Venda do Novo Banco pode representar 8% do M&A na banca europeia este ano

[Eagle Eye]

Today's the day
by David Nichols

On Friday it's always helpful to sneak a look at the weekly chart to see how it's shaping up. I've found that a simple weekly candlestick chart can tell you a surprising amount of information about the condition of the market, especially the mid-term trend.

It turns out today's session is pivotal. A strong day today and the weekly chart will look surprisingly positive; indeed, you might even say bullish. But a down close -- especially one that closes below last week's candle at SPX 834.89 -- would be troubling for the bullish case. And if the SPX closes the week below 830, that's definitely not bullish.



The VIX has been flittering around in the high 30s now for quite a while, and hasn't found momentum in either direction. Fear is staying at high levels, with fluctuating on a day-to-day basis. The latest daily candle on the VIX is a red one, showing fear is diminishing -- at least at the moment. But it will take another down day to confirm the momentum is indeed in this direction.



The bond market is the most interesting gauge of sentiment right now. Bonds had a breakout day to the upside yesterday, in spite of the fact that stocks were also moving up.



The bond and stock markets are not confirming one another. There's no consensus of opinion. Remember, bonds move opposite to their yield, so if we look at a chart of interest rates plotted alongside the S&P 500, we can see how closely these two markets have been moving in sync over the past years.



If we drill down for a closer look, we can see what's happened lately when a divergence of opinion has occurred in these two markets. Lately, when bond traders have been more pessimistic about the world (pushing interest rates down and bonds up -- sorry, I know it's confusing), it has actually heralded a rally for stocks. Yet, when stocks were relatively weaker recently back in January, it spelled further trouble for the stock market.



The up arrows point out the last few times interest rates dipped lower than stocks, relatively-speaking. Each instance brought a quick rally. The down arrow shows where interest rates were relatively stronger, and that was right before the drop down to the Feb 13th low.

This divergence is potentially positive for the stock market. There is certainly a ton of liquidity available to flow back into stocks, if some uncertainty can be cleared up.

But clarity of purpose is not too high on the agenda for the stock market these days, so we can't leap to too many conclusions just yet.

It's still my feeling that the market is rounding the corner into a mid-term uptrend, and without a true, textbook capitulation this uptrend could catch some people by surprise, and engender continuing doubt. There is certainly enough negativity built up to support a pretty good move, all the way back up to SPX 920 or so.

But if this is going to happen, the market needs to make some upside headway today .

Sentiment Dashboard
by Adam Oliensis



SENTIMENT TANK: The tank drained by 7% on Thursday to 75% full of negative sentiment. It's threatening to move down out of the range within which it's been consolidating but it hasn't done so yet. We have a lower high, but not yet a lower low. A breakdown below 75% would be that lower low, and project further draining of negative sentiment, which would also project a market advance, potentially of some decent size.

SHORT-TERM: The hourly gauge moved into an advance phase on Thursday and remained there through the session.

MID-TERM: The mid-term gauge progressed 2% in its newborn advance phase to 12%. The mid-term oscillator crossed over its trigger line, but just fractionally. We are flirting with a bona fide buy signal on the mid-term gauge. Our Confidence Diffusion Index (CDI) advanced to 2 from yesterday's zero.

LONG-TERM: The long-term gauge regressed 2 points to 49% in its decline phase. However, since it remains further into the decline phase than last Friday's close the gauge has not flipped over yet. It's flirting with doing so. It could go into neutral or into an advance phase. If it does the latter, that will confirm our mid-term buy.

It may be that the weight of geopolitical concerns on both the economy and the market will keep the stocks from advancing significantly. However in the current environment of pervasive pessimism the technicals on sentiment are such that IF we get even a decent-sized positive news shock this market is ripe to put in a very strong upward surge. In the absence of a climactic "whoosh" bottom, it's about as ripe as it can get. However we have to be aware that that "whoosh" could also derive from all the things the market is justifiably concerned with.