Early Bird Update

00:016- Equity Commentary

The Nikkei 225 is off .52% to 9530. Bloomberg attributes the drop to Investor Sentiment:

‘“Investor sentiment is a bit twitchy,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which manages $85 billion. “The U.S. data was a bit poor. This week we’ve had a couple of good days and investors may be looking to take profits.”

The CSI is up 2.00% or 65 points to 3,288.52. The ASX 200 is down 13 points to 4686.60.

In the U.S. GE reports before the opening bell on the NYSE: “Analysts project a second straight quarter of higher profit after eight periods in which it declined or was little changed. Adjusted earnings may be 27 cents a share on sales of $37.4 billion, the average of estimates in a Bloomberg survey.”

SPX, Dow, and Nasdaq Futures are flat. 5 and 10 Year Treasury futures are up 0.05% as of writing.

00:05- Commodity Commentary

Energy- Nat Gas is currently positive by $0.0001, up on light volume. November CL contracts have followed the dollar for most of the session. Losses were paired from 82.53. November contracts are up at $82.75/barell.

Precious Metals- Silver has led the rally and is up 1.47% or $0.36 to 24.795. I see $25.00 on Silver before $1400 on Gold. Gold is positive on the session up $3.60 to 1381.30.

Grains- Wheat and Corn continue to rally as we have a global shortage. In addition corn may be benefiting from E15 legislation now in place. Though, bullish activity is in order until the next USDA report reports accurate Supply numbers. The always important yield/acreage ratios remain on the low side when measured against previous estimates. Wheat is up .82% and Corn is up .93% on the session. Additionally, Soybeans continue to extend gains, advancing by 1.20%.

00:00- FX Comentary

EUR/USD- the pair traded down as low as 1.4009 at 20:15. The pair then traded up to 1.4049 and faced resistance at 1.4050. The 'Sovereign Default Trade' seems to have found support in the 1.4025-1.4035 range. Currently we are long at 1.40387.

Cable trade - The pound traded down to 1.5985 at 20:30 and has since traded up around 1.6005. The pair sits at 1.5997 at present time.

U.S. Dollar Index- The DXY gained traction and is trading up to 76.88.

U. S. Trading

CPI , Empire State, and Retail Sales come in at 08:30.  I expect 'robust' retail sales data to bolster equities.  Additionally,  expect a weaker USD tomorrow with stronger Commodities.  Good morning and good luck.

-Patrick M. Ambrus

Sources: Bloomberg.com, Stockcharts.com, The Gartman Letter, Financial Times

Do Your Own Homework-SPX Update

'Buying Gold is an excuse for people not to do their homework.'

-Alex

SPX: 1 Year Daily Chart:



Another day another dollar: that is true if you were long the SPX in U.S. trading today. The SPX rallied 1.45% to 1141.92 on the session led by Energy, Consumer Discretionary, and Industrial stocks. Many Tech bellwethers displayed robust performances as Google rallied 3.7% to 508 and AAPL closed above 280 up 2.85%.

Pop Quiz: Why did equities rally today class?



a. President Obama's Town Hall assured investors America is "The Greatest Nation"
b. The SPX broke resistance of 1131
c. Japanese Markets were closed
d. The Tea-Party will uproot American Politics
e. No significant economic data released
f. I forgot how to take these tests

The answer is probably a combination of b, c, and e. The S&P finally broke out of its uninspiring trading range on light volume. Though, this may be short lived. Early in the session gold rallied to new highs around 1284. However, these gains were unsustainable. In addition, agricultural commodities, base metals, and Natural Gas led commodities lower. The USD failed to sustain any gains against the Euro, Sterling, 'Aussie', and CHF. Also, the bond market lacked bullish convictions. Alas, capital flowed into equities by default.

October Nat Gas:1 Month Chart



December SPX E-mini: 1 Month Chart



Trades
We took advantage of the sharp sell-off in December Nat Gas contracts and entered a long position as prices firmed. Also, we are long the Dollar vs. CHF. U.S. Housing Starts come in at 08:30 and The Fed decision is at 14:15 EST. We expect equities to pair some of their gains in tomorrow's session.


Patrick M. Ambrus
Twitter: AnalyzeCapital

Sources: Stockcharts.com, Bloomberg.com, VanityFair

Bear Trap or Bull Run?-SPX Update

Wait and watch. That is where your tape reading comes in, to enable you to decide as to the proper beginning.

- Larry Livingston, Reminiscences of a Stock Operator

Unless, you were hiding out in a cave somewhere with Osama Bin Laden watching endless re-runs of President Obama's Oval office adress you probably noticed the huge rally in equity markets yesterday. Many analysts, economists, traders, and journalists attributed the rally to 'robust' PMI data from The People's Republic of China, Europe, and The U.S. Though, ADP employment showed glaring mediocrity in job growth leading up to Non-Farm Payrolls on Friday. Regardless of trailing economic data, the tape tells the true story as always.

