Timing is everything. Last night I left right after the markets closed for a little R&R. When I returned the markets had all dropped 1% after hours in reaction to a well telegraphed fed’s discount rate increase. The markets felt ambushed and the timing seemed suspicious. Like the Apple accounting change, which also had been telegraphed, the markets reacted to the news by "selling now and think later".
Today we will find out how "baked in" the news was. Everyone is trigger ready for the rate hikes as they traditionally end that nice bull market recovery period. News trumps all and most technical analyst like me tend to ignore the news as a one day "noise" event. Once everyone knows the news it quickly gets incorporated into the market and our indicators settle down and we try to discern to new sentiment. That one day of baking in the news becomes a blind trading day for our longer term indicators so we must turn to our intraday indicators to see how we are doing.
Up until 4:15pm yesterday we were well on a bullish recovery form correction and sentiment was flashing blue skies ahead. Today we will test the fortitude of the bulls, so the momentum continues for the bull side and all eyes are on how they will handle today’s gap down.
Asia
Europe
United States
Economic news
Those CPI numbers came in ok. Are the producers eating the inflation? Do they not have any pricing power? What does that mean for future earnings?
Earnings
Breadth Charts
40 DMA % Index
This chart from yesterday remains bullish with a +6 Score.
10 Day High – Low
We mentioned in the room yesterday that now the market has re-launched into a bullish direction it is time to start looking for weakness or waning strength. While the NYSE put in a bullish +2 on the charts the RUT and NAZ took a rest and put a in 0. So this chart scores only a +2 today.
52 Week New Highs
Like the above 10 day high – low this chart also only puts in a +2 because of the strength in the NYSE and weakness in the NAZ and RUT.
Conclusion
| Chart | Score |
| 40 DMA % Index | +6 |
| 10 Day High – Low | +2 |
| 52 Week New Highs | +2 |
| Total | +10 |
The charts put in a +10 which is still bullish but signaling a little stall here as the market needs to consolidate its recent gains.
$SPX
The markets have done an amazing job bouncing after hours here from a 10+point loss to down just 2 points pre market.
Yesterday we made it up and over the 1100 – 1105 area which now becomes support and this morning we will see how strong that support is. It is OPEX Friday with a big news event so watch the intraday data and determine the direction. It could be quite volatile.
Bulls Plan; The Bulls are now fighting the fed. They need to maintain that 1100 area, if that fails today they need to hold 1090. A last stand for the bulls is at 1071. A close above 1100 today would be considered bullish.
Bears Plan: Pounce on the opening and drive the price below 1100 and let the resistance there work to weaken the bulls for a final sell off down to 1090. The bears have gained ground on any close below 1100.
The bulls have control of the ball. If they can play defensive offense today and just maintain in the face of bearish news that will tell us a lot about the sentiment here.
