The S&P has closed higher four out of the last four sessions. Despite the nearly 90-handle selloff the S&P has regained its footing and settled above 1850 last Friday.
With all the talk about a 20% correction in tech stocks the S&P remains stubbornly firm and up 46.1 handles in 4 days. There have been a lot of reasons to sell the S&P so far this year but like 2013 every selloff has led to a new high.
While the S&P closed above the psychologically important 1850 level it also closed above its 1845 50-day moving average. At the low end, it held 1814, above its November peak at 1813.
When the S&P sells off, the public gets scared and instead of buying at support levels they end up stuck short. When the algos are tired of searching out downside stops they start searching for upside buy stops. We said several times last week that the shortened week, which contained the Jewish Holiday Passover, the April option expiration week, and Good Friday, might be a problem for the bears and that’s exactly how the week ended up. After being down -37.7 on Thursday, April 10, and down -15.4 handles on Friday, April 11, there seemed no reason to be concerned.
Then the S&P made its low in GLOBEX Sunday night and started its push the other way. Monday Apr 14 +12.8, Tuesday Apr 15 +15.1, Wednesday Apr 16 +13.1, Thursday Apr 17 +5.1.
The Asian markets closed mostly higher and in Europe 10 of 12 markets are trading up. This week’s economic schedule includes 19 different economic releases and 10 T-bill or T-bond announcements or auctions. Today’s economic and earnings calendar includes the Chicago Fed National Activity Index and Leading Indicators numbers and earnings from Halliburton [NYSE:HAL], LG Philips LCD [NYSE:LPL], and Netflix [NasdaqGS:NFLX] as well as several regional and midsized banks.
Our view
The markets go up , the markets go down. That is the theme for 2014. There is no clear trend. When the “crowd” gets too long in to the rally the S&P sells off. When the “crowd” gets too short into the decline the S&P goes up. Mondays overall this year have not been kind to the S&P; we lean to selling the early rally and buying weakness. It could be we see a down day.
As always, keep an eye on the 10 handle rule and please use stops when trading futures and options.
- In Asia, 8 of 12 markets closed higher : Shanghai Comp. -1.52% , Hang Seng +0.28%, Nikkei unchanged -0.03.
- In Europe, 10 of 12 markets are trading higher : DAX +0.99%, FTSE +0.62%
- Morning headline:“ S&P 500 futures seen higher after Easter Holiday”
- S&P Fair Value: 1858.45 (futures 2.80 higher at 1861.25 as of 6:34AM CT)
- Total volume: LOW 1.25M ESM and 9K SPM traded
- Economic calendar:Chicago Fed National Activity Index and Leading Indicators. Earnings from Halliburton [NYSE:HAL], LG Philips LCD [NYSE:LPL], and Netflix [NasdaqGS:NFLX] as well as several regional and midsized banks.