Futures are up strongly ever since last evening moving steadily higher from up four to now up almost nine S&P's. This action points towards a test of the critical 1366-1369 area as highlighted in this mornings charts. The bounce in the futures is credited to the happy talk concerning the fiscal cliff delemma, however, it is far more likely an anticipatory rally ahead of the Greece decision tomorrow. The European leaders have promised a solid decision on Greece for the last four months, continually delaying the decision again and again, the latest delay moving the date from 11/12/12 to tomorrow. The markets are sick of all the European dilly-daddling, as well as sick of all the central bankster intervention which have destroyed confidence in the markets, so traders are providing one last chance for the Euro leaders to get it right tomorrow for the Greece decision. If a snag occurs and the Euro leaders once again punt Greece forward, the broad indexes will likely sell off strongly. If Greece resolution is announced, the markets will likely remain happy into this time next week.
The charts are not convinced that the SPX 1343 is an adequate near-term low. Nonetheless, the charts did display positive divergence among some of the indicators to intiate the Friday bounce in the broad indexes. The key level is the 12-month MA at 1368 which decides if the markets are in a cyclical bear market or cyclical bull market pattern. Last week the broad indexes slipped into a cyclical bear. The bulls will show that an upside recovery rally is real if they can take the SPX over 1370 and higher, otherwise, they got nothing. The three key parameters to watch today are SPX 1369 (the 1366-1369 gauntlet), NYA 8000 and VIX 16. All three are contributing bearishly to markets to begin the week. If any of these three flip to the bull side, that would confirm the upside rally, and the degree of strength of bullishness can be measured by the extent of if one, two or all three of these parameters turn bullish. If all three turn bullish, there is no doubt that the bulls will be running and likely right into the holiday, and also, Keybot the Quant, Keystone's algorithm, will likely flip long. If the market move higher results in one or none of the three parameters changing, then the rally move will be short-lived and likely peter out and roll over.
The 10-year yield continues to move sideways at 1.61%. Money is not moving from bonds to stocks. This rally move today is likely traders simply playing a market bounce. The retail sector appear desperate with retail sales appearing everywhere and stores extending hours every way possible. Typically, the Monday's after OpEx Friday move opposite to the Friday move, which was up. Thus, weakness would be expected but the futures currently disagree. Seasonality-wise, markets are typically bullish the two days in front of Thanksgiving, and the shortened-session on Friday is one of the top highest percentage bullish days of the entire trading year. Interestingly, last year we were in the midst of the November sell off at this time and markets were actually weak during Thanksgiving week and bottomed on the Monday following Thanksgiving. So the battle zone is set for today at SPX 1366-1369. Bulls win at 1370 and higher. Bears win under 1366. Pay attention to NYA 8000 and VIX 16. These parameters will dictate market direction today. The bulls will rule if the 8 MA stays above the 34 MA on the 30-minute chart, if the 8 MA reverses and moves back under the 34 MA, the bears will rule moving forward. LOW earnings beat handily so this reinforces the positive vibe to start the day.
Looks like we're already printing 1371. Like you, I say it has more to do with Greece than the fiscal cliff. The news media likes to hand out explanations like toothpicks. On the fiscal cliff front, I don't really see this "Rising Hope of Avoiding the Fiscal Cliff", like the hacks over at CNN are talking. Grant it, we're damn stupid if we go over the cliff, but I don't really see anything different today than a week ago. Same congress, same President, same arguments. Maybe we'll solve it yet, but I don't see these cosmic mood enhancers that they speak of.
ReplyDeleteKS,
ReplyDeleteIf you could recommend a book on technical analysis, what would it be?
Jan, there are a lot of them out there, and every book seems to give you differnt tidbit that is important. As a starting point, use the www.stockcharts.com web site. Click on the tab that says "Chart School." Study all the info on the stockcharts.com site and that will get you moving in the right direction with trend lines, channels, triangles, wedges, head adn shoulders, cup and handles and other indicators. Also, you can punch in a ticker symbol and bring up any chart you want from there so it is more like interactive learning and is probably better than any books. Murphy's book on TA, and Yamarone's on economic indicators are good. There are many books to review. You can always visit the book stores and review many books before you buy them (if you are in the States).
DeleteAnd Keybot turns bullish?
ReplyDeleteMy TA is only mediocre, but if you ask me that has the ears of a bear market rally. That can't hold.
ReplyDeleteHello all, yep, Keybot flipped long at the open, SPX 1369, NYA 8000 and VIX 16 gave way so that verified the bullish happiness. It does appear to simply be a dead-cat bounce style move but regaining the 12-month MA is no small feat, that gives the bulls street cred, so continue using 1369-ish as The Decider, right now back to a cyclical bull.
ReplyDeleteVery simply use VIX 15.95 and XLF 15.61 as your guides today. Bulls need XLF over 15.61, bears need the VIX over 15.95.
This is a bear market rally and will end by next week.. Vol is not confirming a bull cycle and neither does the VIX. If you review bearish advisor report that actually went down this week which means their were very little short sellers in this drop. This rally were sucker longs getting sucked into believeing the bull market will continue. IT WILL NOT and new lows will be made. Sell once the spx gets close to 1400 by Tuesday. XLF will roll over. by tuesday
ReplyDeletewhat does the xlf have to do with the market. The financials are being manipulated by the money printing. A better gauge is the homebuilders
ReplyDelete