Top Line: Trading in premarket was subdued because oil had popped to a modest new high, still not too far from the range it's been in for a month. But, from those early highs in oil, prices fell most of the day and oil closed down on the day. Stocks prices were firm as the price of oil dropped.
We find the whole "trade stocks based on oil prices" to be contrived, mostly. Here we see the public being very persuaded that higher oil means lower stocks. It's a foregone conclusion that lower oil is less inflationary and better for stocks. The problem with the theory is that it just hasn't been the case. We say the stock rally has corresponded very well to the oil rally we have seen. Ok, let's not argue facts with the stock market, they hardly care about facts.
The news continues to bleed bad ink with today's New York Fed Manufacturing Index falling to -8.68 from -3.23 on expectations of -1.5. Here anything below zero signifies contraction. Expectations were for an Improvement but the reality was much worse than expected.
Tomorrow we get to see the PPI report and after last week's CPI number, this should be an interesting number. We'll be interested to see how Wall Street spins this one. The CPI number was tortured and remains a Big number but the stock market took it in stride???
Other news for Tuesday is the Current Account Gap and May housing starts, both of with could be market moving but probably won't be. The bullsh contingent is hoping to see a "bottom" in housing again this month. Optimism and Complacency Rule.
We are going to leave you with a short post again this evening but the message of the rally is that there will most likely be a selloff right on its heels. We think that time is close.
The SMA (Simple Moving Average) is an important part of a technical toolbox. Major behavior in stocks as measured by the 200 Day SMA are very important to any longterm trades. Combining the 50 Day SMA with the 200 Day SMA can yield some insightful itmes.
In the case that we are talking about (in our last post), the NDX is riding the 200 Day SMA with what we consider to be Bearish undertones. In this case we think the right look for the position of the Q's, as they're called, is that it touches/touched it's 200 Day SMA 9right around 48.25) and should now fall away from it aggressively.
FSI: 94.42 (highest level since June 5th)