Today ends February, EOM. The monthly charts receive new prints this evening. Keystone's Job Report Friday Market Indicator (Other Signals page) was forecasting an up February based on the up Jobs day, and currently that is on track with six and one-half hours of trading remaining. The SPX started February at 1498 so that will be a level worth watching today to see if February does close up, or not. The SPX closed at the strong 1516 support yesterday. Watch the strong 1518 and 1520 resistance above like yesterday. The bulls will launch an upside acceleration above 1520. The bears need to see 1495 today to accelerate the downside, a formidable task, retracing yesterday's up move, but not impossible. Bears will be content with simply sending volatility higher today to stop the market upside move. February typically finishes weak the last couple days. Yesterday definitely smacked that seasonality factor silly which happens now and then. Perhaps the expected seasonality will kick in today? March begins tomorrow.
Much of yesterday was a short-covering upside orgy. Volume was light at only about 70% of a days average expected volume. Copper selling volume far outpaces the buying volume over the last few days. Tech and small caps lagged the broad market over the last two days. For bullish markets, you want tech and small caps to lead the way, not lag. The Dow Industrials ($INDU) and SPX ($SPX) moved above their 20-day MA's at 13954.79 and 1510.97, respectively. The Nasdaq ($COMPQ) and RUT ($RUT) are not above their 20-day MA's so pay close attention to 3166.97 and 911.08, respectively. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours and days ahead so watch to see if the 8 MA curls over and heads down, or not. The SPX also moved above the 200 EMA on the 1-hour chart at 1500.27 signaling bullish times ahead so pay attention to the psychological 1500 level.
Keystone's Inflation-Deflation Indicator sits at 2.90, now in disinflation, on the verge of falling into deflation. This sounds like craziness in light of the wild upside equity market move yesterday. The many market cross-currents continue. Be very wary and skeptical of these markets, Fed or no Fed. The 'don't fight the Fed' mantra is always correct, until it isn't. Over the last week, the Dow has printed a new high but the Trannies have not. Thus, to keep Dow Theory on the bullish side, the bulls need to see $TRAN take out 6020 right away this morning. The Dow is within 100 points of its all-time high adding even more drama to today's theatrics. The new all-time high would make for spectacular weekend newspaper headlines. Sequester, schemester, no one cares. Traders know politicians will kick the can so there is no worries. The CPC put/call ratio, and lower VIX yesterday confirms this ongoing complacency. There is simply no fear or panic in markets and stocks are not attractive on the long side until you see the panic and fear surface. Watch VIX 15.70 today, bulls win if the VIX stays below 15.70, bears win above 15.70. The XLF 17.21, financials, remains important as well.
JCP and GPRN are puking this morning. It is a shame how the JCP brand was destroyed. Dear ole departed Mom would shop at JCP as her fave store for decades. If she was here now, she would be shopping at M, TGT and WMT, not JCP. JCP alienated all their loyal customers. MCP rare earth company had bad news so that may pound all the rare earths today. KSS earnings are weak with weak guidance. Ditto LTD (Victoria's Secret) and BKS (books). Watch the retail sector, RTH, today. The GDP number is +0.1% recovering from the initial -0.1% last month. It is shameful that the huge amount of Fed money pumping since early 2009 results in a flat GDP, absolutely shameful; nothing for the taxpayer's money and the young people are now screwed for their life times being stuck with the bill. The economic data in general a short time ago did not affect the futures which point to a flat start today. Natty Gas Inventories are 10:30 AM and the Kansas City Fed's Manufacturing Index hits at 11 AM. Farm Prices at 3 PM will affect the ag sector and commodities. Fed's Fisher and Evans speak this evening. The 10-year yield jumped from 1.85% back up to 1.90% yesterday and overnight back down to 1.88%. Up yields = up equity markets, down yields = down equity markets. The euro is 1.3118 above the 1.31 level which serves as a bull-bear line for today; bulls win above 1.31, bears win below 1.31. Crude oil is hovering around 93; above 93 and equity bulls are happy, below 93 and bears are happy.
