Sunday, June 8, 2014

* 6-8-14: Market Focus: Prepare for The Week to Come

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Last week was a big one for the market in terms of economic data and technical levels.

Jobs. Check
European Central bank QE. Check
Volatility  Disappearing. Check
US QE tightening, ECB QE easing. Check, Check.

On Friday, The S&P 500 not only eclipsed a new all-time high, but it saw an incredible 60 new annual highs, and zero new lows. Details on last week can be read here:

6-6-14: End of Week Report

 Further, we saw VIX hit a 7-year low . You can read that full story here:

VIX - 7-year Lows Breached. The Calm Priced into the Market is Stunning. But Did You Know This?

The VIX spot closed at 10.73% on Friday, more than a seven-year low.
  • VIX close has not been this low since 2-23-2007
  • Since 1996, VIX Has Only Been this low 60 Times.
  • For the 9+ Years Between 1996 and Summer 2005, VIX was Never this Low.
  • All-time Average VIX: 20.1%
  • All-time Median VIX: 18.4%
The divergence between the S&P 500's return and the VIX's move has grown larger than at any point in over five-years.

Provided by Charles Schwab optionsXpress

The correlation divergence between small caps and large caps eased, or in English, small caps and large caps both went in the same direction (up).  The chart, before last week, looked like this:

Even Biotechs rallied hard. You can read about the recovery in Small Cap Biotechs here:

Daily Biotech Small & Micro Cap Update

But now, we have the week to come.  And there are economic events worthy of note, earnings worthy of note, and a growing trend in bullish chart patterns surrounding... Chinese Large Cap ETFs.

Below you will find all that we need to prepare for the week to come

All data and images for this report are provided by Charles Schwab optionsXpress

Economic Calendar
The sentiment will be an interesting pulse of the market.  As the SPX goes hgher and VIX goes lower, it almost feels like people are getting more uneasy with the market's gains even though the VIX is imploding.  Note the jobs numbers as always on Thursday.

Partial List of Noteworthy Earnings This Week
The 15 most optionable earnings events; a relatively quiet week as we have moved well out of earnings season.  But, if you have the will to trade, there are company specific events to analyze.

Technical / Pattern Breakouts to Watch: Up-trends
Note again, repeats for several weeks now, the China large cap ETFs.  The Chinese ETFs however finally underperformed the S&P 500 last wee.

Bubble, new bull market, or randomness?

S&P 500: +1.3%

FXI: +0.4%
XPP: +1.1%

Technical / Pattern Breakouts to Watch: Down-trends
Note MOMO favorite ZNGAand two pharma companies.

This is trade analysis, not a recommendation.

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