Thursday, January 30, 2014 Zeb’s Vue

General Information and Analysis

US

 

Comment:

Comment for 1/30/2014	Measure	Indicator	Ranking
Weekly RSI	WeeklyRSI	55.6	Neutral
Long Term MVA (200 day MVA)	200 MVA	4.81%	Bullish
5 Day Slope of 55 day MVA	Slope55MA	0.40%	Bearish
Intermediate Trend (Using ADX)	ADX(14)	22.54	Bearish
Short Term Trend (Daily RSI 3)	RSI(3)	20.68	Neutral
Relative Volatility ATR vs. 1Stdev	ATR(90)	1.02%	Watch Out
VIX - MACD 10/30 (slope down)	MACD	0.800	Bearish

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. Note on VIX:  VIX closed at 13.77.  That is not a "bearish" indication.  VIX is moving up albeit not strongly, but 20 is considered to be a bearish sign, and it is a long way from that.   

The intermediate market technical signals are neutral to bearish.  The long-term direction (200 Day MVA) is still bullish. 

In the short to intermediate term,  the stock market has turned bearish. 

 

 

The Bullish Percent Index has broken out to the downside for DOW.  The bullish pct index (BPI) is a breadth indicator based on the number of stocks on Point and figure buy signals within the DOW.  As stated many times, daily prices are fairly random, and after the large range down yesterday the price still held at 1767 to 1770 level on the S&P 500 futures. 

As we can observe, the S&P 500 has not given a bearish signal yet (although it is in a col. of O's), while the DOW has given a bearish signal.  As seems normal, the price signals and the internal strength signals are mixed.

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

Yesterday 1-29-04			1/28/2014
High	1801.25		High	1797.00
Low	1764.00		Low	1771.00
Close	1771.25		Close	1788.25
R2	1816.25		R2	1811.50
R1	1794.00		R1	1800.00
Pivot	1779.00		Pivot	1785.50
S1	1756.75		S1	1774.00
S2	1741.75		S2	1759.50

 

 

Stocks –

Zeb's VUE:

One must keep their head during uncertain times in the market.  Yesterday would have been a very difficult day for day traders after the FOMC announcement.  A day trader would have found the market very choppy, and that prices moved very fast.  Only the biggest traders would have received decent fills I expect.  The market vacillated between 1781-1764.  What does not appear on charts is how fast the market moved 2:00 PM EST to 3:00PM EST.  As I noted, this would have been an interesting (and probably frustrating) day for day-traders.

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The unemployment Insurance Weekly Claims Report was disappointing as new claims increased by 19,000.  The four week moving average is usually watched by traders.  It rose to 330,000.  The number was well above the forecast. 

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Emerging markets are grabbing headlines.  This has been happening for some time, and I asked in a round table of currency traders what was happening in Argentina.  That round table was 2 weeks ago, and since then the media has made it apparent, that Argentina was not the only problem.  Do these countries now present a real threat to the global economy?  Zeb's vue is that capital investment flows into emerging markets, and then flows out.  The outflow happens as a result of current account deficits - the difference between a nation's savings and its investments.  Investors (and traders) of all markets (bonds, stocks, small business, infrastructure, commodities) view the current account as an important indicator of the health of an economy. 

Generally, emerging market problems do not lead to global contagion as occurred during the 1997 Asian Crises. 

If we are to see a contagion then we should see a domino of asset markets buckle under the weight of emerging market stress just as we did in 2008 with the U.S. subprime crisis or the Euro crisis in 2011-2012.  That stress is not apparent if you were to view credit default swaps (where CDS is a measure of risk).  The recent move in emerging markets is nowhere near as troublesome (YET) as the deterioration in 2012 Global climate. 

Look to GOLD to be the "canary" if the emerging markets start causing global stress.  If gold continues to rally sharply during the crises, it would indicate the stress is spreading into the financial system.  Watch gold's prices.