Thursday, January 23, 2014 Zeb’s Vue

General Information and Analysis

Geithner Was Angry:

Reuters published a story about Geithner (form Secretary of Treasury) and the S&P rating agency.  S&P downgraded US debt, and the story provides "color" on Geithener's reaction.  Geithner called Harold McGraw of McGraw Hill Financials, and what anyone (but Geithner appartently) would take as a threat.

"McGraw said he returned a call from Geithner on Aug. 8, 2011, three days after S&P cut the U.S. credit rating to "AA-plus," and that Geithner told him "you are accountable" for an alleged "huge error" in S&P's work. "

"He said that 'you have done an enormous disservice to yourselves and to your country,'" and that S&P's conduct would be "looked at very carefully," McGraw said. "Such behavior could not occur, he said, without a response from the government."

The US government brought a civil fraud lawsuit against S&P for inflating ratings and failing to downgrade ratings soon enough.  The US denies this suit had anything to do with the US debt downgrade, but as you might surmise, the timing was an odd coincidence then.  No other rating agency was sued, even though they followed the same procedure and protocol as S&P except for the downgrade of US Debt.  Here is a link to the article:

http://uk.reuters.com/article/2014/01/21/mcgrawhill-sandp-lawsuit-idUKL2N0KV1O120140121

US

Comment for 1/23/2014	Measure	Indicator	Ranking
Weekly RSI	WeeklyRSI	72.5	OverB Falling
Long Term MVA (200 day MVA)	200 MVA	9.28%	Bull
5 Day Slope of 55 day MVA	Slope55MA	0.48%	Neutral
Intermediate Trend (Using ADX)	ADX(14)	12.87	Chop
Short Term Trend (Daily RSI 3)	RSI(3)	61.88	Neutral
Relative Volatility ATR vs. 1Stdev	ATR(90)	0.78%	Quiet
VIX - MACD 10/30 (slope down)	MACD	0.020	Chop

 

Comment:

 

Long term, the bulls are still in control.  The market was very quiet yesterday, and I would surmise day traders did not do well unless they had a system to trade chop (and knew it would be choppy).  The market has been in a trading range for all of January (albeit some of the moves were significant.)    

Overnight, the S&P 500 futures is way down.  DOW and NASDAQ are also down.  They are below both support lines (derived off the Pivot).  Look for next support at 1826.50 on S&P 500 futures.  The next major support is at 1826.25; low made on January 13, 2014; which is also the low for the year.

Trader Bias should remain long.

Technical information from price only is inconclusive, as there has been no trend since December 26, 2013.  Basically, short term swing traders should step aside for now. 

 

The table above is a rating for intermediate and long term trend in the S&P500.  I used the S&P 500 as the indicator for the USA stock market.  For day traders: You may find it useful to trade in the direction of the trend.  However, looking at any daily chart over lots of years, the trading direction for the day is pretty random. 

S&P PIVOT ES Mini March Contract - Tuesday- Useful on Friday 1/10/2014

Yesterday 1-22-04			Day Before Yesterday
High	1843.25		High	1844.00
Low	1834.75		Low	1826.25
Close	1838.50		Close	1838.50
R2	1847.50		R2	1854.00
R1	1843.25		R1	1846.25
Pivot	1839.00		Pivot	1836.25
S1	1834.75		S1	1828.50
S2	1830.50		S2	1818.50

 

Stocks –

Zeb’s View:

The opening today will be down, and the market is so far down, it may try to fill the "gap" from yesterdays's close.

It likely will depend on a slew of earnings releases from big names for earnings season: McDonalds (MCD), Netflix (NFLX), and Western Digital Corporation (WDC).   Keep your eye on Boeing (BA) today as well.  They are up y/y 92.4% on stock price.  Is this too high? 

Nasdaq is trending (sort of) higher in January, while the DOW underperforms and is flat to down.  If you believe that NASDAQ usually leads a bull market, then you have to believe the markets are going higher.  However, any 7 year old will tell you the market is going nowhere on the charts.

Everyone is looking at the first real economic news of the week.  The jobs report along with existing homes sales will be reported.  The Leading Index is due to be released as well.

Labor Report

Released On 1/23/2014 8:30:00 AM For wk1/18, 2014

Prior Prior Revised Consensus Consensus Range Actual New Claims - Level 326 K 325 K 330 K 303 K to 355 K 326 K 4-week Moving Average - Level 335.00 K 335.25 K 331.50 K New Claims - Change -2 K -5 K 1 K

 

The year end labor report was not signaling improvement in the labor market.  The new report is signaling some improvement; albiet the numbers did not meet expectations.

So far, the market opened down, and continues  to go down; so far not moving to fill the opening gap down.