LATEST FED SPEAK Although the accommodative stance language can be expected to stay in the upcoming FOMC statements, traders are increasingly aware that such language is used as an offset for upcoming hawkish developments such as: i) the termination of the MBS purchases next week; (ii) start of some reverse repos operations (draining liquidity); and (iii) the looming increase in the discount rate. Bear in mind that the Atlanta Feds Lockhart (said last night that extended period phrase must stay) is not a voter at this years FOMC.
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By Nicholas Santiago on March 23rd, 2010 12:58pm Eastern Time
Everyday we see the markets continuing to climb. This has been a bull run for the ages since March 2009. During this one year rally the market has not had a single ten percent correction. This move has been impressive to say the least.
Since the February 5th, 2010 pivot pullback low the market has emerged with new leaders. The iShares Russell 2000 Index (NYSE:IWM) was the first index to make a new high in 2010. This index represents small business and is viewed by many as a leading indicator.
Last years lagging and government owned stocks such as American International Group Inc (NYSE:AIG), and Citigroup Inc (NYSE:C) have all rallied higher during the first quarter of 2010. This is also a sign that speculators believe times are getting better. Traders and investors are seeking out the bottom of the barrel names in order to get a return.
Historically the market leaders have been copper and copper stocks. This usually tells traders and investors that there is building and expansion taking place. Currently the only building and growth that is taking place comes from China and parts of Asia. However, since China is starting to tighten their lending requirements for banks, copper has not outperformed. Leading copper stocks such as Freeport-McMoRan Copper & Gold Inc (NYSE:FCX) and Southern Copper Corporation (NYSE:SCCO) are still below their January 2010 highs. This pattern has historically been a negative signal for the markets.
The markets have continued to climb higher and the trend is clearly up. This reminds me of the children game musical chairs. The market continues to move higher everyday. Currently the markets are saying every thing is just fine. However, be careful to not get caught when the music stops.
Nicholas Santiago
Chief Market Strategist
InTheMoneyStocks.com
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GBP FALLS across the board on a combination of a bigger than expected slowdown in inflation and disappointing CBI figures. Feb CPI fell to 3% y/y from 3.5%, supporting the Bank of Englands expectations that the previous rise in inflation would only be temporary before returning to its 2.0% target. CBI index on retail sales volume fell to 13 in March from 23 in Feb vs. expectations of 20. CORRECTION: UK BUDGET is Wednesday not Tuesday). GBPUSD seen retesting $1.4930, followed by $1.4880, while EURGBP shows preliminary signs of a turnaround that could reach 0.8830, followed by 0.8770 later this week.
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By ITMS News on March 22nd, 2010 5:32pm Eastern Time
It is important to use multiple time frames in order to find the best support/resistance levels. Often what looks to be a bullish level on a smaller time frame may not necessarily be a bullish pattern on a larger time frame. The same theory holds true for moving averages on different time frames.
In this example, the SPY was putting in a bullish pattern on the 5 and 10 minute charts. However, InTheMoneyStocks.com traders identified the 200 moving average on the 60 minute chart as resistance. The SPY approached, and hit the 60 minute 200 moving average where it began a small pullback from that level presenting a great, high probability trade. Intra-day this was a very nice pullback, you can find this type of trade almost on a daily basis.
Remember this tool; use moving averages on multiple time frames to capitalize on powerful, profitable trades intra day, EVERYDAY!
By Gareth Soloway on March 22nd, 2010 1:45pm Eastern Time
Apple Inc. (NASDAQ:AAPL) is retesting a key breakdown line on the 60 minute chart. This line starts from March 5th, 2010 per the chart below. Note how it hits many times and then on March 19th, 2010 it finally breaks lower. After a short drop, it is now surging back to retest that key line. This is a major resistance area on a retrace basis. If Apple closes above that line, it would be a major bearish failure pattern and could signal more upside.
Apple Computer has been the market leader for quite a while now. It is truly the technology powerhouse the markets look towards. Any weakness or inability for Apple to retake that trend line could be a signal of weakness, not only for the markets but for the whole entire market. Just over a year ago, Apple was trading well under $100 per share. Since then it has been on a one way track, chugging higher.
Keep an eye on this stock and that trend line today and in the next few days. Should it recapture that line, watch for a possible move to $230 or higher. If it fails to recapture that trend line, a fall could happen quickly. It is possible to see Apple eventually sell off to $200 by late summer.
For more key data and analysis, join the Research Center at InTheMoneyStocks. Get daily videos, guidance, calls, analysis and more. See you there! $$$
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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By Nicholas Santiago on March 22nd, 2010 12:45pm Eastern Time
Nearly everyday the market repeats the same pattern. Today for instance, the S&P 500 futures were trading lower ahead of the opening bell. This move lower for the index futures tells us the U.S. Dollar index is trading higher, as was the case this morning. Then it happens, almost as if it were set to a clock; the U.S. Dollar index begins to sell off sharply from the premarket highs. As the dollar declines the stock market indexes rally.
This same scenario can be seen on any given trading day, whenever the major stock indexes get in trouble and close to a technical support level. Look at the U.S. Dollar index chart today as this is a perfect example of what takes place. As this occurs, one can see how the market and the U.S. Dollar index can both trade higher on a daily and weekly chart. This is because the dollar declines once the U.S. market opens. Please remember that the U.S. Dollar index trades 24 hours a day.
Obviously institutional computer programs are simply trading inverse to the dollar once the opening bell rings at the New York Stock Exchange. Therefore, the intra-day U.S. Dollar index chart is the most important chart to follow. The only time the stronger dollar does not have a negative effect on the market is when trading volume is extremely light. This has also been the case during the month of February and March. Historically the months of February and March are very heavy trading volume months, however, this March has been lighter than August 2009 which is the peak of the summer doldrums. Remember light volume favors the upside.
