Tuesday, March 3, 2015

Keybot the Quant Turns Bearish

Keystone's proprietary trading algorithm, Keybot the Quant, flips to the bear side at SPX 2104 at 11:33 AM EST. JJC is under 32.01 causing the market weakness. The bulls must push JJC back above 32.01 to stop the negativity. If JJC stays under 32.01 and UTIL under 596 the bears should be fine. As always stay alert for any potential whipsaw. More information is found at Keybot's site;

Keybot the Quant

Monday, March 2, 2015

SPX Daily Chart Upward-Sloping Channel Overbot Negative Divergence Developing

Last week, the indicators on the SPX daily chart was showing some near term juice so a move higher was expected and is occurring. The chart is negatively diverged across the four-month time frame and the very near term (the last few days) except the MACD line (neon green line) that wants another high in price. The rising wedge, overbot conditions and neggie d created the spank down four days ago but the MACD was not quite ready. Note, however, that the MACD is neggie d over the four-month period a sign of weakness. So the bears are all set to sell the market except for that pesky MACD.

Price has touched the upper or lower rails of the upward-sloping channel 8 times since December so that red channel carries some clout. Perhaps price will seek the lower rail again now down at 2010-2025. Price also needs to back kiss the 20 and 50-day MA's especially the 20-day MA at 2084 and rising. The bears are beaten everyday for the last month but they will fight back starting anytime over the next 1-3 days.

The projection is that price comes up for another higher high either today, or tomorrow, or even Wednesday but when that occurs the MACD line should print negative divergence (the MACD will stay below that thin red line in the right margin) and that will lock in neggie d with all indicators in both the few-candlestick period and the four-month period and begin smacking price lower. The full moon hits on Thursday at 1 PM EST and stocks are typically bullish moving through the full moon, so this throws a wrench in the works. The SPX needs to print the higher higher in price to lock in the neggie d on the MACD, so the best thing for bears would actually be for price to rally higher and place the top today. If not, perhaps price comes up for the top tomorrow. If not, and price sells off for a day or two, without printing the higher high in price, it will still want to come back up so that may be in concert with moving through the full moon. Thus the bulls may be able to keep things elevated this week but even so the upside appears very limited.

To move away from that windbag rambling, in a nutshell, the SPX should top out any day, you will see the neggie d on the MACD and that will send price lower to the 20 and 50 day moving averages and then perhaps the lower rail of the channel. Sideways to sideways down going forward. 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 8:39 PM: The bulls ran stocks higher in the afternoon with the SPX printing a new all-time closing high at 2117.39 but not a new all-time high. So price comes back up for a matching or higher high just as the long and strong MACD over the last few days wanted (as discussed above). With today's elevated price, the MACD remains below the peak from 3 or 4 days ago, thus, neggie d and the chart is set up for the bears to begin a spankdown. However, since price has a big up today a further move up is likely (momentum) with price taking out the all-time high at 2119 and change; its only a couple points higher. Watch the MACD line; as long as it does not come up above the peak from a few days ago, the bears will create a spankdown for stocks beginning tomorrow or Wednesday. If the MACD line edges up above the high from a few days ago, the bulls have more gusto for a few more days when the top will print. The guess would be a print at 2018-2022 tomorrow which serves as the near term top in the market probably after lunch time. If the MACD prints higher, then the top will likely occur the end of the week or early next week at 2025-2032. Copper is trading weak and this will create market weakness if it remains in place overnight.

Note Added 2:35 PM EST on Tuesday afternoon, 3/3/15: The bears came to play today from the get-go spanking equities down due to the neggie d. Copper weakness sends stocks lower. Watch the bull-bear level at JJC 32.01 (identified by the Keybot the Quant algorithm) to see if bulls can stage a comeback. JJC is at 31.78 in the bear camp causing market weakness.

COMPQ Nasdaq Composite Monthly Chart Overbot Negative Divergence Developing

The previous SPX monthly chart (type symbols in the search box at the right margin to bring up a chart of interest) is negatively diverged across all indicators and the Dow Industrials (INDU), is the same set up. So the S&P 500 and Dow are content in rolling over going forward and calling the current levels a multi-year top. The Russell 2000 small caps monthly chart is also in the same camp with SPX and INDU willing to roll over and die.

