Upper Market Resistance Zones Being Challenged – Is It Real

Markets opened higher at the 500’s upper resistance of ~1377. It is notable that the 500 futures fell off from its mornings high of 1375 to 1370 just before the opening and I would expect the markets to follow suit by falling later in the day baring any notable news to send it higher. But right now some strength is being noted as the 500 continues to melt up but under low volume. Appears the dips are being bought by bullish speculators, but the conserativeness in me says wait.

The DOW reached up as high as 13013 at the opening and is currently at 13033. The 500 spiked up to 1378 and remained at that level for the first 20 minutes to where it is now at 1380 and looks like both might melt up a bit higher.  SSO is trading at 56.15 rising from 56.20 earlier and SPY at 138.46. The 500 is developing an interesting candle that may just prove the top is ~1377 and a correction is not far behind. Would be nice to see a spike.

Volume is low again today exacerbating the overall market weakness in my opinion and you can expect markets to trade today within a narrow range and with no conviction. The VIX volatility has again fallen to new levels of 13.99 which flies in the face of any bearish notion, but is it just another false signal? It has since risen up to 14.82, but well below the 20 demarcation of implied risk off. This indicator along with many others, including charts for the technical traders here, have been demonized by just about everyone declaring the lack of usefulness and erratic false signals. Watch for a spike in volume as that will be my “signal”.

The market wasn’t all that impressed with this early mornings financial reporting as the futures fell. I expect the next news maker to be Spain.

The later 10 am reports show the markets pulling back ever so slightly as U.S. Retail Sales Grows in February by most in 5 months. U.S. Business Inventories (Jan) print 0.7% VS. 0.5% expected. Prior was 0.6% (Revised from 0.4%). JOLTS – Jobless rate fell in 45 U.S. states in January to 3459 from expected 3334. All in all a so-so report and market weakness prevails.

The Feds meet again today, but the feeling on the Street is that rates will remain the same. They said they would remain low until 2014, but today’s text will have to be reviewed to see if anything for the future is being hinted at.

Gold, silver and oil is down I expect the USD, currently up, at 80.66 to fill the gap at 80.08 with in a couple of days at most. It almost did yesterday falling as low as 80.10.

The EU finance ministers’ meeting is going on right now and mum is the word. Ms. Armistead believes the reason is because they are ‘hiding’ a problem.

Louise Armitstead says the FTT debate is just a red herring wheeled out by EU technocrats when they want to “look busy”:

She writes:

You can always tell when European leaders are rattled: the Financial Transactions Tax (FTT) races to the top of the agenda.

Love it or hate it, a 0.01pc levy on transactions made by banks is entirely irrelevant to solving the advancing debt crisis.

So why – with Greece’s €130bn bail-out signed but probably inadequate and a raft of sinner states teetering under their debt loads – have European leaders said today’s summit in Brussels will focus on a bank tax?

Summit groupies will have seen this before: it can mean leaders have reached deadlock, need more time – and almost always that they need to butter up the northern European electorate.

In the face of any hurdle the FTT is the technocrats’ boxing ticking dream: look busy; raise money; smack banks; tackle a complex, cross-border issue; and kick over-achieving London while you’re at it.

So what are they hiding this time? In a word Spain. In a few words, the stirrings of a radical retaliation of “sinner states” against the German-led imposition of austerity and central rule.

Both the Asian (closed) and European markets are up.

Written by Gary