Monday, January 9, 2012

Morning Post 01/09/12, SPX

Well two things are on deck today. First and most importantly is the Merkozy meeting that is happening right now. As most traders know these can be volatile market movers (usually due to RAMPant rumors from the FT or some other "source" leaked 10 minutes before the meeting has ended that usually end up being nothing bust a rumor).  Second is that earnings season starts today with AA leading the way. You can find a handy earnings calendar here. Next week will be huge with the financials reporting. You can expect some wild action coming soon.

If there is one thing that I believe you can look at that is a barometer of safety in the world is where is everyone holding their cash. Think about this for a second (cause all your money is in a bank). If banks are not keeping their money in their own vaults and have moved it to their central banks, then is there something very wrong with the system. Is there some sort of massive risk out there that we are not being warned about? See, "the ECB Deposit Facility usage soared to a new all time high of €464 billion, an increase of €199 billion" from EUR Rebounds From Multi Year Lows On Merkozy Meeting, Short Covering; ECB Deposits Soar To Record | ZeroHedge.

Looking at the minis this morning in a 4hr chart - First notice the 1280 level is strong resistance. Second, notice the low volume. Third, see the weakening MACD, RSI and S Sto indicators. Fourth, the nontraditional channel (yellow) I pointed out last week where the support held price up. Did the blue wedge break support and a fall is coming here or can they push it thru 1280 resistance and keep the channel intact? I think the wedge is busted. (Of course a MerKozy meeting surprise rumor can spoil the bears plans at any second.)

The most telling chart in my chartbook is the DOW. For the index that holds biggest and baddest of the stock universe, it is the weakest by far technically. Where price has run to higher highs the underlying technicals are very weak.

Now look at the Bullish Percent SPX chart - Has it lied in the past? No. All is takes is for the SPX to hit a higher high and the divergence between bullish percent and price to be set. See the pink lines. When they go in opposite directions that is not a good thing.

Lastly, what I harped on all last week - the FOMC Meeting chart - Study it closely and correlate it to the BP chart above.

I did not address the exploding dollar (bad), high oil (bad), TNX low (bad) and gold rising (indifferent). The STB has spoken in the not to distance past that I thought the dollar and markets would directly correlate and they are with both moving higher. This is in direct contrast to the inverse correlation they maintained most of the past few years. Concerning for the bears in this move is that a rising dollar has been usually good for their case, but here the markets are rising with the dollar thus creating room for a dollar move south and for the markets to move up celebrating the resumption of the inverse correlation (a centrally planned move). STB just can't grasp the "move to safety" in the US fiat, but it is what it is until the Bankor comes.

STB is in full caution mode right now with divergences forming everywhere. The charts appear to be setting up for a pretty good move south. It could be today, tomorrow or at the end of the month, either way, some sort of larger move south is brewing big time.

GL and GB!

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