I think most of you would agree that this is a very strange session – things feel a bit out of sync. First we got a textbook ramp & camp formation plus a moderate trend day alert. But then we have Mr. VIX up over one percent as well:
What gives? Besides, this is starting to look a bit like a bottoming pattern and we now have a range between 14 and 16. Let’s see which side wins this one. But as we are approaching single digits I’d say that the bears have the long term advantage – plus May is approaching.
Meanwhile the hourly spoos have run into upper resistance, which may explain the ramp at the open which quickly ran out of steam. However, IMNSHO the daily chart is a lot more interesting:
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As you can see we are right at the 1405.75 NLBL – a breach here today would be pretty bullish as we already sliced through the one at 1400. If it happens tomorrow that’s fine as well – there is no resistance above, just a big volume hole. Note that this is a new NLBL and it’s good for the rest of this week.
As you can imagine I am also following the AUD/JPY as it’s often an early harbinger of trouble on the equities side. Interestingly we pushed all the way into an inflection point here as well in the form of our previous NLSL at 87.37. If you look carefully however you see that we are currently trading again below an older one right below at 87.2.
Bottom Line: Something smells fishy here and I don’t see any setups I like today anyway. Thus I will just watch the Net-Lines shown above. Of course IF we push above SPX 1414 then we’re probably off to the races – the AUD/JPY and the spoos should provide early indications of that. Bear in mind fair value today is -5.9 – almost -6.0. Thus a breach of 1411.75 on the SPX is roughly equal with the NLBL on the daily spoos – mark your calenders! But until then I’d be very cautious about the long side here.