The strange days continue, cue The Doors. In a nutshell, Keybot the Quant remains short but will flip long at SPX 1420.34 today if this level holds a few minutes. SOX and XLF are firmly bullish. VIX remains above 15.85, bearish. The 10-year is at 1.62%. The SPX is printing 1416.20 right now. The Nasdaq has turned red so tech is leading lower. The markets are very erratic and unstable. Typically it is best to watch in these markets. If the bulls can grab 1420+ they will be able to run with the ball. Until then, the mixed signals and odd market behavior continues. The 50-day MA is 1417.07, use this as a major bull-bear signal today. Consumer Sentiment was surprisingly weak but markets spiked higher on the pivot, then rolled over.
Note Added 12/7/12 at 12:41 PM: Status quo. Speaker Boehner laid an egg at 11 AM saying 'no progress, the Whitehouse has wasted another week, the president is slowly walking us to the cliff, Geithner's comments were reckless, the president's plan results in trillion dollar deficits forever'. Perhaps next time he will tell everyone how he really feels. The SPX dropped about three handles and the comments created a negative market tone. XLF is near 16. SOX is leaking off the highs but remains elevated at 377. VIX is at 16.40-ish, the confluence of the 20 and 50-day MA. Use this as a bull-bear signal for today. VIX above 16.40 is happy bears, below 16.40 is happy bulls. Friday's markets typically experience some buoyancy in the afternoon as short traders pare back positions due to event risk on the weekend, which would typically be positive market news occurring. So markets may float upwards over the next couple hours. Watch to see if the bulls can attain 1420+ today, or not. The strong 1413 support is holding. The 50-day MA at 1417.08 is overhead resistance. The 10-year yield is 1.62%. Nasdaq and RUT are negative, the SPX and Dow Industrials are positive, thus, tech and small caps are leading the broad markets lower. AAPL is down -2.6% today but is now trying to make a run off the bottom. The beat goes on, cue Sonny & Cher.
Note Added 12/7/12 at 4:13 PM: Status quo into the close although volatilty fell like a stone. The VIX came down to threaten 15.85, closing at 15.88, perhaps still settling out. The bulls pushed the markets higher in the afternoon as would be anticipated. No great shakes today, SPX 1420 will be important come Monday, and obviously, since the VIX came down for the bull-bear line in the sand, whichever way the VIX moves after Monday's bell, the broad indexes will move opposite. The 10-year yield showed some life today jumping to 1.63%. AAPL is near the Death Cross, but not yet. The 50-day MA is 597.89. The 200-day MA is 597.45. Thus, the moving averages remain 44 pennies short of crossing, so Monday appears the day the Death Cross occurs for Apple. There is no doubt that the bulls are pricing in a positive solution to the fiscal cliff. TRIN prints 0.51, three uber bullish euphoric buying days in a row, that simply does not occur often. The markets need to sell off to relieve the excessively bullish buying and force the TRIN back above 1.00 for a day or two. The SPX closes at 1418.07 above the 50-day MA at 1417.16, a feather in the bulls cap. This test of the 50 is important since now price must decide to either stay above using the 50-day as support moving forward, or, collapse in failure. The answer occurs early next week.
Cue led zep....communication breakdown, good times bad times, no quater...
ReplyDeleteThat's a hell'uva H&S formation developing on a VIX 3 month chart. Target around 10 if executes.
ReplyDeleteSean
Perhaps Sean, but it is best to use H&S's during uptrends and especially at tops. At bottoms it is better to look for inverted H&S's. So, for 2012, the inverted H&S may be more in play since a spike up in VIX is long overdue, especially since volatility should be picking up this time of year. A head at 13 and neck line at 27 would target 41. If a high 41 is printed in the coming days or weeks, that would correspond to a huge markets selloff. In mid 2011, the VIX launched and once the 20 was above the 50 was above the 200, the rocket boosters kicked in. As always, timing is tricky. Simply using the 200-day MA at 17.51 would be an important level to watch moving forward.
DeleteI'm short.
ReplyDeleteDoesn't this market know it has to die now?
Barring major news, I look for us to move sideways the rest of the day. The VIX has been trending down but not enough for the bulls to run away with it.
ReplyDeleteVIX came down for a look but did not break thru the 15.85 to close under. So the bears still have this one in their camp, albeit by pennies. So for Monday morning, market dirction is easy. If the VIX launches higher, markets sell off, if the VIX drops at the open, the markets will catapult higher, the VIX will jump thru 1420 and run towards 1429. So the bears must stop a drop thru VIX 15.85 (this number may change slightly), and at the same time prevent a move up thru SPX 1420. Bulls will be pushing the other way. TRIN is uber low three days in a row which you never see.
ReplyDelete..that should be the SPX will run up thru the 1420 and onward to 1429 if the VIX drops under 15.85....
DeleteKS, what does the death cross of the 50 and 200 on AAPl, or any stock, historically mean, and what percentage, if you know, is it correct for that occurrence.. thanks
ReplyDeleteNothing much. The folks on television that shout about the Death Cross for AAPL, and Golden Crosses, are armchair technicians. For short-term trading, the crosses are useless. They do tell you the intermediate term trend, think weeks, so it is a useful technical indicator that definitely tells you a stock is weak and in trouble if the 50-day is under the 200-day MA (death cross), or the stock is looking good with upside ahead for the golden cross (50 above 200). So do not pay much attention to it. Use the other tools that are written about on this site daily to trade Apple or any other stock, the death and golden crosses are simply a nice intermediate term indicator, not much more than that.
Deletethanks much as always
DeleteThe cherry on top of the pie would be the market to drop hard during and after the FOMC meeting next week ... in this crazy markets nothing really might amaze me ....
ReplyDeleteV.
(totally disappointed of the Friday market movement ...)
:(
Friday can be treated as a non-event, markets would have stayed flat all day long but the typical Friday buoyancy pushed markets higher into the close. Monday may be an extremely eventful day in the markets. Watch VIX 15.82 like a hawk, it will give you the answer at 9:31 AM Monday.
ReplyDelete