The last day of the month is typically a high volume day with volatility; there are normally portfolio adjustments that are made by the institutions. Monday had almost none of that with low volatility and low volume during intraday trading. It made me wonder if this market has no suitors, except the Federal Reserve! In the bonds, the wall at 143 gained credibility and solidarity. Once the Federal Reserve backs off buying them there should be a rapid and extensive decline. There is really no significant support until 140 then 139 ½. Normally there is an influx at the beginning of the month, but the stock market is in a vast divergence. This is similar to past situations I have seen other years. Most of the upside dynamics were accomplished by noon eastern time. This was not indicative of a trend up day environment. The bonds journeyed into their resistance at 143 to 143 ¼ and were promptly shellacked as the 10:00 news was released. This demonstrates the heaviness of the bonds as a full point correction ensued. It appears that the upside was broken, so we will have to see how much downside there is yet to come.
I expect that we will slowly move into an environment more conducive for day-trading soon. There was a Dr. Jekyll-Mr. Hyde type of market today. The bears did not prevail, nor the bulls show fear. The bonds went above 143 once again and were repealed. This range is tightening so I would expect to see a resolution within the week regarding the bonds’ range. There is an intermediate resistance at 143 ¾ and intermediate support at 141. One of these will eventually be violated on a close, but keep in mind the bonds are overbought.
Thursday’s close was vital for the S&P 500. Closing below 1390, given the internals of my Cook Cumulative Tick (CCT) indicator, the market is in for a rude awakening downdraft. Energy lost always proceeds price deterioration. This could be a monumental confirmation day. The bonds did a pendulum swing. They journeyed approximately ¾ point down then up. This is quite a feat and can only be accomplished by manipulators.
The April payrolls were well below expectations. Crude-oil and energy shares took a fall. However, LinkedIn to a hop on these results. The S&P was crippled, dropping 22 points to 1,369, while the Nasdaq fell 68 points to 2,956. It was the worst week so far in 2012 for the both of them. The internals of the stock market generally formulate before confirming in price. The overbought situation matured to the point that our daily CCT was showing declining tops. It resulted in a very heavy market and the prices have now been confirmed. Heavy minus NYSE tick on Friday with long durations was a sign the environment has changed. The breaking of the 1390 on a closing basis overnight confirmed what the internals had been telling us for days. It is far enough into the month that the beginning buying influx has completed. The bonds showed a real rarity. They were severely decimated with the morning news. A massive computer manipulator pushed prices back to the previous highs with a vengeance. Traders must honor the computer manipulator is gigantic. Guess who is the perpetrator?