14 Minute Read

Market Recap April 28, 2016

April 28, 2016

By | 7 Comments

MR
MARKET SNAPSHOT
Dow17822.20-219.35(-1.22%)
Nasdaq4808.35-54.79(-1.13%)
SP 5002074.69-20.46(-0.98%)
10-yr Note+8/321.824%
NYSEAdv 997Dec 1941Vol 687.91 mln
NasdaqAdv 1001Dec 1803Vol 1703.45 mln

 

IN THE NEWS HIGHLIGHTS:

  • Bank of Japan surprises market by holding policy steady.
  • Dollar tumbles against yen (Dollar Index also broke a vital support zone).
  • Bloodbath in the market today.
  • Q1 GDP Growth (0.5%; Briefing.com consensus 0.9%)
  • Facebook (FB) beats analysts’ expectations for Q1.
  • Quarterly earnings in focus.
  • Increased M&A activity among health care names.
  • Carl Icahn dumps AAPL causing shares to drop even further.

 

RECAP– A very interesting day. Technically, the major activity occurred last night as the Bank of Japan announced monetary policy. The market instantly clipped 20 points on the news. It looked to have mostly recovered after the morning opening bell only to give up its gains in the late morning and throughout the afternoon. This has been the most volatile day in the markets that we have had in weeks.

In-depth look of daily news at Briefing.com (CLICK HERE)

In-depth look at after hours movers (CLICK HERE)


Economic Calendar

Today

  • Monetary Policy Statement from the Bank of Japan – This technically came out last night at 11pm, but it had a major impact across the currencies, commodities, and equities markets. For detailed coverage on this, check out my detailed analysis here.
  • Advance GDP q/q – Actual:  +0.5%   Forecast: +0.7%   Previous: +1.4%
    • The change in growth of the US GDP from quarter to quarter (reported in annualized form). This figure is slightly alarming as the trend for advanced data has been in a downward slope. Now, this figure is only a preliminary number and likely going to be revised, but even if you use final GDP data, the last 4 quarters have seen slower growth than the previous 4 quarters. 


Upcoming Reports

  • April 29: No major news

 

FedWatch June 15 Rate Hike on Probability for April 28: 11.3% (View the probability chart here)


A Look At The S&P Futures Intraday Chart – KEY Levels

  • BoJ Statement caused the ES Futures to break it’s support of the 92-94 range and clip 20 points almost instantly.
  • Found new support around the 2074 mark.
  • Retested the old support range (new resistance), crossing over briefly until precipitously falling to 2065.
  • Hung around 2070 at the closing bell (4 pm).
  • Continued to retrace to 2074 (old support and possible new resistance) after the closing bell.
  • VIX spiked.
  • TRIN did NOT close over 2. Usually TRIN closing over 2 on a down day is a market breadth indicator for a bullish reversal for the following day.

 


A Look Into the Heat Map

 

Bloodbath in the market today. AAPL dropped further causing the most damage as Carl Icahn announced that he is dumping shares. Aside from Facebook (FB) posting positive earnings, the only real safe havens in today’s selloff are in the Consumer Discretionary and Utilities sectors.

MARKETS

(click on symbol for chart)
SPX –  Bull
DOW Bull
Nasdaq Bull
Russell  Bull

VIX – 15.22 – We saw an increase in volatility today, also a gauge of fear in the market.

 COMMODITIES

Oil (USO) –  Bull – Crude Oil reached an all new high today just above $46 and may be at resistance as it gave up some ground going into the close. Look out for a retest of resistance. 
Ag (DBA) – Bear
GLD –  Bull – We saw a decent spike in gold. This is due to a flight to safety as there is plenty of equity and currency risk in the market but also due to a collapse in the dollar making gold more expensive as it is price in USD. 
SLV –  Bull

THE DOLLAR

UUP USD weighted ETF – Bear – I am rather bemused that the BoJ Statement had a bigger impact on the US Dollar than the FOMC Statement did yesterday. As I mentioned in my other post today, the news from the Bank of Japan caused the dollar to drop precipitously. As seen in this intraday chart, the dollar proceeded to form a low base right on top of support at 94, formed a cup and handle pattern testing twice before finally breaking the 94 mark, and continuing to run. As you learn in Master Trader, old support becomes new resistance as the dollar tried to cross over again later this morning, but failed to do so.

