What a difference a day makes on Volume…

Yesterday’s volume was the lowest non-holiday related volume so far this year. Although we keep pushing above the 1130 level on the S&P we still haven’t been able to break out with strength, The  financials XLF  are keeping the lid on the market, while the Tech stock performed we.

Today technology was weak from the start of the day, lead by TXN INTC and STX, as well as commodities that started the day weak on the back of Asian concerns for growth prospects, AKS AA.

Today’s volume was much higher for the SPY due to the volatility increase we got after the 2.15pm FOMC announcement. The announcement resulted in shorts having to cover positions, since we traded above the pre-2.15pm levels for the rest of the day – yet we stayed below yesterday’s close, leaving us within a tight trading range.

For tomorrow we continue to have a similar trading range in the SPY 113 area is resistance and 111 is the support levels, as for volume we did good today because of the FOMC meeting, but I’m not so sure we will get the volume tomorrow since we are in August after all.

Dull Summer day…

Apart from the short burst of energy on the open this morning, the markets really didn’t have much of any direction or volume. the $SPY traded 204mm slightly higher than yesterday – but as mentioned most of it in the 1st 45min of the day. The 200 day moving average on the S&P has turned out to be the next resistance levels in the markets, we couldn’t stay above it today, despite the nice gap up we had this morning on the back of good earnings.

The VIX once again proved to be useful as it moved higher during the course of the morning session, keeping the longs under tight control, and keeping the shorts, especially in the gold sector, nice and profitable.

As for the rest of the day, Keystone mainly stayed on the sidelines, as the markets lost volume as well as a clear direction. Let’s see what sort of volume we get tomorrow…

Earnings Season has started

Light volume up day at the start of the earnings season (SPY didn’t  even trade 150mm shares).Technically plenty of stocks are starting to test the next level of resistance, either the 50day or the 200 day MA — most of which are still sloping down. Could the failed Head and Shoulder be the bottom for now of these markets? that is what we are testing out for the next few weeks, earnings will play a big part in answering that question. For the most part analysts and companies have lowered expectations for the 2Q, as can be seen by the beat in AA and CSX last night. My expectation is that companies might beat 2Q earnings expectations but will remain caution about the 3Q – seems like the right thing to do with the unemployment levels still very high – any upbeat 3Q guidance will be taken as a positive surprise by the markets..

Portugal was downgraded this morning, yet the impact doesn’t seem to be as negative as other downgrades, for one S&P kept a stable outlook for the next 12months. Also Greece was able to issue some 6month bonds at below the 5% level, a decent reentry into the funding markets.

Recent upgrades for the semiconductors is helping the Nasdaq gain some relative strength ($BRCM breaking out nicely), what we need now are the financials to start kicking in some positive sentiments – $JPM, $BAC and $C all report later this week. These two sectors will be the focus of my attention today ($SMH and $XLF).

Welcome to the 3Q

Portfolio managers couldn’t window dress up the results for the last
quarter, they are hoping that with such a weak close the 3Q will be
easier to beat expectations. Either way their are plenty of unhappy
investors out there, even hedge funds performed very poorly in the
quarter.

Spain’s possible downgrade was well taken by today E3.5bn 5yr note
auction, which is helping out the euro this morning. Financial reform
passes congress, but still needs the votes in the Senate, which won’t
get to it till after next week’s recess.

Plenty of employment numbers in the next two days, which will set the
tone for the start of the 3Q. Followed by the long weekend. Volume had
been very low for the most part of the day until the sellers took over
at the end of the day, raising the volume on the SPY to 300mm – a high
number for a market trading on the lows of the year.

Once again wait till volume picks up before committing capital in a
trade otherwise you run the risk of getting chopped up, like most of
yesterday morning.

Will continue to trade commodity stocks as the
currencies are still dictating a direction in these markets. The Tech
sector closed weak yesterday, as some of the leaders dropped to new
lows for the year – DELL CSCO EBAY MSFT INTC… all worth looking at
today.

EU’s possible support of Greece leads to rallies in US markets

The Greeks are known for many things. The Parthenon, Pythagorean theorem, mischievous God’s and a debt crisis that is moving the US markets. In this week alone, the market has rallied on news that the EU would help Greece with its debt.

Wednesday, Feb. 9, at 11:45 am the SPY (chart below) reversed their downtrend on the day and bounced from their lows of 106.27 to make new highs at 108.15 ($1.88 or 1.74%.) This 45 minute move was based on unfounded rumors the EU would help out Greece.

Thursday, after an announcement from Brussels that no resolution was made, the SPY bounced from 106.62 to it’s high of the day of 108.25($1.63 or 1.5%.) Again, nothing has been decided although the EU is pledging support.

The dollar, which was gaining strength against the EUR/USD (chart below), initially bounced after the news, but then came back in as it was found to be “premature.” The EU is looking to give in-direct aid, but there won’t be any more details until sometime next week. As of this writing, the EURO is continuing to give up ground to the dollar.

The biggest gainers in US equities on the strengthening dollar have been basic materials. Although the overall sector has been the weakest over the last month down -9.2%. This week it is up 3.7% and more than any other sector. Today it was up 2.7%. (Bar Graph Below)

AK Steel Holding Corp (AKS) was up today 4.74%. It found resistance at it’s 50-day moving average. I will be monitoring it closely to see if it continues to rally as well as paying attention to the EUR/USD.

Shaded areas represent the volatility to the upside in the market.

The dollar is clearly getting stronger against the EURO

Week performance

Day Performance