BigTrends

Ok, that title was a bit of a joke there.  Fertilizer stocks are on the move tonite with a big guide up from Potash, a favorite of ours.  We can look  to POT, MOS, AGU and IPI to lift higher on Friday and likely beyond.  The charts were setting up nicely too, and this will likely put these stocks in breakout mode.  We'll be looking for an opportunity for a trade here, taking advantage of the surprise and low volatility for an upside trade.

Lately we've been seeing good leadership in stocks, and yet the indices are just slowly moving forward.  This may be the best of all worlds, for the 'wall of worry' is up.  How so?  First, we've seen stocks breaking higher on lower volume.  Normally this would concern me, however the 'non believers' are out there.  Frustrated bunch, aren't they?  Retail has been strong of late but traders may fade the retail sales number due out on Friday.  Tech has been strong and financials are waking up.

That's a good question.  By some metrics yes, we're overbought and due for a pullback.  But by and large the indices ae not in nosebleed territory.  Oh sure, the markets are up 3% or so over the last week, and over 6% since the last reaction low on Feb 25.  Given the low VIX we don't expect to see massive surges, in fact the SPX has had only 2 days of a 1% move since mid Feb, nearly a month.  It's been a jagged climb since early February.  But the important question is leadership.  Are we seeing it and more importantly, is it credible?  The fact is rotation is the name of the game now, and what's the flavor of the day may not be it tomorrow.  Until that changes the momentum may carry stocks to the January highs, just more than 1% from here! 

I use different timeframes and like to see confirmation over a different series, of course when all the technicals are in alignment we have a high probability trade.  The daily chart shows great formations for Grandslam trades, while the hourly setups are much better for Extreme ideas.  Here's what is showing up this am:

The one big snag on the recovery has obviously been a lack of job growth.  For whatever reason you believe the fact remains the private sector has had trouble adding payrolls.  Certainly the Federal Gov't has been trying to help, but perhaps we have regressed.  The confidence numbers are weaker, regional areas are showing signs of stalling and revisions tell us there are more job losses in the pipeline.  The market says:  'what, me worry?'  The remainder of the week shows us jobs data each day, starting with ADP, jobless claims then the big one Friday.

The fear of a slowing economy is not assumed here, and while fear  is not a factor we have to be on guard for a quick selloff. 

The fear gauge, or the VIX is showing high complacency and general malaise about bad news.  That's dangerous, but for now the market is sanguine.  As you can see from the chart the indicator is sitting right where it was when the last big rise occurred.  Remember that one?  The SPX dropped 60 points in about three days.  Jobs data is out the remainder of the week, and perhaps the bulls have exhausted themselves for the time being.

That title was from the movie '6th Sense', uttered by Haley Joel Osment when he could see ghosts that nobody could see.   When it comes to the markets, I sometimes feel the same.  Let me explain.  The big shot yesterday against the bow, that 18 minutes of intense selling was something noticeable.  Tradable?  Sure it is, but a good way to get stuck, too.  But that was 'so yesterday', as a friend of mine likes to say, so why worry?  Tuesday's move intraday was much more than fly by night.  This one hurt the bulls badly, and while today was a trivial bounceback, make no mistake there will be more selling behind this.  In fact, the resistance near 1110 still is in place, the high   Below is a view of the QQQQ, and it shows the move yesterday and today.  If Tuesday was just a shakeout, we'll know it soon.

My friend Helene Meisler at www.thestreet.com REAL MONEY says she sees head/shoulders patterns everywhere on every chart.  So, I took look at some dailies and sure enough, I can see 'em, too!  In fact, there are reverse h/s and longer H/S patterns here.  o wonder the markets are confused!

Last evening the Fed raised the discount rate.  Big deal?  Well, only if you believe in history.  But, one has to ask...is it different this time around?  And, if you believe so...and you believe the Fed and their notion this is just a 'one off' event, then the Fed Funds shouldn't be touched.  But what about the futures market?  It seems the FF futures aren't buying it, and the hysteria over this preliminary move forced a 'shoot first, ask questions later' response.  You can see below the futures market sold off a bit.  Harsh reaction?  Initially, it could be...we'll have to see over time if these contracts continue to dip.

The discount rate is a measure only considered if banks are not lending to each other.  It is the 'penalty rate' from having to go to the Fed window and is really not used much in practice.  For all intents and purposes this move should be considered a 'closing' of certain emergency measures that were brought about from the financial crisis.