SPX daily update

The stochastics are continuing their way down to oversold territory. The 50 MA has served as support on more than a few occasions. Being today was the end of the quarter it seemed like window dressing for most of the day and we got confirmation during the last hour. The broken downtrend line could serve as support if the 50 MA does go, and the 20 MA should provide support before that. Tomorrow is April fools day and in the past has been an up day about 80% of the time. (See http://hit-the-bid.blogspot.com/2009/03/end-of-quarter-effect.html for more detail ) I will be looking to get long to capitalize on that trend provided we confirm a trend day. As I type this the ES is trading 787.50, that was THE place to get long today and a major level of support. We broke below that in after hours trading for a few hours making a low of 779.50 for now. I think we are still in for more of a correction before pushing higher..then the "sell in May and go away" theme should kick in to take us to new lows. Just a potential scenario, as you know nothing is set in stone, so stay nimble and trade what you see NOT what you think.

What a difference a day makes:



Just thought I would throw this in it is $VOLSPDC the cumulative volume of the S&P 500. Monday almost all red Tuesday almost all green...until the last hour anyway. Handy to watch...especially on trending days. $ADD is good too. I will post an internals workspace at some point if I can figure it out.

Don't forget to check the blog daily after the close around 4:00 CST I post a new indicator, paintbar, strategy, ect for Tradestation...that's right EVERY DAY! Enjoy!

The "End of quarter" effect

Does the stock market offer a predictable pattern of returns around the ends of calendar quarters? Do funds deploy cash to bid stocks up before quarter ends to boost portfolio values at the end of reporting periods (with subsequent reversal)? Or, do fund liquidity needs tend to drive stock prices lower before ends of quarters? Is the end-of-quarter effect the same as the turn-of-the-month effect? To address these questions, we examine daily stock market returns from 10 trading days before to 10 trading days after the ends of calendar quarters. We also compare daily returns with those for turns of calendar months. Using daily closes for the S&P 500 index since 1/3/50.






In summary, evidence suggests some weakness before ends of quarters and excess returns in the few days after ends of calendar quarters, but the effect is of low reliability and therefore risky to trade. The fourth quarter pattern is the most unique.

From CXO Advisory group

SPX 5 min

Looks like a bearish rising wedge but could break out to the upside still. The grey lines are gaps. White line is our uptrend line

Market profile for 3-31-09

Courtesy of subq

785 is the pivot and 787 is old support so new resistance. Should be interesting to see if we can take out 787 overnight and hold it.

Gold

Tests Rising Channel Bottom.

GOLD (Futures): Gold Closed lower at the end of the week taking back most of its previous week gains and testing the bottom of its weekly rising channel currently located at 920. The commodity’s technical outlook remains clearly to the upside as long as the mentioned channel bottom and its weekly low at the 920 level are not violated. In that case, we should see Gold recovering from those losses and retargeting its Mar 23’09 high at 958 with a trade above there accelerating further upside gains towards its Mar 20’09 high at 968. Beyond the latter will leave the 1,000/7 level, marking its psycho level/Feb 20’09 high being targeted and then its 2009 high at 1,033. However, if the 915/20 area is decisively taken out, risk for further declines will open up towards the 881.10 level, which is the location of its Mar 18’09 low followed by the 801.70 level, its Jan 15’09 low. Weekly studies are negative and pointing to the downside supporting this view. We still retain our bias for Gold to continue to maintain within its rising channel and subsequently set off additional upside gains. The bigger risk however in our broader outlook on the pair is a technical pattern (double top) which could be shaping up on the weekly and the monthly timeframes. Lets keep our fingers crossed and see whether this will unfold or not. Aside this threat, medium term trend for Gold remains to the upside.

Weekly Chart: GOLD


by Mohammed Isah of FXTechstrategy.com

COT Data

Commercial Net Tracker instructions
This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A. If the current value is at a 12-month low, the cell will display a red/burgundy background. B. If the current value is at a 12-month high, the cell will display a green background. C. If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D. If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.

