SPX popped at the open and promptly rolled over on its sword after the Consumer Confidence data, which was actually better-than-expected. Perhaps more and more traders are noticing the froth at these lofty levels. AAPL continues higher, trees do grow to the sky afterall, but, the negative divergence remains so for the last five bucks Apple remains a nice shorting opportunity now. There is no doubt that AAPL is holding up the tech sector which keeps the Nasdaq outperforming the SPX and reinforces continued market buoyancy. The markets are AAPL and AAPL is the markets.
VIX is the little engine that could for the market bears. Since the major sectors remain in the bull camp, the bear hope starts with the VIX regaining the 20-day MA at 18.5-ish. VIX now printing 18.33 trying to muster up strength. The bulls attacked SPX 1370.58 but it only held for a few minutes. The bulls have been unable to attack the 1372 handle which is what they need for a bullish acceleration higher, so keep watching that today. The technical indicators and charts, as presented this morning, show the indexes ripe for a sell off, but, traders cling on to the positive outcome for the LTRO2 news coming in the hours ahead. The LTRO2 is the main even this week. Today is all sideways action so far. Watch VIX, if bearish, you will be happy seeing 18.5 and higher. If bullish, you want to stay under 18.5.
Note Added 2/28/12 at 12:07 PM: The bulls keep running with the ball. SPX 1370.58 and 1372 was taken out which opens the door to 1377 R. The bears are having a hard time keeping the VIX at 18 let alone overcome 18.5. AAPL remains an attractive short now over the last 5 to 7 bucks to 532. Lots of trading remaining today, keep yourself strapped in as we approach the LTRO2 announcement.
Note Added 2/28/12 at 3:31 PM: The SPX is playing around in sideways mode today, the 1370.58 and 1372 S/R are key today. VIX made a try for 18.5 today but then rolled over and is now trying to maintain 18 into the close, so the bulls are in charge. Today is all AAPL, which boosts tech and the Nasdaq, and when tech leads the broad markets go up. Gold and silver jumping today front-running the LTRO2 announcement in the hours ahead. Dow keeps teasing 13K but this is of no significant importance. Markets are likely idling sideways into the LTRO2 announcement; traders are content to roll the dice and see what happens. Watch VIX and AAPL into the close.
You are totally wrong on SLV Short SLV up 1.31 as I write this, I went long last week. Whats up with your call ZSL?
ReplyDeleteMac
Hello Mac, if Keystone is wrong, it will not be the first, or last time, all you have to be is more right than wrong overall. The ETF's do not move entirely in sync with the underlying commodities or indexes all the time, especially for commodites and volatility. The ZSL is a simple short term trade based on the positive divergence on the daily and weekly charts.
ReplyDeleteNo doubt this morning is a blow as the RSI for ZSL has broke under the month prior number so as of today's action, you have a point, and this is not a happy development if long ZSL. But, in the multi-month time frames, the daily chart remains fully negatively diverged. This behavior typically points towards an extended basing period on tap.
Silver, gold, copper, commodities have all had a great bull run on the Fed's easing annoncement in the Fall, the LTRO1 that kicked in December, the China easing and now the excitment around LTRO2, so that is a lot of money seeking a place to go. That is why you see the commodities inflate, gold and silver inflate, the Dividend Stock Bubble grow, and the muni's and corporate's climb. Thus, this makes your case.
However, the beating on the dollar should end, the buoyancy in the euo should lead to a pull back. On SLV, the opposite moves and the 4% jump is seen today. SLV regained the 200-day MA at 34 which really provided the juice to move higher, it also has a bull flag in place now as well. A back kiss should be in order for SLV to 34 since it was such an important level to overtake. SLV is negatively diverged across all indicators except the RSI (which is expected since the ZSL RSI dropped today), so this reinforces a move to back kiss the 200-day MA.
But you are correct so far, the LTRO2 anouncement will be big overnight and immediately impact all markets so we will have to see the effect on the dollar tomorrow.