Leaving on a Jet Plane

I'll be traveling over the next couple of days and may not be able to update the blog in that time.

Headlines this morning showed an accelerated GDP number with 4Q GDP coming in at 3.0% versus 2.8% expectations.

Expecting bullish action to continue over the remainder of the week, which means I like buying the dips.

Levels to watch today on the ES:
Resistance above at: 1374.75-1375.75, 1378.75-1379.75
Support below at: 1369.50-1370.50, 1365.25-1366.25

Bullish Ways Continue

Markets have maintained bullish conviction as dips have been routinely bought and higher highs have become standard. Even the S&P Cash index broke its 2011 high briefly yesterday. The Dow Transportation index ($TRAN) is one index not supporting the bullish move. It is currently more than 3.5% off its high from February 3d and remains 7.9% off its 2011 highs.

Futures saw continued gains overnight but sold back down this morning after a worse than expected durable goods number. Support has now come in at yesterday's post-rally consolidation lows, currently around 1366-1367 on the ES.

Although a correction may be on the horizon, I have to remain bullish for now.

In terms of today's trading, we will likely see limited action or consolidation following yesterday's rally. That will be added support for the bulls.

Levels to watch today on the ES:
Resistance above at: 1373.25-1374.25, 1380.50-1381.50
Support below at: 1361-1362, 1353-1354

Markets Begin the Week With Some Selling

Even with strength in the markets to conclude last week's trading action, the upper 1360s resistance on the ES has continued to hold.

Markets under some pressure this morning. The negative sentiment is likely in response to G-20 finance ministers who refused to increase cash available to the International Monetary Fund without additional financial safeguards in Europe. European markets are down across the board this morning.

Levels to watch today on the ES:
Resistance above at: 1361-1362, 1364.50-1365.50, 1371-1372
Support below at: 1353-1354, 1348.50-1349.50, 1345-1346

Strength Resumes

Markets rallied yesterday to close at their highest levels of the year and have continued slightly higher overnight. The 1368 resistance has held up so far on the ES. The current action reaffirms strength in the markets. Bears may have to remain patient a little longer.

We'll see if resistance holds today at the current highs.

Watch for Consumer Sentiment data at 9:55am EST followed by New Home Sales at 10:00am EST.

Other events of interest that could influence markets:
-St. Louis Fed President Bullard and San Francisco Fed President Williams discuss a report on "Housing, Monetary Policy and the Recovery" at 11:35 a.m. ET
-New York Fed President Dudley and Philadelphia Fed President Plosser speak as part of a panel on fiscal challenges around the world at 1:30 p.m. ET

I will consider shorting any new highs today, but will not hold any shorts over the weekend if strength continues. Have to prefer buying the dips for now.

Levels to watch today on the ES:
Resistance above at: 1368-1369, 1372-1373
Support below at: 1358-1359, 1353-1354, 1348.50-1349.50

Lets See if the Choppy Action Continues

Markets saw some positive momentum briefly overnight as the ES rallied to 1362 and then sold off in contradiction to positive news out of Europe as Germany reported better-than-expected German IFO sentiment data.

Lets see if bears can increase the pressure today and drive price any lower. I wouldn't be surprised to see continued choppy action and expect that any new lows will likely be met with buyers for now. At the same time I expect rallies to the upside to be rejected.

Charts remain bullish, but my bias is turning bearish.

Levels to watch today on the ES:
Resistance above at: 1361-1362, 1367-1368
Support below at: 1351-1353, 1347-1348, 1342.50-1343.50

Distribution Before a Fall

Today's action is great, we are seeing some of the finest chop in a long time. In my opinion this is distribution, the bigger funds are slowly getting rid of their positions. I think the decline, if we get it, will be short lived though. I like the mid 1320s as a good target to the downside. If selling is intense enough, we could see a move down to below 1310. I will consider swing longs below 1310 if the ES manages to sell that low. Its still early, we'll see how she goes...

A close above 1360 today on the ES, however, will make me think twice about getting excited for the short-side.

Some Selling Pressure

There seem to be more and more signs for concern in the markets.

Tensions in Iran continue to mount which is driving oil prices higher. Higher oil prices are never a good thing for the global economy.

Manufacturing PMI for China came in at 49.7. This is up slightly from January but remains the fourth straight month under 50 showing continued signs of contraction.

Manufacturing PMI for Eurozone and Germany came in lower than expectations.

Although markets are still near their highs, there is minor selling pressure of late and the market is due for at least a small correction.

Existing Home Sales in US due out at 10:00am EST

Levels to watch today on the ES:
Resistance above at: 1364.50-1365.50, 1367.50-1368.50
Support below at: 1354-1355, 1348-1349, 1344-1345

The Unfavorable Greek News Turns Favorable According to Reuters

EURUSD as well as ES Futures rallied this evening based on headlines that Euro zone strikes deal on second Greek bailout package.

This is an example of noise. Don't believe the hype.

For example the Reuters article states that, "...a second bailout programme for Greece includes new financing of 130 billion euros and aims to cut Greece's debt to 121 percent of GDP by 2020..."

