After the ramp into the close on the SPX yesterday- the index is stretched again above its SMA 50 by about 10% - and this has been an area where markets have topped out of late-
The VIX also a bit stretched to the downside at more than 5% below its SMA 10-
RSI (2) levels at about 90 on most major indexes- which has also been an area where markets have retreated of late - and check this chart for some FIB areas
on the NAZ- which is more stretched to the upside than the SPX.
In addition to the stretch, the momentum indicators may be saying that the run is about done as they are definitely diverging from the price action.
with some interesting commentary and looking to follow the path of least resistance;
In addition to a QID trade yesterday - I was in and out of DBA for a nice profit as the commodity trade seems to be back on- I plan on trading bigger in that space
as that appears to be a good space for now.
Barrons with a short interview from Stephanie Pomboy of MacroMavens- not that bullish:
"And her Exhibit A is the amount of financial pain being priced into the credit markets. She readily grants that spreads have narrowed, but notes that they remain "far, far wider than they were at the 2003 cycle lows."
The complacent reaction among the investment cognoscenti is that the credit markets are wildly oversold. More likely, she sniffs, it has something to do with the fact that "an overwhelming portion of some $8 trillion in mortgage debt (or 80% of the total) is teetering on the edge of, or in some state of, negative equity."
"As to the Fed's claim that the equity of homeowners as a group stands at 43%, she points out that what the Fed neglects to tell you is that roughly a third of them have their houses free and clear. Lo and behold, some basic arithmetic reveals that 67% of homeowners with mortgages have equity of less than 15%. That, Stephanie comments drily, suggests the "destruction priced into the credit markets hardly seems out of whack with potential reality."
Absent the powerful stimulus provided by the unprecedented boom in housing, she sees a huge hit still in the offing for nonfinancial corporate profits. A worst-case analysis is that such profits would sink to 2003 levels, a further decline of $450 billion, or 54%. Under a less exacting (and frightening) estimate, using their relationship to GDP, they would return to their pre-bubble percentage of 3.5%, which translates into a drop from here of $340 billion, or 41%.
Ron Baron with some stock picks - WYNN PBCT NILE DV;
The magazine also bullish on oil services companies SLB BHI HAL;