Should Gap Down

Got another strong signal today for a gap down in the market.  When I look at oil, Brent crude oil is a better gauge of worldwide demand than NYMEX, so it is understandable that we rallied so strongly because Brent did selloff about 2%, much more than NYMEX.  I actually think oil will keep going higher short term because we've received oil bearish news over the past couple of days and it didn't do too much to the oil price.

Oil is in a very ignitable position right now.  I don't think we've seen the end of this oil rally on this runup. 

China Strong Europe Weak

The emerging markets trade is back on.  They got oversold after all the hedge funds reduced their weighting in the sector.  China has been on fire lately.  The funds are just back to beating up on the helpless, Europe. 

Crude oil continues to look like a bull trend that won't stop until we go still higher.  I haven't seen a climactic move that usually signals a reversal.   Anectodally, I am hearing of hedge funds derisking like they did in May 2010, but to a much less extent.

A reversal from a healthy gap up to even on the futures is a bad sign for the first couple of hours of trade.  I will take that to mean that we have early weakness followed by strength in the afternoon.  No one wants to be short in the overnight session when we've had so many of these mindless gap ups on nothing. 

Gap Down Signal

I am getting a fairly strong gap down signal, at least a 75% probability.  I'm not too bearish on the market, but I do think we've got to flush out some longs soon before we can thrust higher for good.  A gap down tomorrow with another move up in oil would be a good opportunity to flush out the weak hands.  Otherwise we'll likely just have more listless trading and choppiness.

Crude Higher, So are Stocks

Futures slightly higher despite another $2 bump up in crude.  The market is amazingly resilient, even as Europe lags and Asia ex China underperform.  As I have repeated before, the US will be the last to fall among world equities, not because it has the best economic prospects, but it has the easiest monetary policy.  Don't confuse asset inflation via easy money with organic real GDP growth.  Expecting some oscillations early in the day to give way to selling in the 2nd half of the day.  A retest of 1306 support and gap fill is in the cards.

A Weak Close

We just had a fakeout stop run intraday and crude is pushing new highs.  I am expecting selling to come in for the final 30 minutes.

Feels Weak

The dip is just too big and didn't occur in the first half hour.  I am taking away my call for the market to rip higher in the 2nd half of the day.  I am feeling a bit neutral about the intraday pattern, but more likely we'll keep going lower, crude oil is just too strong here for the market to make any headway.

Early Consolidation

Job report came around consensus but it looks like oil is pressuring the market a bit.  I would not be short this market today.  We washed out the weak hands on Tuesday and its likely headed to higher ground before we get another whack.  Yesterday, the market was up big but the put call ratios were not as low as one would expect.  There is still that wall of worry that this market is easily climbing.  Expecting any early dips to be buying opportunities.  We should grind after the first hour.

Short Squeeze Day

Watch for the market to keep heading higher into the closing bell.  Market still feels short to me and they will be flattening out ahead of the nonfarm payrolls report which traders do not want to be short in front of.  1333 looks very doable by 4 PM. 

Trichet

Trichet's hawkish tone at the ECB conference call is putting a scare into the Europeans.  The Americans could care less, but the European indexes are near the day's lows, despite the big up move in the ES.  The breadth of the global equity rally is narrowing, first it was the emerging markets, and now it is Europe.  The US is the last man standing in this bull run.  Still expecting the run up into 1340 by next week, but the upside from 1340 will be limited. 

Gap and Runs

I can't remember the last time we had a big gap up and a move lower in first two hours.  It has almost always been a chase for risk right off the opening and we move higher substantially in the first hour.  And by lunch time, we are pretty much done with the day's upside.  I have a strong feeling that the algos and the quants are all over this pattern and buying hand over fist in the first 30 minutes of the day.  Just an observation on a big gap up day.

Big Gap Up

Today's gap up seals the deal.  The pullback is over.  We are going back to at least 1340 by next week.   I would buy any morning dip but I doubt there will be one of any size because the fund managers are underperforming and need to get in to this market. 

Expecting a run up into the nonfarm payrolls number tomorrow and a big beat of consensus Friday and another gap up. 

Oil at 101.80

And the market is still positive.  Even though we are off the highs of the day, if you told me coil would be up over $2 and the market would be positive, I would have been very surprised.  Hoping for an oil spike to $105 or so to put in some real fear and scoop up ES into the dip.

Pullback Almost Done

The market is trying its hardest to shake out the bulls without giving bears too much time to cover.  You still have to lean long in this market, even with the early signs that the long term uptrend is straining to overcome geopolitical forces.  I will probably be a buyer around the lows from last week around 1295. 

We are consolidating the long term uptrend and it is quite violent, because the trend was quite long.  Off the consolidation, I will have to see how sentiment is.  We seemed to have shrugged off yesterday's weakness which is a good sign that any further selling will likely be limited this week.

First Day of Month

We are used to the big up day in the first day of the month like the rising of the sun.  Well today, the sun rose in the west!  We have a down day on the first day of the month.  The pattern on a day like today after 2 strong up days is usually a trend straight down for the whole day.  There is strong support around 1306 so it will be tough for the bears to crack, but I've learned over the years never to give too much credit to very short term support and resistance levels. 

No Big Gap Up

I was surprised to see the ES fade away from the European highs of 1336 down to 1328 earlier this morning.  This isn't the same market that has been powering higher for 6 straight months.  The price is sufficiently high to put pressure on bulls when the momentum fades away.  I am looking to enter short this morning, but I'm afraid the market won't oblige me with a first day of the month pop which most fund managers are gaming.