4:00pm
Stay tuned for today’s video.
3:25pm
ES at fresh session highs at 1240. Remember the 1245 resistance level. XLF trying to take out 19 as we approach 3:30.
3:16pm
We saw the XLF reach 19, and then pull back about 20 cents, but it is holding its gains so far, currently up by 10%. The test will come at 3:30pm when the past few late-day selloffs began.
2:51pm
XLF at a fresh session high above 18.84.
2:47pm
Possible double top pattern as the ES recently rose above yesterday’s high. I’m not calling for a breakdown, but the pattern certainly supports it.
2:44pm
ES and XLF are near session highs. Volume still light when compared to this morning. There is not much panic short covering yet. This rally is either about to end or about to start. Remember, the market has sold off near 3:30pm is the past 3 sessions.
2:32pm
Christopher Cox appearing on a CNBC interview. I think all the scapegoating of speculators and short sellers is laughable. To blame anything other than the fundamentals of the economy for low stock prices is an absolute joke. And for the chairman of the SEC to announce to new measure to enforce a pre-existing law is embarrassing. Traders have been shorting stocks without first borrowing the shares for years and the gov’t has looked the other way. Now they want to enforce the law. Well, thanks for finally doing your job. I could really care less.
2:22pm
Volume on this rally is not overly impressive and is yet to feel like a serious short squeeze. Either this rally is nothing but a dead cat bounce and will soon fall apart, or the real squeeze has not even started yet.
2:15pm
15 minutes left in crude oil trading.
2:12pm
XLF testing session highs. If we take out 18.60, we might see continued upside to around 19.
2:01pm
I’m not paying attention to the Fed minutes because Bernanke updated the Fed’s priority since the last meeting. This is old news that is no longer relevant. Bernanke more recently stated that the Fed’s priority is financial stability.
1:45pm
FOMC minutes from the last meeting coming out in 15 minutes. I don’t think this will move the market given all the recent Bernanke testimony.
1:09pm
I would like to see more volume buying in the XLF. This is the middle of the lunch hour. Possible double top formation.
1:03pm
Market breaking out to new highs.
12:50pm
ES trading near the highs of the day. XLF up 7%. Oil is off its lows but still trading lower by about $4. While this is a nice rally so far, the market has a lot to prove. The S&P and XLF are still in a downtrend and are not even near breaking out.
11:01am
Stepping out of the office for an hour or so. XLF at session highs and the ES near session highs.
10:55am
The USO bounced off the 107 level we identified in yesterday’s video. This completes the M of the MA pattern, and now we must watch for the formation of an A that will take oil to new lows.
10:35am
Crude oil falling on an unexpected build in inventories. Pieces are coming together for a bounce rally. Oil is down and financials are up on the same day. We have not seen this lately.
10:19am
Oil inventory data due out in 15 minutes at 10:35am.
10:15am
The action so far this morning is bullish. Pullback on light volume. ES and XLF holding above 200 moving averages. I would like to see the XLF break above yesterday’s high at 18.22.
9:57am
Financials leading the market higher. ES surging above its 200 moving average. XLF up 5%.
9:33am
Financials are broadly higher, with the XLF up by moire than 3%.
9:30am
ES has rallied into its 200 moving average at 1216.50.
9:19am
If we rally, keep in mind the declining trendline on the ES that this market has bounced off of 5 times. It is currently sitting around 1245, which is 30 points away.
9:00am
Oil remains weak, trading near 138.75, though off its lows, which reached 136.17.
8:50am
Wells Fargo (WFC) beat on earnings and revenues. June CPI came in hot at 1.1% v 0.7%E, but excluding food and energy: 0.3% v 0.2%. Inflation remains contained when you strip out food and energy. That means higher food and energy prices are not spreading to other areas. This is a good thing. The Fed considers food and energy inflation to be somewhat outside of its domain and beyond its control, as it is based on global supply and demand forces. Inflation remains under control and this will allow the Fed to keep interests low, if not cut them further, to help the struggling economy, expecially the financial sector.
Short term lending rates cannot be increased until earnings growth begins to accelerate. The big plus on the inflation front, is that there is no sign of wage inflation.
On another note- A lot of interest lately about ‘naked short selling’ (the borrowing of shares for short sales without taking actual delivery- a practice which inflates the float). The laws have been clear and on the books for some time regarding companies with a percentage of short sales on the ‘failure to deliver’ list , they just need to be enforced by the SEC. The spot light on these large financials, which have been deemed too big to fail, may be what it takes to attract this attention and fix this glaring problem. The handful of financial companies that are being held to stricter short sale enforcement on this coming monday from this practice should, if this is a fair playing field, spread to other sectors.
Unfortunately, the 30 point rally off fresh lows has been consistent on this entire downtrend. Yesterday’s SP500 volume was a record.
According to TrimTabs Research, there have been $13.4B of mutual fund outflows so far in July. This is another indicator that this market is near a bottom.
Hey craig,
A clarification, when you say 200 moving average, this is a 10 minute chart and the 200 moving average on this chart?
Hey Clarke,
That’s right. I’m referring to the 200 moving average on a 10-minute chart of the S&P E-Mini Futures Contracts, or ES.
did anyone look at the vix index? It seem to have spiked up to 35 before dropping to 28.
