THE NEW WEEK Options

[TechMan]

Seasonality advantage goes to the bulls next week. On the first trading days of April OpEx weeks, the Nasdaq started the week higher 7 out of 12 times and ended the week higher 9 out of 12 since year 2000. However, the Nasdaq and the SPX hourly and daily are all pointing down with Fort Knox built around SPX 1387 as the bears' backstop.

In addition, I had posted this chart back in February, when the Consensus Bullish Index had risen to October 2007 high at 77 (77 Sunset Strip). In my book that was the only time it had ever reached that level. And, it had only reached 76 twice, both of which had occurred in April 2010, just before the "Flash Crash".

So, due to this type of rare event, there are only 3 vertical lines (1 blue and 2 black) prior to my February comment. And now, take a look at how many of those vertical lines were bunched together in February and March of this year. It had reached new high 78 twice just in March. That's one heck of a bullish sentiment of historical proportion.

78 = Red
77 = Blue
76 = Black



As stated previously, I don't have the data from December 2010 to January 2012. Still, it's simply stunning to see this type of hysterical euphoria. You don't see that even during QE1 stock market surge in 2009 and 2010.

[TechMan]

Still more than 60% of both the NQ and the NQ 100 components are below their 50 DMAs, yet both Indexes continue to stay above their respective 50 DMAs. Other than the Fibonacci Retracement levels, it's notable that the NQ post-breakout pull-back didn't even come close to touching the breakout level. The broader-based NQ is obviously the weaker link, which, to me, is always a negative.

Above all, I'm expecting "The Nones of March" low to be tested, and it may come as soon as next week.




And, compare to the 4/4/12 chart that I had posted before the opening bell on 4/5/12, when the probability of a breakout became prominent.

This post has been edited by TechMan: Apr 14 2012, 01:47 PM

[TechMan]

London based The Guardian called last week's selloff in Spanish and Italian bonds as "the puff of smoke billowing out of a volcano getting ready to blow". That keeps Spain on top of the watch list for the new week.

Although the ECB's decision to flood the financial system with cheap money and the pro-austerity right-wing party's election victory have eased the pressure of Spain's financial crisis, the effects may have already dissipated.

The new administration is faced with over 20% unemployment while trying to implement more austerity measures. Meanwhile, banks in Spain are loaded with toxic real estate loans. The interesting thing about Spain is that 1/3 of its bloated deficit is made up by the overspending of the autonomous regional governments. The size of Spain's economy is beyond eurozone's rescue fund firewall.

Of course, one can't rule out the possibility of the euro breakup leaving the ECB holding the bag. The Bundesbank, Europe's de facto central bank, sees that possibility and is strongly opposing any further LTRO.

"The rain in Spain stays mainly in the plain."

[TechMan]

Nikkei opened down 115 points and continues to slide, as both the Yen and the Dollar rally against the Euro. However, so far futures seem unmoved by the volatility in Asia. That makes it a very interesting divergence.

It may be just a matter of time and "acceptable tolerance". Eventually, they'll have to come home to roost. Like I said, it's time for synchronization. Here's keeping track of another "divergence" in Europe.

[EDIT] Euro has just rammed through my previously referenced support at 1.3032. Let's see if it breaks 1.3000 tonight.




And, compare to the chart I had posted on 4/1/2012.

This post has been edited by TechMan: Apr 15 2012, 07:51 PM