The ISM Manufacturing Index disappoints reporting 49.7 for June, far lower than the 53.5 for May and under the ctitical 50 level. Construction Spending was positive but ISM carries more clout. Markets tumble lower on the news losing about five S&P handles for the intial move. Since the bulls had a smidge of green in the futures before the U.S. open, the markets jumped to a HOD at 1366.35. The 1366 is key resistance so it has held for now. A move up thru 1366 will lead to the test of the important 1370-1372 as highlighted in this mornings chart.
The SOX, JJC and CRB are all under the levels provided this morning, thus, the market bears do not plan on giving up easy. Keep an eye on the NYA 40-week MA at 7718, with price now at 7768, fifty points above. If the NYA falls thru 7718, the markets will weaken considerably for another leg lower. If the NYA stays above, the markets will want to line out sideways. The SPX is at 1358. Remember, 1358 is very strong support from the action last week. Losing 1358 will lead to 1356 then 1351. The 20-week MA is 1360.16 and the 100-day MA is 1359.65, the SPX fell thru both of them as this message is typed. Today and tomorrow will probably be a couple of lazy hazy days of summer.
Note Added 7/2/12 at 3:23 PM: The CRB is no longer of interest to Keystone's algorithm; the level of interest leaps to 298 so commodities can be considered to be bearish. Copper, JJC, dropped at the open today, under JJC 44.35, which remains the level of interest, creating the negativity and drag on the broad indexes today. Semiconductors, SOX, are dictating market action currently. Watch SOX 383.50, these levels are constantly recalculating and changing, below and the bears will push the indexes lower, above, and the markets will become buoyant. SOX is now printing 383.28 which is bearish for markets. Watch semi's very closely into the closing bell.
Note Added 7/2/12 at 3:42 PM: Note the SOX moving above 383.50 about ten minutes ago which provides the market push higher.
Note Added 7/2/12 at 4:00 PM: SOX ran from 383 to approaching 385 in the final half hour of trading creating the market buoyancy. A light volume day occurs today as expected. Uneventful action although copper weakness is very important since Dr. Copper is a market leader.
Lazy volume days ahead for sure this week... Yawn... Reaction to disappointing ISM data was muted IMHO, showing the uber bullish mentality there is now since late Thursday. Given the negative divergence, that KS pointed out, this arrogance will be spanked down soon when the bear has recovered from Fridays beating. Given they ISM went from slightly expanding to slight contracting is a bad sign and shoukd have been greeted with more selling IMHO, so that will come soon, but first a higher high (maybe 1366 was it!?)
ReplyDeleteWhat is your opinion on the ECB rate decision this Thursday and Bank of England easing will keep the market moving forward to 1400s? Thanks guys for your input!
ReplyDeleteNot sure, maybe this is already baked into the market due to Friday's rally. I think the domestic data (if jobs data is also weak) will have to sink in somehow. Now this bullishness needs to burn off first.
ReplyDeleteHello all, the ISM was weak and should have done more damage, but traders are on vacation and content with floating the markets sideways thru the holiday. We will see if this task is accomplished into the early close tomorrow. ECB 25 basis point rate cut is probably priced into the markets currently, perhaps even a bit more towards a 50 bip cut. Thus, if the 25 cut occurs early Thursday morning, markets should be unreactive. No cut and a large sell off should occur. More than 25 bip cut should send markets higher. Thursday and Friday is where the market action should occur this week. The jobs report is a crap shoot. The weakness with the jobs numbers should continue and a more optimistic outcome is probably priced into the markets currently. Copper and commodities are bearish again, as measured by Keystone's algo. SOX is the most impirtant sector as this message is typed. SOX 383.50 will tell you market direction today into and thru tomorrow. Above is happy bulls, below is happy bears.
ReplyDeleteI don't now what market you are looking at, but the Bull is definitely back, the ISM had no impact. 1358 held and lifted off like a rocket, bears better run for whatever reasons. This is headed to 13000.
ReplyDeleteSince you're making comments here, you must be relying on Keystone's website for technical readings.
DeleteIf you are smart, show your input...troll!!!
Just wait 'til mid-November and 2013, the bull will get killed and QE can't even rescue them!
Day and night we go higher and higher
ReplyDelete