And then there's the tech and biotech heavy Nasdaq that hits 5000 today smacking the bears in the face. The central bankers are powerful and the latest goose to the stock market is by the PBOC (China) with a rate cut over the weekend. The NXPI and FSL merger announced this morning creates joy in tech land as well. The main thrust higher is due to the largest company in the world; Apple. Retail traders are caught up in the Apple hype and have been buying AAPL regardless of price since November. This thrust higher launches the COMPQ above 5K.

The red lines show the rising wedge, overbot conditions and neggie d  that created the December-January spank down but note that pesky MACD line that continued to slope higher long and strong. After any pull back it wanted the Nasdaq price to come back up one more time; and it did in February. So the higher high in price now, both in February and now a higher high in March, the indicators are all negatively diverged, except the pesky MACD line. If markets collapse this month, the MACD line may drop negative to lock in current highs as the multi-year highs, however, the more expected path would be a down up down pattern. The green circle shows the MACD remaining long and strong (sloping higher). The other indicators are all negatively diverged (sloping lower) with the higher high in price so a spank down should occur this month, however, the strength from the MACD wants price to come up one more time, then the index should roll over with a multi-year top in place.

Price is far extended above the moving averages needing a mean reversion lower. The selling volume in Dec-Jan was lower than the buying volume in October (which was caused by obscene global banker intervention that stopped a market crash) so that provided a feather in the bulls cap. The bears needed to push lower harder. So price mounts the big up in February for a new high and now a new 15-year high to begin March. The buying volume is weaker than both December and January so that is a feather in the bears cap. The bulls needed to push higher harder.

Projection is for the Nasdaq to sell off in March-April, then come back up to the current highs above 5K again in April-May then roll over with a multi-year top printing. The SPX and Dow may roll over at any time and do not have a reason to print higher highs so their negativity may drag the Nasdaq lower sooner rather than later as well as limit the recovery move higher for the Nasdaq. The Nasdaq has a six-year rising wedge pattern which is very ominous since the collapses from rising wedges can be quite dramatic. The projection is that the major indexes top out at anytime from now through May printing a multi-year top. Obviously, if AAPL begins dropping in force it will drag the indexes lower just as it dragged the indexes higher the last few months. 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.

COMPQ Nasdaq Composite 1-Minute Chart NASDAQ PRINTS 5000 FIRST TIME IN 15 YEARS

The Nasdaq prints 5K for the first time in 15 years at 10:29 AM EST on 3/2/15; levels not seen since the tech bubble in 2000. The Nasdaq all-time high is 5132.52 on 3/10/00 and all-time closing high is 5048.62 on 3/10/00; so there is more work to do for the bulls. In addition,  the inflation-adjusted high for 5K in 2000 is 7K nowadays. Thus, 7K is needed to compare equally to the dotcom bubble at 5K.

Nonetheless, congratulations to the bulls, or more correctly, congratulations to the central bankers now acting in collusion around the world. The PBOC rate cut is the latest global goose that can be given credit for pushing the Nasdaq higher. NXPI and FSL announce a merger deal that will create a $40 billion company creating a boost in semiconductors and the Nasdaq. AAPL trades higher boosting the Nasdaq and is the key influence in sending the COMPQ above 5K. 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.

SPX Monthly Chart Overbot Negative Divergence

The monthly charts receive new prints last Friday as February ends. Today is the first trading day of March so a new candlestick will begin and remain active for the next 22 trading days until EOM and EOQ1 on Tuesday, 3/31/15. Keystone has been highlighting the monthly charts over the last few months to identify where the multi-year top will potentially print. The red lines show the rising wedge pattern, overbot conditions and negative divergence across all indicators that occurred with the higher price high in December, thus, a smack down occurs in January.

