RTH moves above 41.15, see if it holds a few minutes. If so, this will create further market buoyancy. NYA is negative today at 7542 so it is not making a run for the 40-week MA at 7637, yet. Tech is moving up slightly more than the broad market so this helps create buoyancy in the broad indexes. Low volume is expected today ahead of the holiday. Markets remain at the mercy of European news. Consumer Confidence at 10 AM is a potential market pivot point. After the confidence number hits, traders will start to slip out the back door.
Note Added 5/25/12 at 10:18 AM: Consumer Confidence shows the highest reading of sentiment in four or five years. They must have asked all the people that are working. Oddly enough, in these erratic markets, the broad indexes do indeed pivot on the data, pivoting down, not up. RTH remains above 41.15 so the markets remain buoyant. The bulls, however, cannot move the NYA higher to overcome the 40-week MA, thus far, so this limits the upside. The SPX touched 1324 but it held for only a few seconds, resulting in price falling lower. The bulls need to hold 1324 for about ten minutes to accelerate the upside. The bears need to see the RTH lose 41.15 again as soon as possible, then they can focus on a run at 1310.50 today as the market drops. If RTH stays above 41.15 today, the broad indexes will float along sideways to sideways up into the holiday weekend. The Nasdaq is now red and no longer leading the broad markets upwards today so a feather was taken from the bull's cap and placed in the bear's cap. The aroma from the grill is already wafting thru the air acting as a siren song for traders. There goes a trader sneaking out the back door.
Note Added 5/25/12 at 11:29 AM: The lazy hazy Friday action rolls along. SPX moving sideways, watch the HOD 1324.20 since if price moves above that, and stays above for a few minutes, an upside acceleration will occur. RTH is above 41.15 favoring bulls. NYA is flat. Nothing has changed. Psycho RIMM is catching a bid today after yesterday's beating. A long player must have opened the door to the trading floor and yelled "Patents!" so RIMM moves higher. The NYSE volume run rate for today is about 70% of a day's average volume and this will likely slow down further. There goes another trader sneaking out the back door.
Note Added 5/25/12 at 2:55 PM: SPX could not punch thru 1324 today and hold it so she's wandering lower. The 5-minute charts shows a descending triangle with base line at 1319.50-ish that just gave way; target is 1315. Bulls could not move above 1324 and bears could not move under 1310.50 so a sideways day occurs. Tech keeps moving on either side of the broad markets, leading the parade for a while, then not, so this promotes sideways behavior. The 8 MA remains above the 34 MA on the 30-minute chart so the bulls are in control of this very short term time frame, for now. RTH is above 41.15 but only by a hair. If this fails, the markets will move lower into the close. Markets soured today on the news that Spain's Bankia needed more funds to keep them above water than originally thought. Keystone is taking profits on AMRS into the strength. Also bot CTRP opening up a new long position.
Note Added 5/25/12 at 3:16 PM: RTH teetering at 41.15. SPX continues to leak lower. Keystone bot TWM opening a new long position (this play is an inverse ETF, short small caps). RTH loses 41.15, markets should make another move lower.
Note Added 5/25/12 at 3:21 PM: SPX printing new lows for the day; a 1314 handle but the bears needed to make up for lost ground yesterday and need to see 1310.50, another three or four points to tank the markets in front of the close. Tech is not leading the move lower so this will mute the downward slide. RTH is under 41.15 back in the bear camp now so this helps sustain downward pressure. Keystone bot TLAB opening a new long position.
Note Added 5/25/12 at 3:35 PM: RTH is coming back up to 41.15 again. Looks like the broad indexes may simply want to skid out sideways into the weekend and rest until Tuesday. The market weakness shows that traders are not paring back short positions in front of the weekend so many are concerned over bad news coming out of Europe. The volume run rate for the NYSE is only 50% of a day's average volume today. Many traders already ran off today to begin the holiday. There goes two more traders sneaking out the back door.
Note Added 5/25/12 at 3:57 PM: Keystone took profits on SVU, will look to reenter. Keystone shorted T reopening this short position.
The intraday euro chart looks like people could really flee it. Maybe a short-term bottom.
ReplyDeleteHello Anon, 5-minute chart is positively diverged so that would agree with your thought. It's getting close to a short term bottom but there is a big gap at 122 that needs filled. The charts would be agreeable to a quickie bounce but it probably then needs one more down move and a while to move sideways to base. The problem is that any bad Europe news is going to continue to beat it, and the dollar euro relationship may adjust as well. Markets are extremely news-driven now.
ReplyDeleteThe S&P refuses to be wrassled down in a meaningful way so far. I feel that I screwed up and should have sold summer IWM puts and vol (VXX) last week, when they were huge winners. Now, not so much. You sound like you are trying to get long TZA in a meaningful way. What do you think about that trade moving into the next week?
ReplyDeleteHello Anon, it is always about the time frames, sometimes you simply have to roll with the punches. The high volatility is fantastic for traders. It will cause these wild spikes, where the Dow Industrials are up 200 one day and down 200 the next, sometimes intraday. The key is to continually lock in profits since profits disappear quickly if you hold on to trades.
ReplyDeleteKeybot the Quant remains short so as long as that is the case, that is more of the short to intermediate time frame view, think days and weeks. The retail sector turned bullish on Friday which provides bull's a smidge of oomph for further upside but this can easily fail at the opening bell on Tuesday.
The NYA remains under the 40-week MA so as long as that is the case, over time, say weeks, the broad indexes will be lower. Watch this closely in respect to trading this ST to IT time frame. Also watch the SPX 12-month MA, these two can answer your question in the days ahead.
For the shorter term trades, Keystone is moving in and out of all kinds of trades, long and short, more focused on taking advantage of chart patterns and divergences. The TZA and TWN trades brought on and increased are attractive since Keybot remains bearish and the Euro news remains troubling. Typically on a Friday you should see market buoyancy but the markets leaked lower in the afternoon, this behavior is more bear friendly. The other aspect of shorting the indexes is that lower numbers would be anticipated moving forward so even if the SPX comes back up to 1340, these short positions can be added to. It is best, however, to stay away from the 2x and 3x ETF's, to reduce risk, if you want to follow a similar theme.
The European news flow is now dictating every market move and this was clearly evident on Friday. Each piece of news immediately causes markets to react. This action renders fundamental analysis useless. At least technical analysis can weather this erratic storm since the news is immediatley built into the chart so analysis can be refined. But the fate of the markets are simply in Europe's hands. In a nutshell, do not stay married to any positions, if you have profits take them, and cycle into something else, try to stay hedged in your portfolio always holding some amount of longs and shorts. The general vibe would be that the indexes should see lower prices in June. The utes remains strong, however, so a back kiss of 1340 SPX remains in play. Losing 1292 and the markets will crack open like an egg. Focus on the RTH 41.15-41.16 level and the NYA 40-week MA at 7637 on Tuesday as a major guide forward.
The bullish ETF's have been battered, TNA from 60's to 44, FAS from 110's to 74, etc. The mpvement on the bear Etf's has been good but not runaway impressive. TZA 17 to 23, FAZ 20 to 27. Many are shorting the Bull ETF's rather then buying the bear. Which is interesting if anything. It's going to be intriguing to see if we go lower on the Bull ETF's. It all seems rally like a healthy move for them all, with still a bit of weakness in the bear ETFs. Just hat I see.
ReplyDelete