The market opens moderately lower, but the declines aren't enough to puncture the big sp'1600 level. Bears face severe problems with a very large QE of $5bn this morning. Underlying momentum is starting to swing back to the bears, but what matters is where we close on Friday.
sp'daily5
VIX'daily3
Summary
*daily VIX black-fail candle sure isn't such a great one for the bears. I remain very concerned VIX will go red by the 1pm close.
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I've seen this picture many times before and it rarely ends well for the bears.
Despite a truck load of bad news/mood out there, the market is barely -0.5%.
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*for the record, I will hold short into Friday, but I sure ain't confident about the current unclear mess.
10.03am.. ISM Data, weak, 52s, but not recessionary, and not enough to kick this market lower.
Bulls still comfortably holding sp'1600.
1021am...sp'1606,, hmm... As ever though, 11am is often a low point of the day. I am concerned we'll test 1600/1598, and then soar on the QE.
Good morning. Futures are somewhat lower, sp -10pts, we're set to open around 1604. Oil is trading $101, with the precious metals higher. An early morning break back under sp'1600 does seem likely. The only issue is if the bears can close it under, despite a large QE.
sp'60min
sp'daily5
Summary
An interesting 'short' day ahead.
We have a large QE of around $5bn to deal with, but world markets are shaken up by the Egyptian issue, which has driven oil back above the big $100 level.
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If we can close <1600, then I will be looking for the low 1570s on Friday, with VIX 19s.
8.33am.. futures jumping back higher, sp -3pts, 1611....hell, they are almost close to positive.
With the large QE, bears are massive risk today. Worse case.. a close >1625/30, which will nail the bears for another few weeks.
9.17am.. sp-6pts, so thats 1608. That is still a fair way from breaking the 1600 threshold, and will be really tough to break after 10am, once the QE money starts kicking in.
We've seen this picture before, 'bad news everywhere', only to close green.
The mid-term weekly 'bearish' outlook/count is still holding together. The critical line remains the 10MA @ sp'1628, and we've repeatedly come very close to breaking it. Yet these borderline situations are typically the case in market land. Where we close the week will be pivotal.
sp'weekly7 - near term bearish count
Summary
So...we still have a blue candle on the weekly 'rainbow' chart, (we need 1605/1595 to get back to red), and the bearish case is still on.
Primary downside target remains the lower weekly bollinger, currently @ 1506, but that will rise to around 1512/16 next week, and the 1530s by mid July.
As has been the case since the 1687 high of May'22, 'the faster we fall, the lower we can go'.
Right now, it looks like the 1530s will be hit, but no lower.
WTIC Oil breaks the big $100 level
As I type (10.30pm EST), WTIC has now hit the $102s, and could easily be a few dollars higher in the morning.
WTIC, monthly 20yr historic
WTIC, monthly'2, rainbow
The Egyptian situation is a major one, and if the Suez canal is closed (or merely at threat of closing) - if only for a few days, we'll probably be looking at WTIC $110/120s. That will most certainly upset the equity markets, and we'd be unquestionably trading back under sp'1600.
From a simple price perspective, the first 'easy' target is the monthly upper bollinger of $106. A daily close >110, and then we could be looking at a couple of $10+ daily gains. I'm certainly not expecting the $147 all time high to be hit any time soon, but the daily, weekly, and monthly trends are ALL trending higher.
Higher Oil prices for the US..and other western economies, that will help the 'summer of recovery, ver'5.0', yes?
Looking ahead
Wednesday has three pieces of econ-data, ADP jobs, EIA oil report, and ISM non-manu (10am).
*there is a very significant QE of around $5bn to prop' up the market tomorrow, and bears are going to be under severe pressure until the early close of 1pm.
Things will become a lot clearer by the Friday close. At that time, we'll either be breaking well into the 1630s, or closing <1600. I'm guessing it will be the latter, and I remain on the short side.
Goodnight from London
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intra-day video from Mr Permabull, 'Carboni
I certainly agree with him on Gold and bonds. Yet, higher bond yields will be a downward pressure on the market, at least until the market 'gets used to it'.
