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LEIBOVIT FILES


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#1 Chris G

Chris G

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Posted 10 November 2013 - 12:01 AM

Leibovit Files
Monday, November 04, 2013


A Pause That Refreshes?

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STOCK MARKET - ACTION ALERT -BULL - New 401(k) funds on the first of the month helped turn stock prices higher on Friday, but I remain short-term cautious as some indexes posted a 'Key Reversal' on Wednesday and a Leibovit Negative VR on Thursday. Looking at the S&P 500, my expectation on a short-term basis is that we should now be trading lower and I am looking for 1730 with potential to 1710 or even 1660. Afterwards, the potential to 1807, possibly 1859 exists, but let's wait for confirmation of a bottom and/or a breakout first. VRtrader Platinum subscribers remain long the inverse ETF for the S&P at this time with a mental stop above Wednesday's highs, but even a slightly higher high does not necessarily negate downside potential afterwards. Stay tuned. I remain on an overall BULL signal until greater evidence to the contrary unfolds. This is for now a trading call only.
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COMMENTARY:

Although equities endured a relatively quiet session, the same could not be said for the foreign exchange market. The U.S Dollar rallied throughout the day (actually up six days in a row), gaining significant strength against the euro and the pound. The Index ended near its high with an advance of 0.7% at 80.72. The euro was under pressure since yesterday amid rumblings of an ECB rate cut by year-end and continued chatter of negative interest rates. Heavy selling dropped the pair roughly 300 pips off its October highs to 1.3490 against the dollar.

Friday's economic data was limited to the October ISM Manufacturing Index, which increased to 56.4 in from 56.2 (Briefing.com consensus 55.0). The common adage throughout the government shutdown was that the manufacturing sector would suffer from lost orders and demand. If the ISM index is an accurate gauge of manufacturing activity in October, then the expected weakness never occurred. New orders actually strengthened in October. The related index increased to 60.6 in October from 60.5. Meanwhile, order backlogs ended a contraction period and increased to 51.5 from 49.5.

Monday's economic data will be limited to August and September factory orders, which will be released through a single report at 10:00 ET.
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The DJ closed up 69.80 at 15615.55. On Wednesday, the DJ touched an all-time new high of 15721.08. The next theoretical next target range would be 16000-16250.
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The S&P 500 was up 5.10 at 1761.64. Last Wednesday we traded at 1775.22 intraday, a new bull market high. Next potential upside target is 1807, but there is about 25 point downside risk here if you're trading. Support is at 1729 and 1700 and then 1646.47, 1627, 1610 and then 1550.
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The Dow Transports were up 72.59 at 7047.77. On October 29 the Transports touched a new bull market high of 7064.67. The next big technical upside target is 6900.00 when we clear the 6754.81 high. Support is at 6237 and then 5700.00.
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The Russell 2000 was down 4.49 at 1095.67. It touched a new bull market high at 1123.26 on October 30. Support is at 1090.30, 1037.86, 1009.46 and then 960.00.
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The Nasdaq Composite was up 2.33 3922.04. On October 30 Nasdaq traded at a new bull market high at 3966.71. Next upside technical targets include 4000, 4100 and 4500. The lowest low to date occurred at 3573.57 on August 27. It sure appears Bernanke wants the Nasdaq to trade back up to its record high of 5000 from 13 years ago. I believe the date was March 12, 2000!
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The CBOE Volatility Index (VIX), which measures the cost of using options as insurance against declines in the S&P 500 (i.e., the higher the number, the more fear in the marketplace) was down .47 at 13.28. The recent highs are 21.34 on October 9 and 21.91 on June 24 - the highest highs since the March 15 low of 11.21 - the lowest level since February 2007. The higher we go in the VIX, the more likely a bear cycle is upon us.


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