According to the short-term 15-minute chart of the CPC and the CPCE, it looks like the market will rally today as they have gone bullish. The long-term chart for the CPC and the CPCE are still strongly bearish.
The methodology for the bank stress tests will be released today, which should provide a clue as to the direction of the financials. As the financials go, so will the market. It will be interesting how the regulators fudge the stress test methodology to make the financials look good.
Update at 12:47 PM EDT:
If the SPX rises above 868.27 today, then the bulls will have over-powered the bears putting them in control of the market. So far, the high today on the SPX is 867.81, which is close, but no cigar. The bears have to make a stand here.
We have light volume today, which is to the favor of the bulls. The bears are likely cautious due to the stress test methodology release in about an hour. Though the financials have rallied some, with stress test consultations on-going during the morning today for the individual banks, I would think insider trading would propel the bank stocks much higher if the news was truly good. But this is speculation on my part.
Here's an article from Bloomberg:
Insider Selling Jumps to Highest Level Since ‘07 as Stocks Gain
By Michael Tsang and Eric MartinApril 24 (Bloomberg) --
Executives and insiders at U.S. companies are taking advantage of the steepest stock market gains since 1938 to unload shares at the fastest pace since the start of the bear market....
While the Standard & Poor’s 500 Index climbed 26 percent from a 12-year low on March 9, CEOs, directors and senior officers at U.S. companies sold $353 million of equities this month, or 8.3 times more than they bought, data compiled by Washington Service, a Bethesda, Maryland-based research firm, show.
That’s a warning sign because insiders usually have more information about their companies’ prospects than anyone else, according to William Stone at PNC Financial Services Group Inc.“They should know more than outsiders would, so you could take it as a signal that there is something wrong if they’re selling,” said Stone, chief investment strategist at PNC’s wealth management unit, which oversees $110 billion in Philadelphia. “Whether it’s a sustainable rebound is still in question. I’d prefer they were buying.”
Insiders Sell
Insiders from New York Stock Exchange-listed companies sold $8.32 worth of stock for every dollar bought in the first three weeks of April, according to Washington Service, which analyzes stock transactions of corporate insiders for more than 500 mostly institutional clients.That’s the fastest rate of selling since October 2007, when U.S. stocks peaked and the 17-month bear market that wiped out more than half the market value of U.S. companies began.
The $42.5 million in insider purchases through April 20 would represent the smallest amount for a full month since July 1992, data going back more than 20 years show. That drop preceded a 2.4 percent slide in the S&P 500 in August 1992....
The S&P 500 has rallied 26 percent over 32 trading days, the sharpest rally since 1938, as speculation increased that the longest contraction since World War II will soon end....
Update 1:40 PM EDT:
The bulls just took the S&P above 868.27 proving they control the market. This wipes out Monday's decline. If the S&P goes above 875, then the market might be off to the races as shorts cover and drive the market higher. The put/call ratios for the SPY, DIA and Qs are heavily bearish; so there's a lot of short covering ammunition to support a rally.
Using the 15-minute charts, the VIX just went bearish with the CPC and CPCE still bullish, but with a diminishing slope and giving appearances they might be heading into a level - or sideways mode. The daily charts still still have all three indicators in a bearish mode.
Update 2:45 PM EDT:
The stress test methodology announcement turned out to be an absolute joke. There's no interest in transparancy and the final report to be released on May 4 will be the same.
As long as the S&P stays below 875, which was last Friday's high, then the market is still considered to be in a corrective pattern with an initial downside target of 780. With today's lack of transparency, there will be a big sell-off in the next couple days.
The 15-minute chart shows the CPC (at 0.85) and CPCE (at 0.79) have gone from a bullish downward slope to horizontal; i.e., neither bearish or bullish. If they turn upward to a bearish slope, then we will likely have a sell-off at day's end and on Monday.
No comments:
Post a Comment