Friday, February 28, 2014

Keystone's Midday Market Action 2/28/14; EOM

Today is the last day of the month; EOM. February did not live up to its negative reputation. The broad market indexes are up about +5% or +6% this month. Today, financials (XLF) run strongly higher ignoring negative C news. Volatility collapses lower which created the rocket fuel to print a new all-time SPX high at 1867.92. VIX 13.93 is the key bull-bear line in the sand identified by Keybot so that is why equities leaped higher (VIX under 13.93) but note that as this is typed, with about one hour of trading remaining in the day and week, VIX is 14.01 back above 13.93. Hence, some market weakness appears. Even though the bears were smacked in the teeth this morning, they rise up to growl this afternoon pushing volatility higher once again creating market negativity.

The dollar/yen has fallen down to 102 so the stronger yen also creates the afternoon softness. Usually shorts like to pare back positions on Friday afternoon which causes lift in the markets but lately are there any bears remaining? The last two days of February are typically bearish so perhaps some of this seasonal weakness is filtering in this afternoon. The new moon is tomorrow and markets are typically weak moving through the new moon. Next week begins the new month of March and typically new money lifts markets the first few days of the month.The ECB Rate Decision and Press Conference, and then Monthly Jobs Report, hit next Thursday and Friday, respectively. Traders may be a bit too relaxed considering that drastic negative currency events tend to occur on weekends.

Note Added 3:02 PM:  The SPX is dropping now at 1855 which is the lower red trend line on the 2-hour chart posted a short time ago. You know what that means. Yep. Bounce, or die, time.

Note Added 3:36 PM: The SPX died, and then bounced. The markets are a circus. SPX now at 1855-1857. Ukraine unrest is blamed for the afternoon selling. The new government is telling Russia to not take over Crimea and to back off, thus escalating the ongoing turmoil. The all-time closing high from yesterday is 1854.29 so there will probably be drama around this number into the bell. VIX is 14.20 remaining above the important 13.93 level.

Note Added 3:55 PM:  XLF is 21.69 so bulls are riding the financial strength today. VIX 14.22. SPX is back above 1860 so this must be due to the additional money flow juice described in the previous chart. China PMI is tomorrow.

Note Added 4:10 PM: The SPX prints a new all-time closing high at 1859.45 and new all-time intraday high at 1867.92. VIX is 13.99 so the bears clutch this feather for their caps. XLF is 21.72 well above the 21.44 bull-bear line in the sand which carried the bulls to victory today. Next week will be a continued battle of financials and volatility, and copper should come into play also. China PMI is important this weekend and Putin likely holds the key to global markets. Putin will either sit on his white horse and provide a thumbs up, or thumbs down, to the Ukraine situation. The banks are very important over the coming days. A currency crisis usually develops on a weekend. Bulls are feeling good going into the weekend, however, they apparently could not muster up only six cents more of strength to push VIX under 13.93.

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