Furthermore, I don't think that the EU can afford to look weak in any sense with the rising tide of anti-EU/austerity political groups that are gaining in popularity across the continent. In fact some of the harsher terms were demanded by none other than Spain which has its own problems with the Catalonia region and Spain's extreme leftist Podemos party. Ireland has their anti-austerity leftist Sinn Fein. Italy has their 5-Star movement which is anti-austerity and anti-Euro. On the far extreme right, France has its National Front, Finland's "True Finns" also far right, the UK's UKIP and Germany's own "Alternative for Germany" rounding out the far right. These are for the most part not fringe elements in the political theater, most are ranked within the top 3 parties so the threat to austerity and/or the Euro is not a negligible one.
Getting back to the market, we also have the biggest threat to the F_E_D's status quo since Dodd-Frank with Democrats and Republicans each gunning for more oversight, less independence for the F_E_D, such as Rand Paul's "Audit the F_E_D" so Yellen will have more to deal with in front of the House and Senate over the next 2-days than is usually the case at the semi-annual Congressional (formerly Humphrey Hawkins) testimony which was mandated along with the F_E_D's dual mandate in 1977 in the "Balanced Growth Act".
While the market will be looking for any sign of F_E_D thinking on rate hikes, I suspect most questions are going to be less of a forward looking economic perspective and more of a full frontal assault with the F_E_D's only real ally being the President's veto pen. Under these circumstances, it's not hard to imagine why the market seemed to be drifting today.
The financial media's narrative regarding the bounce in Treasuries today was that of protection with the Greek submission due by midnight, however I doubt this is the case as we saw the probability of a TLT/Treasury move higher last week in Leading Indicator TLT Follow Up / Market Update and several other posts.
The fact that TLT is forming a bottom at the same time the market is putting in the "Igloo with a Chimney" topping pattern cannot be ignored as that correlation is tight.
NASDAQ COMPOSITE DESPERATELY SEEKING $5K...
I think by the look of today's late day ramp and AAPL's support of the NDX, the NASDAQ Comp is desperately trying to hit the psychological magnet of $5k, which it came close to today at an intraday high of $4960.26. $5k would be an easy and meaningful target, whole numbers, centennial numbers and ATNH's are always magnets (why do you think retailers never mark prices in whole numbers, but rather $9.99?) , although the reason for going after such a psychological magnet may not be what it appears.
The market which closed mixed from the Dow down -0.13% to the NDX up for the 9th consecutive day at +0.14% was obviously mixed with the R2K coming in at unchanged after a semi-idiotic looking late day ramp.
However, I do think TLT is lower tomorrow, perhaps finishing up the base area. Here's why I suspect a pullback (although the overall price action has flattened out from the former downtrend, making perfect sense with the market's price action)...
The pump and dump today on the "OPEC" Emergency meeting that was shortly thereafter denied officially, looks like it may be part of the larger picture which we have been expecting, USO Update
The interesting thing was even after the dump, there were still positive divergences as a sort of support level formed through the day, this is at the same area we expected a head fake move (stop-run) below in our USO trade set-up from last week (USO has moved exactly in that direction since the post).
Our custom SPX:RUT Ratio indicator did not confirm price earlier today in the Leading Indicators update and it closed the same way...
During our afternoon ramp, the divergence between yields and the SPX was ridiculous, but this is what leading indicators are for, ferreting out real moves that will hold vs head fakes that are useful for tactical entries.
Despite the late day pump to get the averages out of the red as best they could, it looks like VIX short term futures were seeing more of a bid.
Looking at internals, there was no Dominant Price/Volume Relationship, it was as mixed as the market and really no where near anything considered dominant.
Of the 9 S&P sectors5 of 9 closed green, although not by much with the leader (consider the target-NASDAQ) of course being Tech at a meager +0.35% with the laggard being Utilities at -1.13%.
Of the 238 Morningstar Groups, only 107 of 238 closed green and again, small gains in the green groups.
This suggests that the market is not done trying for what I'm guessing is NASDAQ Comp $5k, although even with AAPL pushing hard and a few other short term, smaller helping hands like a pullback (likely) tomorrow in TLT/Treasuries, the market is obviously struggling here, the late day ramp to get half of the averages green as all were in the red looks to be clear evidence of this.
Otherwise, today had the feel of an op-ex pin, again I suspect there's some hesitation with the Greek situation to do much of anything right now, but as I said Friday, I see no upside in this scenario, only pure downside risk.
Taking a quick look at our broader breadth indicators, Russell 2000 is standing out as its Advance/Decline line is peeling away from price, a trend that has been moving along through the year, but getting stronger now (weaker for the Russell). The same is happening to a lesser degree in the Russell 3000's A/D line as well.
The Absolute Breadth Index is also falling apart, the trend is particularly noticeable through 2015. (Maybe tomorrow I'll do a breadth post).
Because it's material to the market right now, the NASDAQ Composite's Advance / Decline line which was strong through 2013 and part of 2014 when it flipped and went negative, remains so and near term action is lacking breadth, meaning fewer stocks are participating on the upside.
In addition, the Breadth indicators that show the Percentage of NYSE Stocks trading above their 40-day/200-day or 1 and 2 standard deviations of either, have not moved up in at least 12 days, many have moved down and several have been flat/down for more than 12 days, nearing 3.5 trading weeks, this is not what you should see when a market makes a move higher, like the 9 days green for the NDX, these should all be at new highs rather than flat to down, especially for that period of time...More evidence that this price pattern of an Igloo with a Chimney is a weak area in the market and almost certainly the same price pattern we see just before a reversal to the downside (or upside for an inverted Igloo with chimney which has a head fake move that is a stop run rather than a breakout).
Futures aren't providing any obvious clues right now, just more of the same after the closing ramp, FLAT, although the Russell 2000 does have a bit of a nasty negative divegrence which looks like perhaps some of the late day ramp risk is being unwound, I wouldn't expect it in the NDX futures, but' we'll see if anything develops later and if it does I'll post it.
Yellen and Greece are the main events tomorrow. Yellen gets started at 10 a.m. tomorrow with a prepared statement before the Senate Banking Committee. Wednesday at 10 a.m. she'll be in front of the House Financial Services Committee.
I suspect we'll hear something more on Greece soon so I'll check futures as always and post anything I find that stands out.
Enjoy your night.
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