The bulls run higher to begin the week, up through the strong 1586 resistance, so the test of 1589 occurs and then the push higher to test the all-time closing high at 1593.37 once again. The HOD is 1592.16. The VIX travels higher today to near 14 before falling on its sword moving lower helping the broad indexes move higher. Interestingly, after the opening bell, the markets were higher and so was the VIX. VIX is now at 13.48. Watch VIX 14.00 as the bull-bear line in the sand (instead of 14.16) moving forward which helps the bears since it is an easier level to achieve. The 8 MA pierces up through the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours and days ahead. The bulls reverse the bearish 8/34 cross that occurred on Friday. The 2-hour, 1-hour and 30-minute charts are uninspiring from an upside perspective since the matching price highs are now occurring with negative divergences. However, the excitement over more central banker easing this week keeps the markets elevated.
The Dallas Fed manufacturing data was very weak but traders do not care since the Fed will fix the markets. The dollar/yen is back above 98. Weaker yen is higher dollar/yen is higher equities (bulls can thank the BOJ). The 10-year yield stays low at 1.65%. The markets are twisted into mixed relationships currently courtesy of the central banker intervention. Lower yields should correspond to lower equities, not the case. The weak commodities and copper, although higher today, should have hurt equities recently, instead, stocks move higher. The new asset bubbles in dividend stocks continues higher. Watch to see if the bulls can punch up through the 1593.37 all-time closing high. The minute and hourly charts are not agreeable to this outcome but the central banker joyousness this week is supplying market optimism. April ends tomorrow. The month began at SPX 1569 which may come into play the remainder of today through tomorrow. TRIN is 0.92, close to the neutral one, not exactly a ringing endorsement for the big upside shown today. For such a big jump in the SPX, the TRIN would be expected to be 0.7 or 0.8 or lower.
Note Added 1:38 PM: The bulls are running higher on the perceived happy central banker talk this week. The SPX punches up through the all-time closing high at 1593.37 so watch to see if the closing print can maintain this level, or not. The all-time high is 1597.35. The SPX is now at 1594.60 and the HOD is 1595.41. VIX is 13.48 stumbling along flat today. TRIN is 0.70 now affirming the upward move in the broad indexes today. The low TRIN will keep markets elevated through the closing bell. Volume is pure vapors today, only at a run rate of about 60% of a day's average expected volume, but, no one can take it away from the bulls who continue to print higher numbers due to the Fed and BOJ pumping. $UTIL is now near 537, simply amazing; folks are buying dividend stocks and perceived safety and ignoring price levels. SDY and DVY (dividend ETF's) are printing new highs, creating M tops, with negative divergence on weekly and daily charts.
Note Added 1:48 PM: There's a new high for today, the bulls appear unstoppable. HOD is 1596.01 now only one-handle from the all-time high. The SPX 10-minute, 15-min, 30-min, 1-hour and 2-hour charts are all negatively diverged preferring to see price roll over here, but, the central banker's easy money keeps the bulls happy.
Note Added 2:06 PM: HOD 1596.47. VIX 13.40. TRIN 0.74.
Note Added 2:14 PM: HOD 1596.65 only seventy pennies away from a new all-time print for the SPX. VIX 13.43. TRIN 0.75.
Note Added 3:24 PM: The HOD at 1596.65 is holding for the last hour. The SPX is 1593.42 on top of the all-time closing high by a few pennies. The broad indexes experience some spanking from the neggie d on the minute and hourly charts. Price should want to move sideways to sideways down moving forward. VIX is 13.72 only 28 pennies away from signaling the all-clear for market bears. The SPX is up and the VIX is up; one of them is wrong. TRIN is 0.79 remaining low today so the bulls are hanging their hat on the TRIN. Believe it or not, volume has actually weakened over the last hour, now at a run rate of only about 56% of a day's average volume. There will be a push at the close but the day will end as vapor volume.
Note Added 3:49 PM: The drama is if the SPX prints a new all-time closing high above 1593.37, or not. VIX 13.72. The low TRIN at 0.79 is carrying the bulls.
Note Added 3:53 PM: VIX is 13.73 only 27 cents away from the bull-bear danger line. TRIN now moving up into the 0.8's. SPX leaks lower to 1292.
