Pre-Market Brief

Good morning. ECB keeps rates unchanged at 0.75%, although some are still looking for some kind of annoucement about help for Spain/Italy.

Jobless claims: 365k  vs 370 consensus

*Factory orders are due at 10am
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sp'60min

sp'daily5

Summary

We appear to be set to open much like yesterday, sp +5pts to 1380 or so.

There is little question that we are rolling over on the daily cycle - as lead by the Transports and Rus'2000 indexes, yet we're still trading within a channel that is now five weeks old.

Good wishes for Thursday trading!
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Knight Capital: whose algo-bots went wild yesterday...-50% pre-market....have reported a loss of $440 million due to their crazy bots!
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UPDATE 9.04am

Draghi notes that he does NOT have the authority to do anything else.

Market swings from a brief peak of sp+10pts to -10pts.

;)

Is sp'1391 the top of this cycle?

With the FOMC failing to announce further QE today, the question remains, was 1391 the top of this cycle?


sp'daily5

We have the very first sign of a rollover on the daily MACD cycle, and we're now a moderate 16pts below the recent peak. Even a move to 1340 will not break the key lower channel line though. So, bears really should not get overly excited, even if we're trading in the low 1340s this Friday afternoon.

Only with a few closes in the 1330s..and preferably <1325, can the bears start to consider the more bearish outlook.


sp,daily4 - the 'more bearish outlook'

The above chart is indeed the somewhat bearish outlook .It is pretty much as bearish as anyone could argue for right now.

The problem the bears face is that in each of the previous collapse waves (May 2010, and July/August 2011) both had a noticeable catalyst which really spooked the main market. In 2010 we had the first concerns about Greece, and last summer we had the concerns over the US fiscal deficit/debt mountain.

So, the bears really need a catalyst to whack this market back through 1340, then 1325..and ultimately the strong 1310/00 resistance zone. I would think most doomsters could reel off a list of dozens of 'big ticking problems' out there, but, I do admit, for any major down cycle to occur, bears need a motivating issue in the days and weeks ahead. At the moment, other than 'Mr Market waking up..and realising a US recession is likely', I can't see anything in the near term to cause 'severe market upset'.


One final chart to close the day...

VIX, weekly

VIX weekly remains one of my favourite bigger picture charts, and you can clearly see, if we do see VIX +22, then it'd be suggestive there is a reasonable chance of at least a mini explosion to around 35/40 within the next 3-6 weeks.
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Both Thursday and Friday are filled with more econ-data, and we have the ECB who will doubtless do some meddling (even if its just words) this Thursday.

The initial first target is clear. Bears need a break under 1340, bulls merely need to contain things within the channel.

Goodnight from London

Daily Index Cycle update - rolling over

Today was certainly a bit of a choppy one. The close was not exactly inspiring for the bears, the declines were again only relatively moderate.

Yet, on the daily MACD cycle, we are starting to rollover, as lead by both the transports and the Rus'2000 small cap.


IWM

Sp

Transports

Summary

A very bearish day for the tranny, which even put in a nice close below the hugely important 5000 level. Two more daily closes under 5k..would be a real warning that the long awaited wave'3 lower might finally be underway.

See the MACD cycle on the Sp' closeup chart, it IS rolling over. Bears should arguably seek at least one major down day of sp -20/25pts either tomorrow or Friday. So..the target would be somewhere around 1350..preferably in the 1340s.

A close in the 1330s at any time would break the lower channel, and portend for possible severe falls next week.
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A little more later.