There was no reason for price to come back up since the neggie d with the indicators shows that the rally is completely exhausted. Six years is a long way for this bloated bull to run. But price does come back up for a higher high constantly fueled by central banker happy talk. The maroon lines show price with a higher high and the indicators remaining universally negatively diverged so a spank down is anticipated for March. Note the MACD cross is positive so the market bears need this cross to turn negative asap. If the MACD cross remains positive the bear case will not arrive and stocks will remain at elevated levels. Price is extended far above the moving averages requiring a mean reversion.

The green lines for the indicators show how the long and strong profiles kept sending prices higher. Negative divergence was appearing last year and created the strong smack down in October but back then the RSI and MACD were long and strong wanting to see one more high in price, which occurred in December and that ushered in the neggie d and the retreat. The chart is very negative sans the MACD positive cross.

In January, price dropped into the same range as the October sell off but note that the selling volume is not larger than the buying volume in October. The central bankers came out with guns blazing in October to prevent a market crash so it is understandable that the volume sky rocketed with the easy money flooding into markets in waves. Since volume was not robust to the downside in January, the bulls puffed out their chests and ran stocks higher in February. Note, however, with that record-setting February rally, the major indexes up +6% and higher, that buying volume could not surpass January's selling volume. This helps the bear case for March.

The chart says a multi-year top is in place for the stock market and a high print would be expected anytime say now through May with sooner having more clout than later. Cash is a position; it would be prudent to exit any long stock play that you are not willing to hold for a few years time. If you are a die-hard bull, and addicted to the six-year rally, at least make sure your current long plays are liquid with millions of shares traded daily not thousands. That way, if the hammer is lowered, you will at least be able to get out that tiny exit door as everyone else jams their way through. Projection is sideways to sideways lower going forward. In addition, as pointed out several times, the long term SPX monthly displays an ominous rising wedge pattern and the collapses from rising wedges can be quite dramatic. 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.

February Publication of the Daily Chronology of Global Markets and World Economics Available from Amazon

The February publication of the Daily Chronology of Global Markets and World Economics 2015-02 is available through Amazon (AMZN). February is another wild month for markets. Stocks were trading choppy sideways chewing up bulls and bears but the bulls win out in February catapulting markets higher on the Ukraine ceasefire, Greece bailout and central banker happy talk. Deflation remains rampant in Europe. Global stock indexes are printing record highs with bond yields at record lows. One-third of Europeans bonds are trading negatively!

The West Coast dock slowdown created angst. Chinese rings in the lunar New Year; the "Year of the Sheeple." Net neutrality is approved changing the internet forever; the government steps in to fix problems that do not exist. The Holy War waged by ISIS Islamist radicals against Christians and Jews continues. Social unrest and wars continue around the world. Ukraine fighting is ongoing despite the ceasefire. ISIS Islamist radicals are performing genocide against Christians and Jews while the world looks on.

The chronology records economic history in real time preventing revisionist tampering in future years. Many of the same asset managers telling everyone to go long the market in 2008 are repeating the same mantra these days. Their quotes and words are recorded. Perhaps they are correct with their market cheer leading; perhaps they are not.  If a multi-year top prints during the weeks ahead, the chronology serves as the most accurate accounting of the market topping process. The chronology is the most reliable and easy to understand source on the web or in hard print explaining global markets.

As always, all monthly publications are available from the links in the left margin. We are living through historic stock market and economic times. The daily chronology is the most accurate accounting on how a potential epic stock market top forms in real-time. The detailed chronology prevents the writing of revisionist history in the future.The monthly publications are compatible with most electronic devices and include an extensive Business Acronym List and Ticker Symbol List. The Acronym List is the most comprehensive list available on the internet. The chronology is not available in hard copy and only distributed around the world electronically.

