10am update - A Fed day..to start the month

Welcome to May! Market is opening moderately weak. Bears need to see sp<1570s, with VIX 16/17s to know this latest up wave is complete. Precious metals and Oil are very weak, and both are possible leading warnings for the equity market. USD is still weak, -0.3%


sp'60min

vix'60min

Summary

So...a little weakness to start the day, but its nothing significant yet. In fact, baring a break <1570, I won't be the least bit pleased.

Its been a rough past 7 days for the bears, and the obvious big target is the 1536 low. That is an awful long way down right now, and I find it hard to imagine the market getting spooked enough across the next few days to have any chance of hitting that.

As ever, look to the VIX. If we see some power in the VIX, 15/16s, then it would open the door to an 'interesting' Friday.

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*I will be focusing on Oil especially this week, since I am short USO from the low 33s.

Oil is confirming a turn lower...

I am seeking USO in the mid 31s. If the market unravels...then 28/27 is the bigger target for a key multi-month low.


10.11am.. market looks to have broken the narrowing wedge on the index charts.

First target remains the sp'1570 threshold. Bears should be seeking a daily close under that this week. VIX in the 14s...I'd like to see 15s later in the day.

Pre-Market Brief

Good morning. Futures are largely flat, sp' is set to open around 1597/98. USD is notably weaker again, although that isn't help precious metals or Oil, the latter of which is down 1.5% already. ADP data came in somewhat weaker than expected @ 119k, vs 155k exp.


sp'60min

vix'60min

Summary

Welcome to May, thats one third of 2013 done already
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So, ADP was weaker, but it certainly wasn't negative. More data to come at 10am, and also an Oil report at 10.30.

If the Oil report is bad, perhaps we'll see a -4% day?

USO is set to open -40 cents @ 32.75

I am seeking the mid 31s by this Friday. Today will no doubt see a confirmed rollover on the MACD cycle..and there is very considerable way to fall.
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..and don't forget..its a Fed day. FOMC announce at 2pm.


 9.22am... precious metels snap lower...Silver is in trouble of breaking the recent low.

Oil continuing to weaken ahead of the oil report.

Bullish stocks, Bearish commodities

April saw net gains for the main headline indexes. The two market leading indexes - Trans/R2K, both saw minor declines though. Meanwhile, Copper and Oil declined in April, with the former especially suggestive of 'deflationary' issues. May will be interesting, especially if some significant volatility (VIX >20) comes back to the market.


Sp'monthly

sp'monthly2, rainbow

Copper, monthly

WTIC Oil, monthly

Summary

The market almost seemed to want to spite the bears into the close, with a fractional new high of sp'1597.57. That made for a monthly gain of 28pts (1.8%) which is certainly nothing to be dismissed.

Primary trend remains higher, as the rainbow chart clarifies. A simple green bullish candle, the fourth consecutive one, and its now been 20 months (Sept' 2011) since we had a red candle.

With ongoing QE-POMO, and an absence of 'black swans', why would May see any declines?


Oil and Copper - still presenting moderate deflationary warnings

Oil and Copper declined by 3.8 and 6.4% respectively across April. Both closed the month well off their lows, so the monthly price action was actually more impressive for the bears than it might initially look.

For me, Copper is the big one to watch. The big $3 level is an absolutely critical one, and if we see sub 3s at any point in May, the bulls should be at least 'somewhat' concerned..

Similarly, a break < $80 for Oil would be a major issue, and open the door to what a fair number of analysts are saying - 'WTIC Oil in the 50s'. Right now, that is of course a very long way down, but April did see some serious downside.


Looking ahead

Wednesday has the ADP jobs number, ISM, construction, and the weekly EIA oil report. Infinitely more important though is the FOMC. An announcement is due at 2pm, I'm unsure if the Bernanke will be doing a follow up press conference.

Unquestionably, this month has been a real disappointment for those in bear land. The April declines have been fully reversed, and we have closed the month with new highs on the SP and Nasdaq.

May can only be better...right?

Goodnight from London