Note Added 4:00 PM: Big drama as things settle out, above 1593.37, then below, now back above........ looks like 1593.61 which is a new all-time closing high. VIX is elevated as well which sets up tomorrow for some drama; the SPX and VIX cannot both be up, this will resolve. TRIN closes at 0.77 which provided the bull fuel today. One more day of April remains and the month began at SPX 1569, 24 points below.
KS,
ReplyDeleteYour Deflation ratio is currently at 2.80, which is below your 2.90 level signaling deflation.
How do you interpret this -- bullish since it could imply more Fed QE, or bearish since it could imply weaker earnings?
TW
Yep, that will still take some pondering, however. For all the early QE's, the Fed waited for deflation to appear before they pulled the trigger and announce QE1, QE2, Operation Twist, but that changed late last year when the Fed threw the kitchen sink at the markets with QE3 Infinity and QE4 Infinity and Beyond. So the equities markets were goosed while they were somewhat elevated already, the Fed changed their game plan, trying to get the maximum bang for the buck. So that takes us up to the present.
DeleteBut now the commodities and copper have fallen out of bed, the 10-year yield is at 1.66%, disinflationary and deflationary conditions, so the easy money is simply pumping stocks but not particularly helping the economy. So, does the Fed throw up its arms and say they cannot do anymore, or, will they try to increase the already obscene QE action? It all appears to be coming to a head. The deflationary numbers should be viewed as negative for equities. With deflation, the Fed would want to increase QE but how can they do that when it is already completely out of hand? This is all uncharted waters and no one is around from the Great Depression to explain how markets handle a massive global deleveraging.
''El-Erian (PIMCO): Fed must let markets work on their own'' (marketwatch.com)
ReplyDeleteLol, not one single chance with those FED psychotics! .... If EVEN Mr. El-Arian felt like saying those words.... what else can an Anon like me add? ...
V.
p.s. the danger in this situation is that starting from a certain moment nobody will short this market and thus the biggest condition for a fierce drop will be accomplished in absence of any bear! It's like using antibacterial soap ... you have the feeling that you're extra-clean, but in fact, by eliminating those 99% of bacteria, the 1% remaining can do real nasty damage cause it has much more vital space for developing!
It's the equilibrium that's thorn by the FED ...even El-Erian said it!!!!
Markets are there already V. The low CPC put/call and low VIX show the complacency in place, everyone figures they will have plenty of time to exit the markets if a down draft occurs, so there is no reason to buy protection or worry, so the doorway at the exit is starting to look mighty skinny.
DeleteHey Arnie, are you in cash now. Any thoughts now that 1593 has been smashed? Thanks.
ReplyDeleteBK
very tough call, the market is now somewhere in some 4th and 5th waves at some degree and that makes counting the waves very difficult. the easy money has been made.
DeleteI lowered my stop today to ~1590 (1588 to be exact), and minimized the damage. Hence, this could be an extended b-wave or a wave 5 up before a larger more meaningful correction occurs. time will tell.
VIX remains the key metric. VIX is at 13.70. If VIX moves above 14, the market bears will growl strongly. If the VIX stays under 14, the bulls will motor along without worry.
ReplyDeleteKS, some news indicated that Gold will fall to ~$800, what do you think? Thanks!
ReplyDeleteGold will likely remain fine over time. When the hyperinflation hits in the late 20 teens and into the 2020's gold will likely print from 2 to 5K. The 1000 level may be doable on the pull back but perhaps the 1200-1250 will serve as a base. This is a difficult market now, the GLD and other paper instruments are being viewed like stocks but the physical gold remains in high regard with supply low. What it comes down to is if we fall into a deflationary funk like the Great Depression. In these disinflationary and deflationary times, cash is king. Prices become cheaper and cheaper but no one can take advantage since they are in debt and cash poor. The folks with cash available will suck up all the deals. In a deflationary environment, gold will get hit like stocks but it seems the 1200 level should hold, and say at least 1000. Somewhere in here may identify a buying opportunity for the last push higher that will occur in the years ahead as wild inflation and hyperinflation kicks in.
Delete