Daily Chronology of Global Markets and World Economics February 2015-02

Saturday, February 28, 2015

BPSPX Bullish Percent Index Daily Chart

The BPSPX remains on a double whammy market buy signal after reversing six percentage-points as February began and then crossing above 70%. The bulls are in charge in the stock market unless the bears can create a six percentage-point reversal. BPSPX topped at 76-ish so the math is simple for the bears; cross 70% to the downside and all Hades will break loose with the stock market selling off in force. If BPSPX remains above 70, the bulls remain in charge walking along easy street. 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, February 27, 2015

SPX 2-Hour Chart

The SPX 2-hour chart motors along after the negative divergence smack down (red lines and red arrow). The rising wedge patterns and overbot conditions also created the downside move. The bears do not have much gusto, however, as bulls keep copper elevated and volatility low to prevent any downside traction. The SPX 30-minute chart shows a sideways dance currently. The indicators above show the MACD line with a negative cross and weak and bleak profile (the slope of the line is down). The stochastics and ROC are also weak and bleak over the last few hours. The RSI and histogram are flattening in concert with the sideways action shown on the 30-minute chart.

The weak and bleak indicators show that a lower low for price is likely after a bounce for a candlestick or two. So the expectation would be for price to move sideways to sideways lower until the indicators positively diverge. The stoch's are under 50% in bear territory. Watch the RSI to see if it goes sub 50% into bear territory since that will forecast further downside ahead for price. The longer that the RSI stays above 50% the more likely that bulls will take the stock market higher. 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 4:35 PM: The SPX drops to 2104.49 at the closing bell a lower low. With t he lower low in price the indicators are all weak and bleak (sloping lower) and the RSI is down to 48% in bear territory. The weak and bleak  indicators want lower lows in price after any bounce occurs in this 2-hour candlestick time frame. Bears should be able to keep price weak for a few candlesticks which would take markets into Monday afternoon or Tuesday morning. Note how, as previously mentioned, February finished the month weak because the month was strongly up; you typically see this behavior after a very strong month. Also, February typically finishes weak, which it did. The monthly charts receive new prints today. A quick look at the SPX monthly shows the universal negative divergence remaining in place which predicts trouble ahead and would be in agreement with a multi-year top at hand. The Dow monthly chart is also the same set up with negative divergence, overbot conditions and a rising wedge. Ditto the RUT (Russell 2000). Ditto the Nasdaq, however, the pesky bulls are tough, and the MACD line squeezes out a slightly higher high. This may extend the top in the COMPQ for an additional one to three months. So those charts say down in March perhaps into April, then back up again in Apriil/May with the SPX, Dow and RUT not printing higher highs, but the Nasdaq will come back up to current price levels or more, then all four indexes should roll over for perhaps a muliti-year trend downwards beginning. Thus, a multi-year top may occur anytime now through May.

SPX 30-Minute 8/34 MA Cross

The 8 MA crossed under the 34 MA creating a bearish cross signaling selling for the hours ahead but the bears do not have a lot of downside juice. The bulls are keeping copper elevated and volatility low prohibiting the selling from gaining any traction. Bears are okay if the SPX stays under the 8 MA at 2110.44 moving sideways. If price moves above the 8 MA it will curl the moving average higher and chart the path to a positive 8/34 cross that would exalt the bulls to victory. Bears need to keep price under 2110 and start pushing lower.

The SPX receives the neggie d spankdown as shown by the red lines and red arrow. Price is moving sideways now. The SPX will have to make a decision within a few candlesticks which is anytime over the next couple or three hours, thus, since only 90 minutes of trading remains, equities may choose to slide out sideways into the weekend and make the decision on Monday morning. Whichever way price breaks from the blue trend lines identifies the winner.

Keybot the Quant algorithm remains long and is tracking JJC 31.98 as a key bull-bear line in the sand most influential to broad market direction currently. JJC is 32.16 which prevents the bears from making any downside progress. Market bears need JJC under 31.98 or they got nothing. Watch the SPX in relation to the 8 MA to see how the week finishes.

The algorithm also identifies UTIL 596 as a key metric for next week. UTIL is now printing 594 so bears receive a big feather for their caps come Monday morning if UTIL remains under 596. If UTIL finishes today above 596, the bulls are going to slap the bears silly on Monday. 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 2:36 PM: SPX 2109.31. The 8 MA on the 30-minute is 2110.10.  JJC 32.14. UTIL 593.80.

