Copper stole the show today, it will be important again tomorrow. Copper moves up if the dollar is down and visa versa so you can watch the dollar and know what is happening to copper. AMZN catapults upwards after the close this evening on stellar earnings while SBUX drinks away its troubles with a double latte mocha cappuccino. Amazon eats Best Buy's lunch since folks use BBY as the showroom and idea center, then the consumer returns home to buy the product on the Internet from AMZN. S&P downgrades Spain debt with a negative outlook moving forward. The news was not unexpected but the S&P future's dropped about four handles on the announcement a couple hours ago and are moving into the overnight period weak.
The Friday technicals can be simplified to a bull-bear battle between copper and semiconductors. Copper, JJC, is now bullish above 48.10 and this affects the markets positively. Semi's, SOX, are bearish below 418.50 affecting the markets negatively. Markets will move sideways if there is no change. If the SOX move above 418.50, the market bulls will move forward on a sustained path higher that has some staying power. If the bears push JJC back under 48.10, however, the upside rally is over and the bears will send markets south. The CPC Put/Call printing in the 0.7's and low 0.8's, as well as the VIX printing 14 and 15 handles (today LOD 15.75), are consistent with where significant market tops occur.
The SPX closed above the critical 1399 resistance, now support, but two pennies shy of 1400. The bulls will accelerate markets higher if the 1402 handle is touched. The market bears need to push about twelve points lower to 1387.25 to accelerate the downside. A move thru 1389-1401 is sideways action. SPX S/R is 1406, 1404, 1403, 1402 (for Friday only), 1401, 1399, 1394, 1391, 1389, 1388, 1387.25 (for Friday only), and 1386.95 (20-day MA). Note the sturdy confluence of support at 1387-1388 for Friday, if that gives way to the downside look out. Extreme caution is required in these markets. GDP at 8:30 AM will impact futures then the markets will pivot when the Consumer Confidence is released at 9:55 AM. European bond market will be important in the early morning due to the Spain downgrade. Higher Spain and Italy bond yields will create anxiety that will weaken U.S. futures. If a weaker open is projected for Friday after the GDP number hits, after the opening bell, watch JJC, if it drops under 48.10 the downside will have legs, but, if the markets sell off but JJC stays above 48.10, the bears got nothing.
KS, what a bang to the markets after aapl announced yesterday! Traders just shook off the bad Jobless Claims numbers. Seems like all bad news is priced into the market given the low CPC ratio you mentioned. We need to shocker event to rocked this market. I miss those waterfall crashes of last year. Seems like we probably won't get one this year given the uber bullishness going around. Seems like the Bernanke put is holding up this market very strongly. Why is Keybot long on IWM? Now I'm kind of concerned since I'm long on TZA. Take care.
ReplyDeleteSteve
Don't worry, you are still going to get the waterfall crash...
DeleteWhy do you think that Zig? Are you also shorting this market? I'm not sure we'll get that with an election year and with central banks manipulating world markets. The best us shorts can hope for is for stocks to take the steps down and slowly drift lower. My SPXU is doing a 5-for-1 reverse split. That is really going to hurt. I hope TZA will not do one soon. These inverse ETFs have not worked for me as well as they have last year.
DeleteSteve
Hello Steve and Zig, in trading you have to roll with the punches. Time frames are important. With the low CPC and low volatilty this says that a market downside event is likely in the days and weeks time frame, say anytime within the next couple months. QE3 should be off the table until this down move in the markets occur and you see the CRB under 280-ish. The Apple rally this week will likely peter out. Samsung is actually the leader in smartphones (44.5 M sold) versus AAPL (35.1 M units sold) and Foxconn, Apple's production arm, is plummeting 16% this morning stating lower demand on tap. The shorter term moves are very erratic these days. Europe can impact markets at anytime. The bulls are looking good short term, GDP and Consumer Sentiment is important this morning. Copper, JJC, 48.10 will tell you a lot today. Keybot is operating in a lower risk mode due to the whipsaw's occurring. Keystone maintains the index shorts as a hedge against Keybot at the same time. The markets are very news driven. The current status is that the bulls are running with the ball but the broad indexes will likely choose the next top soon. It will be interesting to see if the prior highs are taken out for the broad indexes, or not, since, if not, they will form right shoulders for an H&S pattern which would usher in the forecasting by the low CPC numbers.
DeleteInteresting bit of fakery appearing to occur on Nasdaq after hours activity. 14 million shares of SPY in one fell swoop?
ReplyDelete- Ande
Can someone tell me why the e-minis start to move again after 2am. I have found that sleeping is very expensive you wake up and the move is over.
ReplyDeleteI think that last hourly bar on the E-Mini(s) is self explainatory. Between 3am and 4am whosh straight up. ;) starting the day in the green is nice... baring any adverse news as referenced by KS I'd like to see the vix gap up and ease lower leaving the wind at our backs as we go up to 1405....
ReplyDeleteJust reading the commentary and pulled up the daily chart on tza it looks carbon copy to the daily vix ...
ReplyDeleteHello Ande and MCAP, European markets open and affect the futures markets. The tape is jumpy this morning, coming back to flat but now drifting lower again. The main three market drivers are Apple, constant Fed comments on QE using the word 'accomodation' and the Europe mess. EOM is Monday, May begins on Tuesday.
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