Good Morning ASX traders, I see you had a great day on the mid and small caps. Now that I have wiped up the coffee I sprayed on my keyboard during @syzygy’s interruption of the cash open, things are a little back to normal.
S&P/ES/SPY : 2734/2734/273.30
Quick note: What I usually try to do is offer meta-analysis of conventional and not-so-conventional opinion from both technical and macro angles. Sometimes I offer an opinion of mine. For instance, in the aftermath of Friday’s close I mentioned I was hoping for a test of the 5 day moving average and fortunately for me, we pretty much got that yesterday. https://hotcopper.com.au/threads/sh...4023784/page-59?post_id=31123960#.Wo1xGLjLc3Y.
Time frames are important and I am as guilty as anyone of not being clear enough when we are involved in a discussion that mixes short term technicals with intermediate term fundamentals.
We are now in the matrix where fundamentals and technicals converge.
Two competing ideas at this juncture (SPX 2730) are 1: the idea that was not heavy selling of the rejection of the 61.8% retrace of the recent lows. The Nasdaq tech index managed to hold on to its 23.60% retrace of those lows and its dual S&P/Nasdaq constituents are rallying strongly on today’s open. Every minute that the S&P does not roll back to at least higher lows vs 9 Feb decreases the odds of that happening in the short term. Overall, the indexes are seeking to consolidate at these levels. The question is: where will that consolidation lead in the intermediate term?
2: The contrary view is comes with a wider time frame. This is where fundamentals become crucial to trading decisions. This second point matters more for swing traders than for day traders. While there is volume structure developing near ES 2733 area, a wider view of the S&P is causing swing trading bulls to approach their purchases with some caution. The 2770 area in S&P/ES/SPY is a gap that looks weak to me. This is the area where catalysts are required for further gains. The impetus for a move higher from those levels could be nothing more than lack of negative macro or geopolitical news input and we won’t know what kind of new volume structure develops there until it happens. Levels to watch on any exploration down into higher lows are 2650 and 2600. As mentioned yesterday, this week’s resistance is first at 2750 and next at 2770. 2700 is still an important pivot.
NYSE Breadth A-D Lines are strong at +1420 right now. Uvol-Dvol is still anemic and hugging the flat line. Cumulative TICK is stronger than yesterday and is trending higher. TRIN is higher at almost 2.00, and that is a bearish reading.
Implied Volatility The VIX is down -11% today requisite with the opening bounce for S&P, but the VIX Futures term structure and levels are holding steady. VXH8: 17.80. VXJ8: 17.50 VIX: 18.28
Open Interest SPY 270 that correspond with SPX 2700 puts are outpacing the calls in that area as of right now, and the 2720 area is evening up a bit.
Equity-Related Currencies/Crosses The USD is strong again, today, and as mentioned previously this is something to watch. Many believe USD strength could be interpreted a negative for stocks.
Commodities Gold is floundering a bit here consolidating after yesterday’s losses and no doubt waiting for the results of the 5-Year Note auction and FOMC minutes.
Debt/Bond/Treasury A 35 Billion 5-Year treasury note auction will be released at 05:00 AEST. 10 Year Note futures are flat and the yield on the note is 2.90%.
S&P Futures are now trying to get above the value area.
(20min delay)