However, I think the move up had little to do with the FOMC statement and was more likely planned in advance as 3C has been showing us a bullish undertone, even during some of the worst day down. The see-saw action has made it difficult to hold a trade for more then a day unless you are using very wide stops. You can always use the VIX as a gauge of market volatility to asses how wide your stops should be.
Europe is quickly falling. The best example I can think of right now is a personal one. My most beloved dog, an amazing dog who just a week ago was totally fine, was diagnosed today with malignant melanoma, with tumors in his heart, lungs, kidneys and liver, he has less then a week to live and more like 2-3 days. I hope that doesn't make you uncomfortable, I am always open about my life. However the point being, 30 days ago his blood work was normal, 30 days later and his liver is shutting down. There comes a point of no return, a tipping point in which things accelerate beyond our control and that is what Europe is experiencing this right now. Expect things to start to unravel faster then even the algo headline scanning systems can track,
There is talk of France (only 1 of 6 European countries ) losing its Aaa rating. Should this happen, the entire burden of the EFSF will fall squarely on Germany and there's already political/social backlash against any involvement in baling out other failed/failing E.U. members. In fact, it looks like it will cost Merkel her political career. Even though the rating's agencies have affirmed France's Aaa rating, the self-fulfilling effect of bank runs may indeed cost them their much coveted rating status. At which point Germany would likely let the PIIGS fall and the Euro experiment would end.
Italy looks to be stepping in front of Span to be the next of the PIIGS countries to be on the fast track toward default, I think they've closed their markets 2-3 times this week and it look like a short selling ban will go in to effect, likely exacerbating the situation rather then calming it as historical evidence from the US has shown, when we banned selling financials short.
The race to the bottom in currencies is going thermonuclear. First the Swiss National Bank, followed promptly by the BOJ , an intervention with a 2 day half life, and now the Swiss look to peg the Franc to the Euro. Border controls are already in place in certain countries and the spirit of the EU is quickly fading in to resentment. Yet the market showed some resilience, not only in the fact that it has not plunged further, but in the internals on the up days which have been astounding.
Charts and Internals...
The big accomplishment for the S&P--500 was holding right at the 500 day moving average.
The internals were not as exciting today, but not bad-20/30 major Morningstar groups closed green. 189 of 239 Industry/Sub-Industry groups closed green. The Dow had 21 advancers, the NASDAQ 100 had 78 winners, the S&P-500 had 333 winners and the Russell 2k had 1060 losers and only 857 winners.
The dominant Price/Volume relationship was easily Close Up/Volume Down, generally considered a bearish relationship, but in context it doesn't mean much. Had we rallied 5% today on that relationship, it would have been worrisome.
As I've been warning, there's something not right in GLD and GLD has fallen the last 2 days-irrespective of the safe haven trade.
As mentioned earlier, the VIX gave a bullish signal today, having crossed above its Bollinger Bands on Wednesday, falling below on Thursday and posting a lower close today confirming the signal.
One way I get a feel for the market is buy the trades that are available and there are a lot of nice looking trades that seem to want to pullback a bit which is exactly what I expected for the market. We didn't make it as low today as I had forecasted, but we did give back some decent gains, for example: The S&P gave back about 1.3% off its highs on a day it closed up .54%, so this morning's early prediction was pretty good, but not perfect.
Also as mentioned, R1 is acting as resistance.
Oil is showing some bullishness, I expect a little more basing there before a rally attempt.
Last I want to end with a daily chart of the $USD,
This actually makes sense with what I'm seeing in the market.Remember that the dollar has an inverse correlation with equities, so f the hourly hart is about ready to turn down, that would likely mean equities would see a pretty fierce upside rally, however, as I have noted, I believe this will be the last rally and the next shoe to drop will be more intense then this one. With the daily chart accumulating, the dollar (after the fall signaled by the hourly chart), could put in a massive rally pushing stocks down in line with my last shoe to drop theory. This s why I say I see huge opportunities ahead, things are lining up and a crash in Europe could be exactly what sends the dollar higher and equities, much, much lower, but first we have a rally to look for.
Have a great weekend,
No comments:
Post a Comment