Resolution is at Hand

Terrible traffic today so I am home late.

Resolution is at Hand
Last night I discussed the possibility that a slew of flammable components could get the markets running higher if there was some kind of spark to ignite them. Today there were two:
-Huge reversal in financial shares to the upside
-A probable Euro Zone debt package sized around 2 trillion Euro (WOW!)

The Euro debt agreement is in flux it seems with some denial coming out, but it's too late. Why? They have seen the numbers the market wants and will have to roll around to making it happen. Market expectations are a bitch.

Putting it all together the stage is set for some Panic De-Selling. Apple missed their earnings by a bit, so the Nasdaq is pressured right now in the futures. If that fails to stop a run higher tomorrow it will be telling.

I am not long term bullish here, nothing is getting solved really. As James Bianco stated, the common fundamental now is trillion dollar money bombs. If it falls, the correlated market will run. News won't matter, save a bona fide slowdown in China and how would we know that anyway.

Now this is not a done deal. An S&P close that sticks over 1230 is a must have here, and soon. You can see how annoying things have been trend wise in this chart of SPY:

You can see the upward GREEN channel was breached on 9/22. The downward RED channel was breached on 10/12. One can draw this very differently, but it is how I look at things.

A run to about 1280 could happen and that meets the 200 MDA. Looking out at just about 2 months left in year and being down for the year what might market players think about doing then?

In any case, I think resolution is close at hand. Maybe this week will give the answers needed to get more actively involved with the market.

Have a good night.

Panic De-Selling

Just getting caught up on reading things. Forgot my phone charger today and thus my battery devouring Droid phone was about dead by 10am.

Panic De-Selling
Today markets gave back some ground but it really does not affect my topic tonight. The vicious rally seen over the past week or so has pulled major indices back from just about bear market territory to close to even for the year. Digest that little nugget for a second.

And I think there exists a chance for an even more extreme move.

I was thinking about this late last week and it's not exactly a novel idea. Josh Brown touched on it this morning:

Futures Higher as G20 Leaders Demand Euro Zone Not Ruin the Q4 Rally
Everyone needs a rally this fall. Everyone.

They're making it happen. They'll tolerate no distractions. Lukewarm data points will be treated as positive data points and positive data points will be received orgasmically. Negative stuff will be tossed over the market's shoulder and dismissed as "priced in already". Watch the shift in psychology - "just give me a reason to buy, man, just give me a reason."

It can be strange to see but markets demand several weeks (months?) of bad data before they will even consider a slow down is possible. After a market drop though, the slightest "better than expected" or other minor positive data point will be seized by the balls as proof positive a rebound has arrived. The power of positive thinking I guess.

Below is a chart of the S&P 500 daily going back to July:

In late July when things started to tumble there was plenty of debate and discussion about various key levels of support on the way down. There are a bunch and everyone comes up with numbers differently. I have my major support levels marked by lines on the chart. You will notice the fall went right down and through 3 major support lines and stopped at the 4th(around 1120). That was Panic Selling. Get me out NOW, not later.

The big drop felt different to me than other corrections when it started, just more sinister. The latest market rally has my attention as well. It's a bit stronger and more pronounced than other attempts.

And this is all about psychology now. Fear of missing out on a huge run is palpable out there. Time is running out on the clock this year and performance has been flaccid. If the S&P stays above 1230 another time it could cause a rush back into the market.

You have the gunpowder that is performance anxiety. You have some jet fuel that is some kind of Euro fix (delay Greek debt haircuts, kick can, use small soothing words on markets). China could ease which is more scary than good but for the near term will be kerosene. All you need is a spark.

Maybe earnings season will go well this time around. Maybe the FED drops a bomb. Who knows, it won't take much. I think a run to the 200 MDA could happen fast (1275 - 1280) and if it does the chasing could be Lord of the Rings epic at that point.

If you are a follower of markets, you can feel the tension now. The only pent up demand in this economy is the desire to buy stocks going higher.

Will it happen? CROX and IBM did not help things tonight after the bell. The Occupy Wall Street (I will have much more on this during the week) thorn is starting to draw blood. Europe may screw the pooch once again. Risks abound as well as common sense but here we are anyway a spark away from a mad rush back through the exit doors many ran out not long ago.

And that is Panic De-Selling.

Have a good night.