CAT earnings were in line after the China shenanigans were backed out. The guidance was lower, however, as well as extremely broad, so broad where it is of no use. CAT promises for a better second half of Q3 and that is good enough for long traders; the Koolaid tastes great with CAT up over 2%. Copper is flat on the day so perhaps the commodities traders are not convinced of the happy talk. JJC is 46.17. The bull-bear line is 45.80 so copper continues to add bullish strength to markets. Of great interest is the big drop in CAT's back logs which are not a healthy sign. In a true recovery you want to see folks beating down the doors demanding equipment, instead the back log of work is shrinking year on year. The 10-year Treasury yield hit 2% today, so dough is moving from bonds to stocks and the tentative move to embrace riskier assets continues. The Durable Goods were better than expected which encourages bulls but the Pending Home Sales were much weaker than expected encouraging bears. The markets are continuing to prefer the good news and ignore the bad news. Lo and behold, the VIX is over 13.
Utilities are important again this week. The 50-week MA at 467.18 remains a critical bull-bear line that will directly influence broad market direction. UTIL is 469.33 now so this causes market bullishness. UTIL came down to test 467 after the open and the bulls bounced it higher. Watch the 8 and 34 MA cross on the 30-minute chart now showing the 8 above the 34 MA signaling bullish markets for the hours and days ahead. The 8 MA is inching lower but the mid-morning pump is underway so the bulls may once again spoil any bear hope. The SPX LOD is 1496.33 so price held the support at 1495-1496. The euro remains above 1.34. Bears need UTIL under 467.18, JJC under 45.80 and/or the 8 MA under the 34 MA on the 30-minute chart, otherwise, they got nothing. TRIN is flat at 1.00 showing neither a preference for bulls nor bears today.
Note Added 1/28/13 at 4:24 PM: Markets end the day flat. UTIL remains above 467.18. JJC remains above 45.80. The 8 MA remains above the 34 MA on the SPX 30-minute chart. Three feathers remain in the bull's cap. The Dow Industrials and SPX, the broader market, are down today while tech and small caps are up. That is a feather in the bull's cap. The SPX is rolling across a top here in the minute and hourly time frame and would be expected to leak lower tomorrow. YHOO's earnings are better than expected and it jumps 5% AH's, now settling at 3% up. Thus, the two key releases today, CAT and YHOO, go the bull's way. Two more feathers. The bulls are running out of space to place all these feathers in their cap, every day is sunshine and every evening is happiness. The TRIN was flat today across 1.00 giving the bears a hair of an advantage at 1.16. The BPSPX, CPC, NYMO and other charts will be of interest once they provide the closing numbers over the next hour or two. CAT was up 2% but note the pull back in SCCO (copper), down 5%, JJC was up only eight pennies and FCX was down a percent. Thus, CAT supplied the booze for the party today but they were the only one drinking; copper is flat to weak. Banks were weak today.
Hy KS, one question.
ReplyDeleteThe next down wave assuming it will start here and get to 1460, or starts at 1520 and gets to 1475-1480 ... Keybot the Quant will capture the status change or will it remain on "long" status for this aprox. and possible 40 (maybe only 30) points trip (4th wave on spx)?
Also considering that after this corrective down wave, imo, next stop is in the 1575-1630 area? (in spring - april/may/june'13 , maybe).
Thanks,
V.
That is an interesting question. As always, no one will know until Keybot does its thing since it only sees 0's and 1's. The quant appears fixated on copper, JJC 45.80, and utes, UTIL 467.18. This is likely the answer. As the markets pull back, both of these would need to lose the levels shown and chances are that the algo will flip to the short side. If only one turns bearish, the quant will stay long. So a ten or fifteen handle pull back in the SPX would likely correlate to only one of the parameters retreating, then the SPX would recover and perhaps print the 1520's to satisfy the 80/20 rule. But if both parameters fail, and Keybot goes short, there is no guarantee that the SPX will come back up. But, if the SPX drops, say towards 1460, and the JJC adn UTIL are bearish, but then one of them turns bullish again that will be the near-term bottom and a move back up will begin. If, however, the markets are selling off, and JJC and UTIL is bearish, and the VIX would spike above 16, the downside would have a long ways to run lower.
ReplyDeleteThank you ,
DeleteV.