The bears push back a little yesterday but volatility remains low so the downside was no real threat. Keep watching VIX 14.55 for the bear confirmation signal. GTX 4930 remains important as well since it will provide further upside bull fuel if it is achieved. A key development yesterday was the semiconductors, a critical bellwether for the overall economy. Most everything you buy nowadays has a chip. The SOX dropped over 2% yesterday. It is remarkable to see copper collapse, semi's drop, and financials losing steam, while the safer haven stock bubbles grow. The markets are truly ignoring the warning signs. Rubber is down as well. If chips are now stumbling lower, it is hard to imagine how any recovery continues, however, the Fed is firing the money bazooka each day and the markets remain happy enjoying the Caligula-style upside orgy. Watch SOX 425 closely today. SOX begins at 427.80. The broad indexes are in serious trouble if SOX 425 fails; this has taken precedence over the importance of VIX 14.55 but both remain key to market direction.
Factory Orders are released at 10 AM so markets may take a stutter step. Motor Vehicle Sales are reported today. Listen for the pick-up truck sales since this is an indicator of economic strength, or lack thereof, mainly in the housing sector. Contractors will buy new trucks if they see steady work ahead. Fed's Kocherlakota speaks at 1 PM and Evans speaks at 7:30 PM. Additional Fed speak is now scheduled this week so they must see a need to raise the bullhorn and pump the markets. Eurozone unemployment rate hits a record high 12%. Italy's banks are weak today, however, Europe is holding up fine as they return to trading from the Easter holiday. Today is the calm before the storm. The back-half of the week will receive the BOJ, BOE and ECB central banker barrage as well as Monthly Jobs Report on Friday morning. Copper is weak this morning. The 10-year yield is up a couple ticks to 1.84% verifying the buoyancy in the S&P futures, now up seven.
For the SPX starting at 1562, the bulls need to touch the 1571 handle which will immediately create the test of the all-time high at 1576.09. The bears need to push below 1559 to accelerate the downside. A move through 1560-1570 is sideways action today. The 8 MA crosses down through the 34 MA on the SPX 30-minute chart signaling bearish markets ahead, however, as mentioned yesterday, the last few crosses have resulted with a bullish thrust the following morning to ruin the bear's fun. Watch the 8/34 cross closely. The 8 MA is 1562 so as long as the SPX stays below 1562 the bears are okay, but, the futures show otherwise to begin the day. In a nutshell, SOX 425, VIX 14.55 and GTX 4930 dictate market direction.
