Pre-Market Brief

Good morning. Futures are somewhat higher, sp +11pts, we're set to open at 1853 - crucially, back above the 50 day MA. So long as Yellen or Fed official Fisher, don't say anything 'stupid' today, equity bears are not likely to be able to turn this back lower. Metals are set to open..flat.


sp'daily5

Summary

Frankly, it is not looking good for the bears. If we are indeed trading in the 1850s this morning, and certainly..if we get a daily close >1847 or so, then it would be highly suggestive that a short term floor is in. To me, that is a major disappointment.
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Using the R2K as a guide

If you saw the recent two videos from Walker, you'll know about his scenario where the R2K hits/briefly breaks the 200 day MA, only to rebound. If we see a net gain for the R2K today, I'd think it is white flag waving time for the bears. Urghhh!


The following would be a valid bearish scenario - so long as the R2K does NOT break >1210/15 in May/June.

R2K, weekly2, H/S

Make of that..what you will. Right now, that seems the best hope, but clearly, the R2K is now due a 6-8% rally, and we're already higher by 1% in pre-market.

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To those currently on the short side, I wlll merely note 'trading stops will be useful'. After all, worse case, is that this nonsense breaks new index highs (at least for the Dow/SP') in May..before the next wave lower.

As for me, I don't intend to get involved until after the Easter break. Further, any daily closes >1850, and that rules out any short side trades in the immediate term (if not much of May).


yours... content to be on the sidelines for 'some time'.


9.18am.. Pre-market gains holding... sp+12pts....that takes us to around 1855. It is pretty decisive now.

Notable gains in Oil, +1.1%


9.37am...It looks decisive. Barring a collapse on 'Yellen talk' - seemingly unlikely, this down wave is done.

First upside target is the 1870/75 price cluster zone.


9.51am.. hmm, a little spiky-fail...but we DID break the 50 day MA..and mood out there looks like bears are exhausted.

Bears need to hold the line

It was a messy day in market land, with some interesting price action between sp'1844/16. Equity bears need to hold under the 50 day MA of sp'1846, but more than that, they really need a weekly close in the mid/low 1830s, to attain a second red candle on the weekly 'rainbow' charts.


sp'weekly7

Summary

With a daily close in the 1840s, the red candle..has turned blue. This is a clear provisional warning of trouble to those still on the short side.

As it is, I'm still guessing we'll hold under 1850..but more importantly, under the 50 day MA...currently 1846 - but rising each day.
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The second market leader in real trouble

Most notable aspect of today was unquestionably the R2K, which broke below the 200 day MA, and was briefly trading in the 1000s. Despite the latter day recovery, this was an important break.

The bigger monthly charts are even more of a problem for those seeking continued 'broad upside across the summer/2014'.

R2K, monthly

A monthly close under the 10MA - currently 1114, would be huge technical damage to the broader up trend. Underlying MACD (blue bar histogram) cycle is rolling over, and is set to go negative in May. Right now, best 'bearish case' are the mid/low 900s - which would likely equate to sp'1625/1575 by late summer.


Looking ahead

We have some housing, and industrial prod' data in early morning. However, Mr Market will be far more focused on what Yellen has to say. She is due to appear at the Economic Club of New York around lunch time. Further, Fed official Fisher is also on the loose, whose comments might motivate the market one way..or the other.

At 2pm, the latest Fed beige book is released, and no doubt the algo-bots will be reacting to that.

*next sig' QE-pomo is not until next week.
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Video update from Walker


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Permabear in tech disarray

This morning was somewhat annoying. I had a straight forward plan. Short from the 1840/45 zone, but no..my computer was having 'issues', and because of that, I decided to abandon picking up a short side block, not knowing if I'd even be able to get online later in the day. Yeah, I don't have a backup PC right now.

Anyway, today was interesting to watch. With two days left of the week, I'm highly suspicious that the market will trade largely sideways, within the 1825/45 zone - critically, STILL under the 50 day MA. If that remains the case, then next Monday, I will seek a major re-short, and would still be seeking downside to the 1770/60s.

Goodnight from London

Daily Index Cycle update

US indexes closed moderately higher, sp +12pts @ 1842. The two leaders - Trans/R2K, settled +0.8% and +0.4% respectively. Near term outlook is for minor chop into the 3 day Easter weekend, holding under the 50 day MA of 1846. Bears look set for renewed downside early next week.


sp'daily5

R2K

Trans

Summary

A bit of a messy day, but the daily charts offer more clarity than the smaller hourly/15min cycles.

In my view (when you consider the bigger weekly cycles), we are likely developing bear flags. If that is the case, we'll close this week somewhere in the sp'1825/45 zone - importantly, to remain under the 50 day MA.

The price action in many ways is similar to late January, and if Wed/Thursday is largely minor chop..it will form a very clear 5 day bear flag.

Downside next week would be from the 1840/20 zone...down to the 1770/60s.
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a little more later...