Wednesday, June 28, 2017

PKW Buyback ETF Monthly Chart; Negative Divergence; Overbot; Upper Band Violation

Buybacks are the mother's milk of higher stock prices creating a never-ending rosy scenario for bullish traders. Central banker easy money provides plenty of cash for companies to implement huge share repurchase programs. The intent of the Federal Reserve's and other central banker's monetary policies is to provide easy terms so companies will buy capital equipment and hire workers to create a recovery. Screw this.

For the last few years, the greedy wealthy, investment banks and privileged class instead use the central banker money to fund buyback programs. The repurchase programs pop stock prices higher providing pocket fulls of money for those that hold large stock portfolios. The rich take care of their own. Every day of life is easy and great if you are wealthy and own a lot of stocks.

PKW is a buyback ETF. Obviously, it runs insanely higher over the last few years as buybacks are all the rage. However, the monthly chart is topping out. The daily and weekly charts are negatively diverged and want to see a retreat in price in the near term. The monthly chart displays universal negative divergence over the last 3 and 4 years (red lines). The bulls are trying to create a sliver more of strength (short green lines) which would be another month or two but the overall longer term neggie d should take command and roll PKW over to the downside.

The stochastics and  RSI are overbot open to a move lower. Price has violated the upper band so the middle band at 47.73 is on the table. It appears that the buyback game is coming to a conclusion. The obscene buybacks drove stock prices to their record highs last week. What happens when the buyback joy is over?

When everyone looks back a year or two from now, they will ask how could we not see it all coming (a drastic selloff in the stock market)? In the 2007-2009 financial crisis, subprime lending was clearly the culprit as well as the nefarious activity by the banksters. The thing that everyone is missing now is that the PE's are actually a lot higher than reported if adjusting for the impact of buybacks.

The buybacks have pumped most stocks at least +30% higher in price than they would have been without the buyback programs. This shorter term joy always occurs but it leads to longer term disappointment. The buyback eliminates stock shares so the earnings per share automatically moves higher. Isn't financial engineering great? Thus, if the PE is say, 18.5 now with earnings at 130 that yields the SPX at 2400. But taking away the buybacks, earnings would be more likely down at 90 to 110 (or adjust PE higher) which is an SPX at 1700-2100.

The 8-1/2 year central banker Keynesian experiment continues. The Fed has not been able to create inflation all these years despite their radical money-printing. Deflation likely wants to take a chunk of flesh out of markets since it was cheated from properly clearing markets back in 2009. A huge fuel supply for higher stock prices is buybacks but the buyback train is sputtering and likely running out of gas. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

DAX Germany Daily Chart; Neggie D Spankdown; Testing 50-Day MA

The DAX is printing at 12608 right now (red dot) falling below the 50-day MA support at 12611 that now becomes resistance. The upper standard deviation band was violated mid-month so the middle band is on the table and even the lower band. Price comes down to tag the middle band, dances there, and then fails and is very close to the lower band now at 12590.

The red lines show the ominous rising wedge pattern for price while all the indicators were negatively diverging. In addition, the indicators were coming off overbot levels. All these bearish indications forecast and create the spankdown that occurs. The indicators are weak and bleak so lower lows would be expected after any bounce would occur in this daily time frame.

Price likely wants to touch the lower band since it is in the neighborhood. That would place the middle band at 12730-ish on the table. The DAX likely wants to play around at the 12520-12600 range for a few days and then recover higher.

The DAX weekly chart is negatively diverged across all chart indicators so when price recovers in the daily time frame it will likely be a good opportunity to go short since the weekly charts wants to see weakness for a couple weeks or month. The monthly chart is topping out like other major global stock indexes so a multi-year top is on the table for the DAX this year.

The DAX is currently deciding to either bounce, or die, from the 50-day MA. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Monday, June 26, 2017

SPX S&P 500 Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 6/26/17

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for the trading week of 6/26/17. Friday, 6/30/17, identifies the end of the month, end of the second quarter and the end of the first half of the year, EOM, EOQ2 and EOH1, respectively.

Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and important S/R.