Note Added 2:51 PM: SPX 2106.27. The 8 MA on the 30-minute is 2109.76.  JJC 32.15UTIL 592.83. VIX is 13.77 remaining subdued helping bulls. Copper is not dropping so any weakness in stocks right now will likely recover. Utes are a touch weaker and staying under 596 so that will be ammunition the bears are gathering to fight back hard come Monday morning.

Note Added 3:02 PM: SPX 2104.60. JJC 32.15. Copper is not dropping so despite the drop in stocks, the bears likely do not have downside juice. UTIL 592.62.

Note Added 4:15 PM: SPX 2104.50. JJC 32.19. UTIL 594.19. Copper would not yield. UTIL closes under 596 and will begin under that level for Monday which will create market negativity. Bears will need to push copper futures lower overnight Sunday as well to make sure they have enough downside juice to smack markets lower. Conversely, if copper futures trade higher going into Monday's opening, and UTIL bounces above 596 after the opening bell, the bulls will continue the upside rally. Equities may have weakened into the closing bell due to the Congress continuing to work towards averting a shutdown of the Department of Homeland Security. Bears should not get too excited since copper remains elevated. Yesterday and today, that strength in copper is a big time aid for the bulls; it prevented the downside selling and is keeping stocks elevated. For the 30-minute chart above, the SPX collapses below the blue trend line down to 2104 at the closing bell. The 8 MA is 2109 so the negative 8 /34 MA cross remains in play signaling bearish markets for the hours ahead.

Wednesday, February 25, 2015

SDS Ultra Short S&P 500 2-Hour Chart Oversold Falling Wedge Positive Divergence

The drama with the SPX 2-hour chart continues with the indicators negatively diverged except for the money flow over the last few hours. Therefore, another 1 to 3 hours may be needed to plant the market top. The SPX has been moving sideways at these levels for over one day.  For a different perspective, the SDS 2-hour is shown above. SDS is an ETF that is a double inverse for the S&P 500. In other words, if the SPX goes down -1%, the SDS goes up +2%. On the other side, if you own SDS and the SPX goes up +1% you are slapped silly -2%. SH is a single ETF inverse play that moves one to one rather than the two to one.

The SDS chart above is positively diverged across all indicators (green lines) which is not surprising since we see the S&P 500 (SPX) chart negatively diverged (except for money flow still wanting some upside). The charts are mirror images of each other since they move inversely. Price is extended below the moving averages requiring a mean reversion higher (higher SDS = lower stocks). The falling green wedge and oversold conditions are two more feathers for the market bear's hats (SDS bulls). The expectation would be for price to bounce from here beginning at any time over the coming hours; it has a strong chance of moving higher before the end of the session. That means stocks should sell off. It will be interesting to see what happens.

If stocks keep moving higher, the same analysis should hold. Stocks are typically bullish during the Fed testimony and this has come true. Interestingly, during last July's testimony, the day before, and both days of the two-day meeting, were all bullish, as would be expected, but the day after the two-day meeting  the SPX dropped 30 handles. February typically finishes weak which would be tomorrow and Friday. Typically when a month is up wall to wall, like this month, the last couple days are weaker.

A breakout is occurring to the upside for stocks as this is typed with SPX above 2118 at new all-time record highs. High print is 2119.02. The money flow indicator on the SPX 2-hour remains long and strong so the bulls keep finding a way to keep stocks afloat and inch out higher highs in price. The SPX bounces three points in fifteen minutes. WTIC leaps to 50.38 so the energy and oil stocks must be boosting the broad indexes. Keystone opens a long position in SDS looking for a pull back to begin for stocks. The spike move right now is impressive; the bulls are toasting Chair Yellen as they sip the Fed wine. 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 1:40 PM: SPX HOD and all-time high is 2119.59. Energy stocks, XLE, jump +0.7% intraday in only 10 minutes time so the oil move higher creates the broad-market spurt over the last one-half hour. WTIC oil 50.20. Brent oil 60.33. You can see that oil hit 50.50 and 60.60, respectively, minutes ago with the all-time high in stocks printing, so equities are moving with the oil price.