Pre-Market Brief

Good morning. Futures are a touch higher - as they have been most of the night. Retail sales, jobless, and producer prices all came in roughly inline. The $ is a touch higher. Most notable since early in the night, the metals, which are being hammered lower, Gold is -$18, Silver -80 cents.


sp'60min

sp'daily5

Summary

It will be important for the bears to put in a lower high today. Certainly, any move into the sp'1440s would be a massive problem, although I find that unlikely, now that the FOMC is out of the way.

What is clear, until we are back under the recent 1398 low, I really don't think any bear can be confident that the bounce is confirmed as over. The big 1400 is actually rather close, barely 2% away, so one major down day, and the bears will be right back.

Good wishes for Thursday trading!

Back test...complete?

The sp'500 hit 1438 today, that was 95pts higher than the recent 1343 low, just over three weeks ago. If this was indeed a wave'2 bounce, then we should be seeing the first declines into next week. The first sign that the current up trend is complete will be a few consecutive daily closes under the recent 1398 low.


sp'daily4 - original bearish outlook

sp'daily7 - fib levels

sp'monthly3e - seeking a red candle

Summary

So, we closed 10pts below the high of the day, with the sp' closing fractionally higher @ 1428. My original wave'2 'stupid bounce' was seeking a move from 1345 to the 1400/25 zone. The recent closes in the 1420s have been disconcerting..to put it politely.

Yet, despite what has been a significant 6% bounce, the monthly charts are still holding their provisional blue candle warnings of trouble.

Bears should be seeking a monthly close under the 10MA @ 1396. This is just 2pts under the first target of 1398. So...a daily close in the 1380s..would be pretty decisive.


Breaking back into the 1380s

The fib chart - even though its just a basic one, illustrates how a daily close in the 1380/70s would be a very natural target in any initial wave lower. Personally, I'd really like to see 1380/79 hit, before Christmas. Now that the FOMC is out of the way, that target is a lot more viable.
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Thursday will see retail sales data. A red index close, even a small one, would be very useful for the bears. However, on any outlook, the bears should be seeking sub 1400s sometime next week.

Goodnight from London

Daily Index Cycle update

The main market closed largely flat, although the transports and Rus'2000 small cap were especially weak. With the VIX closing slightly higher, and the $ recovering in the afternoon, things are starting to turn back towards the bears.


IWM (representing Rus'2000)

SP'daily5

Trans

Summary

A bearish engulfing candle on the Rus'2000 (see IWM chart), that is probably the most bearish signs out there today. First target would be a daily close <81. If we see 80/79s, then a fast test of the recent 76 low seems likely - equating to sp'1343.

The tranny hit my rough target of 5200, and has put in its second spiky/topping candle in a row. A major down day is expected either tomorrow of Friday.

The sp' daily chart also put in a second spiky candle, and even though it closed a tough higher, that is starting to look like an exhausted multi-week rally.


Key targets

The doomer bears need to see watch for the following. First target, the recent 1398 low, and then the 1343 low. I will note that once we are trading back below 1398, I'll be again confident that my original bearish outlook is still likely correct.

A break of 1343 - which seems more likely AFTER Christmas day, will open up a VERY fast move to the June 1266 low, and I'm guessing that won't hold long, and we'll floor somewhere around 1225./1200 by late January.

With Bernanke now out of the way until next year, things just got a whole lot simpler for the bears. I am quite looking forward to the remainder of the week.

A little more later