EW: Stock Market SPX Closed Above Cycle Top Resistance

The FDIC Failed Bank List announced three new bank closures this week.  The Federal Deposit Insurance Corporation seized the American Trust Bank, based in Roswell, Ga., with $238.2 million in assets and $222.2 million in deposits; the North Georgia Bank of Watkinsville, Ga., with $153.2 million in assets and $139.7 million in deposits; and the Chicago-based Community First Bank, with $51.1 million in assets and $49.5 million in deposits.

Commodity Whack-A-Mole
 (ZeroHedge)  Ok, someone needs to step in here before people get hurt... Er, more. The chart below is not of some biotech strategically bought by various CT hedge funds having just announced a successful obesity Phase 3 trial. It is corn: one of the most widely consumed commodities in the world. And while corn appears to be today's limit up commodity, elsewhere cotton has just limited down as a continuation of the recent ICE plundering, courtesy of the exchange's margin hike; rice, after touching on highs, has decided to drop aggresively, as have cocoa (never mind the Ivory Coast government vacuum) and coffee. This is the kind of environment in which companies that do not have commodity price hedges can go bankrupt in a span of months.

Drop in Jobless Rate May Not Deter Fed From Carrying Out Stimulus Program
(Bloomberg)  The surprising drop in the U.S. jobless rate to the lowest level in 21 months probably won’t deter Federal Reserve policy makers from carrying out their program to pump $600 billion into the economy, economists said.

VIX retraced below its 10-week moving average.
--The VIX declined below its 10-week moving average in what appears to be a deep retracement.  The pattern since the May Flash Crash has been the Broadening Wedge, which is a continuation pattern.  Weekly Stochastics indicate that momentum may be building for a bullish breakout in the VIX.  

(Dow Jones)--Just as there's no perfect hedge, Friday's market gyrations were a reminder that there's no perfect way to trade the stock market's "fear index" either. As scenes of unrest in Egypt and a Nasdaq glitch sent stocks lower, traders dove into complex new exchange-traded notes tied to the CBOE Volatility Index, or VIX, which jumped 24%. Volume in 16 such notes leapt to roughly $1.2 billion Friday, more than twice the 20-day average around $500 million, data collected by VelocityShares showed

SPX closed above Cycle Top Resistance.
SPX closed below weekly Cycle Top Resistance at 1328.61.  It appears that the Master Cycle from July 1 has not rolled over as evidenced by the new high made this week.   Last week’s rally formed point five of an Orthodox Broadening Top.  This is the same pattern that formed just before the Flash Crash in May.  The Cycle Bottom Support which called for a drop to 1025 last April is now calling for a drop below 1000 today.  

Gold caught inside its Diagonal.
-- Gold is now caught inside its weekly Diagonal Formation.  It rebounded from its Trading Cycle low which arrived on January 28th and may be finished with its retracement.  An alternate arrangement may be a retest of its 10-week moving average at 1373.01.  The next probable downside target is mid-Cycle support at 1023.00.


www.beyondneanderthal.com   

$WTIC ready to violate its 10-week moving average.
-- $WTIC still remains above its 10-week moving average at 89.75, but just barely.  The Commodities Index ($CRB) achieved a Master Cycle low on January 26 and may seek a deeper low on or around February 7.  This may set off a broad-based decline to the lower trendline of the Orthodox Broadening Formation. Crude oil fell after a government report showed that the U.S. added fewer jobs in January than economists forecast, bolstering concern that fuel demand will slip. Today’s jobless numbers showed many fewer people got jobs than expected and that many others have simply given up looking for work, which raises concerns about U.S. consumer demand. We already are looking at weak demand and very high stockpiles.

The Shanghai Index trades at mid-Cycle Support.
--The Shanghai Index remains closed for its Chinese Lunar New Year.  $SSEC appears poised to leap above its 10-week moving average, giving it a buy signal from a Master Cycle low.

$USD declines to 78.5% retracement, currency tensions mounting.
-- $USD bounced from a Primary Cycle low this week.  While the $USD has been made a 78.5% retracement of its rally from November 5, the Euro retracement had extended to a little more than the 61.8% level of its decline.

Regards, Tony
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