March comes in like a lion here in scenic Pennsylvania, cold and snowy, so it will surely go out like a lamb with tee shirt weather on tap in four weeks. Since the markets are coming in like a bear, will they go out like a bull? The sequestration hits with 85 billion in cuts on tap and a 0.7% hit to GDP over the remainder of the year. The political clowns are meeting at the Whitehouse right now. The law makers went home so this is simply a photo-op playing the American people for suckers as usual. The day begins negatively as the futures projected. Volatility jumps higher and is remaining elevated, so far. The VIX is at 15.97, above the critical 15.65 bull-bear level, so the markets are weak. The financials, XLF, remains elevated above 17.23 so the bulls do not appear too concerned about today's weakness, thus far.
The euro is dropping like a stone today to 1.2985 losing the 1.30 level. The dollar is over 82. Higher dollar = lower euro = lower oil, copper and commodities = lower equity markets. The SPX bounced off the 200 EMA on the 60-minute chart at 1501. The 8 MA curled over to the downside and is heading for the 34 MA on the 30-minute chart. As long as the SPX stays under 1517, the broad market weakness should continue. WTIC crude oil is making its way lower to test the lower support and 200-day MA at 90.0-90.4. Dr. Copper is lower again today and if the doctor is sick, everyone is. Watch the copper sideways symmetrical triangle chart posted yesterday. Commodities weaker as well. The economic data today was a mixed bag, something for everyone. Overall, the improved sentiment and ISM provided market lift offsetting the poor data in Europe today and China last evening.
Trannies continue to try and attain a higher high at $TRAN 6020, fighting yesterday but unable to close higher as the Dow punches out new higher highs. The COMPQ and RUT are under their 20-day MA's but the SPX and INDU remain above their 20-day MA's (tech and small caps remain weak as compared to the broad indexes which is a bearish signal). Watch the SPX 20-day MA at 1512.44. Markets may be stabilizing hoping that the politicians come out of the Whitehouse singing and dancing proclaiming prosperity for all.
Note Added 3/1/13 at 10:50 AM: VIX is 15.51 back below the bull-bear line at 15.65 which creates the broad market lift. VIX 15.65 will tell the tale today. The bulls and bears fight at SPX 1517. TRIN is 0.93 bull-friendly, falling from the spike high at 2 at the opening bell down to the sub 1.00 numbers.
Note Added 3/1/13 at 11:27 AM: Speaker Boehner walks out of the Whitehouse by himself, never a good sign. A happy sign would be all the clowns walking out together. Boehner says that the increased revenue was already addressed during the fiscal cliff and now it is time to perform the spending cuts, which is fair and in the spirit of compromise. President Obama and the democrats, however, want more revenue which means higher taxes. The president is set to speak shortly. Boehner's comments whacked the wind out of the bullish sails, the SPX dropping from over 1518 to 1515. Let's see how the president affects the markets in the time ahead. VIX is creeping back up to 15.59, 15.62..... High drama. TRIN is 1.07 back on the bear side.
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