 Here are 5 observations I made on the Dollar Index on multiple different time frames:

1. It’s Bearish.
2. It’s kind of forming a double top (M) pattern on the 3 year/Weekly candlestick chart. As well as additional M’s within each top.
3. Broke key support at 94.
4. The 8/17/9 MACD on the weekly chart crossed under on March 7-March 14 and has already run a good 3-4% of its total value.
5. The 50 day MA crossed under the 200 day MA (daily chart) on 3/30/16.


SOLON’S TRADING THOUGHTS

Proceed cautiously. If you still have puts on your portfolio in preparation of yesterday’s FOMC Statement, it may be a good idea to keep them on. As Tim always says, “it’s never a bad idea to buy insurance when the VIX is at or below 15.” There’s really no telling what the market will do tomorrow and if it breaks that support zone at 2070 on the /ES futures chart, then it could run for quite a bit (ie. previously indicated support zones of 2040 or 2000). Current internals that I look at (being the VIX crossing over the Bollinger Band, the TRIN closing above 2.0, a huge spike in volume indicating support holding) aren’t showing a short term (bullish) reversal. For this reason, Tim’s words of wisdom hold especially true today.


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7 Replies to “Market Recap April 28, 2016”

  1. KEITHGIUNTA KEITHGIUNTA says:

    Thanks Solon for both reports.

  2. Bill Trimborn Bill Trimborn says:

    Thanks for the timely recap, Solon! It’s a good thing I listen to Tim’s advice.

  3. Nicholas Kingsbury Nicholas Kingsbury says:

    Thank you for taking the time to do these and the BoJ report.

  4. Avatar CYNTHIABLACKWELL says:

    Thanks for the reports, Solon. Very informative. A question…can you expound on why you have AG as bearish? Is it because on the daily, the 50DMA has passed under the 200DMA? The movement seem be reversing to the upside, though, on both weekly and daily charts and it seems to be testing resistance at 10.02. Then I thought maybe you meant DBA and not AG. DBA is an Agriculture Fund and is bearish. I’m a little confused. Thanks again.

  5. Avatar ERICSIMMS says:

    Great Recap, Solon! This could be the beginning of a new wave of volatility and market action under downward pressure. I bought Jan 2017 puts to protect my long positions, if that indicates how I feel about things. This recovery with fundamentals seemed hollow and empty. But we shall soon see . . .

  6. SolonStephanou SolonStephanou says:

    @Cynthia. That is a great question. The quick and honest answer is that I kept Ag(DBA) from Gino’s Market Recap from 2 weeks ago and haven’t updated it. It’s not something that I look at on a regular basis or trade myself, but I left it in in case people would like to trade it. I apologize for not updating it as regularly as I do with Oil, Gold, and the USD.

    With that said, I will give you my analysis on on it. I would still categorize this as Bearish. It’s easily Bearish on a 3-Year/Weekly chart as it is still lingering at it recent lows which it only put in 2 months ago. If I drop down to a 1 year/Daily Candlestick chart, I’m more likely to say it has been trending sideways (with a prior bearish skew) and putting multiple bottoming patterns. It had a bearish channel from August to February which has broken and put in a higher/low. I would call it a reversal just yet until it clears 21.5 and maintains it. For the record, and it’s kind of cliche, but a trend remains the trend until it is no longer the trend. In simple terms, bearish remains bearish until it is clearly (and you could say with confidence) that it is bullish.

    You are right in pointing this out as it obviously has many indications of a reversal. I’ll throw in a chart with several observations in the Market Recap.

  7. Avatar CYNTHIABLACKWELL says:

    Great Solon. Thank you!

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