Market Overview

Z W E I G, The Zweig Finally Goes Overbought.. an Event We Have Been Waiting for


Around the Globe

    • Shanghai (China) +0.25%
    • Hang Seng (Hong Kong) -0.10%
    • Nikkei (Japan)-2.08%

Europe as of 6:01am EDT

    • DAX (Germany) +0.19%
    • FTSE (UK) +0.11%

Today's Economic News:


Wow! Look at the news from the UK. Great unemployment numbers and another drop in the unemployment rate.  Other than that, not a lot happening today as we wait for the USA markets to open.  Eyes will be on the housing market which has been touted as a decent recovery story,  but yesterday's numbers disappointed so watch 9:00am for the House Price Index, we would like to see price inflation in housing continue as it is a great way to inflate the beleaguered US middle class.

10am is the consumer confidence numbers.

Quote of the Day:
For Sweetest things turn sourest by their deeds; Lilies that fester smell far worse than weeds.
–William Shakespeare

Current Breadth Readings: (click here to see all our breadth charts)


ZWEIG! It is done. Complete … well, maybe there will be a follow-through day, but our drought of Zweig overbought values is over and for us marks the beginning of the battle for the top, much as it was declared in November last year for the bottom when we went oversold.  We will switch high weighting off of the trenders that have faithfully remained bullish and begin to consider the markets as range-bound and looking for that first 1%+ pullback to define the downside range and we still need to define the upside, which should be tested a time or two before the wheels come off for a more aggressive downside.


ES SP500 Futures Comments:

Short: 1494
Long:  1476

Our 1489 from yesterday got squeezed through the cash close yesterday and we put in a 1491.50 high of the March contract, amazing.  That is the new high watermark, with the globex session moving down to the pivot area here at 1484.  We still think 1% pullbacks need to be tested, that is 2x what we have been doing so for that reason or first full-pullback buy area now sits at 1476 along with the new high.

The Zweig overbought puts us into battle of the top mode as we watch the top begin to get drawn.  Topping can be a long painful process of pullbacks and retries so February could get a little bumpy.  For those that want higher, that move into the close is further evidence that there are plenty of traders willing to short at these levels — the bulls need those traders.

We thought yesterday that handing off the piton to Asia and Europe might produce some more upside, it has not, just a decent hold about 0.5% back.  There is not much in the way of economic news so we wait and see what will become of today as far as follow-through.   A third green day would certainly surprise but it is not out of the question, but we think just a peek above 1491.50 is all that can be mustered.



US Dollar DX Futures Comments:

If there is something fundamentally going on here in the US economy and it is stronger then that of our European brethren / sistren we should see this pattern now reverse to the upside.  That delta is hard to figure and evidently so for the traders also as we remain trapped in a range even as the equity markets make new highs.  A kind of neutral holding pattern.  We have a slight bearish prejudice on the dollar as we think Europe is in a stronger recovery and had worse publicity .  So we think 79.5 before 81, but our resolve is not strong and we could claim tomorrow we have been dollar bulls all along.


TLT Twenty Year Bond ETF Comments:

TLT lies in wait and now we like it better to the upside.  Interesting that it is not testing the 118 area even as the market moves to new highs.  We have raised the lid on TLT now, looking for prints of 124 to the upside and 118 defines  the downside range.


>>> Follow us @redliontrader<<<<<


DISCLAIMER: The information and data in the following report(s) were obtained from sources considered reliable. Opinions, market data, and recommendations are subject to change at any time. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any commodities or securities., its  officers, directors and its contributors may in the normal course of business, have position(s), which may or may not agree with the opinions expressed in this report., its officers, and directors are not agents, representatives, or affiliates of the CME Group or any trading entity. Trading Futures, Options, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Any decision to purchase or sell as a result of the opinions expressed in these report(s) will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: News Forex Global Economics Markets Trading Ideas


Related Articles

View Comments and Join the Discussion!