Interesting charts. No doubt frustrating and confusing the troll. We've got low volume and some trepridation hanging on the coattails of the S&P bulls but there was no big downturn or selloff either. So for the 3d day we are decoupled from the euro and dollar further frustrating and confusing the troll who hasn't figured it out. Vix and market fear are down. S&P weekly chart with stochastics above 80 appears to be on the verge of duplicating the Mar-Dec 09 and the Sep 10-Apr 11 bull runs with the stochastics staying above 80. I think Atticus may have called this already. Just waiting for the union to mount a charge to win this third battle of Bull Run. That said, I think the bull run may be short as I suspect earnings are going to start coming in under expectations messing with our high fundamentals to date. Unless a limited QE3 helps to avoid a major downturn but that would frustrate and confuse the troll.
Yes we will. dj30 still has the year's high to break through for momentum to return. comp and ndx look the most promising for a move to the upside, Rut continues its elongated wedge formation and appears to be at decision time, with most ma's converging. GLD and SLV both continue to appear weak. Volume in equities will likely increase coming out of last week. The SPX also has most ma's converging. With a continuation of momentum, best guess is SPX 1292 by Friday.
My newbie gut tells me that the market has now fully priced in any great swing issues coming from Europe but that not to say something over there may peak some interest every once in a while but I'm focusing on US technicals for now. I'm following fxe as the price is dropping. There are two or three meetings in Europe this month but I may trade some 128/129 bear calls on the weekly maybe for next week. It appears Netflix is being bought up by some institutional investors. At noon when it was at 92, I traded 9 85/87.5 bull put contracts on the Jan 2 weekly at .66. I'll be watching the uptrend this week to see if I can scalp some more premium. Maybe the other leg of an iron condor may open up if we find a peak somewhere this week. SPX is flat as nine-ender has stated. Still have my Jan 2 weekly 1235/40 bull puts looking good. I'm still a little bullish this week but it is really just part of a sideways trend now that needs a quick rally on some good news to break it above 1300. Guess I'll watch it for a couple days as I'm just enough bullish to not risk the other leg of an IC this week but I'll probably bite on something Wednesday. Then do my usual Friday morning ntm/otm scalp for supper money. My 5 contract 110/115 Jan 12 Bidu bull puts bot last week at .76 still look good.
Is it really so easy to decouple? I can hardly believe that when euro is declining, us stock still remains high. Although it's what is happening right now. I think the stock would fall much more quickly in the near future to keep up with the euro.
A few good tehnical posts from priceaction lab about SPX/SPY: http://bit.ly/xRgfts http://bit.ly/zoQqAn Here is a very interesting post on the SPY/FXE correlation: http://bit.ly/ybKo8p
Very interesting market this morning up 14 handles. Oil screaming higher as well. Going back to the weekly chart that I posted. I pretty much am a scale up seller every 10 handles from here and don't expect much more that 1310 to the upside. Unless ECB comes in and says they will issue some type of QE program. Then I would probably reconsider my position. I guess to say I'm rather bearish up here as I don't think the fundamentals of the world economy look very attractive. The EU is most certainly facing a recession looking to be unavoidable at this point. This will in turn contribute to weaker growth in China and spill over to the US. However, with oil racing back how can we sustain solid GDP growth, I don't believe we can. So going back to the weekly chart I posted with out some sort of QE measures by Central Banks I think the larger H&S pattern could be in play. Government deleveraging might finally have to take place since Soverign Gov't bond yields are really starting to get scary and will most likely put pressure on other highly indebted countries. (Such as the US) It is very difficult to grow when US Debt to GDP is 100%. We can contine QE and just end up like Japan or just deleverage properly and let free markets work with out intervention eliminate debt and get back to some kind of sustainible growth.
thank you for the links, very interesting. I think we can all agree the correlation in recent months has been high. Currently, the spx is up a full ATR so i would think it would be coming close to the high of the day. However, october's high is now clearly broken after 5 days of sideways action, and the momentum could take it to 1300 for a 20 point move. The gap up today is sizable and will need to fill, but doubtful it will happen today. It would be very telling if the gap did fill today, that this was likely a blow off top. Rut is still under its Oct high, dj30 continues it march since the Oct low, ndx and comp continue their march as well. Significantly, the vix is at a 5 month low and almost below 20, this often precedes a pullback or drop.
It will be very interesting to see how we close today. Looking at the NYSE ticks most of the upticks have been met by selling. However the close will be very important on the daily. Maybe late sell off into close for an outside reversal? With the VIX being this low some people will take advantage of low volatility. Again, todays close will be important and this daily candle. If we close below 1292 in the cash looks to me like could be double top (possibly.) 4 more hours to see!