I'd like to be able to take the time to load up the Risk Asset Layout and take a more detailed look at the market, maybe I'll try to do that although it's a bit time consuming.
There are some mixed signals, on the whole they are better than I would have expected for today. I have two guesses as to what is keeping the market from all out disaster today and they are probably related to some degree. We have had signals the last several days (although not VERY strong or clear) that the market may indeed not be finished with this shakeout move starting on April 10th. My expectations for this shakeout move are based partly on gut feeling (which is based on market behavior and recent trends) and several decent 3C signals, notably in AAPL, was for there to be one last volatility upside move and AAPL would have one last upside move. Admittedly the shakeout move has fulfilled all of the targets that were set so these extra two expectations are above and beyond what we expected as the minimum move that would be required to make such a shakeout worthwhile.
My two guesses as to why we may be seeing this relative strength in the market on a day that should otherwise be a bloodbath are probably related, 1) When Wall Street sets up a cycle (that would be starting April 10th) they rarely let it fail. If indeed this cycle is not finished, this concept of Wall Street protecting cycles they have set up in advance takes on a whole new meaning after the wicked fundamental events out of Europe last night and I will have a whole new appreciation for just how far Wall Street will go to protect their short term cycles. The second which I have mentioned many times recently is the defense of ER/USD $1.30. I have speculated on who is defending the Euro, perhaps the Bank of International Settlements, perhaps China in an effort to keep their exports to their number one trading partner affordable at a time when Chinese exports and manufacturing are sliding badly. The two concepts are either closely related or one is taking full advantage of the other (that would be Wall Street taking full advantage of any defense of the Euro as the Euro is a risk currency and it needs to be somewhat healthy for the market to move higher).
When this is all said and done, we may have uncovered a much deeper involvement by Wall Street in short term market manipulation and the lengths they will go to to protect investments as there is a certain amount of buying or accumulation needed to get the market primed to move higher before retail momentum chasers take over that responsibility and head faked shorts are squeezed also helping.
This should also make the concept of the head fake move and why they occur much clearer to you. Hopefully you will learn from it, be able to identify likely head fakes and instead of being a victim of them, use them to your advantage. There are more ways to assess a head fake move than just 3C alone, although I believe it is one of the best indicators for the job.
I'm encouraged by the market today after seeing yesterday's fundamental data. Logically the market ha no business being even in the vicinity of break-even on the day. As mentioned earlier, I don't believe for a second that positive German manufacturing data and a plan to bailout Spanish banks is behind the market's resiliency at all, although the financial media need to point to something as to not reveal the true reasons.
The SPY is near several zones of resistance, while they are weakened and older, they still apply, the yellow zone is gap resistance, even though it has largely been filled, the residual resistance is still there. The second zone at the red line appears to be a key level that has shifted from resistance to support back to resistance.
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