Happy April Fool's Day; stay on guard for tomfoolery. China PMI printed an 11-month high but the number was short of consensus. Japan Tankan Survey was weaker than expected so these two sank the Asian markets overnight and kept the S&P futures flat to negative to start the day. European markets are closed as traders enjoy the Easter holiday still yet. The SPX is trying to punch up through the 1570 level to make a run at the all-time high at 1576 but as yet not successful. A weaker ISM Manufacturing Index causes market weakness this morning. The VIX is 13.52 up almost a buck but remains far short of the 14.65 the bears require. Thus, the bulls have their feet up on the desk as they nurse stomach aches due to excessive hard-boiled egg and chocolate consumption over the weekend.
Copper continues to collapse and each day the broad indexes turn a blind eye. Commodities are weak with GTX at 4881. The bulls need to see GTX 4930 to receive upside market fuel. For now, the VIX remains below 14.65 and GTX below 4930 so markets float sideways. TRIN is 0.95 favoring the bulls by a small amount today. The 8 MA remains above the 34 MA on the 30-minute chart signaling bullish markets for the hours and days ahead (see this morning's chart) so the bulls are happy and content to begin the new quarter despite the slight market weakness. The first sign of market trouble is the 8/34 cross. The broad indexes are not in trouble as long as the VIX stays under 14.65; when the VIX moves above 14.65, the market trouble will begin.
Note Added 4/1/13 at 1:03 PM: The 8 MA stabs down through the 34 MA to signal bearish markets for the hours and days ahead, however, as this morning's chart shows, over the last couple weeks, each time the bulls find a way to thrust the SPX higher. The 8 MA is 1563 so if the bulls move the SPX above 1563 that action will curl the 8 MA upwards to ruin the bear's day once again. For now, the bears have a minor victory and it will stay that way if the SPX stays under 1563 and moves lower. The VIX punched up through 14 but leaked lower now at 13.75. Bears got nothing without VIX 14.55 (this number drops from the 14.65 mentioned earlier). GTX is now flat at 4909; the bulls need GTX 4930 to gain market strength. TRIN is 1.30 firmly favoring the bears ever since about 10:45 AM. The bears are trying to push lower, the SPX is at 1562, but without higher volatility, the bears got nothing. Watch to see if the 8/34 MA cross remains bear-friendly, or, if the bulls quickly reverse the cross. Snow fills the air in good ole Pennsylvania continuing the winter that never ends; everyone wishes that it is an April Fool's joke, but alas, it is not.
Note Added 4/1/13 at 2:10 PM: The 8 remains under the 34 MA on the 30-minute chart. TRIN is at 1.43. The 10-year yield is 1.84% remaining lower on the day. Three feathers for the bear cap, however, the VIX is at 13.60 leaking lower and helping the bulls keep the broad indexes elevated.
Note Added 4/1/13 at 3:50 PM: The Nasdaq is down one percent with the SPX down 0.5% and Dow Industrials down only 0.1%, almost flat. This shows the Fed's easy money continuing to pump dividend stocks and blue chips. TRIN is 1.41 so bears should be fine through the close. The VIX is 13.83 moving up but still not near the 14.55 danger line as yet.
Note Added 4/1/13 at 4:10 PM: Bears keep the 8 MA under the 34 MA on the 30-minute chart so that signals bearish action for the hours and days ahead. However, look back at previous 8/34 crosses; the following morning the bulls come in and ramrod markets higher so tomorrow's open will be important. The 8 MA is 1562 and the SPX closes at 1562 so the bulls must push the SPX above 1562 tomorrow while the bears will try to push under 1562. This action will provide the initial hint on market direction tomorrow. The 20-day MA is 1553 and likely needs tested. Volume was very light today as traders call in sick or leave early in search of Pepto Bismal that counteracts that last deviled egg that should have remained on the serving tray. The VIX is 13.58 unable to sustain any steady upside and remaining in the bull camp. But bears, however, can take comfort knowing that they are only 97 cents from VIX victory. So the stage is set for tomorrow, it is all about VIX 14.55; volatility matters. Small caps lagged today. Trannies down 1.5%. Copper, steel, aluminum, coal and tech all weak. The Fed's money fuels new asset bubbles in divvy stocks, blue chips, consumer staples, healthcare and utilities.
"Thus, the bulls have their feet up on the desk as they nurse stomach aches due to excessive hard-boiled egg and chocolate consumption over the weekend."
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LOL!
Classic Keystone humor!
The jelly beans fell between the couch cushions and the leftover turkey casserole is on the menu this evening. Hopefully, all the eggs were found from the Easter egg hunt although it does appear that a couple are unaccounted for.
DeleteAPPL could not hold the 442, 435, broken, remember 20 leads to 80. A break of 420 and it will see 380's before earnings.
ReplyDeleteThe gap from 11 days was the target and it now filled that gap at this 429-ish. Apple is probably good to go again for upside. So maybe a day of basing yet but it would not be surprising to see it move up from this level. If it does drop the 422 level would be key since it may slip away from there, but this 422-429 area appears to be an attractive entry area for the long side.
Deletewell that's not the Easter bunny I've been expected :) ...what happens today is just a April First joke ....like viewing bulls all squeezing themselves, pretending to be hurt :) in order to offer some satisfaction to bears ...
ReplyDeleteMaybe a correction will never come ... I guess this kind of thought is somewhat bullish, ha? No, I guess not. :)
Maybe until April 15 we will see a down movement to 1430 - 1470 (those might be potential targets) to eliminate the air accumulated beneath the markets ... even a sane bull needs corrections for the sake of market medium/long term stability.
V.
VIX 14.55 is key V. Happy bulls with VIX sub 14.55, happy bears when VIX moves above 14.55.
DeleteWith AAPL, it looks like we again question 420. It's been a stronghold so far, but you're right. If it fails, we're looking at 380.
ReplyDeleteMaybe use 422 as the first line of defense since 422 would lead to 418 that would breach the 420. But Apple should hold the 422-429 and this may be a good entry area for the long side.
DeleteThanks KS for the insight on Apple, one thing is for sure is that when the bash it they bash it 10 points if it ever breaks 6 points down. Your analysis seems on, but I am so hesitant with it at this point. I think an average in with minimum percentage here maybe key, if the market corrects big time it will probably rise. I have noticed that between APPL and BBRY, that shorts are like roving pack of dogs that feed on one or the other leaving the other alone while they rip the carcass of one.
ReplyDeleteKS,
ReplyDeleteSince the SPX seems to be closely manipulated with QE and the flight to dividend stocks, have you considered using the VXN instead of the VIX?
I notice that the VXN closed today at 14.40, which is a lot closer to your 14.55 level.
TW
VXN is a fine play as well, however, to correlate it to the $VIX 14.55 would be a level at about 15.80-ish. VXN is at 14.48 so it would need to see a bit over one-point higher to verify the bear case.
DeleteKS,
ReplyDeleteWhat's the stop on MCP according to KeyBot?
Keybot handles the main directional trade for markets so it does have any input to MCP. MCP will likely be held and added to moving forward. It took the additional leg lower as all the metals and miners continue to get hit. An add at 4.7-4.9 may be targeted. It should base across the current level but the rare earths are extremely volatile. It should recover. Charts are oversold with positive divergence although some sideways basing may now be required due to the drop.
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