Pre-Market Brief

Good morning. Futures are moderately higher, sp +5pts, we're set to open at 1877 - a mere 6pts shy of breaking a new historic high. Metals are sharply higher, Gold +$13, Silver +1.2%. Today is quad-opex, so expect some price swings, especially in the latter part of the day.


sp'60min

Summary

If we open >1875 - which now seems likely, then the H/S scenario gets trashed, and all those touting the sp'1900s for April can probably start celebrating.
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The equity bears have two things in their favour today. First, no sig' QE, and second, the underlying issue of 'sell into the weekend'.

Yet, the break above 1875 is significant. It looks like the week is going to end with the weekly cycles flipping back to outright bullish. Urghh.

Seeking a weekly close under 1858

After almost three full trading days of a market flirting with breaking >sp'1875, the equity bears should be seeking a weekly close to confirm last weeks provisional 'warning of trouble'. A Friday close <1858 will offer some important confirmation that the broader upward trend is indeed... tired.


sp'weekly7b

Summary

Barring a break >1875 (or at least >1883), I'll keep on posting the above scenario, which remains my 'best bearish scenario' for this year.
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Threshold for green/blue candle is sp'1858, and that is partly why I am focusing on that number. After today's frustrating price action, I think most bears would gladly settle for a Friday close in the mid/low 1860s.


Japan sure looks bearish

The monthly chart of the Nikkei sure looks damn ugly, and we have the MACD (green bar histogram) warning of major trouble in April..and probably the summer.

First downside target remains 12k, with a secondary of 10k. Any monthly closes under 12k, and that would be a real problem. I realise some would argue 'Ohh, Asian or even the EU indexes are not important', but hey, if the Nikkei is at 12k in April/May, the Dow will at least be in the low 15000s.
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Looking ahead

Friday is quad-opex, so expect some serious price chop, especially in late afternoon.

Fed official Bullard is speaking in the late morning, and as ever, the market might use any statement/comments as an excuse to move.

*next sig' QE-pomo is not until next Wednesday, so equity bears have a clear 3 day window to knock this market lower, at least to test the H/S neckline in the low sp'1840s.
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Borderline

Without question, the daily close of sp'1872 is way too close for comfort for those holding overnight on the short side. Any move >1875 will trigger a lot of short-stops, and then the mainstream talk would flip to 'when are the 1900s coming?'

sp'60min1c

The above H/S scenario is right on the edge, and frankly, if we don't at least close lower by 5-10pts tomorrow, It'll likely turn out to be a bust. As ever...one day at a time.

Goodnight from London

Daily Index Cycle update

US indexes closed moderately higher, sp +11pts @ 1872. The two leaders - Trans/R2K, settled -0.1% and +0.3% respectively. Near term outlook is for some 'selling into the weekend', which might equate to VIX breaking into the 17s.


sp'daily5

R2K

Trans

Summary

Arguably, the most bearish aspect of the day was the 'old leader', Trans, which actually managed a fractionally red close, despite the mild hysteria in the headline indexes.

So..where now? Bulls have been trying for 3 days to break >1875 - which for me is the top end of a possible RS of a H/S formation.

All things considered, so long as we don't gap open >1875 tomorrow, equity bears should have opportunity to push the market lower into the Friday close. After all, who wants to be going long, with continuing geo-political rumblings?

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a little more later...