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Equity Update
Submitted by Nic Lenoir of ICAP
There are a few interesting developments today. On Tuesday we pointed out that there was not enough short-term divergence in S&P or Nasdaq futures to consider shorting them. But a no volume spike on the holiday yesterday took care of that. We need to see a little bit of follow through on today's sell-off to confirm we are going back down to test 1,025. Here are a few solid elements to look at which point in that direction:
Dax futures have failed twice to bypass the former support of the bullish channel now resistance. The chart says it all.
Similarly Nikkei futures have failed to break back above the former support. A break of 9,600 would open the way to more significant downside.
The Russell 2,000 came back to test the 50dma as resistance and failed to close above it as well, and the 21-dma and 50-dma posted a bearish cross right on top of the index, which in theory calls for more weakness.
As long as these 3 resistances are in place the dynamic from here should remain bearish.
It is worth noting also that the dollar index has bounced hard from the year's lows made yesterday in no volume and with strong divergence. We could expect to retest 76.81. Note that on a break there we would trigger a double bottom that would catch more than one short the wrong way. Asia central banks were spotteed today support EURUSD, but with little success other than stalling the fall for now. The night session should prove decisive if they lift the market in more size. We are also at a key level in oil, where crude futures could show dignificant downside on a break of 76.45. This would imply a new 20-day low which would probably stop out the trend followers out there.
Good luck trading,
Nic
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We are going to 1060 today. Mark it.
How about not
Gee, everyone is a prophet with a crystal ball
What gives?
This is bearih, that is bearish...
Everybody and his brother is bearish
You know how these one-way bets usually end up.
P.S. Sell and let that pig hit the fan, you stupid.
friend of mine told me that every major index (dow, r2k, sp500, nasdaq) have all filled their gaps from the oct 08 meltdown
if true...time to get short. of course i've been thinking about that since april
:( So have I.
We've had a couple of bounces off the 1102 range. Could be a double top. There's some "formidable overhead resistance" above here.
Until liquidity is absorbed somewhere else, equities will get ramped up.
I read the other day that billions of investment euros in money market funds are coming into play once the 1 yr term deposit with 4% to 6% interest expires.
Banks and investors are literally swamped with cash and don't know where to shove it next. Until there's a decent interest rate hike, money will continue to flood the markets.
Walk, you are dead right. These downturns are consitently "supposed" to be the start of a pullback, but for what reason. yes yes, i know, market is overvalued and all that crap but where else can anybody get a return. You could tell at the close today that the shorts hv no conviction. We pull back minorly, and then up again.
The dollar vs. everything else. Who ya got?
Giant spike in ES into the close as usual.
This was a low volume day. So as per the government mandate, GS and JPM were supposed to use the low volume to get the market +0.45% by close. Interestingly this did not happen.
Apart from that, this day may - MAY - be important, as yet another failure to breach 1100.
Sorry for sounding stupid but why would the Asian central banks support the Eur/USD trade, shouldn't they be wishing for a stronger dollar?
So we've had 4 trading days of the past 30 that took us over 1100 intraday. Just today and yesterday the S&P went above 1100 a full 7 times (3 yesterday and 4 today). Yet in spite of all this we've not yet closed above 1100.
My trader gut says we've not seen the tops of this bubble yet, but technically speaking after such a firm rejection of 1100 we're looking at some downdrafts next week.
And oil...im looking at you CL1...you weak like soft handed Ukrainian trembling at the feet of Mother Russia...Guess we'll have to bounce off (or try a lil lower than) $75 until we try for $80 again.
And the $...75 on the DXY is strong like big Russian Bear that takes all campsite picnic baskets.
You forgot to mention the long term trend line.
Go to you tube and search George Carlin- The american dream.
thank me later.
He's right on the Russell 2000...the action there is putrid, and it's problematic when smaller, high beta names crap out badly.
Without the BNI buyout goosing the Trannies, the chart there would look equally abysmal.
It's on fumes now...
What gives?
SELL SELL SELL
Everybody and his brothers is bearish these days :)