Commodity	12-mo low	12-mo hi	27-Mar	20-Mar
Cattle (feed)	845	6,452	2,744	3,309
Cattle (live)	-21,243	31,210	17,133	20,855
Hogs	-8,804	10,915	9,927	10,915
Pork bellies	-644	-79
Corn	-260,921	66,323	-28,193	-21,366
Oats	-6,401	2,198	260	923
Soybeans	-102,215	16,898	-11,117	4,042
Soybean meal	-85,681	-1,533	-28,798	-19,118
Soybean oil	-47,219	20,737	11,512	18,680
Wheat	-13,403	40,438	20,244	23,734
Orange juice	-9,883	1,627	-1,964	-692
Coffee	-32,584	12,520	-7,624	-1,534
Cocoa	-43,967	623	-22,868	-20,769
Sugar	-212,451	-72,825	-161,566	-131,968
Cotton	-44,054	16,051	4,798	12,149
British pound	-3,972	63,155	30,221	33,691
Canada dollar	-65,777	31,326	8,374	20,555
Euro FX	-33,437	44,526	-6,325	2,191
Japanese yen	-67,682	29,994	13,248	13,804
Swiss franc	-29,760	22,561	1,458	14,019
US dollar index	-35,509	7,734	-6,356	-11,458
Mexican Peso	-125,536	21,127	2,752	10,371
Australian dollar	-84,096	18,869	-17,496	-6,592
S&P 500	-100,460	31,776	-68,882	-59,749
T-note -10 yr	-15,882	218,307	42,717	79,726
T-bond -30 yr	39,220	163,627	110,347	144,268
Eurodollar	-1,645,114	-222,700	-496,403	-222,700
Crude oil	-70,689	47,478	-22,721	-16,390
Heating oil	-34,030	-4,419	-31,845	-22,111
Unleaded gas	-79,526	-24,194	-63,231	-58,183
Natural gas	13,831	141,945	71,144	76,847
Copper	-7,913	29,085	15,976	16,856
Gold	-246,577	-69,496	-181,289	-175,684
Platinum	-12,505	-2,758	-10,929	-8,938
Silver	-71,151	27,908	-33,601	-35,760

To view the entire year of commercial data please visit www.pricecharts.com.

ES Market Profile

Courtesy of SubQ

Internals...

not looking so good.

Economic data for this week

Week of March 30 - April 03
Date ET Release For Actual Briefing.com Consensus Prior Revised From
Mar 31 09:00 Consumer Confidence Mar 28.0 27.0 25.0
Mar 31 09:00 S&P/Case-Shiller Home Price Index Jan NA -18.5% -18.55%
Mar 31 09:45 Chicago PMI Mar 36.0 34.7 34.2
Apr 01 08:15 ADP Employment Change Mar -635K -648K -697K
Apr 01 10:00 Construction Spending Feb -2.0% -1.6% -3.3%
Apr 01 10:00 ISM Index Mar 37.0 36.0 35.8
Apr 01 10:00 Pending Home Sales Feb -1.0% -2.0% -7.7%
Apr 01 10:30 Crude Inventories 03/27 NA NA +3300K
Apr 01 14:00 Auto Sales Mar NA NA 2.9M
Apr 01 14:00 Truck Sales Mar NA NA 3.5M
Apr 02 08:30 Initial Claims 03/28 645K 653K NA
Apr 02 10:00 Factory Orders Feb -0.3% -0.3% -1.9%
Apr 03 08:30 Average Workweek Mar 33.3 33.3 33.3
Apr 03 08:30 Hourly Earnings Mar 0.2% 0.2% 0.2%
Apr 03 08:30 Nonfarm Payrolls Mar -640K -656K -651K
Apr 03 08:30 Unemployment Rate Mar 8.5% 8.5% 8.1%
Apr 03 10:00 ISM Services Mar 43.0 42.0 41.6

ETF/commodities relative strength

This is from a free newsletter I get from the Van Tharp Institute:

" have a new model in which we track the relative strength of the various ETFs representing the economy of the entire world. I will be publishing this once a month. Ken Long, who developed the algorithm we use, publishes a similar report every weekend at www.TortoiseCapital.com. If you’d like more information, then I’d suggest you attend our ETF workshop, which is held several times each year. Ken explains how these numbers are derived in this workshop.

The areas in green are stronger (the total rating is at least one standard deviation above the mean); those in yellow are the next strongest (above the mean). Those below the mean are in brown; and those more than one standard deviation below the mean are in red. I’ve also taken all of the double leveraged funds out of my database, which means that the top and bottom funds are not devoted entirely to those groups.

By the way, if you didn’t read my article on GLD last month, then please take a look at it. ETFs have some additional risks that the underlying instrument doesn’t have, just like mutual funds have risks that the stocks they own do not have. Namely, the instrument you are trading could fail (and cost you extra money), while the underlying trading instrument (i.e., gold) could be doing fine. In fact, I find that each month some company is closing down a set of ETFs, and I have to eliminate them from the ETF database that generates these charts. I think funds are being eliminated now faster than they are added. And what happens if an ETF that you own is taken off the market?"




This world view continues to look better with a number of areas (other than the U.S.) starting to turn green. However, I’ve taken out the double leveraged funds, and right now the only reading above 60 is Russia (and that’s just because of recent strength, not long term strength). South Korea is at 56 and South Africa is at 57.

The next part of the chart shows commodities, real estate, and interest rate products, along with the top and bottom 15 ETFs. As I said, I’ve taken out the double leveraged funds so that we have a better example of the overall world picture.




The Strongest Areas:

1) Russia
2) Copper (JJC)
3) Gold Mining Stocks (GDX)
4) Oil (DBO, USO, and OIL)
5) South Africa (EZA)
6) South Korea (EWY)
7) Asia (less Japan)
8) Broadband

The Weakest Areas:

1) REITs (RWR)
2) Realty Majors (ICF)
3) Vanguard REITS (VNQ)
4) Real Estate 50 (FTY)
5) US Real Estate (IYR)

The overall picture of what is really weak is clear. The bottom 8 all have to do with real estate until we get to 9 and 10, which are related to health care.

S&P 500 charts

Daily chart of the $SPX...dashed lines are broken trend lines. 60 period stochastics are at 55, 20 and 50 day MA's remain below and could act as support. We have declining volume, slowing price momentum and a high VIX to contend with, so the rally may be put on hold this week. 838 and 878 offer resistance as well as the major down trend line here are the major support and resistance levels courtesy of Robert Colby at traderplanet.com:
Potential Resistance:
1,576.09, high of 10/11/2007
1,552.76, high of 10/31/2007
1,523.57, high of 12/11/2007
1,498.85, high of 12/26/2007
1,440.24, high of 5/19/2008
1,406.32, high of 5/29/2008
1,366.59, high of 6/17/2008
1,335.63, high of 6/25/2008
1,313.15, high of 8/11/2008
1,274.42, high of 9/8/2008
1,255.09, high of 9/12/2008
1,238.807, Fibonacci 78.6% of 1,576.09 high
1,220.03, high of 9/25/2008
1,077.08, Fibonacci 61.8% of 2002-2007 upmove
1,044.31, high of 10/14/2008
1,007.51, high of 11/4/2008
943.85, high of 1/6/2009
881.39, Fibonacci 23.6% of 2007-2009 drop
877.86, high of 1/28/2009
839.80, low of 10/10/08
838.01, Fibonacci 61.8% of January-March drop

To discover the next Support, traders probably will be watching how the market acts at the following levels for the S&P 500 cash index:

Potential Support
666.79, intraday low of 3/6/2009
665.23, Fibonacci 61.8% of 2002-2007 upmove
602.07, Fibonacci 38.2% of 1,576.09 high



Based on closing prices, the S&P is up 23% in 13 trading days. This makes the bounce the second largest since the top on 10/10/07. The last big bounce was from 11/20/08 to 1/6/09, when the S&P rose 24%, but that bounce was followed by a new low. From November 1929 to July 1932, there were 5 bounces between 20% and 23%, and all were followed by lower lows. That 50% fib is what I will be watching closely on Sunday night and Monday during trading hours.




