4:30pm
In the last 15 minutes of ETF trading, the XLF spiked higher to 22.49, piercing its 50 moving average. This is a significant resistance level. And with the S&P finishing at session highs, I do expect a pullback consolidation period beginning tomorrow.
4:00pm
This rally has been fast and furious. And we missed the entire move. Well, you live and learn. The S&P is set to close above its 20 moving average. I do question the sustainability of this rally given how quickly the run up as been. The XLF was just 46 cents away from its 50 moving average.
3:44pm
S&P at resistance - top of channel
3:36pm
GS has rallied to resistance at 187.
3:18pm
The S&P remains strong nears its highs of the session. Financials are leading, with the XLF up more than 3%. The volume is not there on this recent run up and does not feel right. We are still holding small short positions, using. I do not expect the SPX to close above the 20 moving average.
2:45pm
Market has rallied in the past 10 minutes into a double top area. SPX now just above 20 moving average on daily chart.
2:08pm
Crude oil is now $2 off its lows, but still down $3.50 to 128.40 with 20 minutes left in pit trading.
1:43pm
My gut is that we move lower from here. I just don’t see the 20 moving average getting taken out this afternoon. Watch out for a double top.
1:27pm
The ES continues to consolidate above the 20 moving average on light volume.
12:49pm
ES finding support at its 20 moving average. There is no sign yet that this rally is going to fail, but 1264 is very strong resistance. Watch out for a double top this afternoon.
11:30am
StockTock is shorting the S&P here as we move into the 20 moving average on the daily chart.
11:08am
SPX at session highs above 1261. The 20 moving average sits at 1264 and should serve as resistance.
11:04am
Wachovia (WB) CEO comments giving the financials a lift. Says the company is not looking to issue stock for capital raising… has several options to raise capital other than the sale of securities in poor environment. XLF now in positive territory.
10:47am
The volume buying in XLF is drying up. Now that it has filled this morning’s gap down, it may be ready to roll over.
10:20am
The ES is rallying above its 200 moving average. The volume is strong. But keep in mind, all this action is really just consolidation under the 20 moving average. If we break above that level (1264 on SPX), then we consider the breakout to be significant. Day traders may want to take a shot on the short side if we approach that 20 moving average.
10:03am
Oil continues to tank here. Now down almost $5 towards 127. The ES is rising into its 200 moving average at 1256. Should find resistance here.
9:58am
Market getting a boost here from falling oil prices, now down more than $3 under 128. I do not want to buy into this market yet.
9:41am
Market being led lower by financials, materials, and technology. Gold, oil services, and utilities are higher.
9:25am
The futures fell hard yesterday after disappointing earnings results from AXP and AAPL. Since then, the futures have traded sideways in a range between 1248 and 1254. Oil is trading lower by 1.39 to 129.65. QQQQ and XLF look bearish with light volume trading at a slightly upward angle.
This was regarding the economist article. -
‘That suggests yet another irony; the debt of the GSEs has been trading as if it were guaranteed by the American government, but the debt of the government was not trading as if Uncle Sam had guaranteed that of the GSEs.’
- That is correct. There is no premium in the treasuries at this time.
“The companies have also been unwilling to accept the pain of market prices in acknowledging delinquent loans. When borrowers fail to keep up payments on mortgages in the pool that supports asset-backed loans, Fannie and Freddie must buy back the loan. But that requires an immediate write-off at a time when the market prices of asset-backed loans are depressed. Instead, the twins sometimes pay the interest into the pool to keep the loans afloat. In Mr Rosner’s view, this merely pushes the losses into the future.”
- This requires more detail then what has been published. A delinquent loan is NOT a foreclosure that needs to be written off at a depressed price. Paying the interest on a delinquent loan does indeed push the problem into the future, but it far less costly than incurring the loss of the loan at a depressed price. The majority of delinquent loans do NOT go into foreclosure
The best thing Congress, considering the government is potentially on the hook for it, can do is to look into the levels of leverage that these companies were allowed to amass. Improper leverage is the predominant problem in almost every bubble that has been created dating back to 1929.
“In the end, the turtle at the bottom of the pile is the American taxpayer. But that suggests that, if Americans are losing money on their houses, pensions or bank accounts, the right answer is to tax them to pay for it. Perhaps it is no surprise that traders in the credit-default swaps market have recently made bets on the unthinkable: that America may default on its debt.”
- The problem with this thinking, and what this article doesn’t consider, is that aggregate housing prices will at some point, probably sooner rather than later, stabilize. Some areas already have, and areas that saw unsustainable price appreciation such as CA, NV, FL will eventually have to bottom. When that happens the at risk loans that need to be written off will stop depreciation of the loan portfolio. It’s not going to be the end of the world.
The MA pattern in oil was a nice call, Craig. The confirmation close below the June 6 gap up on Friday was also telling.
Trading volumes have substantially declined the past few days from the pace of the previous week, let’s see if we have that small pull back on continued smaller volume, setting us up for the next push up and past the 20 dma on the SP500.
what do you think of the SKF.. the xlf has moved higher today yet again.. these moves are insane, but volume today is stronger than yesterday
Idan, I’d rather trade the S&P because it remains below the 20 moving average. The XLF should consolidate here with the overall market, but it could also squeeze into its 50 moving average. We covered most of our SKF after the XLF’s bottoming candle this morning, but we still have some. We also put on an SDS position when the SPX rose above 1263, Check out GS - looks like a bull flag pattern setting up a test of the 187 level.
and if you’re buying some SDS, your exit is the 200 SMA of the 10 minute which is now ascending and is now at 1246?
No, the 200 SMA on the ES 10-minute is 1257. But I may hold it overnight depending on the action. My exit is a break above the 20 moving average on the SPX daily.
oh.. i’m looking at the $SPX and not the ES.. so i guess that changes things
Check out the 5 minute SPY, you can see a head and shoulders formation
The double top/head and shoulders is coming to fruition
Hey craig, let me know if you cover your short on the S&P before the end of the day or keep it overnight.
Maybe a little soon to look ahead but consider the following…
SP500 - The market fell from 1440 to 1200 in a little under 2 months. We are currently at 1266. We have made back 27.5% off the decline, fueled mostly by a recovery in financials. A 38.2% Fib. retracement of this large move is ~1291.
Oil closing down well below the June 6 gap up. Gold down. Late day SP500 run, - Let’s see how Asia and Europe respond to this, if they can continue the climb.
We finished the days on the highs of the session, is that pertinent to today?
Today was interesting, to say the least. I do not want to chase this move from the long side. At the same time, I don’t want to be short in the midst of a strong counter-trend rally. So… I will patiently wait for a pullback and an attractive entry. This market is due to pullback and consolidate.
Rally is not that big of a suprise to me. When you can basically buy quality stocks at BV and 80% off their 52wk highs you jump right in. Now, I admit I bought in on the way down and took some losses, but even after this rally, if you want to hold for the long term, you can’t beat some of these deals. I agree pullback will have to occur with profit taking and some bad news left to come out somewhere.
I have a question - does USO have another small gap to fill around $91 on May 01?