Whenever the dollar fades from the open, traders can look at most commodity and agriculture stocks to catch a bid. Some names that rallied from todays declining dollar include Potash Corp./Saskatchewan (NYSE:POT), Exxon Mobil Corporation (NYSE:XOM), SPDR Gold Trust ETF (NYSE:GLD), Freeport-McMoRan Copper & Gold Inc (NYSE:FCX), United States Steel Corporation (NYSE:X), and most other inflationary stocks.
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INTENSIFYING RISK AVERSION boosting JPY at the top of the ranks in currencies, followed by USD then CHF. We warned in prior IMT that Indias rate hike as well as anticipated tightening from the Fed (discount rate) and China (actual rate hike not reserve requirements) will weigh on risk aversion. EURUSD next immediate target at $1.3390, which is the 76% retracement of the rally from the $1.2860 low to the $1.5126 high. EURJPY seen testing 120.60, while cable seen capped at $1.5070.
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The passing of the healthcare reform in the US House of Representatives will largely benefit brandname drugmakers and device makers as the latter avoided deeper price cuts while having fees and rebates delayed to 2011. But global equity markets will be more concerned with Fridays rate hike from the Reserve of Bank of India, Fed Chairman Bernankes Thursday speech about the exit strategy (which may be used to explain a probably discount rate hike on Thursday) and expectations of a Chinese interest rate hikeas the PBOC has yet to increase borrowing costs aside from tightening reserve requirements and limiting new bank lending. GBP EXTENDS SELL-OFF after more members of the BoE mention bumpy recovery and keeping the door open for further asset purchases. Markets turn to Tuesdays UK BUDGET where Chancellor Darling will give details on the BANK TAX as well as announce the govts 2010 and 2011 estimates GDP growth, deficit and unemployment. None of these dynamics are expected to boost cable.
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By Gareth Soloway on March 21st, 2010 12:19pm Eastern Time
The markets are setting up for a showdown. Simply put, volume has been muted of late but may change shortly. The market awaits further European information on how bad the Greece crisis continues to be and in reality, who is next? The markets seem to be sweeping it under the carpet, but everyone knows Greece was just the first of many to come. For now, the markets are content to ignore it.
Volume indicates lack of institutional involvement. Over the last six weeks, since the February 5th pivot low, the markets have soared to new 52 week highs. However, there is no sign of major institutional buying. If there was, volume would be much higher. Speculation is rampant that deals have been struck with the government to keep institutional selling to a minimum to hold the markets higher. We continue to see bad news pushed under the carpet and good news pumped. Whether you believe in the shady activities, one thing is for certain, the markets never go straight up or straight down. Even the best of manipulators can only keep it in one direction so long.
Next week promises to be a little more volatile than last. It seemed like the markets were held in check for the majority of the week due to options expiration and lack of economic news. In addition, the market was waiting on the healthcare vote. I do not think the healthcare issue is as big of a deal as many believe for the markets. Monday will be pure and simple the healthcare issue. No economic news to speak of will be released. There are continued rumblings between the U.S. and China as well on trade practices which also need to be watched. Starting Tuesday, be alerted to economic and earnings news. One the economic front, watch for housing data. Existing Home Sales and FHFA Home Price Index will be released at 10:00am ET. Wednesday will see Durable Goods orders, New Home Sales and Crude Inventories. On Thursday, the market gets Initial Jobless Claims and Continuing Claims and on Friday, the final revisions to GDP and Michigan Sentiment will be released.
Notable earnings this week include Adobe Systems Incorporated (NASDAQ:ADBE), KB Home (NYSE:KBH), Best Buy Co., Inc. (NYSE:BBY) and Oracle Corporation (NASDAQ:ORCL). These will all have a decent impact on the markets. ADBE and ORCL are both key technology companies while KBH will give the markets a look into the housing market. BBY will obviously play a role with the retailers.
Fundamentally and technically the markets are near term overbought. However, as I mentioned earlier, light volume and possible propping, shady activity seems to keep it that way. Thursday an in spirit of bear flag formed into the close and Friday it did play out. In addition, a new bear flag formation formed into the close on Friday. While the bear flag formation is solid, Monday is expected to be relatively light in volume and that can negate the pattern.
Want to know if the markets will be up or down on Monday with out even looking at the indexes? Focus on the SPDR S&P 500 ETF (NYSE:SPY). If the SPY does more than 200 million in volume, markets should be lower. Less than 200 million, look for flat to higher. Is it really this simple? Yes! Why? Because volume dictates institutional activity and reality. Reality is the markets are overbought. Monday through Thursday the markets were flat to higher, volume never went near 200 million on the SPY. Friday, volume was over 200 million and the markets were lower. This is a great signal.
Do you wish to know what positions I currently hold, entry, exits, projections? Do you want to get 40 minute technical videos every night, along with guidance, market projections and education? Simply join the Research Center at InTheMoneyStocks. It is the best service out there. Join now and start enjoying the amazing Research and Guidance that comes with it!
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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By InTheMoneyStocks.com on March 21st, 2010 2:29pm Eastern Time
The S&P 500 gained 10 points this past week from the prior weekly close. The Index is just 9 points above the 1150 pivot resistance level which was the short term January high. Currently, the broad based index is short term extended and overbought; however, the index continues to trade higher. The next important weekly resistance levels for the S&P 500 are 1200.00 and 1226.00. The important weekly support levels for the S&P 500 should the index pullback are 1125.00 and 1100.00. SPDR S&P 500 ETF (NYSE:SPY)
