Monday’s low volume bounce in the broader U.S. equity market doesn’t offer all that much to analyze in and of itself, yet bearish clues from across the pond are worth making note of.   On both sides of the pond, to a good extent investors are now waiting for corporate earnings season for the first quarter to begin before reading more into the state of the domestic and global economy.  The earnings calendar this week however is relatively light as most heavy bellwethers/market movers don’t start reporting until next week, when things really kick into high gear.  The numbers I will be looking at this week are those of JPMorgan Chase (JPM) and Wells Fargo (WFC), both due to report on Friday.

To the charts we go:

Instead of the usual daily chart of the S&P 500, and just because it’s Tuesday let’s mix it up today and look at a closer-up 60 minute chart, dating back to mid February.  The two blue parallel lines represent the up-trending channel off the November lows, which I also pointed out in yesterday’s piece on the daily chart.  Note that on Friday post the March employment report disappointment, the index bounced (not so coincidentally) right where it should have, namely at the November up-trend line.  With yesterday’s follow-through buying the S&P 500 is now a whopping ten handles off the 2013 highs, something that the bears don’t like to hear.

Meanwhile in Europe both the Eurostoxx 50 as well as the German Dax 30 blue chip indices last week snapped their June up-trend lines and unlike their U.S. counterparts yesterday showed no willingness to bounce.  How long can Europe continue to show negative divergence versus the U.S. without weakening the chart of the S&P 500?  Likely not much longer, yet I would be remiss not to remind ye faithful that price remains the ultimate and only arbiter.

Back to the state-side charts, in addition to weak semiconductors, transports and small caps, both the industrial and materials sectors of the S&P 500 last week also snapped their November 2012 up-trends.  With Friday’s reversal and yesterday’s follow through buying, as long as these simple up-trend lines are not meaningfully overtaken again we can still operate with a bearish posture.  The coming days will likely offer resolution to the bull/bear fight as investors either chase’em higher or take profits on the back of earnings announcements.

Last but not least, allow me to muse a couple of words on the chart of Apple inc (Nasdaq: AAPL).  As it often goes with cult stocks, finding a bottom takes time for the simple fact that sellers are aplenty on any bounce.  Hopeful institutional investors having bought (and not yet sold) the stock north of the $600 mark are antsy to get out of their positions, keeping a lid on the stock for the time being.  From a pure price action point of view the stock looks weak and very vulnerable to slice below $400.


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