For the S&P 500 in history, the all-time record high print is 2453.82 on 6/19/17 and the all-time closing high is 2453.46 on 6/19/17. The all-time record intraday low is 666.79 (the infamous 666) on 3/6/09 and all-time closing low is 676.53 on 3/9/09.

For 2017, the intraday high is the 2453.82 and closing high is 2453.46. For 2017, the intraday low is 2245.13 from the first trading day of the year on 1/3/17 and the closing low for the year thus far is at 2257.83 on 1/3/17. For 2016, the intraday high is 2277.53 on 12/13/16 and closing high at 2271.72 on 12/13/16. For 2016, the intraday low is 1810.10 on 2/11/16 and the closing low for 2016 is 1829.08 on 2/11/16. The intraday low in 2015 is 1867.01 on 8/24/15 and closing low for 2015 is 1867.61 on 8/25/15.

The stock market (S&P 500) prints the highest number in history at 2454 last Monday. The Dow Jones Industrials print above 21.5K. The band is playing, “Happy Days Are Here Again.” Traders are drunk as skunks buying stocks with reckless abandon and total disregard for price. The market complacency is proven by the low CPCE and CPC put/call ratios and multi-decade low in the VIX hanging around the 9 and 10-handles. Market bulls rule and bears do not have any hope with the subdued volatility.

The key price support and resistance levels are 2454, 2453, 2446, 2434-2436, 2431-2432, 2428, 2419, 2415-2416, 2412 (where June began), 2404, 2400-2401 and 2394-2396.

The SPX price is at 2438 remaining above the 20-day MA support at 2432 and above the 50-day MA above the 100 above the 150 above the 200-day MA. The moving average ribbon is stretched to the upside so price will need a mean reversion lower. The 50-day MA support is 2402.

The recent stock market rally began in early November when Trump won the US presidential election. The SPX has ran from 2080 in November to the record high at 2454 last week.

The new moon peaked on Friday evening. Stocks are typically bearish moving through the new moon but the S&P futures are +5 on Monday morning about 2-1/2 hours before the opening bell. The stock market closes early next Monday and will be closed next Tuesday for the July 4th Independence Day holiday. Trading volumes will likely trail off and remain subdued from Thursday, 6/29/17 through Wednesday, 7/5/17. In general, trading volumes may be light over the next couple weeks.

June ends on Friday as well as Q2 and H1 so window dressing is in play this week where funds buy the strongest stocks to show clients they own the winners in the monthly statements. Window dressing may provide lift in stocks early in the week. Two Italian banks are bailed out which is creating global market joy to begin the new week. June began at 2412 so if the bears want to create a negative month, they had better get busy sending stocks lower over the next five days.

For Monday, 6/26/17, with the S&P 500 beginning at 2438, the bulls need to push up through that 2440-2442 resistance level and it is smooth sailing to 2446 in quick order. Above that and price will seek 2451 and if that is taken out the all-time highs at 2453-2454 are on the table.

The market bears need to push the SPX under 2434-2436 to push lower to test that key 2431-2432 level to accelerate the downside. If the 2431 level is lost, price will immediately test 2428 and if it fails, the SPX will be at 2415-2422 in quick order. If the SPX loses the 2422 level (200 EMA on the 60-minute) this week, the stock market will begin accelerating lower. For now, the bulls rule.

A move through 2431-2441 is sideways action to begin the new week of trading.

Note: If the list below displays any blank spaces, view it in a different browser. The data is current up through 6/25/17.

