment criteria not met?
THAT IS NOT POSSIBLE!
Don't short here, it's not the time now!
GS guy
Oh, and one more thing to calm down people that might eyeball at that down action today:
Deletethe action until now starting from 1676 can be viewed as a series of 1-2's that will call a 3 soon in 1-2 days!
1676-1692
1692-1682
1682-1691
1691-1687
1687-1693
1693-now
a series of 1-2's ... keep on shorting if you think you have such big balls! Market can even break 1687, the setup will still be there at a lower level 1-2 setup!
So, all the suckers in the world ar kindly asked to short now, in front of a 3'rd wave, in front of FOMC minutes, of ADP report, of ECB and BOE meetings!
And also , keep some money for your own funeral after this 3'rd wave will appear!
GS guy
Shorting in the face of FED, BOE and ECB ?
ReplyDeleteBOE and ECB will deliver QE this week and people are shorting?
:))))))))))))))))))))))))))))))))))))))))))))))))))
Bears will be burnt to their bones.
V.
KS, whats you opinion on the Potash players this morning. Do you think they have been oversold?
ReplyDeleteThanks
Z.
After all this today you must wait several days or longer for the smoke to clear. They may hit aluminum or other commodities next. This was a major event for the fert's and potash space.
DeleteGS-
ReplyDeleteOn position disclosure, I am 100% in cash right now. I didn't buy that last dip. I'm okay with it, I missed 15 SPX points, risk:reward ratio sucked.
I remained in cash here as I am unsure what the market does next. I am very leery to short here in front of FOMC and NFP data. Most likely will remain in cash until I get a confirmation on trend. If I miss another uptick on SPX, then that's fine. I still dont see a good risk:reward ratio on the table.
However, we are approaching August 1st, I remember you mentioned this chronology as a critical area. What are your thoughts on position going into the hours and days ahead? Are you still 80% cash?
FeS2
SOX, VIX and GTX are key, if two of those go bearish, markets are headed lower. If they stay bullish, SPX floats higher towards 1700.
DeleteFes2,
DeleteI'm still 80% cash and 20% long.
If I were you I'd stay calm in cash until this minor 5 ends.
The last points are the most expensive ones, just leave them.
I mentioned the period August 5-12 as a starter one.
Now we are still in minute 2 of minor 5 that might be understood as a big a-b-c- flat or maybe (as I stated here 2-3 days ago) minor 5 might develop an ending diagonale. Or it will be a classic 5 waves up trend (after a cyclic 1-2's).
You stay in cash , no matter what - you might even see 1750 - it doesn't matter! It's better if you catch a wave from the start than dipping on the last wave!
GS guy
The Fed may be relatively benign tomorrow afternoon. They are already all in. It is surprising to see so many folks think tapering will appear in September. With QE Infinity it should never appear. So perhaps that view is reinforced which will create negativity but if the Fed says whoever expects September is dreaming, that will create the upward catapult affect once again. The Fed may be a non-event.
ReplyDeleteOn the July 4th holiday, the BOE and ECB supplied the fireworks and markets catapulted from SPX 1600 to 1680 in only one week or so. The markets obviously priced in 80 handles of upside due to the BOE and ECB happy talk as the flags were waving and hot dogs and apple pie filled bellies. Well, Thursday morning they have to deliver. So the BOE and ECB before Thursday monrings open may be far more important than Bernanke.
SOX, VIX and GTX remain bullish so it is true that short side is not looking good but this can change in a flash. If SOX loses only a couple points and SPX loses 3 or 4 points, the markets can start selling off in force. So, we wait....
GDP in the morning consensus about 1, some talking 1.2 or 1.4. A coule weeks ago some were thinking 0.8 but it looks like 1.0 to 1.5 is expected. This says a miss to the downside is the more unexpected move, so a 0.8 or 0.9 print may shock markets, but then is it the ole bad news is good news, or do markets simply get sick of all these games and start selling off? The end game to all this CB pumping may be the markets simply waking up one day and saying no mas. At that point it will not matter how many money bazooka's are firing off, the cat may be out of the bag. The reason QE is not working is because of the lack of velocity of money. The dough is simply sitting in banks and other places sloshing around and only chasing into stocks and nothing else. Therefore, no multiplier effect is occurring and the money is not in circulation for business to support the business, and the coffee shop in the morning and the lunch establishments, and the parking lots, and on and on. There is no velocity of money. When velocity kicks in, that will be when the wild inflation and hyper inflation appears. But velocity is missing in action last few years, at some point between now and five more years it will kick in 100%. That is the trick, when will it kick in? And the velocity kicking in may occur after QE exposed as no longer helping the economy, these can and probably will be two separate events.
Agree completely on both comments. KS and GS, we are all on the same page. Thanks guys.
ReplyDeleteI will look to load shorts when the time is right.
FeS2
GS-
ReplyDeleteThanks again for reinforcing my position. I am proud of myself for knowing my risk tolerance and limits. I disliked the risk:reward ratio and instead of making emotionally fueled decisions based on delusional outcomes; I remained disciplined and in cash. I am very pleased with my decision. Feels good to learn and understand more about risk.
Ironically, I manage risk for other people at my day job. Lol.
FeS2