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Wednesday, May 9, 2012

Futures market deciding the fate of this stock market

It was a again a strange day for trading, Dow was down 184 point, then it rallied back 160 point, followed by another sell off and down 97 point. S&P500 on the other hand, was down 21 point, it recovered 21 point loss, then it sold off and down 9 point. Market was expected to be bullish today but future market changed everything. 

This market is behaving in the same manner as it rallied between December - April when Future use to open higher then stock market use to rally upside. Since last week this trend is changed, Future market opens low and then it continued sell off in market hours. This stock market is selling off silently and smartly and if you have noticed in last 5 days, Dow is down almost 433 point and S&P500 is down 48 point. This is the reason I say its not safe to keep anything invested overnight. 

Based on the chart, tomorrow Dow and S&P500 is expected to open lower as its back into bearish zone at today's close but it also depends where future closes and then what Mr. free money printing manager Ben Bernanke says at 9.30 am EST. At tomorrow close market will be in positive.

The first level to check on Tomorrow in Dow for upside is 12908 followed by 12965 which is important break point for the upside. While for the downside, Dow needs to break 12748 followed by 13701.

The first level to check on tomorrow in S&P500 for upside is 1364 followed by 1368 which is important break point for the upside. While for the downside, S&P500 needs to break 1348 followed by 1342. 

Use technical indicator 20 (simple moving average) sma and 50 sma to better visualise uptrend or downtrend in this manipulated market. If 20 sma crosses 50 sma and 20 sma is up, then the stocks will go higher, if 50 sma crosses 20 sma and if 50 sma is up, then stocks will go lower. In the chart red circle is bearish sign, blue circle is bullish sign. Green line is represented by SMA(50) and red line is SMA(20), while blue line actual stock value. To learn more about SMA check out http://www.freefdawatchlist.com/2012/04/understanding-simple-moving-average-sma.html


Dow entered in bullish zone yesterday afternoon as indicated by blue circle representing bullish sign. But the leg down from Futures, reversed the direction and what could be a bullish day changed to bearish day. But dow recovered all of it loses by afternoon before changing its direction again. Dow is again in bearish zone at today close so tomorrow market is expected to open lower or atleast end up flat but it all depends on futures and Ben Bernanke what he says. At tomorrow close market will be in positive.

1 month chart is still bearish and at a break point as you can see if Dow can break 12953 then dow is going higher.

S&P500 started day in bullish zone but it because of futures leg down, it reversed the direction and stocks sold off. At the close S&P500 is still in bearish zone and tomorrow market is expected to open lower or atleast end up flat at the close. At tomorrow close market will be in positive.

1 month chart of S&P500 is still bearish and at a breakpoint. 
Lots of economic data coming out tomorrow and the most important is jobless claim.

BOE Announcement  (Rate cut is expected as UK is in recession, If rate cut is not announced then market could sell off) 7:00 AM ET

International Trade (-49.5 B is expected prev month was -46B, higher will be bullish sign, lower will be bearish sign for stock market8:30 AM ET

Jobless Claims (366k is expected prev week was 365k, higher will be bearish sign, while lower will be bullish sign for stock market8:30 AM ET

Import and Export Prices (Export prices 0.2% is expected prev month was 0.8%, Import prices -0.2% is expected, prev month 1.3%, higher will be bullish sign, lower will be bearish sign for stock market)8:30 AM ET

Ben Bernanke Speaks (This could be big market mover if he mention anything about QE3, if there is no QE3, then GLD, AGQ will sell off) 9:30 AM ET

EIA Natural Gas Report (Built up in inventories is bearish sign, decline in inventories is bullish sign for UNG) 10:30 AM ET

Treasury Budget (-30 B is expected, prev month was -198 B, higher will be bullish sign, while lower will be bearish sign)2:00 PM ET (The Federal Budget Balance measures the difference in value between the federal government's income and expenditure during the reported month. A positive number indicates a budget surplus, a negative number indicates a deficit. )


Earnings before market open: ACCO, ALT, AG, ADY, MT, ATPG, BIOD, CSIQ, DYN, GNVC,INO,, NHI, PETD, RGDX, SOMX, VITC, SNE, SLF, TGX, VITC, WIN

Earning after market close:  ALTH, ASTI, AVII, BRKS, HTWR, MDR, MCP, NABI, JWN, OPTR, NUAN, WX, TWER, STEM, LOV, PHMD

After hours big gainerDMD, LYV, QTM, CQB, INSP, PRIM, MNST, ZN, DIOD, ARAY, TSLA

After hours big loser:  PANL, SGI, CSCO, AMAG, DGIT, XTEX, JOBS, KELYA, WFR, CHS

For day trading watchout BIDU, AAPL, PCLN, MA, V, FAS, FAZ, TZA, TNA, TVIX, XIV, SVXY, UVXY, VXX, SPY, DIA, GLD, AGQ, INFY (remember volatility is not a long term investment option use it for strictly day trading) VIX is still in contango so any rally in it would lead to sell off at close. So becareful with UVXY, TVIX, VXX.

This market is still searching for direction, so if your long term investor, invest after May 17th. Don't keep all your money invested in stock, keep cash in hand to take advantage of any sell off. Good luck

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