Monday, April 9, 2012

Morning Market Summary and Charts 04/09/12 $SPX $ES

Even after a long weekend holiday, when you have had time to get away and relax, remove yourself from everything and basically morph into a lump of jello for three days coming back to this crap can be hard. Reality persists and those that don't get it are growing in number. I spoke to several shop owners on vacation that honestly believe the recession is over, all is well and followed up that conversation with the term "cash on the sidelines". Man, oh man, the sheeple don't get it. Locked into their little worlds they have created for themselves, they sit and dream and all is well again totally clueless to what's coming. They remind me a bit of a Fed economist.

Wasn't it Faber last week that warned 'Massive Wealth Destruction' Is About to Hit Investors: Faber - US Business News - CNBC

One reality that not one shop owner knew of (or could care less about as they don't get the concept either) was that right after the close Thursday Egan Jones Downgraded USA From AA+ To AA, Outlook Negative | ZeroHedge. "A few weeks ago when discussing the imminent debt ceiling breach, and the progression of US debt/GDP into the 100%+ ballpark, we reminded readers that in February S&P said it could downgrade the US again in as soon as 6 months if there was no budget plan. Not only is there no budget plan, but the US is about to have its debt ceiling fiasco repeat all over as soon in as September. Which means another downgrade from S&P is imminent, and continuing the theme of deja vu 2011, the late summer is shaping up for a major market sell off. Minutes ago, Egan Jones just reminded us of all of this, after the only rating agency that matters, just downgraded the US from AA+ to AA, with a negative outlook."

That post says a lot. It screams of more fiscal storms on the horizon and more debt to come. STB will be keying on those events and dates as major market movers this summer, but we have to get past this squall first. Patience, form and follow the Fed has been STB's motto all year. As for form, last week we discussed the potential triple or M top, the head and shoulders set up (like the 5th in this run), upper LT diagonal resistance, persistently overbought conditions with double divergences on the daily charts, the CPC and more. I think the goose is finally cooked, but that is up to the chefs at the Fed to decide.

Minis 4hr - We were discussing this exact event all week last week, the big move Sunday night. 1386 neckline got crushed last night and 1374 support held like a charm. At this moment there is no follow thru to the move that started in Asia (as reaction to the US after the close) and has worked its way back around the globe. Can the bears follow thru after the open is the big question? See that lower pink support diagonal in the lower right corner near 1350? That should be the target for this first move. As always a backtest of the neckline should be anticipated (which will not close the gap on SPX cash. Did a HnS RS launch sequence finally fail?

SPX 60m - Cash chart with targets in green. 1341 is the key zone right now. Not until that cracks (which is 80 SPX points off the high will I get too excited about a major event (like a move to 1140). Channel and lower diagonal support should be gone after the open.

Form looks good here and a bit of fear has been infused into the markets. Reality that was sitting in the shadows is beginning to creep up from behind now. STB mentioned a large overnight gap and a 300 point down DOW day to get things started. Let's see if the bears can pull anything off during open hours. This looks promising so far.

On calling a top ......tempted, let me work on that a bit.

GL and GB.

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