The bulls came to play today keeping the financials, XLF, well elevated above 17.21. Volatility leaks lower all day thus far with the VIX losing the 15 level well under the bull-bear line at 15.70, so the broad indexes run higher. JOY earnings beat and is up 5% so this global bellwether adds bullishness as well. The SPX popped above 1499 so 1503 was tested, then the strong 1505 resistance, which gave way. Next is 1509 R, then the 20-day MA at 1510.58, and 1511. The bulls will keep pushing higher unless the VIX moves higher and regains 15.70. Interestingly, copper and commodities continue to weaken as equity markets move higher. The euro sits at 1.31. The Dow Industrials hit 14K but pulled back. Trannies are strong today. The economic data yesterday and today along with Chairman Bernanke's money-pumping talk provides market lift. Crude oil regains 93 after the inventories show a lower build than consensus.
Note Added 2/27/13 at 12:10 PM: Here's the test of the 20-day MA at 1510.68. The SPX crossed above the 200 EMA at 1500 on the 1-hour chart and the 8 MA just crossed above the 34 MA on the 30-minute chart signaling market bullishness for the hours and days ahead. Bears need the 1511 resistance to hold, and for a sharp reversal to occur to curl the 8 MA back to the downside again. The bulls are motoring along today. XLF is 16.50. VIX 14.89.
Note Added 2/27/13 at 12:41 PM: The SPX overtakes the 20-day, which is also the middle BB on the daily chart. So the touch of the lower Bollinger Band did result in an upside move back to the middle BB, at a minimum. The upper BB is at 1531 where the recent top occurred. The SPX is now at 1513 creating two right shoulders for potential H&S patterns. Support below is the 20-day MA and 1510.78, resistance above is 1514, and stronger R at 1516 and 1518.
Note Added 2/27/13 at 2:18 PM: It is fascinating to see JJC (copper) down and GTX (commodities) both down 0.5% today as the equities markets keep punching out new highs, up over one percent on the day. SPX is above 1515 with a HOD at 1515.55. See if the strong 1516 resistance holds, or not. TRIN is in the cellar at 0.63 providing bull fuel. VIX is 14.85 after sneaking a hair above 15 but then falling back. The strong resistance above is 1518, then 1520. With all the free money rushing into equities, like heroin into an addicts veins, the bulls may have mojo to simply run up and test the 1520 R.
Note Added 2/27/13 at 3:02 PM: The SPX HOD is 1517.89 so the 1518 R holds, for now. JOY is up 6% and has a lot to do with today's euphoria. Bernanke says the housing recovery is well underway as well. TRIN is 0.59 uber bullishness. NYAD only at +1670 for a high today. NYHL is muted at 164. The 10-year yield jumps to 1.90% today.
Note Added 2/27/13 at 3:39 PM: The SPX came up for a HOD at 1520.08 so the bulls tagged the 1520 R. The Dow Industrials are up 200 points. VIX is 14.48 near the lows for today. TRIN 0.50. Keystone took profits on NEM exiting this long trade but will likely reenter tomorrow.
Note Added 2/27/13 at 4:02 PM: A wild up day, the mirror image of Monday's down day. The SPX closed exactly on top of the strong S/R at 1516. Tech and small caps lagged the broad market today which is not encouraging for the upside, ditto the low volume only running at about 70% of a day's average expected volume. Short-covering pumped the markets higher as the short traders lost any conviction for the downside. At the same time retail investors are likely chasing the upside afraid of missing the upside. Very poor performance by copper and commodities today. GTX drops over one-half percent and loses 4900. VIX closes at 14.70. Financials jumped to XLF 17.63 today which means no one is worried about Europe. The 10-year yield is 1.90%. TRIN closed at an obscene low at 0.48. JOY provided a big push for the bulls today. These markets are a head-scratcher and are not to be trusted. There is something special going on. Be very wary. Time to let the smoke clear, enjoy a slice of apple pie and perhaps check some charts this evening.
Hey KS. With the bulls winning over XLF and VIX and the breach of the 20-day MA, what is KeyBot still holding onto on the bear side? Is there a specific number we should be following on copper? Will an uptick in the euro do the trick?
ReplyDeleteNot at this time Ben. Keybot remains short for now. It is interesting since the broad indexes are jumping higher but the underlying indications are not as happy.
ReplyDeleteKS, is that a 1495 target then on the H&S? (Notice that the 10-year hasn't budged from 1.88%. Some rally. More like a bull trap.)
ReplyDeleteThere are several possibilities; perhaps head at 1531 and neckline at 1488 which would target 1445 if 1488 fails. Then perhaps using head at 1531 and neckline at 1497-ish would be a target at 1463 if 1497 fails. The 1459-1465 zone is an interesting area of support. Also, as you say, you can use a head at 1531, neck at 1495, so that targets 1459 if 1495 fails. The battle for the 20-day MA at 1510.77 is very important. The 20-day MA is key for any stock or index you play and must always be monitored, so that will tell a lot depending on which side price prefers.
ReplyDeleteAre there any technical signs that might announce a spank down below 20dayMA of spx-daily chart? VIX or XLF or any other thing?
DeleteV.
seems like VIX shows some signs of life :)
DeleteV.
Nothing comes to mind since the 20-day MA is essentially the signal in itself, telling you that the stock or index is bullish if above, or bearish below.
DeleteHi KS,
ReplyDeleteThe sequestration matter, would you expect that to be a main driver now? Italy story remains the same, that is not improved overnight. The other main issue was the US cuts deadline March 1. Does no-deal not expected at all? Will there be some form of deal last minute?
JJC down today, apple down, thats why we are in the red....right? Keybot thinking of swinging to the short side maybe after market goes down?
ReplyDeleteThe sequestration stuff does not appear to matter. The heightened bullishness with Bernanke handing out money on every corner does provide positive sentiment. Just take things day to day, hour to hour. Keybot remains short for now. The SPX probably wants to tag the 1520 for a test.
ReplyDeleteOh! I've forgot that today was a big POMO '' free money'' day .... 27 feb = $4.25 - $5.25 billion.
DeleteV.
thanks!
ReplyDeletedon't know it it does matter in this rigged market ... more money tightening will come friday or this weekend from China. This will impact commodities I guess.
ReplyDeleteV.
WHAT is GTX...I cut class that day and missed the intro to it. is it $GTX? I can't find anything when I google it
ReplyDeletefound it, thx!
ReplyDeleteYep, $GTX is a measure of commodities. The $CRB stopped printing its intraday data so $GTX and $GNX can provide insight during trading hours.
ReplyDelete