The Consumer Confidence number beats expectations printing a reading above 70 and the broad indexes bounce higher on the news. This number places the confidence at levels not seen since February-March as the markets topped last time. The SPX is up thru 1461 so the bulls are looking for further upside, the HOD thus far 1462.71. The 8 MA remains under the 34 MA on the SPX 30-minute chart, bearish, but continued market bouyancy will change this picture as the day moves along. UTIL is 477 and SOX is 389-ish, both well under the levels the bulls need to sustain market upside, 483, and 395, respectively. Thus, as long as UTIL is under 483 and SOX under 395, the market bulls have no where to go. If the bulls break thru either one of these levels, that is a different story.
Both the SPX and COMPQ are up exactly +0.4% so tech is coincidental with the markets and not leading the upside, which hints that the upside has no legs. The beat goes on. Spain needs to put everyone out of their week-long misery. The minute clarity on Spain is provided, the markets will choose a direction.
Note Added 9/25/12 at 12:21 PM: UTIL and SOX continue to lounge around in the bear camp so this keeps any upside market move in check. Tech is slightly leading the broad market higher as the day moves along which helps the bulls maintain market buoyancy. VIX is flat. The 8 MA remains under the 34 MA on the 30-minute chart and now the 8 MA is curling back downwards in concert with the SPX leaking lower, now printing a 1457 handle. The bears remain in control but Spain is going to tell the driver which way to go. Watch the 10-day MA at 1457.85, above or below will tell you who is favored as price meanders along.
Note Added 9/25/12 at 1:47 PM: The SPX is falling thru the lower trend line at 1455-ish shown on the 30-minute chart this morning which would signal a reversal of the three-week September uptrend. If price continues lower, the two-month lower trend line for price would be the next downside support target in the 1435-1445 zone. That zone failing would constitute a serious rupture and failure of the bull rally. Tech is now leading the broad market to the downside. Perhaps trader's are no longer willing to wait for Spain. The support in this area is 1453, 1448 and very strong support at 1446. The euro is 129.46 helping the bulls keep the markets elevated. The bears need to see the euro move down to 129 and fail underneath which would create market selling. The business news channels report that Spain will make a budget announcement on Thursday, so the anticipation is that trader's will hear Spain's plan concerning a bailout between now and then.
Note Added 9/25/12 at 3:14 PM: Whoopsies daisies, the markets slipped on a banana peel. Here's the test of strong support at SPX 1446. The 20-day MA at 1436.70 wiill likely serve as an additional target as the hours and days move along. Earnings continue to receive mark-downs ahead of reporting season. Spain images of riots are on television further fraying trader nerves. Support in this area is 1446, 1444, 1441, and 1440. Yesterday the island reversal vibe was discussed for AAPL. Price is at 677, the bottom of the island. If Apple collapses from 677 down to 670 and lower, in a heartbeat, that would create an island reversal. Bring up a 2-hour chart and check it out. VIX tags 15. SOX is at 380 now, an epic collapse from 395 in only a couple days; weak semiconductors creates strong market negativity.
Note Added 9/25/12 at 9:03 PM: The 1440 support held late day. Fed's Plosser said QE3 will not spur growth, the television screens are lit up with Spain riot footage and the homebuilders are downgraded, a triple whammy affect that buckled the markets. Spain will be the key focus tomorrow. European fears have jumped back to the front burner today. The TRIN closes at 3.08, an uber bearish level which begs to see a market bounce to alleviate the bearish pressure. However, the uber high TRIN ususally comes on a day with an uber low NYAD (-2000 or lower), but the NYAD only printed -1400 today. Thus, the TRIN may want to stay elevated to allow the NYAD to experience some additional downside pressure tomorrow, then the TRIN and NYAD together can help create a dead cat bounce for the markets after the low NYAD print occurs. The euro continues its drama at 129. Below 129 will usher in more market selling. The bulls need to keep the euro above 129 and move it higher to help the equity markets recover. If the futures are even only a hair negative come tomorrow morning, the bears will accelerate the downside move after the opening bell. The bulls will try to keep the futures green with all their might.
There isn't a date on the Spain announcement right its just a matter of them figuring it out that its game over?
ReplyDeleteLots more background here, MCAP:
Deletehttp://blogs.marketwatch.com/thetell/2012/09/25/how-long-will-the-spanish-market-inquisition-go-on/
Yep, there is no date certain on anything involving Spain. When Draghi fired his bond-buying bazooka the makrets exploded higher. In the fine print is that the country must request a bailout, for the ECB to actually go in to buy the short-end notes, when the country requests the bailout, that is code for the country having to agree to conditionality if they want the dough. That conditionality will give up part of Spain's sovereighnty. You can see why they are toiling over the decision. The problem is the markets assumed that Spain asking for the bailout was a given and would happen directly after the Draghi bazooka.But right now all Keystone hears is crickets in the background. As the days move forward the markets are becoming concerned and they need to see Spain belly up, give up their sovereighnty, agree to conditionalilty, and receive their bailout. If Spain balks, the markets will sell off. If Spain delays the markets will sell off. A couple weeks have gone by now, and silence. The markets are no longer willing to wait. Talk behind the scenes is that a bailout request may come on Thursday, so the markets are probably willing to wait two days more, but that is going to be it. Thus, we wait.
