Yesterday was a washout as they say. So we look to charts and stock gods on the internets to find out if the selling is over. Today's big news of course is Jobs. Was yesterday's selling about the weak jobless claims number?
I don't think so. First we were setup in a very vulnerable place to fail right there at the 38% fib level. Add to that the negative news about the eminent failures of Greece, Portugal and possibly Spain made the recent discovery of the the US Dollar even that more fashionable. I generally think the market is confused in there and the mantra is when in doubt bail. The unexpected jobless numbers just added to the confusion.
The real questions is will the numbers today effect the markets one way or another? And if so how?
Let go to the charts and data first to build up some knowledge here.
Asia
Ugly. Japan and China both down around 3% yesterday. The markets opened weak and stayed on their lows all trading day long. The Hang Seng had a little sell off into the close.
Europe
The FTSE and DAX both opened weak and have been selling off all morning.
United States
Economic news
It is all about the jobs today. 8:30 am the jobs numbers are revealed and the markets are looking for their first positive jobs number in about 18 months. Canada already released it numbers and managed to add 43K new jobs with an expectation of only 15K. That bodes well for the US numbers. The markets spiked (as did the dollar) giving us a little hint of how the markets will react with a positive US number.
Earnings
Earnings have come in pretty strong this morning with some nice upside surprises like Beazer Homes.
Breadth Charts
40 DMA % Index
We were making so much good progress and it was all flushed yesterday with the selling. We still have not reached the depths of the October sell off but more selling in here will take us there. The chart scores a very bearish -6 today.
10 Day High - Low
This chart is bad for the bulls. The hook down on the 5DMA on each index is like the groundhog seeing his shadow. It foretells of more selling ahead. I was hoping at least we would get to that flush level on these charts, down to the -56 area that would put in a bottom. We could have a recovery day today but I would not trust that we are on a straight shot back up to the market highs now. This chart scores a -6.
52 Week New Highs
The market 52 week New Highs were our most bullish chart. Today it joins the ranks of the other charts and puts in a -6 score. There just was not a chance yesterday for any stocks to hit their 52 week highs. Today for a turnaround the NYSE will need to hit around 16 in the first 30 minutes. With the gap down now that will not happen. If we rally from a good jobs report premarket it might be possible.
Conclusion
The charts are very bearish today putting in a -18 perfect bear score. They are inherently bearish at the bottom. The real question we need to know is does this weak open today put in the bottom? The 10 Day High-Low foreshadows more selling ahead. Today's open could be it.
The market showed its hand a little from the reaction to the Canadian unemployment numbers and I think the Canadian numbers foretell us about the US numbers. There is some large revisions due today in the numbers and I worry a little bit about the Apple phenom where nobody knew how to react to the numbers out there but unlike Apple we have been foretold of revisions. I am not sure that a negative number won't rally the markets as it could take away the lifeboat status to the US dollar and take some pressure off from that trade.
$SPX
The charts are oversold this morning with a gap down developing. The 8:30 am news however will determine the pre-market position. The bears today need to continue the downward pressure. New prints below 1057 SPX will be a victory for the bears. 1048.80 is the 6% pullback level from the recent top there should be some support there if we break below 1057. I have given the bulls today some little bites. Keep it above 1057 and close above 1084 would mark this as a potential bottom. 1097 become our bounce area now for a potential fall back down to lower lows. We will not give the all-clear for a summit attempt until we are clear above 1097.
Until this market shakes it confusion and learns to take world leadership position again I expect more sideways and possibly down here for the next few days. What would constitute leadership? A nice rally while the rest of the market rolls over like.
Have a good weekend and a great trading day today.
Marlin aka:redliontrader
