John Mylant's  Instablog

Technically Speaking (SPY)

RSI- even though even though I believe a slow down is coming soon in the markets, the RSI indicator continues to remain well above the 50 line and in bullish territory and appears like it's going to continue to move up. It looks like the stock has finished moving sideways off the outer Bollinger band and will now journey up again like it has been doing.

MACD-the MACD continues its sideways journey far above its zero line with no well-defined high point or top that I look for to move down when I think a trend change is coming. Back in the end of January I see the stock high point but it hasn't moved down that far everything is still very bullish.

Bollinger Bands-after moving sideways off the outer Bollinger bands I was waiting to see what the stock would do. As it touched the middle band and it started to move up again which shows me that it hasn't lost any strength. If I believe a slowdown is coming there were no signs given this week that it will be happening soon.

Conclusions- because of the season coming up I'm still aware of weakness to could occur in the stocks move up. But at this point I see no signs in the charts that it is ready to give up its journey. So far it is still very bullish and doesn't look like it's ready to stop.

Current Events

After flirting with an all-time high for three weeks, the S&P 500 (SPX) posted its best closing level in history. But some strategists say Thursday's record could be a harbinger that the stock market rally is running out of steam.

The increase in volatility we've seen is far more likely to be the sign of a short-term top" than the trend of investors buying on dips. If that volatility persists, then you would need to worry about an intermediate top.

Speculator positions show a preference for holding long positions. Mike O'Rourke, chief market strategist at Jones Trading, noted that long positions account for more than 65 percent of speculative positions in futures contracts, a point at which rallies can be overextended.

Cyprus will remain in focus after the government was forced to accept a stringent European Union rescue package to avert default. In a positive sign, there were no runs by depositors on banks after they reopened under tight controls on Thursday.

Presently, the economy continues in the slow growth stage but the looming threat of a slowdown is ever present before us. With the low expectations corporate profits also continue to improve this is going to be a big factor in this first quarter to see how they perform.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Technically Speaking

RSI- even though the RSI indicator continues to look healthy in bullish well above the 50 line, it still shows a negative divergence with the stock. For this reason I am still of the opinion that the market could be coming to a leveling off point in the next six weeks or so. I believe this week will still be bullish but I'm still seen signs of slowdown.

MACD-just like the RSI indicator the MACD is showing a negative divergence. Usually when the Mac D has a high point and then the highs continue to get lower that shows weakness in the present move of the stock. At the least I believe the stock is showing that it's going to eventually slowdown. By eventually running sooner than later.

Bollinger Bands- as the stock moves sideways off the upper Bollinger band, I believe this is showing us signs that it is not yet ready to move down. When I see moves like this the stock usually has more strength to continue to go up. When I see it moving down from the middle band then I will believe that we may see an actual slowdown take place.

Current Events

Cyprus

The island nation accounts for a fraction of euro zone economic output, and yet the wrangling over a 10 billion euro($13 billion) bailout package kept markets on edge throughout this past week. The S&P 500 fell for the first time in four weeks, with weakness linked to uncertainty overseas.

Euro zone leaders have offered the country 10 billion euros on the condition it raises 5.8 billion euros on its own. The rescue plan is smaller in scope than previous bailouts to euro zone members, making investors worry less about a banking collapse and more about the possibility Cyprus would exit the bloc and drop the euro currency.

The worry "is the psychological knock-on effect of the credible possibility of some (country) saying 'Cyprus got out, now they are on their own, they devalued their currency, they don't have to go through austerity'," said Art Hogan, managing director at Lazard Capital Markets in New York.

Earnings

Stocks could see another boost in the form of quarter-end "window dressing" in which money managers add outperforming stocks to their portfolios.

According to Thomson Reuters data, of the 491 companies in the S&P 500 that have reported quarterly earnings, 69 percent have topped analysts' expectations, compared with 62 percent since 1994 and 65 percent over the past four quarters.

A strong showing next week could push the index past both its record closing high as well as its record intraday high of 1576.09.

With earnings season several weeks away, only nine S&P 500 companies are expected to report quarterly results next week, including discount retailer Dollar General Corp (DG.N) and video game retailer Gamestop Corp (GME.N).

Only a few companies released results this week, but they were disconcerting. Oracle Corp (ORCL.O), the world's No. 3 software maker, fell well short of revenue expectations. FedEx Corp (FDX.N), the second-largest U.S. package delivery company, cut its forecast for the year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The financial crisis in Cyprus has been in the news for just over a week now and it did have an adverse effect on the markets earlier this week. The markets dropped on Tuesday in a reactionary move to Cyprus and we could see more of this in the future. Let's explore some solutions for Cyprus and I will give you my observations as to how I believe it could continue to affect our markets.

Russia as a Possible Equation in the Solution

After the population nearly rose up in revolt at the idea of taking their money, the parliament of Cyprus rejected the idea of seizing money from people's bank accounts. Now they need to explore a new way to protect the nation from financial ruin. Officials feared that confiscating money from larger deposits would scare away large depositors and if the money was pulled out quickly it could put a huge strain on the island's financial system and this would exacerbate the problem.

Political leaders have to raise $5.8 billion (in euros) in order to qualify for $10 billion (in euros) as part of a rescue loan.

Russia came up as a possible alternative. Cyprus will try to raise as much money as a can domestically then possibly have its finance minister asked Moscow for support in the form of an extension on an existing loan. This is a real alternative being explored right now.

Because of all the financial transactions with Greece that went bad, Cyprus banks are drawing emergency support from the ECB presently but this is not an indefinite solution. The ECB has pressured the banks of Cyprus stating that aid would be cut off if a bailout deal was not taking care of soon.

Is Cyprus a Possible Precedent for Other Governments?

I'm not sure about other countries but I do know that here in America it is not likely that something like this could happen. Here is a direct quote from FDIC spokesperson David Barr:

"The FDIC' don't you know you walk with Google on the views core mission is to create stability in the banking system and to protect depositors' savings. During the current economic crisis, consumers have seen firsthand how the FDIC protects their money by swiftly making deposits available when a bank is closed. In the FDIC's 80-year history, not a single depositor has ever lost a penny of insured money as a result of a bank failure. Our proven track record has helped prevent bank runs during some very difficult economic times."

Back in the Great Depression, the FDIC started to ensure deposits of up to $100,000 but recently that was changed to $250,000 after the passage of Dodd-Frank. Well what would happen if the FDIC ran out of money? If insurance money would run out, the Federal Reserve Bank would step in and back up the FDIC.

Market Effects

In the bigger picture, the entire euro zone crisis is possibly at the forefront of influencing the markets again. Looking at all possibilities, what would happen if Cyprus could not resolve its present financial problems? Some have said there's a possibility it may have to leave the euro zone. I do not believe this is the case but speculation loves to rear its head. I think this is just talk, not something that will happen. Even though Cyprus is a small company and only about .2% of the euro zone GDP, the symbolism of not being able to solve its debt crisis would have ramifications throughout the continent.

So how should investors react to Cyprus? Personally, I believe that Russia will step in and help the country because of the financial ties that the two countries have with each other. Presently I would describe the problems in Cyprus as a "bearish gnat" that may hang around the markets and attempt to throw cold water on the mild bullish run the markets are presently experiencing. Could Cyprus be a major bullish factor on our markets? Anything is possible, but I do not believe it is probable. If finding a solution drags out, I believe our markets would react and possibly turn neutral in movement to the point where investors observe a trading channel taking place. That's all I would expect from the problems in Cyprus.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.