Watch the Devil’s Triangle Today

Yesterday’s economic numbers weren’t as bad people thought. That’s what CNBC said. I though the numbers were horrible. We had the Challenger Job-Cut report that came in at 241,749. The previous reading was 166,348. Around when the recession first started around January 2008, the reading was 74,986, so we’ve come a long way and we still have a ways to go. ADP came out with a -522,000 reading with the previous reading being -693,000. As you can see from the charts below, both employment indicators continue to go parabolic.

The ISM Non-Manufacturing report came out with a 42.9 reading within a consensus range of 37 to 44, with the final consensus being 39. This might seem like something to celebrate, but look at the chart. This is far from over.

Don’t forget that we have Jobless Claims at 8:30AM EST today. The consensus is 583,000 within a consensus range of 480,000 to 620,000. The previous reading was 588,000. I don’t see how claims would decline when many states experienced a systerm overload from an overwhelming number of claims. Just last monday alone, we had 55,000 announced layoffs. Even if claims drop, that’s just a blip. The chart below might as well be the VIX in Sept & Oct.

Today, we bounced off of the 20-day MA resistance level. Besides the 20-day, we also have the 30 and 50-day MA’s, and 850-855 on the SPX as immediate resistance levels. Once we bounced, it appeared that we were forming a bull flag, but that failed after forming for several hours. From 2PM-4PM, it looks like we’re forming a continuation bear flag to the downside.

What do we look for today? First, whether we gap up or down in response to the claims, productivity and costs (Also at 8:30AM EST), factory orders (10:00AM EST) and whatever the market speculates ahead of Friday’s Employment Situation report.

If we gap up 845-847 becomes initial resistance  (20-day + upper trend). If the market breaks out, then we are seeing 850-852 as the next major resistance level. If we breakdown, I would caution unloading some short positions at the 820 level prior to reach the lower tri-line. As you can see, we are in a symmetrical triangle, built over 35 days or so.

Look at the 5-month charts of the SPX and the DJIA. The SPX is forming a symmetrical triangle while the DJIA is forming a descending triangle, the latter of which has a much higher probability of a breakdown. The DJIA only contains 30 stocks, therefore, keep the SPX as your main index. Once you start seeing DJIA components like BAC, GE, C, JPM, etc. breakdown, then we’re going to have some major problems.

We have a massive load of earnings pre-market today. Here they are: AMBD, ATG, LNT, ANR, STST, ARTG, STD, BIP, BPO, BG, BKC, CAH, CSL, CI, CBB, CINF, CNMD, DTPI, UFS, DUK, EXP, ELNK, ELON, EQR, EVR, FLIR, FLO, IT, RX, IPCC, IFF, KIM, KNL, EL, LII, LZ, MAG, MA, MMS, MNI, MD, MV, MF, MCO, MPS, NCR, NTT, NXXI, CHUX, OPTX, PARL, PENN, POL, PBH, RVSN, ROLL, RSTI, RGLD, SWM, SIRO, SON, SE, SPR, SPH, TEN, TBL, UN, UL, WMG, WW, WU ,WNS.

There’s 2x more than that if you add in the ones intraday and after-hours, but you can go look them up yourself.

As of right now, I am still bearish, especially on the financials, but more so with the regional pieces of shit that are going to sub-$1.

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