The China PMI was disappointing at 50.4 a couple points under the estimate but a hair above 50 indicating a tiny sliver of expansion. The S&P futures dropped a couple points on the news at 9 PM EST last evening but overnight the markets recovered. YUM, a bellwether for Asia, shows a weakening in Indonesia which reinforces the weak China theme. Markets simply ignore bad news. The BOJ is assigning dovish members so that weakens the yen with the dollar/yen posting new highs but that has pulled back. The euro is the key today and was under 1.32 on the China PMI news but overnight regained 1.32 and is now running toward 1.33. You know the drill by now, higher euro means higher markets. WTIC oil is over 94 again. As shown with the euro chart this morning, the critical trend line from when Draghi pledged support for the euro has failed which is bearish for the euro and the broad indexes.
The Italy elections continue. Results should be available about 9 PM EST. Bersani is anticipated to win and he may have an acceptable margin of victory, so the markets are maintaining a positive mood. The U.K downgrade has minimal affect today. A couple of Fed manufacturing forecasts hit this morning, the 2-Year Note Auction at 1 PM and Fed's Lockhart speaks this evening. LOW earnings are in-line with estimates and announces a buy-back, creating another two-point pop for S&P futures. Typically, stocks announcing buy-backs are lower in price about three months out. Bullard's comments on Friday helped the markets recover. Keybot the Quant should flip back to the long side this morning. A gap up opening is interesting since the markets may then require the first couple hours of trading to sort out the path forward. If the euro take a couple-day dead-cat bounce, the markets in general will float upwards, but weakness should reenter moving forward.
February typically ends with weakness the last couple days of the month with the broad indexes losing about one-half percent or more on average. Copper is positive all through the China PMI number into this writing which aids the bulls. Watch GTX 4927, VIX 15.70 and RTH 45.50, all three are causing bullishness in the markets, so the bears got nothing unless they attain one of these numbers. For the SPX today, an upside run appears to continue. The 1520 resistance is very strong, then 1524. The 20-day MA at 1511.38 serves as downside support. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullishness for the hours and days ahead.
Does it look like a switch to long for Keybot is imminent?
ReplyDeleteYes Penney, Keybot flipped back to the long side but do not be surprised for another whipsaw back to the short side. Markets are at an inflection point, very erratic and unstable currently. VIX is climbing again not at 14.63, a move to 15.60+ would seal the deal for a bear move lower for Keybot again. Things are up in the air with Keybot's algo number and signal line at the same place 62-63.
ReplyDelete