Tee’d up for the bulls. Can they handle it? $SPX 1314 is their goal. $study

By : April 19, 2011 at 7:33 am

Turnaround Tuesday:?

Asia:

  • Shanghai –1.87%
  • Hang Seng –1.3%
  • Nikkei  -1.21%
  • JPN – Household confidence missed at 38.3 expectations were for 39.9 last report was 40.6

EUROPE: as of 7:00am EDT

  • DAX +0.35%
  • FTSE +0.53%
  • German MFG PMI 61.7 expected 60.1 last 60.9, a plus
  • German Services PMI 57.7 misses expected 59.9, last 60.10
  • EUR Current Account –7.2B worse than the –2.3B expected and –5.6B last report
  • EUR MFG PMI 57.7 beats 57.2 expected and 57.5 last
  • EUR Services PMI hits 56.9 expected but less than the 57.2 last
  • 10:00 AM EUR consumer confidence –10 expected –11 last

USA:

  • 8:30am Building Permits, expect 540K last 520K
  • 8:30am Housing Starts, expect 520K last 480K

Quote of the day:
Hegel was right when he said that we learn from history that man can never learn anything from history. – George Bernard Shaw

 

Current Allocations:

image

 
Breadth:

 

image

Yesterday was like a punch in the face for the bulls.  They didn’t have a chance against such end of the world news.  They did gather themselves however and improve their position during the day, so they garner some respect.  Breadth went to a perfect bear score, today is a test day and I expect the bulls to follow through with what they started and if they do, this chart will quickly become bullish.  If we have a decent day today like +0.5% type day we could get to +12.  That is how the charts are setup.

 

$SPX chart:

The bears got a little help from their friends at Standards and Poor and we sold off hard to the previous support at 1295.12.    The bull line now is officially at 1322.83, still a distance away, but coming into range for a turn around. 

 

The trend is down, and the lowering of the bull line makes it official.  It also makes any possible rally back up to highs even more suspect.  We sit at a critical juncture here with the  DOW and RUT singing Marley’s “Everything is going to be all right” and the SP500 and Nasdaq signing Paul Simon’s “Slip Sliding Away”.

 

There is plenty of technical evidence for both sides of the story out there and a civil war amongst traders and technicians is in play.  If you want me to make a bullish case, just look at the charts from May 10.  If you want a bear market story, just look at the failed double top on the SP500.

 

For me, I will watch the NDX, QQQs and the BKX (Banking index).  These lazy sectors are going to have to fire to life in order to provide a foundation for the next leg up.  If they can’t lift themselves up as as soon as today then we are looking at a market that is in serious trouble.

 

It is a slow pitch, maybe even a Tee-ball situation, for the bulls today.  Any good close will turn the breadth charts back to bullish.  I plan to take advantage of that and play the long side.  Something I planned to have done yesterday, but had to wait for noon.

 

So to do the technical thing here, watch 1295 for a hold.  We break we most likely fold.  For the bulls to garner respect watch 1314.  A close above there puts the 1309 bottom more firmly in place and more doubt in the bears mind.

 

If the bulls can shrug off yesterday’s action, our right shoulder remains in place on the reverse head and shoulders we have been building on the SP500.  It is time now to put the rest of the shoulder in place and then draw the right outstretched arm if we are going to reach for the sky.  Today is important.

 

Playing long today.

 

-Red

 

image

Latest Posts for:

52 Week New Highs

10 Day Highs minus Lows

40 DMA % Index