Today is the IRS deadline for taxes. The China GDP numbers were weak overnight which created selling in Asia, Europe and all commodity sectors. Copper and oil drop on the news. The big story is the drop in PM's (precious metals) with gold falling under 1400, now at 1423. The PM's are no doubt feeling the wrath of the commodity sell off but also on news that other nations may lighten up their gold holdings to pay off debt. The 10-year yield is flat at 1.71%. The dollar/yen drops under 98 to 97.80 reflecting a stronger yen so the equity futures are lower. The weaker yen (caused by the BOJ easing) fueled the stock market rally last week. The S&P futures are down five but were down about nine a short time ago.
C bank earnings were in line with estimates and it is up a percent or so pre-market. The Empire State Manufacturing Index just hit and it was weaker than expected. The C news bounced the futures a couple points and the Empire took them back down a couple. TIC data is released at 9 AM showing the foreign investment interest in the U.S. The Housing Market Index hits at 10 AM. The North Korea drama continues to play out with everyone waiting for a missile launch at anytime. This April OpEx week is typically a bullish week for markets.
Watch VIX 14.40 today, the bull-bear danger line. The market bears cannot gain traction unless they move the VIX above 14.40. Watch the 8 MA and 34 MA cross on the SPX 30-minute chart, now showing the 8 above the 34 signaling bearish markets for the hours and days ahead. For the SPX starting at 1589, the bulls need to move above 1593 and an upside acceleration will occur to 1597 in quick order. If 1597 resistance gives way, the 1600 plus prints are coming next. The bears need to push under 1580 today to accelerate the downside. The 1580 is also a neckline for an H&S (shown on this morning's 30-minute chart) that would target 1563. The markets may start out weak but watch for the regular central banker pumping at 10-11 AM which sends markets higher each day. The yen dictates market direction; weaker yen occurs as BOJ pumps the easy money talk resulting in higher dollar/yen and higher equities. A stronger yen occurs if BOJ backs off of the money-pumping talk resulting in lower dollar/yen and lower equities. The latter case is in play to start today. Congratulations to the Aussie's as Adam Scott took The Masters prestigious golf title over the weekend.
Note Added 12:19 PM: The gold sell off is receiving lots of attention. SPX has a 1572 handle with LOD of 1570.45, almost 30 handles off the top in these erratic unstable markets. The 8 remains under the 34 MA signaling bearish markets for the hours and days ahead. TRIN is 1.01 not favoring bulls or bears. TRIN was sub one all morning trying to help the bulls but the markets have weight to them today. Watch volatilty and semiconductors. The bulls are not sweating yet, but if either SOX drops under 425.70 (now at 427.01 only one point away), or, VIX moves above 14.25 (now at 13.74), the bears will start driving the broad indexes far lower. If VIX and SOX remain in the bull camp, markets will recover.
Note Added 12:29 PM: Fast-moving markets today. The bottom fell out of the sock drawer, SOX now at 426.15. VIX 13.91. Bulls are hanging on but the bears are pushing hard today. TRIN 1.01. The battle is with the semi's and volatility which will tell the tale for the broad indexes.
Note Added 12:43 PM: Things are dicey, SOX just lost 425.70, now back above. Whoa, VIX 14.29 above the bull-bear danger line at 14.25. Bulls are barely hanging on by a fingernail, could be a big flush on tap. Bulls better push back hard immediately or they will lose control of the situation. SPX testing 1569 support, if it fails, 1565 is next. TRIN 1.14.
Note Added 2:22 PM: Keybot the Quant flips to the bear side at SPX 1566. SOX is now at 424.39 and VIX is over 15, both in the bear camp, and creating the market downside mayhem this afternoon. TRIN 1.27. Keystone took profits on the LL short exiting the position. Also bot SPXL as a countertrend play to hedge against Keybot.
