SPX falls to test 1355.50 after the bell rings. UTIL is remaining under 452.91, bearish. JJC is above 48, bullish, but has a 48 handle now, 48.96. Volatility is jumping over 3%. Remember the VIX fight with the 20-day MA yesterday at 18.72? VIX now printing 18.76, on the top side of the 20-day MA is market bearish, under the 20-day MA is bullish for markets. Tech is not leading the broad markets lower as the day gets underway. The Nasdaq remains flat to slightly negative. This is surprising since the last two days presented lackluster DELL and HPQ earnings and guidance.
Today picks up where yesterday left off. Here comes UTIL up for a look at 452.91. The SPX failed the 1355.50 level, therefore, 1354 should test in quick order and the downside should accelerate. First, watch to see if the SPX stays under 1355.50 for another five or ten minutes, or not. Remember, from last evening's 30-minute chart, 1355-ish is an important level, should the bears now convincingly push down thru.
Note Added 2/23/12 at 9:45 AM: SPX collapsed thru 1354. UTIL came up to within two pennies of 452.91, and died, collapsing, now about one point lower. JJC is 48.58 inching its way towards the 48 level that will signal increased market bearishness. VIX is at 18.91 now moving up above that critical 20-day MA, market bearish. It's all going the bears way right now. If the Nasdaq can step up the game a bit, the bears will start to cruise lower. The housing data in ten minutes may pivot the markets--or accelerate them lower. SPX may have to come up to back kiss 1355.50 at some point. For now the bears are growling, but, with Keystone's SPX:VIX ratio at 71 still above the 68 level, bears need not become too enthusiastic over this move lower. Watch to see if the VIX can move above 19 which would signal further market bearishness.
Note Added 2/23/12 at 11:04 AM: The bears ran out of gas. Since AAPL is up and the Nasdaq is remaining elevated today, the broad indexes did not make any headway to the downside. VIX reversed course and now moved under 18, lower volatility = higher markets. UTIL remains well under 452.91 which is market bearish moving forward. JJC 48.84 remaining 84 cents above danger thus helping the market bulls. The market bulls need to touch SPX 1363 if they want an upside expolosion to occur, the HOD thus far is 1360.63. Market bulls are happy and bears have a tough road to hoe if AAPL remains elevated. If AAPL rolls over, then the downhill sledding will be easy. Here comes the SPX up to test the HOD, this test is important.
Note Added 2/23/12 at 11:17 AM: The SPX fell thru the 1355-ish neckline highlighted in last evening's 30-minute chart. But, instead of a back kiss at 1355-ish and failure, price back kissed and jumped back above the neckline now printing the highs ofr the day which may serve as another right shoulder for the H&S pattern. Today's action places a new neckline in place at 1354, where the bounce occurred this morning, thus, head at 1367, neck at 1354 targets 1341. Using the highs and lows, head at 1268, neck 1352, targets 1236. Thus, today's action for the SPX forecasts a move towards 1236-1241 should the 1354-1355 level give way again.
Note Added 2/23/12 at 2:15 PM: The euro is green, currently printing above 1.33, say no more, the markets remain elevated. Interestingly, even AAPL pulling back from earlier gains, since an anticipated dividend announcement did not occur today, is not having much of an affect on the indexes, although the move in Apple is small. The SPX has placed a HOD thus far at 1362.46. The market bulls need to touch the 1363 handle to ignite an upside orgy. Thus, for now, the market bulls ran out of gas. Neither side wants the ball and when one side receives the ball they hand it back to the other side. UTIL is 450.66 and the negativity of this number cannot be understated. This print is over two points under the critical 452.91 level thus casting a pall over the broad markets, despite any appearances of upside bias in the markets currently. UTIL at this level moving forward is very negative for the broad markets. Since the euro is green today, the dollar is weaker, thus equities are higher. Interestingly, however, is that commodities and copper would be expected to be higher but both are languishing. Perhaps CRB is running out of gas and JJC, now printing 49, has been weak all day, although it remains one point above danger. Oil, West Texas, is approaching 108, and silver and gold are running higher on the weak dollar and continued Middle East tensions. Volatility, VIX, fell under 18 today to bounce the markets. VIX now languishing across 17.5. The complacency remains extremely high in markets, traders are simply not worried about the downside risk at all. This is the type of market where any long position trader tells him or herself that 'there is no reason to worry and if the markets start to pull back there will be plenty of time to exit'. That makes the possibility of a large news-driven event occurring overnight, on any given night moving forward, a very interesting risk to manage.
Note Added 2/23/12 at 3:17 PM: SPX touched the 1363 handle, see if price holds above for seven to ten minutes, if so, the markets should stay higher into the close. The bulls keep running. SPX 1363.61 is the closing high from 2011, price is testing now....right on the dot, 1363.61. See if price can overtake and close above 1363.61 in this final forty minutes.