2453.82 Previous Week’s High
2454 (6/19/17 All-Time Intraday High: 2453.82) (6/19/17 Intraday High for 2017: 2453.82)
2453 (6/19/17 All-Time Closing High: 2453.46) (6/19/17 Closing High for 2017: 2453.46)
2441.40 Friday HOD
2438.30 Friday Close – Monday Starts Here
2432.30 (20-day MA)
2431.11 Friday LOD
2430.74 Previous Week’s Low
2421.80 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2411.80 June Begins Here
2401.78 (50-day MA)
2401 (3/1/17 Intraday High: 2400.98)
2396 (3/1/17 Closing High: 2395.96)
2381.13 (20-week MA)
2376.35 (100-day MA)
2334.07 (150-day MA; the Slope is a Keystone Cyclical Signal)
2297.16 (10-month MA)
2286.86 (200-day MA)
2278 (12/13/16 Intraday High; 2277.53)
2276.34 (12-month MA; a Keystone Cyclical Signal; the cliff)
2272 (12/13/16 Closing High: 2271.72)
2269.18 (50-week MA)
2258 (1/3/17 Closing Low for 2017: 2257.83)
2245 (1/3/17 Intraday Low for 2017: 2245.13)
2239 (12/30/16 Closing Low: 2238.83)
2238.83 Trading for 2017 Begins Here
2234 (12/30/16 Intraday Low: 2233.62)
2213 (11/25/16 Intraday and Closing High: 2213.35)
2194 (8/15/16 Intraday High: 2193.81)
2191 (12/1/16 Closing Low: 2191.08)
2190 (8/15/16 Closing High: 2190.15)
2187 (12/1/16 Intraday Low: 2187.44)
2181.69 (20-month MA)
2146.51 (100-week MA)
2135 (5/20/15 Intraday High: 2134.72)
2133 (7/20/15 Intraday High 2132.82)
2131 (5/21/15 Closing High: 2130.82)
2130 (6/22/15 Intraday High 2129.87)
2128 (7/20/15 Closing High: 2128.28)
2126 (4/27/15 Intraday High: 2125.92)
2124 (6/23/15 Closing High: 2124.20)
2121 (4/24/15 Intraday High: 2120.92)
2120 (2/25/15 Intraday High: 2119.59)
2118 (4/24/15 Closing High: 2117.69)
2117 (3/2/15 Closing High: 2117.39)
2116 (11/3/15 Intraday High: 2116.48)
2115.36 (150-week MA)
2111 (4/20/16 Intraday High: 2111.04)
2110 (11/3/15 Closing High; 2109.79)

Sunday, June 25, 2017

BPSPX S&P 500 Bullish Percent Index

The market bears were singing songs and carrying-on as stocks pulled back (slightly) during March-May. The SPX was on a double-whammy sell signal having reversed six percentage-points off the top and fallen through the critical 70% level. But instead of bear joy, the bulls fight back and punch the bears in the face starting late May.

The bulls regain the important 70% level a market buy signal but the situation remains in flux. A six percentage-point reversal off the bottom 19 trading days ago would be the 73.4 level (67.4 + 6.0) and provide a double-whammy buy signal for the stock market.

Thus, the stage is set. The market bulls win big if the BPSPX moves above 73.4. There will be nothing but blue skies and rainbows ahead. The bears win if the BPSPX falls back below 70 which would restart the double-whammy sell signal and move the stock market strongly lower. Who will win? This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Friday, June 23, 2017

SPX S&P 500 30-Minute Chart; 8/34 MA Cross; Sideways Symmetrical Triangle

For the VST, the 8/34 MA cross on the SPX 30-minute chart is a very useful indicator. Look at the battle. Both key moving averages are at 2438. Thus, if price is above this level, the 8 MA will move above the 34 MA and bulls win going forward. If price slips under 2438, the 8 MA will stab down through the 34 MA and send the stock market lower.

The sideways triangle is in play with a vertical side at 32 points. So a breakout from 2440 targets 2472. A break down from 2434 targets 2402. Price is making a decision right now and has limited space available inside the apex of that triangle; it must choose a direction. The average of the two MA's is 2437.87 so this is the magic number. Bulls win  big above 2437.87 and then above 2440 while bears win big under 2437.87 and then under 2434.

Interestingly, the new moon peaks this evening at 10:30 PM EST and stocks are typically weak moving through this darkest time of the month. Thus, equities favor a downward bias into Monday. The low CPCE put/call ratio was previously highlighted so a market top is near. The S&P 500 either receives the beginning of a spank down today, that may send price from 20 to 40 points lower and maybe a lot more, or, the bulls muscle out a sideways to sideways higher move into the weekend but this will then top out probably early next week and roll over to the downside. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 11:12 AM: High drama. The SPX price, and 8 and 34 MA's on the 30-minute, are all at ...... wait for it ....... 2438. Price must make a decision up or down. Bulls win big above 2439. Bears win big under 2437.