Deletebeing from Holland, and having had a spanish girlfriend, I can say those spanish are one proud, stubborn nation (hell we fought for 80yrs against them 100s of years ago, they never gave up; and did I mention that in our national Dutch anthem we sign "we are loyal to the Spanish king"???). Giving up their independence for money will be a real hard sell. Unfortunately, with Spain's rates creeping up again, I am afraid there is no other way out politically.
DeleteKS, I like your continuation triangle. in EWT that's called a triangle correction, with 5 subwaves a,b,c,d,e. IMHO we've now completed waves a-d, where a=1450, b=1467, c=1452 (yday's low), d=1463 (tday's high), and e should finish somewhere in the 1455s area. As one can see, it seems as if the SPX is now working on that e wave. Once the e wave is complete, then a higher degree 4th wave is complete and a final wave 5 can commence, which would be right in line with spain asking for a bailout.... News, classic TA and EWT all combined into one singular outcome!! BEAUTIFUL
ReplyDeleteThat is interesting, for TA, the target is calculated by using the vertical side of the triangle so using the starting point at 1450, that would be a vertical side of about 20 handles. so a break above say 1462 would target 1482, the break out the bottom at say 1455-ish, would target 1435-ish, which is attractive support from about a week ago. The 10-day MA is 1457.95, call it 1458 so the price action here will show a favorite side.
Deleteps: not saying that's 100% certain. It's the highest probability count for the moment. Any break down can be morphing into another count so, per usual, one always has to trade according to the tape action and not according to what one thinks the tape action will be!!
DeleteThere's our little flush...down a few more points maybe to es1440 then we can all go long next week ;-)
ReplyDeleteKS, yes I think "classic" (it's not really classic, since it's constantly developing) TA and EWT (which is as old as classic TA actually, hihi) get to the same things but differently. I think using these different tools, traders can make pretty decent predictions. EWT is cool and accurate if it works, but it all depends on what the most likely count is. TA is more solid imho as the market seems to adhere to trendlines, triangles and support clearer than wave 1,2,3
ReplyDeleteSpain will make a budget announcement on Thursday so trader's will be looking for an answer concerning the bailout. If the markets leak any lower, they are giving up waiting and will start to push things south. SOX down to 384, chips are crumbling, like smashed potato chips.
ReplyDeletethanks all
ReplyDeleteIf ES 1443.25 holds for today, you might be able to get back in short at 1449-50ish.
ReplyDeleteKS, shouldn't we also get a back kiss of that lower trend line at 1455-ish?
ReplyDeleteYes, but the other lower trend line on the couple month basis is lower at 1435-1445, where price is starting to violate now, so perhaps an even larger collapse south is on tap then price would come up to back kiss this area, but, the short answer is yes.
DeleteAnother thought is that traders were willing to ride this market up day after day and ratchet up stops but when everyone and their bro is doing that same thing, there tends to be air underneath when things turn.
wow, covered down here at 1439 ;-). That was quick and gruesome.
ReplyDeleteSince price ventured down today a test and touch of the 20-day MA at 1436.71 would be prudent, at that support test, price can decide up or down. The 20 is also the middle BB so this would satisfy price coming back to at least the middle BB after violating the upper BB as was shown in the charts the last few days.
ReplyDeleteMr Keystone,
ReplyDeleteTRIN is above 2.
What do you make of this... buy signal?
Yes, in fact the TRIN closed at 3.08, so a market bounce will be needed to burn off some of this uber bearishness action. An updated 30-minute chart was posted this evening and it forecasts further downside. Thus, considering the collapse today, and the high TRIN, a dead cat bounce would be in order, but it is likely not something to buy, not even for a quickie trade, since the SPX probably wants to test 1435-1440.
DeleteUsually the TRIN and NYAD are kissin' cousins, when the TRIN prints an uber high like today of 3 or higher, the NYAD would be expected to print an uber low of -2000 or lower. The TRIN printed 3.08, but the NYAD only made it down to -1406. The action probably caught a lot of long traders by surprise. After all, they were repeating the mantra 'don't fight the Fed' in the lunchroom while they stuffed jelly donuts into their face. What may happen is the the TRIN can stay elevated tomorrow at say 2 or higher, and perhaps the NYAD catches up printing a low -2000 or lower and that may set up the dead cat bounce. You have the right idea but the high TRIN would be signaling a reversal more if the NYAD would have printed a lower number as well.
nice, nice, nice. The abcde count is off the table as prices collapsed below the proposed "a level" of 1449. So something else is going on. 1440-1435 is indeed next stop. Sold my shorts too early..., did a low-risk re-entry at where I though e would end (1453s) and got stopped out when 1449 was violated. Cool beans. Back to shorts again
ReplyDeleteFinally got the TRIN to correct from 9/13. They took their sweet time this time.
ReplyDeleteBPSPX topped at 79.50 so taking off six is 73.50 where a market sell signal would be confirmed. A dip back under 70% would be a strong market sell signal but it remains elevated above here.
ReplyDeleteSPX:VIX ratio is 93 so it remains elevated due to the VIX remaining low relatively. If the VIX gets off its duff and starts jumping higher, which it should, the SPX:VIX should fall much faster setting up a potential show down at the 68 level in the days and weeks ahead.