Note Added 2/23/12 at 4:45 PM: SPX held 1363 into the close. It was surprising a larger upside move did not result after 1363 gave way. Perhaps the 1363.61 closing high from 2011 held price back and the SPX could not close above this critical number once again, falling pennies short. The key force behind the move today is the stronger euro. The euro, $XEU, is now at levels not seen since early December, almost three months ago. Market bears are not able to develop sustainable downside without the euro moving down. Euro down = dollar up = commodities down = equities down. Obviously today was euro up = dollar down =commodites up = equities up. Everyone, including the shoe shine boy, and the cab driver, are shorting the euro creating a buoyancy since the boat was fully loaded to the downside. Today's one percent move higher for the euro flushed some of those weak shorts out of their positions. UTIL closed at 450.75 which contributes market bearishness moving forward. JJC, copper, is a point above 48 contributing bullishness. AAPL finished the day up, the daily chart's negative divergence remains firmly in place so that move is not sustainable at this juncture. As AAPL goes, so goes the markets. As frustrating as these markets are for the market bears, if the euro decides to drop, dollar pop, and AAPL roll over, the broad indexes can turn ugly very fast. As long as the euro is green, however, the SPX will run sideways with an upward bias. Volatility was a bear killer today, the VIX closing under 17. Today's print on the CPC must be referenced to note the complacency in relation to the VIX. The utilities are rolling over, same-o for trannies, and extreme trader complacency is occurring, all three are short to intemediate term bearish indications, but equities float upwards.
Can liquidity negate technical divergences forever? I can see why the bulls get lulled into buying every dip as the hidden hand always appears to support every dip.
ReplyDeleteleeannf
Hello Leeann, I would not get too caught up in the liquidity stuff, the beauty about technical analysis is that everything known is built into the price in real-time, thus, any liquidity benefits are continually priced into markets already. The LTRO will be a soap opera for next week but for now simply let the indexes idle along until they make a decision.
ReplyDeleteTops are near always rolling in nature with paticipation petering out and a slow rolling over pattern. Bottoms tend to be more sharp in nature like the V bottom that always receives attention.
The weakness in the dollar, and the euro strength, since they move inverse to each other, and the euro moves with equities, is the big influence now. As soon as the euro weakens and dollar strengthens, the markets will sell off, until then, we remain in a funk. Thus, the euro and dollar relationship is dictating the market buoyancy. If the dollar strengthens and AAPL rolls over at the same time, that double whammy will substantially spank markets.
For now, SPX needs to touch 1363 to accelerate the upside, HOD is 1362, price coming back up for another look. The drama continues.
crude now 106.67 12:21 EST a pop to 110 can't be bullish for stocks
ReplyDeleteRight now, it seems that any and everything is bullish for stocks. Its quite an enigma really, what's keeping these markets floating. Fundemantals and technicals have all gone to hell. A correction here is important for the general health of the market and the longer its delayed, the steeper the fall would be.
ReplyDeleteHello Anon and Sunny, the elevated euro and weaker dollar, since they move inverse to each other, has a lot to do with the oil, silver and gold trade. Obviouslythe Middle East tensions as well. But the more likely scenario, would be for the dollar to bounce, which means the euro, commodities, copper, gold, silver, oil, and equities, all move lower.
ReplyDeleteMarkets are behaving according to technicals, sometimes it takes patience as a rolling top occurs. Minute and daily charts remain favorable to bears with negative divergence. The broad indexes likely need a catalyst to push them and give them a direction now, a catalyst that will cause the euro and dollar to react. Everyting else will follow.
i appreciate all your comments and hard work. But, lets face it, you even have to be doubting the occurance of a correction. You've never seen anything like this, and neither have any of us. Which leads to ONE explaination; manipulation on the part of somebody. And, the ONLY thing that will get the market to correct is to get everyone in at the top. And with every penny yielding another tick up the pressure to buy is huge! An explosive move UP is what is going to mark the top here, don't you think? A 1000 pt UP day will get all of the bears to capitulate and THAT will be the top, imo. It isn't going to be rolling. Rolling is what is taking us higher. A GAP UP to 13300 will get the day started with a move up of over 500 pts PRIOR to the top.
ReplyDeleteSPX close just below the 2011 closing high...
ReplyDeleteHello Anon, simply provide the markets some patience. Trading sometimes is many days of this paint-drying behavior but it always gives way to a wild stint of action which should be at our doorstep.
ReplyDeleteThe euro will point the way, some euro shorts should have been flushed today. The markets are not a surprise, they are behaving well technically. Continue to watch to see if the bulls win above UTIL 452.91 or bears win under JJC 48. Bulls and bears cannot make up their mind, one of them will shortly.
Hello Arnie, yep, SPX fell a few pennies short, very interesting. SPX 1363.61 very important. The euro and AAPL dictating the action.