Note Added 12:13 PM: The drama continues. Interestingly, the central bankers are jamming volatility lower, the VIX drops under 10 to 9.98, however, the SPX is having trouble moving higher. This is a divergence with both stocks and volatility leaking lower. One of them is wrong. Either the SPX will spike higher or the VIX will spike higher. With the VIX pushed lower, the SPX should have already launched above 2440, 2442 and higher but instead remains sticky at 2438-2439. The S&P 500 may be running out of gas. The battle at 2438 continues as traders grab a lunchtime sandwich.

Note Added Sunday, 6/25/17: The S&P 500 ends the trading last week at.... wait for it..... 2438. So the drama continues. Last week ended with the bull-bear wrestling match in full swing. The SPX traded up to 2441 but could not break out higher. Then price collapsed lower to 2431 but then bounced sharply higher to end the day at ... wait for it....2438. The 2438 level is a popular pivot point and remains in play on Monday morning. Adding to the excitement is the chart above with the 8 MA resistance at 2438.64, the SPX price at 2438.30 and the 34 MA support at 2437.53 to end the week. The bulls are favored in this VST time frame as evidenced by the 8 MA above the 34 MA, however, it remains a crap-shoot since the moving averages and price all sit on top of each other at 2438. Flip a coin. The bulls and bears have plenty to think about before trading begins tomorrow morning. The stock market is a huge bull versus bear tug-o-war struggle and the center of the rope is at SPX 2438 to begin the week. Who will win?

Thursday, June 22, 2017

CPCE Put/Call Ratio and SPX S&P 500 Daily Charts

The CPCE put/call ratio plummets to a low not seen in over one-half year. The 0.50 reading indicates that traders are complacent. There is no fear that the stock market will ever go down. The central bankers keep pumping equities higher to reward the wealthy (that own large stock portfolios) so there is no reason to worry. Investors are drunk as skunks performing jigs of joy as they buy stocks with total disregard for price. Every day is a party; the put/calls drop and the VIX (volatility) keeps printing a 9 and 10-handle.

The red circles show the market tops over the last year. The green circles show the market bottoms. What do you think will happen? Above the green line at 0.80 represents fear and panic and blood in the streets. Investors are screaming and panicking, some jump out of windows; hopefully they are only on the first floor. This panic tells you to buy the stock market with both hands.

If you have been contemplating cashing out of some long positions, the chart above tells you to hurry up and throw them overboard and nibble on the short side. The stock market would be expected to top out at any time, any  hour, any day ahead, due to the rampant complacency, and tumble lower giving all the fearless people something to worry about. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

WTIC Oil Weekly Chart; Oversold; Positive Divergence Developing; Lower Band Violation

WTIC continues moving lower but this morning is attempting to steady itself at 42.77. Looking back, that green inverted head and shoulders (H&S) pattern is text book but after price broke above the neckline at 50 it was unable to remain above. The inverted H&S remains in play and the price action now can be considered  a new right shoulder forming. The head at 29 and neck line at 50 is a 21-point difference so a serious upside breakout would target 71.

Alas, oil prices sink lower. Price violates the lower standard deviation band so the middle band at 49.56, and falling, is on the table. The stochastics are oversold and the money flow is positively diverged wanting to see a bounce in the weekly time frame. This gels with the daily chart that is open to some recovery upside over the coming days.

However, the RSI and MACD line remain weak and bleak wanting lower lows in price after any bounce occurs. The indicators favor lots of sideways ahead perhaps through the white channel. Note the large selling volume over the last five weeks.