If earlier headlines that Greece will actually need €245 billion to cut its debt to 120% of GDP are true, then the decision to bailout Greece to the tune of €130 billion is completely inadequate and is just another example of serious financial problems being pushed further down the road.

More Unfavorable News from Greece, But Markets Remain Strong So Far

Haven't had a chance to post in the past week just as the markets have become interesting for the first time in 2012. What we are seeing is an overbought market entering the introductory stages of a topping pattern.

That being said, I am still bullish on the markets as of right now. However, the latest news regarding Greece makes me think twice. This morning I would have said headlines regarding Greece are only noise and any negative news would create a buying opportunity if equity markets declined. But the latest reports have to be considered as potentially more than just noise.

It has now been suggested that Greece will need another €109 billion in relief (bringing the total to €245 billion) if it is to cut its debts to 120 percent of GDP by 2020. Accepting austerity measures that would enable repayment of a bailout that large would force the Greek people into a recession that could last indefinitely. This also means that creditor countries to help fund the bailout will be even more reluctant to lend. So for the first time, I am actually entertaining the idea that Greece could default and leave the Euro. This would certainly be negative for Global markets.

Futures have resumed trading after the Presidents day holiday and the reaction has not been too negative so far. In fact, after initial selling, futures quickly stabilized and are now ticking back up. We'll have to wait to see how markets open on Tuesday to get a better idea. Greek news may continue to be only noise until the March 20th deadline when €14.5 billion in Euro bond payments must be met.

We can't ignore the obvious bullish price action, nor can we forget last week's comments from People’s Bank of China Governor Zhou Xiaochuan that China is ready to be more involved in resolving Europe's Debt crisis through the European Financial Stability Facility, the European Stability Mechanism and through the IMF. It certainly adds support to the bullish cause.

So nothing yet has changed my bias. I continue to like buying the dips. I also am not afraid to short any rallies to new highs when resistance is confirmed.

Market Surges in Pre-Market Before Being Rejected Lower

Action has finally started to pick up again in the markets which means we can finally consider the possibility that a topping pattern may be forming.

Consumer sentiment levels have been very bullish (averaging over 47% bulls over the past 7 weeks) and this past week sentiment moved above 50% bulls for the first time in that period. That can often be a sign that markets are over bought and can forewarn a correction.

Markets saw a surge in pre-market this morning (again) on news that Greek politicians have reached an agreement on austerity plans. Then, following new jobless claims numbers (initial claims were lower, but continuing claims rose from 3.451 mln to 3.515 mln), markets surged up to make another new high only to see sellers immediately come in and reject price lower. The ES is now consolidating between 1347 and 1349.50 ahead of the open.

I think the highs are in for the day at 1352.75 ES.

Levels to watch on the ES:
Resistance above at: 1352-1353
Support below at: 1343.50-1344.50, 1338-1339, 1331-1332

Expecting Consolidation Today

Not expecting too much action in today's trading. Probably will be a boring day.

Levels to watch on the ES:
Resistance above at: 1351-1352
Support below at: 1338-1339, 1331-1332

Price Levels to Watch 2/7/2012 on ES

Some up and down action overnight. Its amazing that the same old story out of Greece continues to have the ability to influence the market. Nothing new there, Greek leaders continue to agree to disagree on austerity measures. News that there was a plan that would be signed today popped markets higher briefly in pre-market.

Should be interesting to hear what Bernanke has to say as he testifies in front of the Senate Budget Committee today at 10:00am EST. Topics of interest; the decision to keep rates low through at least 2014 and the improved employment numbers released last Friday.

Levels to watch today on ES:
Resistance above at: 1342-1343, 1346-1347
Support below at 1330-1331, 1323-1324

Let's See if the Listless Trading Action Continues

Following the employment number and better than expected ISM Non-Mfg number on Friday, market action was dull for the remainder of the day as the ES traded in a 3 point range for the majority of the afternoon.

This morning markets are trading down a bit amid similar weakness in Europe. Same old same old in Greece as disagreements remain among leaders there on austerity measures and on lending covenants with creditors. US Markets remain in bullish mode for now but are certainly overbought on many levels and suspect for at least a small pull back at any time. But until something changes, I like buying the dips.

Levels to watch today on the ES:
Resistance above at: 1337.50-1338.50, 1342-1343
Support below at 1330-1331, 1322.50-1323.50

Better Than Expected Employment Numbers Pop the Market Higher

I have not been posting much of late because the market has been dull. The release of the employment numbers this morning changed that, at least for the moment. The ES jumped 14 points higher as non-farm payrolls increased by 243,000 versus an expected 155,000, private payrolls totaled 257,000 versus an expected 168,000 and the unemployment rate fell to 8.3% from 8.5%. This was enough to put a bid under the market.

There is plenty of resistance here in the mid 1330s on the ES and I'll be expecting a little bit of selling to come in. I'll look to take profits on any shorts around 1330-1331 and will consider longs again from there. In fact, 1331-1336 may prove to be a nice trading range to buy the lows and sell the highs. We'll have to wait and see the price action conform this once the ES does trade down to 1330-1331. I'll post in the comments if my thoughts change on this idea.