SOX dropped under 422.25 at the open, bear friendly. SOX dumping six points is a big move down, INTC is helping to create negativity. VIX jumped above 19 at the bell but then fell on its sword, now printing 18.74 favoring bulls, so any bearish hopes for a strong down move evaporates. Tech is not leading the downside so this hints at a weak move down as well. Watch VIX 19, it is the most important thing today moving forward. If VIX moves above, the markets will significantly weaken, below and the bulls will move the makets sideways with a slight upward bias today. SPX S/R at 1391, 1389, 1388, 1386, 1382 is in play. Keystone covered the INTC short taking profits. Bot more PAAS. Bot more XCO.
Note Added 4/18/12 at 10:35 AM: The bulls cannot punch above 1388 R, yet, and the bears cannot move the VIX above 19, yet. Markets will drift sideways until one of these parameters give way identifying the winner. SPX is printing 1387.75, bulls are making a run at 1388. VIX is at 18.72.
Note Added 4/18/12 at 12:10 PM: The VIX jumped above 19 and ushered in market selling but a few minutes ago the VIX fell under 19 so the markets recovered. Watch VIX 19 and the critical SPX 1388 support/resistance level as a guide today. CRB dropped under 300 which is a significant bearish development. This drops Keystone's Inflation-Deflation Indicator into Disinflation. The markets have a sideways vibe today going into the Spain auctions now about 16 hours away. Semiconductors, copper and commodities are the main reasons that the broad markets are weak. The bulls are keeping VIX under 19 preventing any significant market selloff.
Note Added 4/18/12 at 3:16 PM: SPX printing 1388.01, directly on top of the critical 1388 S/R. VIX is weaker printing the lows of the day at 18.29; the broad indexes should be up. SOX is printing 420.64 moving upwards for the last hour. The bulls know the only way for the broad indexes to move higher is for the semiconductors to jump back on the band wagon, this occurs at SOX 422.25. HOD is 421.40 so SOX got within 85 cents of catapulting the markets higher. Markets are idling ahead of the Spain auctions now only about 13 hours away.
KS, thanks for posting the percentages in your positions page. I really appreciate that. It just seems that all the negativity of the Spain auction is being priced in since no one expects it to go well. I think markets are either flat or will gap up tomorrow if the ECB decides to plug that auction which is not good news for me since I'm net short. I feel your pain on BOIL and UNG. When will KS capitulate and get on that stretcher?
ReplyDeleteSteve
Hello Steve, for the Spain auctions the question is if the ECB will support the auctions which will make everyone happy and especially equities markets. The problem is that the ECB cannot function like the Fed, so some type of agreement would have had to take place ahead of time, behind closed doors, some type of coordination, to get ready for tomorrow. So it's a crap shot.
DeleteKeystone did a big add to BOIL yesterday and today so that is ongoing. The natty trades will be pursued for a while, UNG, BOIL, XCO, at least a month or two more. When President Obama gave a speech on energy a couple weeks ago and did not mention natty, that really hurt. It's amazing how someone that is intelligent can tout windmills, solar and algae but ignore the cheapest, cleanest, highest supply fuel available, natural gas. It simply defies logic.
The markets should take care of things. At least the weather in the northeast is cooling over the coming days so that may throw a bone to long holders. Natty inventories are tomorrow morning so lots of drama on tap for 10:30 AM.
Key
ReplyDeleteCrb and gold - you had some great charting on gold and gold runners this past week
With the euro equation back in play how does this impact your gold perspective - will it pop with poor euro results (gld as safety) or pop with ecb supply of crack - disinflation points to drop per your prior analysis - so how you feel gold ?
I am short gold hard on futures at 1660
Should I cash in now and wait for fireworks ?
Hello Richarab, as always, you have to make your own decisions. The thought would be that gold sells off since it should move with oil, commodities and copper. Gold price is now under the 20-week MA and 50-week MA and the 20 is about to cross under the 50, all of which are bearish into the intermediate term (a few months). Watch the resolution to the sideways symmetrical triangle as charted for gold a few pages back, price is ready to decide. The dollar not suprisingly has the same chart pattern only inverse to gold. So, all youi can do is wait and see what the result of the Spain auctions are in the morning. Weaker dollar=higher euro=higher gold, silver, commodities, copper, equities. Stronger dollar=lower euro=lower gold, silver, commodities, copper, equities.
ReplyDeleteRemember that many things discussed on the site are operating in different time frames, so it is never easy to say long or short anything as a one way bet. For the disinflation on tap due to CRB failing 300, think of that in an intermediate term time frame where it will serve to keep markets week in the weeks and months ahead. Of course the day to day market movements, however, will gyrate up and down.
Thanks - on the natural gas side
ReplyDeleteSpoke with shale play expert Terry Engelder
Says that ng is simply by product to more profitable LNG and that they are willing to dump or burn ng
Until next exporter - 2013 maybe - we can't make money on ng
Korea pays 14 $ for ng per us equivalent
Demand is there - not here
Be careful
I will too
Thanks
Hello Richarab, keep in mind the current natty trades are in place based on the charts alone; the fundamentals are as you described. In fact, it will take a lot longer than folks realize to design, permit, build and commission the liquefiers for natty so exporting can increase.
ReplyDeleteFocusing on the charts, they have been signaling a bottoming process for the last couple months, which continues, but this is a knife-catch as all other trades are on the site here so there is always trials and tribulations to work thru. What typically happens is that the analysts will be negative, and rightfully so, on a ticker, but they cannot forecast where a bottom should occur, the charts can although the exercise can have many fits and starts, and when a ticker pops, say it recovers from 10 to 50%, that is when the same analysts will signal an all-clear. But, it does not do a trader any good since the gains have already occurred.
Just like at the top, analysts will tell you all is fine and Ma and Pa will buy into that, only to see the ticker collapse before their eyes. The analysts always change their ratings and thoughts after the obvious has already occurred. Thus, the natty trades are simply high risk speculation, and dangerous knife-catches, but it appears that natty gas prices are at or near their bottom. If President Obama would so much as cough and it sounds like the word 'natty', muffled or not, this would place an immediate floor in the natural gas price (a committment to natty infrastructure would place an immediate bottom in price).
Natty price is reminiscent of gold many years ago, beaten down and unloved, even the cab driver and shoe shine boy kicks it daily saying that natty will be a few pennies in the coming weeks. But, in trading all you can do is take it one day at a time and constantly adjust your thinking, be it better for the trade, or worse for the trade. For now, natty charts remain constructive for a bottom and upside ahead.