Markets are expected to be buoyant today and tomorrow ahead of the holiday weekend but are the bulls beginning the party too early? The launch in the markets yesterday occurred after lunch time when rumors said Europe is looking at a bank deposit guarantee program. Perhaps traders should rethink the happiness since it is not the deposit that people are worried about, it is the devaluation of their money. Bank runs are a major worry now. If Greece depositers continue to pull money out of the banks, the banks will become illiquid and fail. Depositers are pulling deposits and sending money to other countries to avoid waking up one morning with the drachma back in place and their funds devalued. The bank runs are hard to stop once they begin. During the Argentina crisis, a step was taken to freeze assets in the banks to stop the runs. This resulted in riots and chaos. Once the money was frozen, people turned into animals venting their anger by throwing bricks through windows and setting fires. This is serious business. With the Greece elections 6/17/12 and next Euro Summit coming 6/28/12, the European crisis is reaching a climax right now.
For the SPX today, the bulls need to move up ove 1321 to accelerate the upside. This was hit after the opening bell minutes ago but after a couple minutes it failed. Keep watching. The bears need to push under 1297 to acceleate a downside move. The 12-month MA at 1293.70 is the line in the sand where the markets fall over the cliff. The 150-day MA is 1316.34 which is important today. So far the top rail of that potential sideways triangle described in this morning's chart is holding as resistance. TIF earnings were weak signaling an end to the global luxury boom. The retail sector should continue to become weaker moving forward. The Nadaq is red and S&P green so tech is not leading the upside and wants to lead the markets downwards instead. The 8 MA remains under the 34 MA on the 30-minute chart, which is bearish moving forward, but the 8 MA is spiking vertically towards a cross. The next couple hours will be important. Let's see if price ventures lower to continue lining out a sideways triangle move into the barbeque weekend.
Note Added 5/24/12 at 3:14 PM: Flat action today with a downward bias. The sideways posture is continuing as discussed in this morning's chart. On the 30-minute chart, the 8 MA pierced the 34 MA to the upside today at 10:30 AM signaling bull-friendly markets. This cross is whipsawing currently as price lines out sideways. Currently, the 8 MA is a hair away from slicing back down thru the 34 MA so today's close here on out may become entertaining. Note that the SPX is now under the 150-day MA at 1316.31.
Note Added 5/24/12 at 3:48 PM: SPX moves back above the 150-day MA. Today was uneventful. RIMM is getting slapped silly but next week someone will mention the word patents and then it will rally. Looks like trader's simply want to slide into the weekend, if possible.
Note Added 5/24/12 at 3:57 PM: Traders are anticipating happy talk out of Europe tomorrow which creates late day buoyancy. Keystone took profits on BBY. Also bot more TZA.
interesting; as soon as the 8MA crossed the 34MA, the SPX peaked and has been declining since. What does that tell us KS?
ReplyDeleteHello Arnie, the 8 above the 34 is bullish and visa versa. When the 8 MA starts to curl that can give you an early indication of a turn in progress. The cross is whipsawing now due to the flat nature of price movement. This should resolve over the next day or so and firmly commit to one side or the other. The 8 MA is a hair above the 34 MA as we move into the close today so the bulls should win this battle. Lots of excitement this week, a sideways day is needed, traders would probably like to see the same tomorrow.
ReplyDeleteI have taken my profit today for GNOM (up +34%) Thanks to KS
ReplyDeleteCongratulations Anon, but give yourself 100% of credit since you control the mouse. You did better on it than Keystone since Keystone exited just before the pop. That was a positive divergence bounce.
ReplyDeleteThus, search thru charts and look for a ticker that is positively diverged across the RSI, MACD, stochastics and money flow, for both the daily and weekly charts for that ticker, and that trade is very very high probability. That way you can make your own fish dinners now.
See if you can find any gem's as well as identifying any niche sectors where many companies are in the same business that may all be positively diverging (to play bullishly) or negatively diverged (to play short).
Remember, we could care less which direction a stock goes, up or down, it is of no consequence at all, all that matters is being on the right side of the trade.