The week begins with the bears growling but they are not producing any damage to the broad indexes. The SPX was either going to touch 1369 for bulls to win today, or 1363.61 for bears to win, so bears won, for now. Keystone's SPX:VIX Ratio Indicator is at 73, five points above the 68 danger level so bulls do not appear worried. AAPL is a couple bucks off the top but remaining somewhat buoyant. The slight Apple weakness is helping the Nasdaq lead the broad markets downwards, which provides bearish street cred for today.
The retail sector, RTH, remains above 39 so the bulls are not concerned overall, the LOD is 39.36 so the bears need to push 36 cents under today's low before the bulls start to panic. TRIN at 1.22 favors sellers although this is orderly steady-eddy stye selling without panic. The NYAD printed a low at -1700 so not yet near the -2000 and lower that is more in tune with signaling a temporary washout so this favors the steady-eddy selling type vibe today sa well.
The SPX support and resistance indicates that the 1363.46-1363.61 zone is now a resistance ceiling and bulls can only develop positivity if they punch back up thru this zone and remain above. Support below includes 1361 (where the SPX is battling now), 1358, 1357.49 (10-day MA), 1356, 1355 (important support the last few days--and today), 1351, 1347, 1346.54 (20-day MA), 1345 and 1344. The battle for 1361 S/R continues.....
Note Added 2/27/12 at 10:45 AM: Here is the test of the 1363.46-1363.61 zone, bulls punched up thru, see if it holds for seven to ten minutes, or not. This fight will likely determine today's action. Bulls must keep price elevated moving forward. Bears need to push back under this zone, if so, they can push lower to retest the 1355 support from this morning. Current print is 1363.58, smack dab in the middle of the zone, here we go, who will win today, bulls or bears? The bears appear to have the upper hand today, but this spike higher in the SPX shows that the bulls are trying to stop the down slide. The next few minutes are critical.
Note Added 2/27/12 at 3:15 PM: Bulls took the ball and ran with it from 11 AM on. The 1369 level was targeted and that gave way about a half hour ago. The table is now set for the fight for the intraday HOD from 2011 at 1370.58, so there will be drama around this level into the close today. Interestingly, tech is not leading the upside, so you would expect the bullish move to peter out; tech is somewhat coincidental with the broad markets, however. AAPL punching out a new high is helping the broad indexes explore these upper levels. The negative divergence remains for Apple so it is only putting off the inevitable downside spanking for a few hours, or a day or so. Would not be surprising to see Apple sell off into the close today. TRIN is 0.84, bullish. Lots of drama ahead for the last 45 minutes. Would not be surprising to see markets move lower again. Watch SPX 1370.58.
Note Added 2/27/12 at 3:30 PM: Watch to see if volatilty, VIX, can punch up thru the 18 level. There it is, VIX 18.01. Remember last week we watched the struggle for the 20-day MA at 18.53. This fight may be front and center again as the markets move to the close today and in tomorrow's session. Bears need to move above VIX 18.50 if they want to get something started, otherwise, they got nothing. The VIX has jumped form 17.62 to 18.00 in the last 20 minutes which has ushered in some minor market negativity. VIX now printing 17.97, if this moves up, the broad indexes move down, or visa versa for the bulls that want to stay under 18.
Note Added 2/27/12 at 4:20 PM: SPX did not close above the 1350.78, so that is a feather in the bears cap. VIX closed at 18.18, so we will call that in the bulls camp for now, and tomorrow we see if the VIX can move above the 18.50 level which will provide a feather in the bears cap if it occurs. The sectors remain bullish overall. RTH is at 39.75 well above the 39 danger level. The semiconductors require watching. The SOX is at 424, watch to see if the 412 fails which would signal market danger, today the SOX ventured as low as 418. Bulls need to be given their due, they are keeping the rally alive this year and are trying to burn off the overbot conditions and negative divergence by moving sideways. Any Europe or LTRO news leading to the Wednesday announcement is very important. Consumer Confidence is at 10 AM tomorrow and this data will serve as a market pivot point.
KS, how many more trading sessions do we need to move sideways before the overbot conditions are burned off? Are you still holding TZA and ZSL?
ReplyDeleteSteve
This is a test. I do not know why I cannot post a comment. KS, you are a godsend. What now, QE3 in process?
ReplyDeleteKeybot is long and bullish, but Keystone is short?
ReplyDeleteHello Anon, in trading you never know how long, or if, price can successful burn off negative energy thru sideways action. The projection would be that the bulls will be unable to do so, and the broad markets should fall at anytime. Yes, all the short term short positions brought on over the last month are on in place and receiving adds. The LTRO news will dictate the market action over the next day or two, it should be wild. Keybot remains long so the bulls remain in control unitl Keybot flips short.
ReplyDeleteHello Anon, Keystone is far from a godsend although he will print your comment out and hand it out to many folks who think otherwise. The LTRO program is a bailout that occurred before the crisis actually occurred. This is different from the States that stepped in with QE1 in March 2009 and QE2 in August 2010, there was no choice, equities markets were going over the falls. QE3 should not occur until we fall into disinflation and deflation, so you can use the CRB as a guide. CRB is at 325-ish receiving an asset inflation pump due to China easing and the LTRO program. If CRB moves back down to 300 that signals disinflation but QE3 wil probably not occur until the CRB is down around 270. But, since the LTRO was intiated without a crisis event, perhaps Bernanke changes his tune and will act sooner? Nonetheless, QE3 will probably not occur unless CRB is under 300.
Hello Alex, yes, Keystone is constantly long and short at the same time. Remember, the key is time frames. Keybot is steering the core position on the long side. Keybot is a proprietary trading algorithm that tends to move thru the weekly, intermediate term area. The algorithm's goal is to chart the smoothest path thru the markets for the year, which Keybot does very well.
Keystone's speculative trading, which the majority of the technical anaysis and charting presents on this site, is more focused on dangerous top and botom calling and more speculative trading. Thus, the expectation is that the current ETF short positions should work out since the SPX and broad markets should pull back down. At the same time we will have to wait to see if the move down is convincing, if so, Keybot will flip short and ride the bear side for a while. If not, and Keybot stays long, then Keystone will have to likely close out the short positions, whether or not they are winners or losers, sinice the move down will not have a lot of strength.
The importance of the next 24 hours cannot be understated. The charts show a pull back is wanted for the indexes but the reaction to the coming LTRO news, probably overnight tonight, will dictate the market result. It appears that much of the LTRO2 move may be priced into the markets already. 500 billion is the amount bandied about, so 500-600 billion or lower is probably priced in to the markets. If the ECB provides shock and awe with 700 or 800 billion or more, the markets will probably take another leg up.
Watch the euro like a hawk since it will immeditely react and you know the asset relationship that will occur from the euro move; euro down = dollar up = commodities and equities downn, or, with shock and awe, euro up = dollar down = commodities and equities up. Buckle up for a wild ride over the next day or two.
Also China PMI this week is critical since it will direcly affect the copper and commodity strength which in turn correlates directly to market strenth, or lack thereof.