The expectation is for a bounce in the near-term any day forward and a week or so of up, then back down to the current lows and lower for a week or two after that and that price low may serve as the low for the weekly chart in that 41.0-42.5 range. Then prices likely move sideways to sideways higher going forward. The set up is not attractive for trading and Keystone has no positions in the oil patch since choppy sideways may be the path ahead. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Wednesday, June 21, 2017

WTIC West Texas Intermediate Crude Oil Daily Chart; Oil Descends Into Bear Market; Lower Band Violation; Oversold; Positive Divergence

Keystone highlighted the Death Cross when it occurred at the end of May and early June. All the oil bulls that were long oil from 50 pooh-poohed the Death Cross laughing at anyone that pays attention to such foolish chart indications. Well, they are not laughing anymore as they sit in front of the computer shirtless with oil printing a 42-handle.

The drop from the February top at 55 to yesterday's low at 43 is a -22% drop. The price sits at 43.51 in the chart which is a -21% drop from the top. Oil is officially in a bear market. When a stock or index falls -10% that is deemed a correction. A drop of -20% is a bear market. Thus, oil has dropped from the correction phase into bear market territory.

Now that oil has plummeted, the silly humans are wringing hands and professing that oil is doomed going forward. Of course that negative sentiment and the chart indicators above will bounce price in this daily time frame. The indicators are universally positively diverged (green lines) as price prints a new low signaling that price wants to bounce and recover to take a breath from the massive drop. The stochastics are oversold also agreeable to a bounce.

Price has violated the lower standard deviation band (purple) so the middle band at 47.15 and dropping is on the table. The middle band, which is also the 20-day MA, is falling sharply and will likely line up with that 45.50 resistance level. The positive divergence may bounce oil price to the 44.4-45.5 area over the coming days. Keystone does not hold any positions in the oil patch currently.

Oil is at levels not seen since last November. Moving under 42 will likely send the price to 37-38. The oil bulls have a shot at stabilizing prices if they can maintain this sideways range at 42-46 for a few weeks. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Thursday Morning, 6/22/17: WTIC continues slipping lower yesterday down -2.2% to 42.53. Currently, oil is at 42.79. The MACD line makes a lower low on the daily chart so the psoitive divergence on the other indicators should bounce price, in the daily time frame, then price will likely come down once again, at that time a more firm base is likely for the daily time frame (so a day or two of up then a day or two of down then several days of up). Oil is likely headed for lots of choppy sideways action. If short the last couple weeks it is likely best to exit the trade. OI is not attractive long or short now since choppy sideways is likely the direction ahead. Brent oil joins WTIC in bear market territory. Brent oil is now down more than -22% off its February top.

YC2YR US Treasury Yield Curve 2-10 Spread Weekly Chart; Record Narrowing to Decade Lows

The 2-10 yield spread is under 80 bips again this morning to 79.5 basis points teasing levels from last year and from late 2007; one-decade lows. The 5-30 spread is also indicating a flattening yield curve at the narrowest levels since 2007.

Treasury yields are; 2-year 1.35%, 5-year 1.76%, 10-year 2.15%, 30-year 2.73%. The 2-10 spread is 80 bips and the 5-30 spread is 97 bips. German 10-year bund yield 0.25%. The US-German 10-year yield spread is 190 basis points and narrowing.

Comically, the television pundits, commentators and money managers are all standing on soap boxes proclaiming that the banks are the best investment going forward. Fred Fafooshnik, a retiree that sits each morning at the local coffee shop, is bragging that he took his entire life savings and placed it into the banks just like the guy on television advised.

Banks need a steeper yield curve to make lots of dough not a flattening yield curve. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Tuesday, June 20, 2017

Keybot the Quant Turns Bearish

Keystone's proprietary trading algorithm, Keybot the Quant, flips to the short side today at SPX 2242. Market bears need to see VIX above 11.62 and the stock market will be flushed strongly lower. Market bulls need either JJC above 29.41 or RTH above 81.50 to stop the stock market selling and restart the rally. If volatility remains bullish and copper and retail stocks bearish, the stock market will stagger along sideways with a slight downward bias.

As always, stay alert for a potential whipsaw tomorrow. More information can be found at Keybot's site;

Keybot the Quant