Friday, May 9, 2014

Keystone's Morning Wake-Up 5/9/14; RL; Wholesale Trade

The whipsaw sideways choppy action continues frustrating bulls and bears alike. Every time the market moves one way and looks like it will commit, it quickly reverses course to tease the other direction. Key SPX S/R is 1897, 1891, 1884, 1878, 1874, 1868, 1859 and 1848. The inverted H&S and rising wedge patterns on the 5-minute chart a few posts back were satisfied targeting the 1889-1891 level yesterday. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Bears got nothing unless they create a negative 8/34 cross. Reference the previous chart.

For the SPX starting at 1876, the bulls need to move above 1889 to accelerate the upside. Price would likely slice up through the strong 1891 resistance in quick order and target 1897 then 1900. The bears need to push under 1870 to accelerate the downside. A move through 1871-1888 is sideways action. Bulls need higher copper and retail stocks. Watch JJC 37.48. Copper was trading flat to higher overnight but now trades flat to lower. The retail sector is sick but RL earnings before the bell may change the mood. Bears need lower financials and commodities and higher volatility so watch XLF 21.83, GTX 4944 and VIX 14.68.

Draghi promises to bludgeon the euro next month at the 6/5/14 ECB meeting. Currencies and global markets may take on a new dynamic going forward. A weaker euro will send the dollar higher and likely commodities lower. This morning the euro is dropping, dollar is popping and S&P futures negative -3.

Wholesale Trade data and the JOLTS (job openings) Report hit at 10 AM which may cause a market stutter step. Watch the 8/34 MA cross on the 30-minute, XLF 21.83, JJC 37.48 and SPX 1889 and 1870 to determine market direction into the weekend. Last week stocks weakened in the afternoon due to Ukraine turmoil so watch for that potential behavior today especially considering the Victory Day in Russia and Ukraine may create stronger violence.

Note Added 11:53 AM on 5/10/14: Financials and copper teased the above levels with XLF remaining above 21.83 and JJC catapulting above 37.48.  Copper provided the Friday bull juice. These levels remain key for Monday.The Dow prints a new all-time closing high at 16583.34. The main road block ahead for bulls is the retail sector. Bulls must push the retail sector higher to send the SPX above 1900. Retail earnings are on tap for companies such as M and KSS next week. Retail Sales data are released on Tuesday morning. The 8 MA falls under the 34 MA for happy bears but the 8 MA is now spiking higher ready to create a positive 8/34 cross on Monday morning. Bears must come to play from the get-go on Monday or they are going to fold like a cheap suit as the SPX tests new all-time highs. Copper is a useful indicator now since it is greatly influencing equities in this near term so the way copper goes should be the way the broad indexes go. Bears got nothing unless they achieve either XLF 21.83 or JJC 37.48.

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