This morning we have bad earning reactions from Amgen, Apple, AT&T, Procter & Gamble (down 2.5-5%+) and a quite poor durable goods orders number……
…..and the S&P is essentially flat. Remarkable.
While expecting a bounce of some sort coming off that one bout of heavy selling, seeing the "V shaped" move taking us back to early month highs in just 3 days is surprising. Now that head and shoulders top theory is starting to lose some steam. Maybe under QE, the 90% down days simply don't mean squat. Certainly a lot of old rules seem to be on hold during QE.
Reviewing yesterday's economic data after …
Looks like the account for the Associated Press was hacked and caused a huge selloff (and now rebound) with a tweet about an explosion at White House. 1:08 to 1:13 the market did a full round trip of 12 points, wow.
After two 90% down days on huge volume last week, a move through current levels would be a complete egg on face moment for the bear case. We have now come to expect the low volume "V shaped" moves since 2009 and right now we might be in yet another one. After stalling yesterday at a 38.2% retrace of the selloff, once that was bested stocks quickly moved up and with this morning's gap up are at the 61.8% retrace in a matter of 24 hours. This is roughly S&P 1574. The chart below is crowded but this also fits in very nicely with the major long term trendline that the S&P 500 has been riding since mid November – and finally broke a week and a half ago.
So if after a break of that trend line AND two 90% down days of major distribution this market simply shakes it all off and goes right back up as if nothing happens, you would certainly have some head shaking stuff. Very key level here with Apple reporting tonight. As a major NASDAQ component it most likely will rest on that stock's shoulders.
Markets rallied sharply first thing this morning before giving it all back. For Fibonacci fans (which I have been using a lot lately) the move from Thursday's low to this morning's high was a 38.2% retrace of the drop. Relatively speaking that is a weak bounce in the context of the type of things we have seen in 2013, and more broadly speaking during all the V shaped rallies. The rally has been on light volume (what else is new) after some heavy selling last week on the down days.
Bulls would like to at minimum recapture …
After the infamous hashtag #grexit to represent Greece exiting from the EU, let me be the first to stake the claim to #Benxit as it appears closer by the day. Normally this would cause the market to panic but considering Janet Yellen appears to be the front runner to replace Ben, and she is going to make him look like a hawk the Kool Aid should runneth over. The latest sign that Ben's days are numbered is this notice that he will not be attending Jackson Hole this August. Jackson Hole being the place of some of Ben's most momentous announcements. He is citing a personal scheduling conflict 4 MONTHS in advance. You know the type – like when you tell your boss you have a "dentist appointment" but it's really a job interview. …