Great analysis, KS.
ReplyDeleteCould you tell us what the Quant is looking at right now?
Al, watch VIX 15.70, now bullish, and XLF 17.21, now bullish, and GTX 4920, now bearish. It appears that Keybot may be content with simply idling along remaining short despite these wild up and down spikes, but, as always, anything can happen at anytime.
ReplyDeleteKS, does the S&P appear to have a "hanging man" candle on the weekly chart? If so, what could be the connotations of a "hanging man" pattern?
ReplyDeletethanks,
tw
You are on the right track and the candle changed when price dropped into the close so you are likely correct, the hanging man is a square and it only has a long lower shadow. The candle ended today as a doji. Since there is one more day the candle can morph into something else tomorrow and may close as the hanging man tomorrow. Hanging men and doji candlesticks indicate that a trend change is on tap. So you look for follow thru for the next candle, which would be next week. But the last four candles are three doji's and a hanging man four weeks ago, each keeps saying a trend change to the downside is on tap, but the bulls keep fighting and keeping their heads above water.
DeleteKS, copper not confirming the buoyancy in the markets today. Nor is the ten year. Nor is the Euro. What do you make of it?
ReplyDeleteSimply lots of mixed signals. Also look at oil, dropping under 92. Using the 80/20 rule, the 92 should lead to 88 for crude. Down oil means down equities markets and a move deeper into disinflation and deflation. China has data tonight and that will dictate copper and commodities and likely decide if the Dow hits the new all-time high tomorrow, or not.
DeleteSPX 500 verified 1525 level and was spanked a little bit ... i have a feeling it will come back to 1525 to get beyond to 1531 ...
ReplyDeleteV.
Yep V, the 1524 is very strong R, then 1525, then 1528, then the strong 1531 R. Today the 1525 R stopped the upside.
DeleteHi everybody, just a quick note that I am back from a 2 week hiatus (1 week for work, then 1 week for vaca), and have only followed the market and KS' updates from the side line, I am sure nobody missed me, lol, but that draw down to 1485 must have sure hurt many bulls and this move up is sure hurting many bears. Ergeo conclusio: nothing has changed. Market as usual!
ReplyDeleteHi Arnie! Welcome back!
DeleteWhat do you think about that weird 4th wave? If it is an ABC than now we are in 5th wave.
If it's a 5 subwaves 4th wave than more downside should be seen ... at least 1478 on spx.
What do you think?
V.
my prefered count is that the 4th wave finished at 1485, and that the market is now in a 5th. Especially considering that the INDU is making new highs. IMHO the move of the 1485 low to today's high could have been wave 1 of 5 and this afternoon's drop; probably into tomorrow is wave 2 of 5. Anything lower than 1500 and we're back into a larger degree 4th wave... that's my alternate count.
DeleteThank you Arnie for you reply.
DeleteV.
ks, they closed it red on the week in the last 10 seconds. month still up, so we may pause next week but likely return ticket to 1530 in april. Copper, Euro, TNX, XLF, XLE all down. Markets start worrying 1 day in advance of sequester. They should be 6-12 months in front of these things...not 1 day!
ReplyDeleteBoy, that is something, on the SPX weekly its down 92 cents on the week, and last night is was up about 30 cents on the week, dead flat overall, despite all the excitement. Like Arnie said above, you could go on vacation last weekend and come back today and you would think nothing happened this week. LOL. Everything is tricky these days. The key drama is probably whether or not the Dow makes an all-time high tomorrow. Everyone says yes which makes you wonder. The China data tonight and ISM and Sentiment will all determine the outcome but if the markets fall short of the new highs and start to sell off, she could fall hard and fast, and all Monday's are down this year as well. We will likely know the story by 11 AM tomorrow.
Delete