3 Month Daily E-Mini September SPX Chart



3 Year Daily SPX Chart



Conclusion:
1100 is the key price level I'm looking for. If the candles trade above this line I expect a retest of 1130 and maybe a break out to 1150. This must happen in Tomorrow's session though. I fear awful Non-Farm Payroll numbers will allow the shorts to plunge the equity markets once again. The RSI will move up and re-test 60, if it fails to do this, I expect heavier selling-pressure to result. As of writing time, 12:00 EST, Nikkei is up 32.27 points @ 895.29 down significantly from the open. Make it a good trading day.

Patrick M. Ambrus
Analyze Capital LLC
Twitter: AnalyzeCapita

The Three Musketeers: USD/JPY, VIX, & SPX

USD/JPY 6 month Daily Chart



-I expect to see a retest of 83.75 levels, possibly as low as 83.25
-The BOJ cannot solely rely on tough talk to weaken the Yen, they must show & prove intervention to the market
-Momentum and Volatility remain flat; no reason to get long or short until a catalyst appears
-The 20 day SMA will serve as short-term resistance; 85.75-86.25
-RSI resistance at 55 levels remains firm
-Don't discount strong economic data; Unemployment sits at 5.3% and a Current Account Surplus is 3.3% of GDP.

Trade: I will get long once I see a retest of 83.75 lows. The BOJ will intervene through Quantitative Easing policies in order to allow the exchange rate to bounce to the upside. Once long, I'm looking for 800-1000 pips to the upside.

------------

VIX 6 month Daily



-200 Day SMA has held as a floor since the 'Flash Crash'
-The 20 day SMA is about to cross the 50 day
-RSI is poised to break through 60 and test 70 overbought levels last seen in May
-Momentum has plenty of room up to 2.5
-As long as money continues to flow out of Equities into Bonds, volatility will persist

-----------

SPX 6 month Daily



-A head and shoulders reversal pattern is well underway
-RSI failed at 50 and will go low until it tests oversold territory at 30
-Momentum topped out and has plenty of room to the downside
-The 20 day SMA will converge with the 50 day SMA in the next couple of trading sessions
-The above chart supplements the VIX story
-This week Consumer Sentiment, China PMI, Euro Zone PMI, U.S. ISM, and NFP take the market sentiment spotlight

Trade: Short SPX till 1000. Look for short-covering/a relief rally before entry. ES Mini Futures are a great place to start. Also, the ProShares UltraShort S&P500 ETF SDS is another way to double down on your bets.

-----------

Related ETFs: ProShares UltraShort S&P500 (SDS), CurrencyShares Japanese Yen Trust (FXY), iShares MSCI Japan Index (EWJ), Consumer Discret Select Sector SPDR (XLY)


Patrick M. Ambrus
Analyze Capital LLC
Twitter: AnalyzeCapital

DJIA Update- Charting for Success

Dow Jones Industrial Average Technical Analysis

Daily Chart-6 months



Notes:
-Momentum still has plenty of room to fall as it just passed break-even territory
-Resistance appears to be forming at the 50-day SMA or 10,300 level
-We could see potential support slightly above 9900-9950
-If this level breaks, Dow could fall to 9300-9500 range, though next clear level of support on the daily chart is 9800
-Expect to see a retest of 50 on the RSI to confirm a downtrend if the re-test fails
-The most recent sell-off lacked aptly confirming volume
-Possibly a head and shoulders reversal pattern


Weekly Chart- 2 Years



Notes:

-Support may come at levels of 9,600-9,700
-200 day SMA acts as near-term resistance, this equates to a price level of 11,000
-The last rally to 11,000+ was confirmed by robust volume
-Momentum still has room to move to the downside, though it looks to be flattening out
-The 50 day SMA is poised to cross the 200-day SMA, ‘The Golden Cross’, which indicates a strong bullish signal
-35-37 will need to be broken on the RSI for this down-trend to continue

Conclusion:

The Daily and Weekly charts both tell equally convincing stories. The Daily chart indicates very bearish sentiment while the Weekly indicates a potential rally is on the way. Thus, in-lieu of the toss-up, I will look to volume over the next few trading days to indicate which way the tape might be headed. At this time, the Dow is up 151.90 points to 10,137.70. A short-covering rally may be underway, or the bulls may be winning the battle today. Regardless, many bears exist in the market, it is only a matter of time before market participants show their true costumes.


Patrick M. Ambrus
Analyze Capital LLC
Twitter: AnalyzeCapital