The Retail Sales data is better than expected. Consumption remains active so folks are spending money. With the flat and weak wage growth, and less hours worked by employees, the underground economy may be growing a wee bit at a time (folks working under-the-table for cash are not counted in the BLS data but they do spend the money they earn). This type of work is especially prevalent in the housing industry, which is a strong sector currently, as tradesman will routinely perform work for cash. Taken on face value, the positive retail sales data may simply indicate that all is fine with the economy. Business Inventories are released at 10 AM so markets will pivot on that news.
Copper and volatility are important. Watch JJC 41.93. Whichever way copper moves from JJC 41.93, the broad indexes will likely follow. The market bears will not be able to growl strongly until the VIX moves above 13.70. VIX is at 12.59 to begin the week. The 8 MA is under the 34 MA on the SPX 30-minute chart so the bears are in charge to begin the new week, however, the 8 MA is poised to pierce up through the 34 MA after the opening bell. Thus, the 8/34 cross will tell a lot to begin the day. For the SPX starting at an all-time high at 1634, bulls only need to receive a print at 1634 and higher and the move to 1640 begins. Bears need to push under 1624 to accelerate a downside move to 1618 which would occur in short order. A move through 1625-1633 is sideways action. Keybot the Quant remains long to start the week, however, if JJC drops under 41.93, and VIX moves above 13.70, and the SPX loses 1624, it is very likely that the algo would flip to the short side. The bulls can receive more upside fuel if they push commodities, GTX, above 4810.
Dollar/yen prints over 102 last evening at 7:30 PM EST, but reversed and is hanging out at the 101.80-ish level. The asset relationships are of interest this week to see if a stronger dollar and weaker euro pressures commodities and equities while at the same time the affects of the dollar/yen on equities diminish. The 10-year yield is 1.93% up from 1.90% a few hours ago. The equities to dollar to Treasury yield relationship is also of interest this week. The S&P futures are off 3 pointing to a slightly weaker start to the week.
Note Added 9:53 AM: SPX moving lower due to copper weakness. JJC dropped under 41.93, now printing 41.53, helping the bears. However, VIX is flat to lower at 12.57 so the bulls have no worries. The VIX level of interest drops to 13.30 moving forward instead of the 13.70 previously mentioned, so the bears can growl strongly if they push the VIX above 13.30. Otherwise, if VIX stays under 13.30, the bulls will keep the markets buoyant. TRIN is 1.02 refusing to take sides today. TRIN above one and bears will push lower, below one and bulls will push higher. The 8 MA remains under the 34 MA on the 30-minute chart signaling continued bearishness. As long as the SPX stays under 1629 (8 MA) and moves lower, the bears are fine. Markets should pivot in a couple minutes on the Business Inventories. Watch the 8/34 cross, JJC 41.93, VIX 13.30 and SPX 1634 and 1624.
Good morning KS,
ReplyDeleteSomewhat I have a feeling that the last 3 days what we have seen was a flat correction and the market now is building energy to jump beyond 1637 on spx cash.
realted to that FED trumpet guy's article (QE to be tappered) , the market doesn't seem to be way too scared ... guess it digests the news ...
what do you think?
V.
Yep, since the Fed just inserted the 'increase' word into their comments a couple weeks ago they would look foolish to do a quick about-face. Perhaps Hilsenrath simply needed to produce a column and that fit the bill. Looks like the markets are already beyond it. The SPX has performed those moves of sideways then another pop higher, so we shall see. VIX is up so its direction will tell the tale.
Delete"The SPX has performed those moves of sideways then another pop higher, so we shall see. VIX is up so its direction will tell the tale. "
DeleteYes KS,
if 1637 is not breached a visit in the 1615-1610 spx cash area is to be expected before a rocket-move to 1658-1680 area will follow to complete the up-movement.
Below 1610-1615 it can not go lower (for the moment) before reaching 1660 and above area.
V.
I agree with your assessment V. We've actually been seeing a lot of that, which actually makes the market kind of frustrating for a lot of traders. When it looks like the markets should pull, we see sideways relief action for several days, then we move still higher. A lot of it has to with the infamous liquidity problem that we're having. There's still so much money sitting on the sidelines.
ReplyDelete''We've actually been seeing a lot of that, which actually makes the market kind of frustrating for a lot of traders.''
DeleteYes, Shane.
But this powerful up-movement from November '12 is already too old and soon will melt.
I know there's a mountain of cash on the sidelines but only the unexperienced retailers would chase this market, the smart money wait for a correction down the road for some good investment action. It's a question of patience.
Getting long here could work but it's dangerous.
It's better to wait for some time to nail some good stuff.
It won't be a straight up-move, believe, me.
V.
X-class flares Sun night and Mon morning. Also recent increased M-class activity.
ReplyDeleteThanks for keeping us up to date on that Marlowe. It takes a few hours for the electromagnetic waves to arrive which should be right about now. Perhaps the afternoon session will become interesting.
Delete@ Marlowe, KS :
Deletewhat effect does have the sun flares on humans? From a trading perspective, I mean?
Thank you,
V.
V
Deletehttp://lunatictrader.wordpress.com/2013/04/01/solar-flares/
Thank you Marlowe ! :)
DeleteV.
If someone asked me to write a plausible doomsday scenario, it would probably involve solar flares. There was an unusual solar storm back in the 1800s that pretty much wiped out the U.S. telegraph system. Because of the effects of magnetic storms on electronics, a really storm storm can put a hurt on a lot of 'puters.
ReplyDelete