So...its March, and in
the last decade March has been historically pretty bearish – at
least for the first half.
Near term – a
retracement is under-way at minimum
Lets take a look at
both IWM and SP' fib levels, which should offer something – in
addition to the part'1 and 2 charts.
IWM - Fib' 74 looks very possible
Considering the massive ramp since last October, a move back to the 76/74 level looks very reasonable. That of course may be as far as we go.
SP' fib levels - 1240/60 zone
This chart shows the true horror of the latest period of low vol' melt up. Relentless baby moves, with just the occasional single red day. A move lower to 1260/40 seems 'reasonable' to hope for, although right now, a 100pt fall seems a very long way down.
The bigger picture
The new favourite chart
of mine recently again merits highlighting. The SPY/VIX is at a
critical level, either we see a major move lower this coming week, or
we're going to likely break much higher.
Mr $ will of course be
important
The dollar remains in a mild uptrend. We could indeed be due an imminent surge higher - with a target of around 22.75/23 on UUP. That would of course put even more pressure on the recently massacred Gold and Silver.
Commodity Stocks –
very weak
The CRX index I do like to follow quite a lot. Contrary to the current hysteria out there, this index is very weak, and is very supportive of the notion that last summer was indeed the high of the overall cycle. We recently have a tiny break above the wedge - and the old resistance/support level. However, we are still considerably below last summers high.
What matters for the bears, they need to see a clear break below 900, and some significant progress towards the 700s by late April/May. In comparison, bulls will want to see a break above 1100..and then some!
Weakness is due, but it might not be much
It is highly probable
we will see significant weakness for the next few weeks. However,
Bears will need to see more than just a 5% move lower. Arguably, only
at least a punch lower down to SP'1240 would suggest there is
anything significant to come. Even if 1240 is hit, bears would then
still have to contain any subsequent bounce to form successively
lower highs. This is something that the bears have not done since
last summers decline ended in October.
The most bullish
aspects presently remain the possibility that the Greek Govt. will
actually pay the major interest payment due late March. The Bond
market however says 'NO!, default is assured mid term', The second major
issue is that of the Bernanke doing a new tranche of QE, most
probably in the form of a 1 trillion purchase of MBS.
As traders, it remains
entirely possible that the can-kicking will continue for some months,
maybe even into 2013. It would remain highly ironic if the doomster
year of 2012 saw many equity markets attain new highs.
Bears need to be
careful, this March could all just be a big tease, before another
very significant wave higher. I am inherently biased, but will note
that unless I see IWM hit 72 this March – or early April, then I'd
assume we are going much higher across the summer.
Next week should be
more volatile (how could it be less so though?)..so, it should be
kinda interesting to watch and be part of.
Good wishes