Tuesday, November 10, 2009

Morning Update/Market Thread 11/10

Good Morning,

Equity futures are down this morning following yesterday’s melt-up (now up after the open):

The Dollar is up slightly, bonds are up sharply, oil and gold are flat to a little bit down.

Yesterday was the best fit for the Bradley and phi mate turn dates, we got a new high in the DOW, will we get a turn this week to finally put a nail into the heart of the zombified wave B? The action over the past week or so sure looks like a parabolic liftoff into a blow-off top, we’ll see.

Of course there’s a divergence with the DOW making a new high while all the other indices did not. That is a sign of a lack of breadth. A healthy market moves up together, not just a few of the large cap stocks. Even if the other indices go on to new highs, the divergence in breadth remains, it is quite large and it is one of the indicators that a top is approaching.

Below is a 3 month daily chart of the SPX. You can see that yesterday’s rocket-shot took us into the neighborhood of the old highs, but right into that resistance area. It did manage to close over the 1,090 pivot, but just barely and may open below it this morning (didn't). If you note, that close did put it back inside the rising bearish wedge. It is common to overthrow those wedges in the final blow-off move, but it’s also possible to fall short of the top. Interestingly, I think, is that the top of the wedge is currently coincident with the 1,133 pivot point. There’s a pivot at 1,107 first, but that 1,133 number could be a destination.

The Redbook and Goldman ICSC are the only data released today, the bond market will be closed tomorrow, but the stock market will be open – sounds like a great chance for low volume “tinkering.” As flawed as those two releases are, I’ll talk about them because they’re the only game in town today… The ICSC showed a .1% decrease in sales week over week, but a larger yoy gain as last year’s number makes for a much easier comparison. The Redbook also increased its yoy gain. Neither of these indicators are reliable indicators of actual economic activity. It should be noted, however, that last year’s comparables are at a juncture where the comparisons will start to look favorable. That is also true in the Fed charts where yoy is presented. Any indicator at this point that is negative yoy is in pretty sad shape, that would be consumer credit.

Hey, the money is sloshing around and I see that just after the open stocks are climbing their (pretty damn steep) stairway to their eventual heaven…

Led Zeppelin - Stairway To Heaven: