S&P 500 Recap and A Look Inside the Markets

There is so much going on this morning, Japan, Bahrain, and Libya, see post below of major headlines, When I woke up this morning around 4am est, bit of insomnia lately, the S&P futures were up about 4.5 points on the back of the Japanese market surge but then 20 mins later Reuters and AP reported that things have taken for the worse at the Fukushima Plant, and things are worsening in Bahrain and now the futures are in the red, interesting gold and silver went down as well.

Yesterday, Stock markets around the world were down hard this morning on news of yet another explosion at the Fukushima nuclear facility in northern Japan. Reports indicated that a fourth reactor was in trouble and that radiation being emitted is now reaching dangerous levels. The Empire Manufacturing Index for March was reported at 17.5, which was above the consensus expectations for a reading of 17.06. The government also reported that Import Prices for the month of February rose by +1.4%, which was above the consensus for an increase of +1.0%. Export prices rose by +1.2%, below last month’s revised level of +1.3% (January: +0.6%).

There was a rare session where the FOMC announcement did not take center stage for the day; the crisis in Japan had the full attention of traders. I have to say there more more than I couple of things I didn't get from the announcement but I will save that for a rant! 

I was shocked there was no re-test of the intraday low and people just bought this thing up. This is CRAZY behavior.

Back to the S&P: Under intense selling pressure from the futures (Down 2.5%), the session began with a huge gap lower but quickly put the low of the day on the chart after just seven minutes. With only minor pullbacks along the path, the index steadily climbed higher the entire session gaining twenty-six points off the lows before some selling in the last quarter hour took the index down six points. But the index still closed at 75% of the intraday range once again for the fifth time in six sessions.

I think the rally was based on rumors that the Tokyo Exchange would stay open the rest of the week and that the nuclear situation was in control.  

Breadth was obviously poor on a 1% down session. But the TRIN is calling for a bounce and something else we find significant within the data: Notice the ten day average of Net Advancing. Yesterday it was -219 and today it fell to only -230. I use -200 to indicate a bearish trend and the ten day average has hardly budged lower even with today's plunge.

The only noticeable intraday volume pattern is that the volume was heavy at the open and fell off dramatically with the normal volume spike after the FOMC announcement. Looking at the Breadth Indicators I see that they are really more mixed this evening than expected. The McClellan Oscillator is the most oversold it has been since November 17th but the Summation Index still suggests that we bounce.

For the SPX Index there were 65 components advancing and 415 components declining. On the NYSE 3,126 issues were traded with 675 advancing issues and 2,375 retreating issues, a ratio of 3.52 to one declining. There were 29 new highs and 77 new lows. The five day moving average of New Highs is 106 while the five day moving average of New Lows is 34 and the ten day moving average of Net Advancing is -230. The Net Advancing data indicates a bearish trend.

So as I finish this (S&P futures are down 4.5 points), the last headlines I see are that the nuclear situation is dire in Japan, ECB under pressure as inflation quickens. The only way this market goes to the 150dma is if there is no QE3 or they will announce it as it goes towards it, and you know they are not going to stop printing money, inflation isn't coming, its here folks, just ask Bill Gross (why you think he dumped all those bonds). 


I couldn't believe it when "the Bernank" said that what they expected inflation to be, and what it is now, its tame or something like that, ah yeah! If you are rich or upper middle class its tame, what about everybody else. Oh, thats right they don't give a crap.


And the economy is or "firmer footing", tell that to the 43 million on food stamps, the 700K homeless and the unemployed. They are just manufacturing numbers pure and simple.


QE to Infinity and BEYOND!