Juncker (Head of Euro Group) and LaGarde (IMF) clash in public over the upcoming Greece debt deadlines of 2020 versus 2022. The disagreement is the first public display of tension between European leaders disrupting the relative calm in recent weeks. Merkel is in Portugal where protestors negatively greet her with signs and slogans such as "Hitler Go Home!" The euro falls under 1.27 and is now printing 1.2678. Spain 10-year yield is up to 5.94%. Thus, the turmoil on the European continent is causing global weakness, the S&P futures are down from 8 to 12 points over the last few hours. Yesterday's action is one of the lowest volume days of the entire year so today things will get back to normal. The dollar is moving up with copper, commodities, and to a lesser extent, gold, are lower.
The NYSE had a glitch with orders yesterday (more flash crash worries). The NYA was not printing properly until after lunch time. Continue watching NYA 8003, now at 8054, since the failure thru 8003 signals significant and extended market trouble moving forward. The VIX dropped thru the floor yesterday. If the VIX stays above 16, the bears are fine. A move under VIX 16 will verify that a strong upside rally is in play. The SPX 1391 resistance is another key number where bulls will show they have strength moving foward if they can punch thru and use 1391 as support.
For the SPX today starting at 1380, the bulls need to touch the 1385 handle and an upside acceleration will occur that will immediately test the important 1391. The bears have an easier path only needing to drop three points, under 1377, to accelerate a downside move. SPX 1369.44 level is the line in the sand, the cliff edge, the waterfall edge, whichever analogy you want to lose. Under 1369.44 and all hope is lost for market bulls. The markets will be technically damaged for an extended period forward. If the bulls can hold 1369, they will be singing a happy tune into Thanksgiving. The futures currently point towards about a ten point drop for the SPX which would test 1369-1370 at the opening bell, where both bulls and bears will realize their fates, but the opening bell remains three hours away and key retail and other earnings are on tap.
HD releases earnings missing on the bottom line but beat on the top line. The futures are not impressed. KORS, SKS, TJX and other retail earnings are on tap today. CSCO reports after the bell and CEO Chambers is always enlightening with his comments, one of the few CEO's that give you the good and bad news. NFIB Small Business Optimism hits at 7:30 AM about an hour away. This evening is the new moon and solar eclipse. Markets are typically weak into the new moon. However, for OpEx week there is typically a bottom that can be bot for a long trade from a Tuesday low into a Wednesday high.
The futures remain stubbornly lower. If 1369 fails as described above, the two scenario's mentioned in the SPX S/R missive this weekend will be in play, either a waterfall crash like August 2011, or, a false break down, where the SPX will drop like a stone but bounce off of one of Keystone's support levels such as 1358, and the markets will immeditately recover and spike higher. Lots of excitment is on tap for today. The 10-year Treasury yield is at 1.58%-1.59% this morning; the 1.70% and higher yields are a distant memory from only a few days ago. Dr. Copper is back in sick bay.
Note Added 11/13/12 at 6:43 AM: Things change fast in trading. There must be some good news in Europe now. Euro jumps to 1.2713 and S&P futures are now only down five.
Note Added 11/13/12 at 8:35 AM: The SPX drifts lower now down 8. The euro is 1.2684 back under 1.27. Use the euro as a bull-bear guide today, bulls win above 1.27, bears win below 1.27. The 10-year yield is 1.60%. NFIB Small Business Survey was flat showing business people unable to make decisions with all the turmoil and uncertainty. Add in higher health insurance and regulatory costs, and costs to pay attorney's to study the new taxes, fees and regulations, and do not expect hiring to pick up any time soon. The Nasdaq is now leading the S&P's lower so this is bear friendly. HD offered up some fuzzy math and say their bottom line beat afterall so the stock catches a bid.
Any thoughts? http://stockcharts.com/freecharts/gallery.html?$UTIL
ReplyDeleteLights out for those utilities, lots of traders selling to avoid all the taxes coming due to the reelection. The utes were of much greater interest this year and about a month ago, now that they have collapsed, not so much. They are a negative indicator for markets.
ReplyDeleteWhen the broad markets tumbled in May, a top that Keystone had called, although we had to let a few weeks play out for it all to roll over, and the markets fell lower, the utilities did not lead the parade lower. The larger market falls occur when utes lead the broad markets lower. Thus, we knew that the May selloff was not the strong leg down and markets would recover, and they did.
Three months ago, the utes topped and rolled over from UTIL 500. That told you that the utes are leading the broad markets lower, of course the SPX was busy making new highs as UTIL started down. Once UTIL lost the 50-week MA that seals a negative fate in for markets. So the utilities told us the current action was coming, and here we sit. So utes will not tell us a lot more from here unless the 50-week MA is taken out to the upside, that will signal the bulls back in good shape.
Watch the VIX 16 level, bears are fine above, a market rally will be verified if VIX drops under 16. This action will also impact Keystone's SPX:VIX Ratio Indicator. Watch to see if the SPX:VIX drops under 68, if so, that will correspond to another 100 to 300 point drop in the Dow Industrials.