The beat goes on. China CPI, Greece deal, BOE easing and ECB rate decision all result in the same-o, same-o. The SPX is down -0.09% while the Nasdaq is down -0.03%, thus, there is no tech leadership to the downside so the bears may be more growl than bite. UTIL at 451, well under the critical 453.69 for this week, so the bulls have nothing to cheer about either. With the dollar down, euro up and commodites up, the CRB at 316-ish well above the 310.50 danger line, nothing much has changed.
The rally is looking very tired for all the reasons discussed over the last few days, including the charts, so traders remain in limbo, walking softly, no tip-toeing, on the eggshells covering the trading floor. Volatility is making a healthy move off the bottom so perhaps that positive divergence shown in the previous charts has ignited the launch sequence.
SPX jumped at the open touching 1351 so the markets accelerated higher, the SPX placing a HOD thus far at 1353.53. Remember Keystone mentioned to watch that 1354 critical overhead resistance and price tested after the open, and received a smack down. Since price attempted a try at such a critical R it would not be surprising to see price move up again for another look at 1354 today. SPX received the smack down from the negative divergence shown on the 30-minute chart last evening. Price came down to bounce off the 34 MA on that chart, watch to see if the 8 MA crosses down thru the 34 MA which signals bearishness ahead. Thus, more of the same today so far. Traders are lulled into a complacent dream world right now. Bulls need UTIL above 453.69, bears need the CRB under 310.50, the beat goes on.
Note Added 2/9/12 at 12:30 PM: SPX came back up but only made it to 1352.50 before another spank down occurred. Tech is leading the upside so the broad markets remain buoyant.
Note Added 2/9/12 at 1:30 PM: SPX is back up again, now testing the 1354 R. Let's see what the market bulls got.
Note Added 2/9/12 at 1:50 PM: Bears showing some strength by spanking price down from 1354, so far. This is strong resistance so it will be telling to see if the bulls or bears win at this critical juncture. The tech sector continues to support the bulls, AAPL up 3.4% today with price going parabolic as if it is a commodity stock. Also of interest is the Dow Industrials. Keystone pointed out the 12928 area of interest this morning (reference the previous SPX S/R Post). The Dow printed a HOD today at 12925, this little mini soap opera is ongoing. The bulls will exhibit strength if they close the INDU above 12928 today, if not, that will be the third day in a row that price attacked that critical level and failed to close above which would place into question the strength of the bulls.
Note Added 2/9/12 at 2:57 PM: Bears showing some oomph, knocking down the SPX from this fierce resistance at 1354. The Dow drama continues as well with the bulls trying to close above 12928. One hour of trading remaining.
Note Added 2/9/12 at 3:10 PM: SPX continues the knock down drag out fight with 1354, a heck of a battlefield today. If SPX does not have the strength to close above 1354, then the indexes may be exhausted. The SPX daily chart is now showing the fourth hanging man candle in four days, typically a sign of a trend change. High drama continues. Tech continues to lead and support the market bulls. Bulls better be nice to their Sugar Daddy, Apple. As AAPL goes, so goes the markets at this point.
Note Added 2/9/12 at 3:20 PM: SPX hits an air pocket and falls to 1352, check that, now a 1351 handle. Support is at 1351 and 1349, the same S/R levels as the way up. Dow now dropped under 12900. Perhaps the bulls are running out of gas.
Note Added 2/9/12 at 4:11 PM: The makret bears can dance a little jig today. SPX 1354 resistance held and also the intraday high from spring 2011 at INDU 12928 held. Tech, and the dollar, dictates the trading. AAPL finishes up 3.5%, at 493. Considering Keystone's 80/20 rule, the path to 520 is probably ahead, but a market pull back will likely occur first.
AAPL is what's holding up the NAS. Getting real close to 500 mark, already up and over the upper weekly trendline. Everyone giddy bullish for SPX 1361 today, but let's see how APPL responds to 500. Kinda interesting to watch. Thanks for your great market insight.
ReplyDeleteHello Anon, SPX 1354 is strong R so bulls have to move thru that first. AAPL is holding up the tech which is holding up the markets. Apple is parabolic now, that type of wild vertical spike typically retraces directly back down.
ReplyDeleteIt will be interesting to see where AAPL clsoes today since Keystone's 80/20 rule is that once a stock closes over the 80 level it wants to seek the 20 level. Thus, if AAPL closes above 480 today, even though it will pull back, it will want to search out 520 on the next thrust upwards.
So that will be interesting to note today, AAPL would have to retrace today's entire move to get back under 480. But a close over 480, even with a pull back then occurring in the markets, will likely forecast a move up to 520 which means the broad markets will then make another move back up to these current levels.
KS, could you refresh my memory? Is the signal for $BPSPX and $SPX:$VIX the same; 6 pt reversals? Or are they different?
ReplyDeleteTHANKS! FOR ALL U DO!!!
Hello Anon, the BPSPX, Bullish Percent, is the six percentage point reversal, and also the 70% level would be important. BPSPX is now 83.40, thus the BPSPX would need to print 77.40 or lower to signal bear fun ahead. If that occurs, and markets head lower, and the BPSPX falls thru the 70% level that will signal additional bearishness. Anything 78 or higher from here forward and the bulls float along without a care.
ReplyDeleteSPX:VIX ratio watch the 68 level. This prints in real time and is now at 73.36, so well above the firm bearish signal, and signal that a triple digit down Dow day will occur, at 68. Volatilty has perked up so as the VIX moves up, this is in the denominator of the ratio, so if you remember your high school math, fractions, a higher denominator results in a lower ratio.
Thus, if volatilty increases, and the SPX drops, which is hte expected relationship, that decreases the SPX:VIX ratio moving it closer towards failure at 68.
KS, it seems that this market is rigged since it has gone straight up w/o any pullback. I don't think it's normal but then again, the volume isn't normal. Do you think that the "wealthy ones" are trying to lure the retail investor back in before pulling the rug out? Thanks for your great insights.
ReplyDeleteSteve
Hello Steve, nope, I would not read that much into it. Price is behaving well technically, the market bears actually logged a victory today since the line in the sand at 1354 held. Also, the Dow 12928 level held. Tech led the upside as shown by the Nasdaq leading the SPX today, as it has done all year long thus far. The professional traders are always looking for the easy marks but Joe Sixpack may not be as gullible, he probably bot in over the last couple weeks to float the indexes up to where they are now, hence, we may have even seen the start of a pull back today.
ReplyDeleteSo, simply watch to see if tech will start to lead down. SPX 1354 and DOW 12928 will be in play as resistance ceilings again tomorrow. Market bulls benefit from weak dollar = strong euro = strong commodities = strong markets. Bears need to see a stronger dollar and that will provide bear fuel, dollar stronger = weaker euro = weaker commodities = weaker equities. Tech, and the dollar will tell the story each day.