ES -- DX/CL -- isee -- cboe put/call -- specialist/public short ratio -- trinq -- trin -- aaii bull ratio -- abx -- cmbx -- cdx -- vxo p&f -- SPX volatility curve -- VIX:VXO skew -- commodity screen -- cot -- conference board

Tuesday, January 22, 2008

 

blast, cut, bounce and...


the terrible impending open for the united states was met with the predicted move -- a 75bp cut from the fed. argue moral hazard and i might agree, but this is what the fed has the tool for.

the market response was to pull premarket s&p futures off the 1255 floor to open near 1274 -- and the rally has kept going through this writing, now at 1306. that still down (-1.5%), but a damn sight better than the (-5%) that looked likely. it was still enough to send the VXO to the moon -- at 39, 50% over its 10sma -- and brought in conspicuously strong ISEE readings, which i've anecdotally noticed at the start of recent strong bounces.

will it hold? beats me. but i thought the whole shooting match was putting in good action on friday with excellent risk-reward characteristics, and there's still a plan in place. i have to admit that the shocking intensity of the decline has me inclined to expect a bounce on the larger side of the suspected 5-15% range when it comes. dr. steenbarger notes the precedents and they are opportunities. kevin depew is also noting the extremely low nyse bullish percent index reading, which only rarely gets below 20%. (ditto the nasdaq.) i am not leveraged (unlike this poor soul) and so can wait if i choose, however painful it is. if the low is taken as s&p 1252 (the 38.2% fibonacci retracement level of the entire 2002-2007 bull run), a 5% move up is 1315; 10% is 1378 -- a huge resistance level; 15% is 1440, another tremendous resistance level. but of course watching the 20-day measures will be paramount, not price targets.

UPDATE: end of day, and the markets never could recoup all the losses, with the s&p closing at 1310. there's a pretty high-volume reversal bar now standing atop a low of s&p 1274.

was that "it"? apple's earnings disappointed after the close, so fragile futures broke down yet again with the s&p rolling back to 1300. today there were panic rate cuts, volatility spikes and high volumes. the ten-year treasury has put on its greatest 17-day run in at least the last 50 years, and other nearby timeframes confirm its place among the great flights to quality of the half-century. there is now a truly spectacular fraction of s&p 500 issues hitting new yearly lows -- a shocking 44%, last exceeded in october 1987. but i somehow wouldn't be at all surprised if there was a probe back down to s&p 1252. (nor would others, it appears.)

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