The bulls had one heck of a party yesterday, Draghi provided the booze for the punch bowl, and overnight China supplied additonal infrastructure stimulus. The China news is bouncing copper strongly today. Copper was negative yesterday as the large upside rally played out, very uncharacteristic since Dr. Copper leads the markets, he is not a follower. The euro touched the 127 neck line resistance level, now piercing up thru to 127.5-ish, watch this closely as highlighted in yesterday's chart. The analysis was that the euro would stay at 127-ish or lower so this action in real-time now is important. Euro higher = dollar lower = commodities higher = gold higher = equities higher. Simply type 'XEU' into the search box to bring that chart up and monitor the euro's progress going forward.
Markets may try to maintain buoyancy into the German vote on Wednesday and Chairman Bernanke on Thursday. Spain's 10-year yield dropped under the 6% level the first time in many months. INTC lays an egg a short time ago lowering their Q3 forecast; bombshell news that should slap semiconductors today. Watch SOX 391. UTIL 467.35 also remains important today
The Monthly Jobs Report shows an increase of only 96K with an 8.1% rate due to a continued shrinking of the labor force. These poor souls did not find jobs, they are simply being forgotten. Manufacturing lost jobs. The consensus was about 130K so the jobs news is sad. There is never even enough jobs month after month to keep up with the 150K to 175K per month new jobs needed for new workers entering the job force each month (due to population growth and immigration). The unemployment situation is structural in this country and will effect all our lives moving forward thru the years. For today's spinmeisters, the republicans will point to the lower jobs number missing estimates but the democrats will highlight the lower unemployment rate. Media analysts joke around that a 7.9% rate will probably print just before the presidential election--funny how things like that occur, so this will be fun to consider moving forward. Hourly earnings are down and average work week hours are steady. Companies obviously do not need to hire any employees from this data.
The SPX closed above the 5/19/08 closing high at 1427, logging a 4-year closing high. However, price has not yet overtook the 1440.24 intraday high from 5/19/08 so pay very close attention to SPX 1440.24 moving forward. The bulls are in firm control and only need a tiny smidge of green in the futures to start the day with an upside market acceleration perhaps to attack the 1440.24 resistance. The futures are currently green encouraging the bulls to make a run higher. A move thru 1405-1432 is sideways action today. The 1419, 1422 and 1427 levels were all important so back kisses would be in order. The TRIN chart posted this morning shows that a near-term market top is likely, with a potential pull back of from 30 to 50 handles over a four or five day period, should the prior fractals ring true. S&P futures are up five so the jobs number had no effect on markets.
Note Added 9/7/12 at 9:43 PM: The bulls continue the party printing an SPX HOD at 1437.39 thus far. The utilities are running higher. Semiconductors are weak, with SOX dropping under 400, but now back above, only down about one percent on the terrible INTC news. The INTC news was immediately remedied by rose-colored glasses. The VIX closed under the 20-day MA last evening, losing a few extra pennies as the markets closed, and forecasted the further negative slippage today. The VIX is now under 15 printing a 14 handle.
Note Added 9/7/12 at 9:57 AM: Stop the presses! SPX is up 0.2% while the Nasdaq is down -0.2%, so tech is leading the broad markets to the downside. The bears finally officially receive a feather in their caps after the beating yesterday. Perhaps some hammock time, under the oak trees, is in order to ponder the day ahead.
Note Added 9/7/12 at 12:30 PM: Gold is running over 1730 today so it appears 1780 is on its way. The euro is moving upwards to 128 which keeps the broad indexes buoyant. SOX is under 400. UTIL is at 471, negative on the day, and the utilities continue to create a background negative market vibe that will need addressed at some point forward. Markets are supported today by traders looking for QE3 next Thursday. With the weak jobs report today, the majority believe that QE3 is now guaranteed next week. Boy, they will be disappointed. We will have to see how early next week is playing out, but at this juncture Keystone remains in the lonely camp that Bernanke will not act with QE, there is no deflationary worry currently and he will not want to waste his limited ammo. The Fed will probably extend the low rate wording from 2014 into 2015 only using that tiny bullet.
Note Added 9/7/12 at 1:52 PM: The status is quo. Since INTC lowered revenue forecasts this morning, the fight of price, now at 399.63, versus the 20-day MA, now at 399.39, for the SOX, is important today. VIX is printing at the lows of the day. SPX is not printing at the highs, therefore, perhaps traders are very complacent again, having no use for the short side since the central banksters are planning on propping up the markets indefinitely. The broad indexes are likely pricing in premium now based on Bernanke delivering QE3 next week. Also of interest is that the traders are likely taking Germany's approval vote on Wednesday for granted expecting it to go thru without a care or worry. Germany will probably vote in favor of the ESM but there will probably be strings attached and the markets are not pricing in strings. Gold is at 1741. The SPX is moving thru 1435-1437 since 10 AM, a tiny two-point range, the direction out of this range is important. NYSE volume is running a shade below yesterday's volume which was at or below an average days expected volume. Trading volume should pick up next week.