Not much to say here....watch the overnight range and previous days, Friday, range, also watch the pivot point and that 819 level for resistance. Hope you all have a great week.

I will be only posting 1 TS program per day...otherwise it takes up a lot of blog space and I would like to get others to contribute...everything that is TS code is tagged as such so don't worry about missing out...they will all be archived.

Absolution

Sector performance last week

The four BIG bears

Contraryinvestor.com March Market Observations

Market Observations

$SPX Weekly

Here is the weekly with the 5,3,3 Stochastic overlay...heading tward overbought. This could be why we have sustained the overbought readings this long.

SPX chart...

Here is a daily chart of $SPX with 5,3,3 Stochastics overlayed. You can see how well it works to signal the start of tops and bottoms. As anything in trading it is not exact but deffinatly worth watching...works on a weekly chart as well.

From StockTiming.com

Friday, March 27th. - Stock Trends, Charts, and Commentary

On Tuesday, we had brought up the issue about "toxic bank assets" being presented to the Treasury this afternoon.

Toxic bank assets and mark-to-market rules are hindering many banks from lending due to Regulatory Ratio requirements ... the problem is very circular, like a cat chasing its tail.

So, the process of fixing this particular problem is supposed to start today. The question is ... will the toxic asset buying program work?

The next few days should prove very interesting as we wait to see how much in toxic assets is brought to the Treasury. It may not be even close to the Treasury's expectations.

Why? Because many banks are sorry that they took TARP money, and resent the amount of control coming from the Gov. for taking the money. So, as fast as they can, banks are trying to return the TARP money and they are "running away from the Government".

Running away from the Government?

If you do a Google search on the News relative to "TARP Funds - return" you will see these kinds of headings:

1. Banks Return TARP Funds to Avoid Choking on Attached Strings.
2. Louisiana bank returns TARP funds - IBERIABANK Corp. said Friday it would be returning the $90 million in funds it received from the government in early December.
3. Sun Bancorp to return TARP funds, CEO says program ‘politicized'
4. Goldman Sachs may return its $10 billion of TARP money to the US government within the next month, The New York Times reported, ...

So, here is the question ...

How can the toxic asset buying program work if banks are now rejecting Government money and returning it? Why would we expect them to go back to the Government to sell their toxic assets when they are running from the attached Government controls?

Many analysts are now watching what happens in the next 5 days. A rejection of the Treasury's offer to buy toxic assets could mean that bank lending will remain tight, thereby hindering an economic recovery.

Here is what the Banking Index chart was saying this morning at 10 AM ...

What is it showing? That there was a nice run up in the beginning of March, but that it stalled in the past two weeks (note the double top just formed).

So now it is moving sideways, and will need good news and positive occurrences to move higher. Will banks returning TARP money make the Banking index break out to the upside? Will a rejection of the Treasury's toxic asset program cause the Banking index to break to the downside?

The data is out yet about the reaction to the toxic asset program. So, keeping a careful eye on the Banking Index ($BKX) will be important because financials represent over 13% of the S&P 500 index.

Emini traders

Just want to hip you to a great site dedicated to trading the ES www.eminiaddict.com

Jeremy

Economic Releases

I'm back...

I apologize to my very few followers for not making many posts as of late. I have taken the big step in to the world of futures trading and that was all I did. Now that I have become a little more knowledgeable I have s few minuets a day to devote to this. I am also looking for someone to co-host this with me...nothing major just contribute useful or interesting things for trading use. Just send me an e-mail or slap up a post here if you are interested.

I would like to thank those of you who do follow me, I hope you enjoy and grow as traders.

Absolution

ETF performance