Enis’s Macro Wrap – Institutions Selling

by Enis November 13, 2012 7:42 am • Commentary

The intraday price action of the past 4 days (since the election) has indicated that institutions have been the primary drivers or weak price action.  Here is the 5 day intraday chart to illustrate what I mean:



I’ve circled in green the opening 30 minutes of each session, and in red is the closing 30 minutes of each session.  Though the chart does not do it justice, the general movement has been that the opening 30 minutes have been flat to higher, while the closing 30 minutes have been flat to lower.  I view, it as one more indication that large institutions are still in distribution mode, even though the SPX index is 100 points from its September highs.

If we start to see the market rally in the last 30 minutes, then I think the all-clear signal for a multi-week bounce becomes more legitimate.  The current backdrop though, tells me that the big boys are not yet done selling.

Markets overnight:

  • Active session overnight.  Asia was completely red from the open, with the Chinese Shanghai index leading on the downside, down 1.5%.
  • Europe opened in the red as well, with weak German confidence numbers doing no favors.  But around 6:30am EST, a headline from the German newspaper Bild suggested the Greece would get a bulk 44 bln euro payment, causing a mini-risk-on rally.
  • However, the rally has failed in the last 30 minutes, with European markets still down 0.5%.  SPX futures have fluctuated between 1379 and 1365 overnight, now trading at 1371, down 0.4% from last night’s close.  1363.50 is the low from Friday to watch in SPX futures
  • Home Depot beat earnings ex-items and raised its sales guidance.  Shares are up 2% in the pre-market.  KORS earnings beat, but its sales guidance was quite weak relative to expectations.  Shares are down 5% in pre-market trading.
  • The dollar and Treasury bonds are close to flat, commodities are slightly lower