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Thursday, May 3, 2012

This stock market simply not ready for sell off

No matter what good news or bad news is coming out everyday but this stock market is simply not ready for sell off. Central bankers of the world are printing money like there is no tomorrow. There has been series of bad news in last two week but stock market have managed to rallied in last two week. This only means market is heading for bigger rally before it could reverse back. Now only thing which could lead to sell off is Fridays job number falls below 150k and if Hollande wins France election. 

Spain 10 year Government yield was above 6 but now its back under 5.90 as ECB stepped in once again.

As expected Dow & S&P500 were in bearish zone at the close and so the stock sold off. But the manipulated rally once again saved Dow and at the end of the day it was just down 10 point when ADP data disappointed. Tomorrow market is back into bullish zone but it depends on jobless claim if it falls below 375k and ECB does a rate cut, the market could rally above 13340. At the same time market could sell off if ECB doesnt cut interest rate.

The first level to check in Dow for upside is 13295 followed by 13338 which is important break point for the upside. While for the downside, Dow needs to break 13265 followed by 13193.
The first level to check for tomorrow in S&P500 for upside is 1415 followed by 1420 which is important break point for the upside. While for the downside, S&P500 needs to break 1400 followed by 1393. 

Use technical indicator 20 (simple moving average) sma and 50 sma to better visualise uptrend or downtrend of 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
Dow started in bearish zone but it recovered and now dow is back to bullish zone for tomorrow. So if jobless claim falls below 375k  and ECB decides to cut then the stock could rally above 13340 but if both doesnt happens then we could see big sell off.

1 month chart of Dow is still bullish but its changing direction, Dow needs to fall atleast 130 point to enter bearish zone.

S&P500 started in bearish zone but at the close its back to bullish zone and we could see rally tomorrow.

1 month chart of  S&P500 is still bullish but its changing direction. S&P500 needs to fall atleast 15 point to enter bearish zone again.

As I have said VIX is in contango, so any rally in VIX would mean it would sell off by close.  Blue circle represent bullish sign, red circle is bearish sign.

UVXY started in bullish zone but as vix is in contango, it lead to sell off by close.

SVXY started in bearish zone but ended up bullish. Red circle is bearish sign, blue circle is bullish sign.
Chain Store Sales 

Challenger Job-Cut Report
7:30 AM ET

ECB Announcement (Rate cut is expected if it doesn't happen market would sell off) 7:45 AM ET

Jobless Claims (378k is expected, prev week was 388k, higher is bearish sign, lower is bullish sign 8:30 AM ET)

Productivity and Costs (Non farm productivity -0.4% is expected, prev month 0.9%, higher is bullish sign, lower is bearish sign) 8:30 AM ET

ISM Non-Mfg Index( 56 is expected, prev month was 56, higher is bullish, lower is bearish)10:00 AM ET

EIA Natural Gas Report ( built up of inventory is bearish news, lower inventory is bullish news
10:30 AM ET Watchout UNG.

Federal Reserve Bank Presidents Speaks 11:00 AM ET

Earnings before market open: FLWS, ARG, ANR, ANSS, BCRX, CAH, CI, CNP, EXXI, GM,  LVLT, OWW, GOLD,  VIAB SNTA, SLE


For Long term keep GMCR, PCX, RVBD, NOK in your watchlist.

For day trading watchout BIDU, AAPL, PCLN, MA, FAS, FAZ, TZA, TNA, TVIX, XIV, SVXY, UVXY, VXX (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.

Friday's job report and Monday's France election result could be a game changer. Good luck.

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