JCP lays an egg with earnings last evening. This should help keep the retail sector, RTH, under 41.38 favoring the market bears moving forward. Global markets are weak overnight. Silver is printing the lows of the year. Gold is now in a bear market, over 20% off the top. Rubber is at a four-month low signaling a slowing global growth environment. Rubber makes the world go round, literally, if rubber demand falls, that says the auto makers, and, more importantly, the large earth-moving machinery and truck manufacturer's are seeing slower demand. This means less auto sales, less shipping, and less site development work, which means infrastructure, roads, and real estate development are lackluster. All this is negative for markets.
S&P futures were down 6 or 7 handles a couple hours ago but have since recovered to the flat line. Markets are very jumpy since Greece is traveling down a Lehman-type path. The European markets have given up the 2012 gains with the exception of the DAX. The dollar is up 12 days in a row, perhaps a baker's dozen today? The asset relationship favoring bears has been in play; dollar up = euro down = commodities down = oil down = gold down = silver down = copper down = equities down. Deflationary type behavior.
The most important event technically yesterday was the NYA stabbing under the 40-week MA at 7628. This is one of Keystone's secular indicators (reference the Secular Turn Signal page on this site) that indicates markets are falling into a secular bear market pattern. The NYA recovered back above this critical moving average to close at 7636. Watch this closely today and the days ahead. Similarly, Keystone uses the SPX 12-month MA as another secular forecasting tool. The 12-month MA is 1295 and the SPX closed yesterday at 1331. Thus, the SPX would need to lose another 36 points to signal a secular bear market pattern. If both the NYA and SPX fall into a secular bear pattern, bearish markets will have staying power and Chairman Bernanke will be ready to announce QE3.
Keystone's Inflation-Deflation Indicator is 289.14/99.859 (CRB/10-yr price) = 2.896, remaining under 2.90 by a hair signaling that the economy is now in Deflation. Bernanke will announce QE3 when the CRB is between 250-280 so there is plenty of drama ahead. Remember how Keystone mentions the utilities often and especially the fact that markets moved lower without the utes leading or moving coincidentally lower. This hints that markets need to recover to provide the utilities an opportunity to lead the markets lower and verify a more sustainable and extended downside path ahead once the utes do lead lower. UTIL is showing weakness this week but at 468 remains well elevated above the danger level of 451 for this week.
For the SPX today, starting at 1331, the bulls need to touch the 1345 handle to accelerate the market upside, a formidable task. The bears only need two points lower, to push under 1328.50 and the downside will accelerate. A move thru 1330-1344 is sideways action. The strongest support and resistance levels for the SPX are 1337, 1333, 1331, 1329, 1326, 1318, 1316 and 1314. Housing Starts hit in a couple hours, this is one of Keystone's key monthly data numbers and will move the futures markets. Oil Inventories are at 10:30 AM and the FOMC Minutes will provide afternoon drama and a market pivot point at 2 PM. Greece dominates the news.
I can't really read the MACD histogram for gold. Now that it's matched the December lows, do you see any positive divergence? Or are you staying away from gold until a QE3 announcement (as deflation continues to take hold and the $USD rises in the meantime).
ReplyDeleteHello Weaver, on the daily chart, indicators are all weak and bleak lower lows as price makes lower lows, but, the MACD histogram you mentioned, is slightly positively diverged, this hints that the price drop is trying to pull up. Since price is lower than December lows however, where the indicators are all weak and bleak again, with the exception of the histo, you have to figure lower prices are coming, but possible basing is ahead. on weekly, descending triangle in play so up to 1660 again and then down to these levels, then potential collapse to 1200-ish. Maybe the bounce occurs in concert with QE3.
ReplyDeleteHey KS, been a while, but still following your posts religiously (ok, that's an over statement...lol) and I've started some gardening too: good for the soul, and have been nurturing my short positions well...with lot's of water and fertilizer... hehehe.
ReplyDeleteI find it interesting to see how the market kinda slowly moves lower and lower, grinding through resistance by resistance level. No real panic yet, still kinda complacent... What's your take?
Hello Arnie, yes, a slow drain lower. SPX 1326 is important, if it fails, price will drop to 1314-1318, then from there 1300. NYA 7628, RTH 41.38 adn SPX:VIX 68, as well as the 8 and 34 MA on the SPX 30-minute chart are the great guides forward right now. These markets are too erratic and jumpy, one can only use these tools and see how it goes each day. Lettuce, cucumbers, spinach, beans are real easy to grow, tomato's as well. There is a virtual Garden of Eden here growing, fertilized by Keystone's B.S.
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