Greece resolution is reached overnight after continual delays since August. The S&P's bounced to up three but then petered away and are now down one. The euro hit 1.30 overnight on the cancellation of the Egypt pro-Morsi rally today and the anticipation of the Greece deal. Alas, the euro is dropping now to 1.2944. The 10-year Treasury yield is down a tick to 1.65%. The dollar is bouncing higher with the euro weaker. At this juncture, the Greece resolution appears to be a sell-the-news event. The markets continue along with mixed signals. Even the major indexes could not agree on direciton with the Nasdaq up yesterday and the SPX down.
The CPC put/call chart last evening clearly shows that traders are completely fearless with no worries that the markets will sell off. This typically means that the markets will sell off. BPSPX remains on a market sell signal and the NYMO is agreeable to a near term market top.
The SPX printed a hanging man candle on the daily chart yesterday which hints that markets would be agreeable to a trend change, and the last six days show a clear uptrend. Despite the increasingly bearish vibe, markets are always focused on hurting the maximum amount of traders. The Nasdaq futures are up right now with the S&P's down so tech is not leading lower today. Yesterday, AAPL continued higher which kept the Nasdaq elevated and tech leading the broad markets on the bull side, which prevented the bears from making any significant progress to the downside. A quickie jog move could hurt the maximum amount of traders in the hours and days ahead where a sharp down move occurs today, traders jump into the short side, only to see the markets spike vertically, perhaps the SPX to 1409, 1413 and higher, wiping out the short trades, only to reverse sharply again for a strong market down move equalling or exceeding the October-November selloff, which crushes the traders that jump in long. This type of jog move would frustrate bulls and bears alike and most traders would likely miss the intial move to the downside. Perhaps a prudent approach of using key SPX resistance levels such as 1406, 1409, 1413, 1419, 1426 (50-day MA), 1429 and 1433, as levels where longs are exited and shorts are scaled in. Of course, the markets may simply head lower in earnest. The 20-day MA at 1394 is key support and would immediately lead to 1391 if it fails. If the 1391 support holds, the SPX will come back up for the potential jog move discussed above, say to 1409, 1413 or 1419, then roll over. If SPX 1391 fails, the bears are likely on the way with the next leg lower for the broad markets.
For the SPX today, starting at the strong 1406 S/R level, the bulls need to move up and over 1409 and an upside market acceleration will occur immediately attacking the strong 1412-1413 resistance. The bears need to push under 1398 which wil accelerate the downside and set up a test of the 1391 support in quick order, where, markets would bounce or die. A move thru 1399-1408 is sideways action today. Four key parameters are influencing market direction today; JJC 44.90 (now bearish at 44.70), SOX 372.50 (now bearish at 370.63), VIX 15.91 (now bullish at 15.50) and XLF 15.62 (now bullish at 15.68). Any change by any of these four parameters will immediately force the broad markets in the same direction.
The Fed's Fisher spoke about an hour ago and his mention of less QE sent the dollar higher and the euro lower. Fed's Lockhart is also making comments. Also, the top dog, Chairman Bernanke speaks at 8:30 AM EST. Durable Goods are 8:30 AM. Case-Shiller House Price Index is 9 AM and the housing sector greatly impacts the Fed's game plan moving forward. The FHFA House Price Index, Richmond Fed Manufacturing Index and Consumer Confidence all hit at 10 AM which will create a market pivot point. The demonstrations against Morsi will go on today in Egypt so traders will be watching the television screens to see if the rioting grows ugly, or not. The 2-Year Note Auction occurs at 1 PM.
Now that the Greece debt plan is achieved, and Egypt and Gaza may remain somewhat calm, all eyes will focus on the Fiscal Cliff. The political bickering is ramping up again with the right referencing the radical liberal left in their speeches, and the left remaining in campaign mode on a mission to tax families making over 250K, in other words, the poisonous political atmosphere remains in place just like before the election. In a nutshell for today, watch JJC 44.90, SOX 372.50, VIX 15.91, XLF 15.62, SPX 1409 and 1398, as well as the market pivot that will occur at 10 AM, and, of course, as AAPL goes, so goes the markets.
In the past, I would have listened to "experts" on things like the debt ceiling, QE2, and QE3. They were wrong 100% of the time. When it comes to the fiscal cliff, I don't listen to them anymore. And in my unqualified opinion, we actually have a pretty good chance of going over the fiscal cliff. I'll be waiting at the bottom.
ReplyDeleteIt does appear that both sides have scenario's where a ride over the cliff would be agreeable to them. Especially since the general consensus is probably over 90% that some type of resolution will occur. Keystone thinks the cliff is more and more likely but the political rhetoric will have to be gauged moving forward. Perhaps we are at about a 50/50 chance now which is far above what anyone else will say. Also, the scenario many do not think about, is that a resolution is achieved, but it may be weak or confusing, and even with that agreement, we all jump off the cliff anyways. It is all so sick. The markets are not free markets that is for certain. Some countries, like the U.S., however, may have more free markets as compared to another country, but free markets do not exist, the central banksters destroyed all hope of free markets. To use a hip phrase, the markets are zombie markets now.
ReplyDeleteThe market spiked because someone sent a letter.
ReplyDeleteHow lame can you get?
This market is really frustrating me right now.