Pre-Market Brief

Good morning. Futures are largely flat, sp'500 is set to open around 1852. Precious metals are starting weak, Gold -$8. Equity bulls have some QE to help today, but yesterdays price action bodes for at least a test of the 50 day MA of sp'1833, with the R2K already having closed under that.


sp'daily5

Summary

*awaiting jobs, GDP Q4 data, with homes data at 10am
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Again, bears have to endure a sig' QE today, of $3-4bn, that will be a problem, but once we're past today, its a clear run into next Tuesday at least.
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I see many touting a bounce, yet we're only 31pts from the high. The declines in the Trans/R2K were very significant yesterday, and it'd surprising if we don't see some follow through - at least during part of today.
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I remain short, but will look to drop a secondary short block, if sp'1845/35 today/tomorrow.


8.32am.. GDP Q4 final reading. ..2.6%... make of that..what you will.

Market remains flat...very vulnerable to falling to the low 1840s by 11am.

8.59am.. indexes slipping, sp -3pts.. we're set to open at 1849...

The low 1840s look pretty easy target by 11am.

9.35am.. minor weak opening chop.. awaiting a down wave to the low 1840s.

9.37am.. EXITED secondary short block.  

Holding core SDS block....

*will seek to re-short a secondary short block on any 'stupid bounce' today.

Best bearish case

With the two market leaders - Trans/R2K, leading the way lower, we have some clear breaks of trend on the daily cycles. The bigger weekly cycle is offering sp'1770/50s, but that really is 'pushing it' for the best bearish case. First things first...a break of 1830, and then 1800/1790.


sp'weekly7

Summary

The above scenario really is a bold one, and frankly, I'd be surprised if we do break much below 1800 within the next week or two.

Of course, if 1883 was a key intermediate top, then we should (at least in theory) come down to around the early Feb' low of sp'1737.

With the lower weekly bollinger band rising each week, breaking much below 1770 (as of next week) looks to be damn difficult. I would keep open the H/S formation...so long as we at least briefly hit 1765...but would be much more comfortable if we saw the 1750s.


Looking ahead

We have the usual weekly jobs data, homes data (10am), and GDP Q4 (final reading).

*there is sig' QE-pomo of $3-4bn...bears need to be cautious, however there is then an 'open window' of no-QE until at least next Tuesday.
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Still hoping for 1800/1790

This week sure has been a battle. We've seen four consecutive daily reversals, but today's was far more powerful - especially for the Trans/R2K. The following chart outlines what might be a somewhat complex H/S formation.

sp'60min1b

Regardless of how you might want to count/label the formation, if we do break <1830 - taking out multiple key supports, then bears should see a further 2% downside. The fib' 61% retrace in the 1790s would make for a natural floor - and that lines up with rising trend support on the bigger daily charts.

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I remain heavy short, with 'line in the sand' short-stops at 1884/85. Right now, I don't expect that to get hit. Instead, I hope to get an exit in the low 1800s next week.

I should note, if we do gap lower Thursday, I will look to drop a secondary short block (SPY puts)..and re-short on any intraday bounce.

Goodnight from London

Daily Index Cycle update

US indexes closed weak, with the sp' -13pts @ 1852. The two leaders - Trans/R2K, settled lower by a very significant -1.6% and -1.9% respectively. Near term outlook offers the sp'1840/35 zone, with strong support in the 1830s. If that fails..bears get an easy ride down to the 1800/1790s.


sp'daily5

R2K

Trans

Summary

We had the two leaders - Trans/R2K, weak across the morning, and with the break early in the afternoon, it only took the rest of the market a few hours, to similarly break lower.

Indeed, we now have clear breaks of trend on most indexes, and near term outlook is most certainly bearish for the remainder of this week.

The only thing the bears have to be concerned about is the Thursday QE, which might negate any opening gap lower.
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Big short trade.

A poster highlighted the following to me this evening...

see: massive trade that spooked the market

Certainly, that probably had some effect, although from what I gather, the bond sale today was probably more important.
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a little more later...