Let me correct that. Vix spiked up to above 37.5.
Del,
I see that on my charts too, but that has to be a data error.
yeah.. that’s really not something to look at…
hey craig,
The QQQQ have a very odd formation on the intra day – since the last 10-15 days. It is a triangle with a descending lower line and a flat upper line. therefore, the oscillations keep on increasing as time goes on.
I have not seen such patterns before. Is this bearish or bullish ?
BAC up 9%, USB up 6% – on the heels of Wells Fargo’s release who also raised its dividend.
On the QQQQ’s, pay attention to the descending trendline on top of the pattern. A break above this line should yield a nice rally.
Oil getting smashed . Approaching the June 6 gap up bottom of ~131, which represents approx 10% off of the all time high. Let’s see if we can fall below this, and oil will begin to deflate. Just as important, sentiment will go with it, as well as the risk of real external event causing a speculaltive blow off top.
Crude supplies up unlike past weeks, yet supply of finished products, which is the key to interpeting this data, (gasoline/distillates) continues to rise for the fourth consecutive week. Behaviors are changing. Demand for that last equilibrium barrel is being driven down due to high prices at the pump. The market is saying the price is still too high. Overall, crude supplies are still relatively high, due to hoarding. This behavior should begin to subside as the price deflates, eventually leading refiners to maintain mean margins as they try and avoid a glut of supply of finished goods by cutting refining capacity.
Is that an hns on the uyg/xlf?
I’m a buyer of Citigroup here, we have a very nice Inverse head and shoulders or WV pattern, and the green candles have more volume than the red ones, I think it’s going higher during the day’s trade.
The UYG needs to break 16.4 (XLF is 18.3 or so) decisively. Otherwise it has failed at the descending trendline again. It is upto the buyers here. The XLF is right at the doorstep of breaking a week long downtrend.
citigroup again loooking more and more like it’ll break it’s 15.7 resistance line and shoot higher on strong volume, forming an inverse head and shoulders, target = 16.8$
Craig.. where is the Descending line of the S&P at now?
It’s around 1245 still. Very far away. Nothing has been accomplished yet except for a dead cat bounce. Stay patient and wait for confirmation.
finally some volume buliding up here…
Lets not forget, that a lot of this buying is due to options expiration week, and so we can actually get an extra short squeeze afterwards.
Gold has given back much of Monday and Tuesday’s intraday gains.
Oil down ~$12 over two days. That is unprecedented.
Craig, I understand that the volume of the XLF is light but how about individual stocks? WFC has had the highest volume ever … any thoughts?
‘And for the chairman of the SEC to announce to new measure to enforce a pre-existing law is embarrassing. Traders have been shorting stocks without first borrowing the shares for years and the gov’t has looked the other way. Now they want to enforce the law.’
- Agreed. The laws already exist for naked shorting and the ‘failure to deliver’ list. Companies sit on this list for weeks, and no action is taken. The threat of action, whatever form it may be, could be enough to scare weak hands out and prevent others from piling in. Remember there are a record number of shorts on the NYSE. This is not an accident. It is exacerbated because of the repealing of the uptick rule, and the lack of enforcement of existing failure to deliver laws.
‘To blame anything other than the fundamentals of the economy for low stock prices is an absolute joke.’
-Shorting, in general, has always been a ‘professional’s’ game for disciplined traders who are light on their feet. Now, with the advent of ETFs, Joe Retail has many new oportunites to participate, for better or worse, but the underlying risks are still there. When these facts are added to the repealing of the uptick rule in summer of 07′, you have a whole new advantage to smart money short sellers in the market. Let’s walk something through. – In the old days, when a stock bottomed, and bid demand picked up, short sellers would have to cover, fueling a classic short squeeze. Today, with the absence of the uptick rule, and the failure to enforce the existing laws on short selling, a different phenomenon happens. When a stock especially one that has a small float bottoms, and bid demand picks up, the large shorts actually do something counter-intuitive. They SHORT MORE! Small pops are still possible, but this allows big money to improve their cost basis if they are caught underwater, and exit positions gradually, where a small investor who doesn’t have the resources would not be able to. This irresponsible repealing of a 1934 uptick rule was put in to help ‘big money’.
Here is an example – LDK. Check short interest in January, March when it reached its lows, and now. The short has increased. Why, because most anyone who shorted through nearly all of 2008 is under water… They are trying to get out. This stock is on the failure to deliver list since October of 2007. Why isn’t the SEC doing their job? … It’s not all fundamentals in the short run. Anything but….
WFC really surprised Wall Street with their dividend raise. And the company’s strong capital position is attracting clients and they are stealing market share. This is an company specific story, but it may have far-reaching implications. The survivors and future leaders of the financial sector are emerging, replacing the weak. If more new leadership emerges, it may help the financials put in a bottom.
we are rallying to the close it seems.. as we have more volume now
SP500 – 1245 – Is a major line. We’ve had a huge move today, including huge volumes in many financials in addition to yesterday. Don’t be discouraged if we don’t break it today.
Legislation introduced to re-instate uptick rule for short sales.
http://www.marketwatch.com/news/story/pressure-increases-bring-back-uptick/story.aspx?guid=%7B7C350EDA-CEE5-4A73-A470-DEE6A8C85206%7D&dist=hpts