Note Added 9/7/12 at 3:38 PM: Status quo today, markets are traveling sideways to burn off some momo. Tech led the broad markets lower today but the bears could not capitalize. VIX continues to print at the lows, now at 14.34, traders are convinced that there is no need to bring on downside protection.
Note Added 9/7/12 at 4:03 PM: The bulls are relentless today, waiting for the final ten minutes of trading to poke up and out of today's sideways 1435-1437 channel. The SPX closes at 1437.92 at the high of the day. Things are still settling out and the SPX ends only two points away from the important 1440.24 resistance. The VIX closed up off the lows but with a 14 handle. Utilities and semiconductors sold off but remain bullish overall. Traders carry off Draghi on their shoulders as they all head off to happy hour for a celebratory evening, drinking the spiked Koolaid from the monetary easing punchbowl.
KeyMoney is right about the charts of course, but we are looking at something crazy now. 1480 almost for sure, and dare I say it - maybe 1550+.
ReplyDeletePerhaps Zig. Look at gold now at the important 1730, any higher and it will be headed to 1780, which would be in concert with the markets moving higher. The euro pop is carrying the markets on its back. The ECB not lowering rates may be helping the markets more than the bond-buying, since it causes the euro lift, which in turn moves commodities, gold and equities higher. It's all about the XEU, the euro, right now, that is most important, now printing 127.54, at the neckline of that inverted H&S on the daily chart. RSI and MACD line are long ands strong on daily chart with others negatively diverged so it would say down, then back up, then roll over in the days ahead.
ReplyDeleteYes, it feels strangely artificial, as if they want everything to rally everything at once. I'd frankly rather be short, but once they get the commodities going up, they can run for a while.
DeleteJust wanted to add I am out of all short term longs this morning, only because we could certainly peel 10-30 pts down next week.
DeleteKS, what great updates. I agree with every word you see; from how this structural high unemployment is affecting us and will affect us for many years to come, to the artificially propped up -throw money out of a helicopter- markets. Reality will face us sooner or later; or as you wrote "when will forever end".
ReplyDeleteinvestors and the 1% class have made serious amounts of money since the 666 low... funny number huh if one is superstitious.... and the working class??? Well, 1 in 10 or probably even more don't even work, have 0 savings or investments in the market, no 401K, nada. In the mean time we are told to believe that all QE is to create jobs... Yeah right. They'd better given the $2.6Trillion worth of QEs to each and every american household; which would equate to ~$25K per household. Then we'd spent ourselves out of this mess in no time.
Oh well, hear me ranting. In the mean time, don't fight the FED or ECB and go with the flow. I expect, as mentioned many times before, marginally higher highs; somewhere in the 1440s , for this to end.
Maybe a nice over throw to 1460 to make the bull orgy complete. that'd be killer.
Here's a question for KS and anyone else who wishes to respond: the SPX is way above the Bollinger Band, and that usually means price declines back inside, even in an uptrend. There are plenty of indicators showing strength, but NYMO and some other stuff suggests this rally is overdone and needs a dip back in the cooling waters of decline. Mondays often open down after big up days... anyone else tempted to open a wee short here?
ReplyDeleteERY looks very attractive for the next coming two days..
DeleteI often fade deep out of the money reading e.g., BB% -/+ 125 as a short trrm swing trade... Its often very effective
DeleteThere are lots of bearish signals including the TRIN as well, so a pull back would be expected. The spike higher in the markets does have a lot of momo. The high was made at 9:45 AM today. SPX did not yet attack 1440.24. Keystone holds several shorts which help to serve as a hedge against Keybot, and the last two days resulted in no changes to those positions. All the shorts have been beaten badly. At the least, however, some amount of short exposure should be maintained steadily. It's only a matter of how much short exposure you want to maintain. An overnight event is what could really shock the markets moving forward, and the die would be cast before the opening bell rings the next day trapping long traders and causing discouraged short traders to miss out on what they were looking for.
ReplyDeleteThe poke up thru the upper BB sure is something on the SPX daily chart. Outrageous bullishness, euphoria, all traders convinced of continued bullish markets without any worry. Since the upper BB was touched, a move to the middle BB (20-day MA) would be in order, at a minimum, which is currently at 1411. Interestingly, a 25 handle pull back would jive with what the TRIN wants to see.
ReplyDeleteIf we want to use wave theory, we just had a 40 or so wave 1 up, so wave 2 retrace takes us to about 1417. Also I see some big guys getting short up here lol...
DeleteFYI: all out of my SSO position. That was a nice $2 gain per share in less than 2 days. Reason I sold is that I, un-expectantly, have to travel next week through at least wednesday and therefore won't be able to trade. I can put stops in place but prefer peace of mind and be all cash given the big events on the horizon mid week (and won't be able to post here either). GLTA!
ReplyDeleteThat may be a good idea since the CPC printed 0.74 signaling that a significant market top is in place now. It appears counterintuitive with all the stimulus, and QE3 expected in the new week ahead, but, that is what the CPC says. Perhaps bernanke does not provide the result that traders are fully expecting?
ReplyDelete