Note Added 3:06 PM: Very fast-moving markets today. Semiconductors recovered, but then fell on their sword again. Watch SOX 425.67, now at 423.07 causing market negativity. Watch VIX 14.21, now at 15.39 causing market negativity. SPX is at 1560.
Note Added 3:12 PM: Terrorism hits the finish line at the Boston Marathon. Markets sell off on the news; SPX now has an 1557 handle. VIX spikes to 15.90.
Note Added 3:14 PM: Dollar/yen 97.15 (down today which means stronger yen and lower equities). Euro 1.3040. The 10-year yield 1.69% (dropping through 1.70% slipping further into deflationary scenario). UTIL is negative, funny, it appeared that utilities would never go down. WTIC crude oil is 88.42 testing the lower rail of the sideways triangle highlighted in this morning's oil chart. Brent oil is 100.26. Gold 1367. VIX 15.83. SOX 424.38. TRIN 1.37. TICK just printed a couple -1200 uber low TICK's identifying a temporary market bottom today.
Note Added 3:41 PM: As video is shown from the Boston Marathon on television, the markets weaken further. Dow -210 (-1.5%). SPX -33 (-2.1%). Nasdaq -77 (-2.3%). RUT -36 (-3.9%). Note that tech and small caps are leading lower. SPX is 1556.39.
Note Added 3:58 PM: Fire is now spotted at the JFK Library. The selling increases again. The VIX has now jumped over 16. Dow is down over -250 now. Markets are going out at the lows. Dollar/yen drops under 97 (stronger yen).
Note Added 4:10 PM: SPX is down -36 to 1552, -2.3%, almost 50 handles off the high only two days ago. Dow is down -266 to 14599, -1.8%, folks cannot get enough of the dividend stocks, blindly buying divvy's at any cost. Nasdaq is down -78 to 3216, -2.4%, tech leading lower. RUT is down -35 to 907, -3.8%, small caps leading lower. RUT has failed the 20 and 50-day MA's. Nasdaq has lost the 20-day MA and is using the 50-day MA at 3213 as support overnight. Dow is using the 20-day MA at 14592 as support overnight. SPX failed the 20-day MA and is above the 50-day MA at 1540. The drama with Keystone's 60-minute chart signal heats up again; the SPX fell through the 200 EMA on the 1-hour chart at 1556.38 signaling bearish markets for the hours and days ahead. Place 1556.38 at the top of the list for things to watch tomorrow. SOX collapsed to 422.67. VIX spiked to 17.27, the highest level in two months. The terrorism in Boston is covered on all major networks preempting all programming. Two are reported dead thus far with 22 injured. The bomb scene remains chaotic. Multiple portable devices are assumed to have been detonated.
KS, always love your "wake-up" commentary as it is insightful and thorough. What do you think of this thought ... gold was the last "ingredient" needed to signal a severe downturn in the market. The reason I say this is because it has been the commodity that has held on the longest to this idea that the FED was "inflating" the economy. Now with it being slammed, and with Dr. Copper (as well as other commodities) already in retreat, the deflation flag (not inflation) is flying strong which means everything denominated in dollars will be worth less and less. And if this is true, we should see another quick $200 - $300 drop in gold. Guess we'll have to see.
ReplyDeleteI don't like it but a have a feeling that the move in gold announces more and more euphoric bulls - > take a look at this ...
Deletehttp://www.businessinsider.com/everyone-should-be-thrilled-by-the-collapse-of-gold-2013-4
also, my guess is that the move in gold (safeheaven asset) is related with another safe-heaven (monetary type) - the yen.
Because BOJ is depreciating the yen, that hurts "marginally" the gold.
I have to mention that the stocks are on the "other side " of the balance...
I don't like it , but I have to mention that right now, under our eyes, all ingredients for a market boom are set.
I might be wrong(although I guess not), but it is to see the market's action.
To all: good luck!
V.
Everyone sure did turn into gold haters in a heartbeat. Considering the COT charts, the uber negative sentiment, and so forth, gold is likely okay in here to buy but there is no rush. Price action is always emotional in commodities especially gold, so it may be a wild ride with a wild spike higher, then another downdraft, but the overall sideways behavior should start to develop.
DeleteKS,
ReplyDeleteThe $CPC rocketed up to 1.15 last week.
Since you have previously mentioned that a $CPC value around 1.20 represents a Buying opportunity, I am curious if you view the 1.15 reading as a similar buying opportunity?
thanks,
TW
Markets have recovered from that reading TW so it is in the ball park. It will be interesting to see where it closes this evening. The 1.2 is the threshold to begin scaling in long, the CPC could easily spke to 1.5 or higher which would be in concert with a large market sell off like the August 2011 waterfall crash. But to answer your question, the idea would be, say if a long market position was desired, to buy one-fourth of SPY once CPC is above 1.2, another 1/4th above 1.3, another above 1.4 and another above 1.5. If it reverses at anytime and starts to drop, an immediate scale in with the remainder may be considered. The markets are throwing off many mixed signals these days due to the central banker intervention so multiple indicators and methods will have to be watched when the CPC moves above 1.2.
Delete''North Korea drama continues to play out with everyone waiting for a missile launch at anytime.''
ReplyDeleteMaybe they've run out of food and , with some red hot chilli sauce, they have eat it :) ....
V.
North Korea doesn't want to go to war. They have nothing to gain and everything to lose. This guy's like 29 years of age and suddenly a four-star general. He's trying to show his people that he's not weak and also that he's able to get the attention of the U.S. The more coverage we give him the more he wins. I also think he's trying to play the same game his father did, but he's not as good at it. He wants to talk this big game and then try to negotiate for aid.
DeleteI guess you're spot-on Shane!
DeleteTrying to play the same game of his father but being also too young and foolish!
The REAL problem would not be US for North Korea , but China - it's only ally! China doesn't want trouble at it's borders and if this little wanna-be guy creates troubles China, not US, will kick him hard! And not military, for sure, but by commercial channels.
After only 1-2 months there will be famine and great social unrest there if the little north-koreean guy acts unwise!
V.
Yep, that sounds correct, 'Lil Kim is flexing his muscles, but the fear is that unlike his Dad and Grandad, who both always had and escape plan at hand where they would ratchet up the talk, but had a path to back off, typically when food or other aid was given to N. Korea. 'Lil Kim, however, maybe simply appeasing his generals and does not have a path to back down, so it all escalates, it can get out of control fast, especially with all these ego's with fingers on buttons. But, the thinking is that it will be a non-event. Apparently the missile is fueled and ready so he has to launch, or not, anytime now through say Friday, so at least this Kabuki Theatre has an ending to it, one way or the other, in a few more days.
DeleteWhoa, Houston we have a problem. SOX 425.45.
ReplyDeleteIt's hard to gauge sometimes. We've been talking about a big rollover for months, but we've also seen little dips where the bulls coming roaring back the next day.
ReplyDeleteKS, What parameters is Keybot looking for to flip short?
ReplyDeleteSOX 425.67 and VIX 14.21 are key today. Keybot is short now but the markets are erratic and all over the map, very fast-moving session. Now there is the news on the Boston Marathon terrorism.
DeleteMarket will continue to drop, all indicators show major reveral
ReplyDeleteGreat call on re-entering the 1540-65 sideways channel, KS. The 50MA is also at 1540. (Can you believe we haven't touched the 50MA all year?) Plus it's the neckline of the H&S pattern you noted on the 2-hour chart. Multiple reasons for it to be targeted. But we also have the fact that this particular week is usually the best of Q2. Plus the benefits that normally come with an OpEx Tuesday. $CPC should be nicely over 1.20 tonight too. Would all this point to a bounce after some opening weakness tomorrow?
ReplyDeleteThose are good thoughts, too early to tell yet, the smoke will have to clear for a while after a day like today. JFK Library smoke now. Wow. VIX now above 16.
Delete