Thursday, February 15, 2018

Keybot the Quant Turns Bullish

Keystone's proprietary trading algo Keybot the Quant flips to the bull side on Valentine's Day at SPX 2679.

Keybot the Quant

Sunday, February 11, 2018

SPX S&P 500 Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 2/11/18

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for the trading week of 2/12/18. Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and important S/R.

The all-time record high print for the S&P 500 is 2872.80 on 1/26/18 and the all-time closing high is 2872.80 on 1/26/18. 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 2018, the intraday high and closing high is 2872.80. The negative market action took out the lows for the year which printed on the first day of trading for 2018 on 1/2/18. For 2018, the intraday low is 2532.69 (12-month MA 2532) on 2/9/18 and the closing low for this year thus far is at 2581.00 on 2/8/18.

Former Federal Reserve Chairman Bernanke implemented QE1 in March 2009 to save the US stock market and protect the wealthy elite class that own large stock portfolios. Nine years later, the global central bankers continue colluding and coordinating their Keynesian monetary policies sending world stock markets to all-time record highs in January 2018. The central bankers are the market.

Retail investors got caught up in the daily stock market news hype and bought equities with both hands into the euphoric joy on 1/26/18. That was the peak of the party. Sucker Joe Sixpack shows up to hold the bag as usual. It has been two weeks of down ever since 1/26/18 with the Dow logging two down days in excess of 1,000 points last week; the biggest drops in stock market history.

The SPX sold off hard due to the rampant complacency and fearlessness in markets as indicated by the low VIX and low CPC and CPCE put/call ratios. Stocks have been spanked down due to the complacency and the spike in the VIX created a catastrophic failure in short-volatility products that exacerbated the selling. The put/call ratios have spiked to levels that now indicate a tradeable bottom developing and nibbling on stocks on the long side can begin.

Pundits proclaim that stocks sold off due to the bump higher in the annual wage number in last Friday’s job report which they say indicates that inflation is rising. The majority of market participants say that inflation is finally appearing and started throwing bonds and notes overboard like crazy (lower note and bond prices higher yields). The 10-year yield is teasing resistance at 2.87%-2.89%. Keystone continues to think that inflation is Godot.

On Wednesday, the CPI (Consumer Price Index) inflation data drops at 8:30 AM EST and this will be an epic market event. Treasury yields will react wildly. The PPI data drops on Thursday morningStock market fans and groupies are already sleeping out in front of the CPI inflation tent ahead of the Wednesday morning release. The CPI inflation data on hump day morning will be an epic data point that tells market participants if inflation is the path ahead, or, if disinflation and deflation remain the chosen way forward.

Wednesday is also the day for lover’s Valentine’s Day so don’t forget your honey or you will spend the evening with Fido in the garage. Ash Wednesday is also on tap that starts the Holy season of Lent. Easter is six weeks away. A partial solar eclipse takes place on Thursday and the new moon peaks for the month at 4:05 PM EST on Thursday a few minutes after the closing bell. Stocks are typically weak moving through the new moon each month.

The lunar eclipse occurred on 1/31/18, which was also the peak for the full moon this month. Stocks are typically bullish through the full moon each month. The stock market basically topped out right on the lunar eclipse event. What drama is in store for the partial solar eclipse this week?

Retail Sales are key on Wednesday. Manufacturing data is key on Thursday with the Philly Fed, Empire and Industrial Production releases. On Friday, the key Housing Starts number hits and then Consumer Sentiment one-half hour after the opening bell.

The stock market is closed for the President’s Day holiday on Monday, 2/19/18. Stocks are typically bullish the two days in front of a three-day holiday weekend so equities may be buoyant later in the week into next weekend. It is interesting since new moon weakness will be fighting holiday joy on Thursday and early Friday.

The stock market is trading on emotion currently. Wild swings are occurring in each direction due to the elevated volatility. These intraday and day to day price swings will continue as long as the VIX remains elevated. Price is pivoting at the key moving averages (MA’s) as highlighted in the list below so focus on these levels as key support and resistance.

The S&P 500 begins the week at 2620. The strongest support/resistance for the SPX (S&P 500) is 2660, 2639-2653 resistance gauntlet, 2634-2635, 2625-2630, 2620, 2606, 2601, 2595-2597, 2575-2588 support gauntlet, 2564-2567, 2560, 2551, 2548, 2539-2541, 2532-2535.

On the bull side, the key is moving above 2639-2640 which will create upside joy. Watch the 100-day MA at 2639-2640, 6-month MA at 2643 and 20-week MA at 2652-2653.

On the bear side, the key is to push down through 2606 and 2601 which sets up the test of that important and strong 2575-2588 support gauntlet. The 150-day MA is 2581. If the 2575-2588 fails, watch the 10-month MA at 2564. If this fails, markets are in very serious trouble and will be sucked lower. If 2564 fails, the 200-day MA support at 2539 is next. If 2539 fails, a test of the extremely critical 12-month MA at 2532 is on tap. This is Keystone’s “cliff edge.” If SPX 2532 fails, stocks will remain weak for many months and likely the next year or two. If 2532 fails, as they say in Brooklyn, “It’s ovah.”

If you find this key stock market technical information (that is not available elsewhere) useful, flip the sofa cushions over, rummage through the kitchen junk drawer and search under the car mats for loose change. Send that booty in to support and continue The Keystone Speculator, Keybot the Quant and Keystone the Scribe blog sites.

Note: If the list below displays any blank spaces, view it in the Google Chrome browser. If you experience any difficulties viewing the blog sites or in disabling Adblock, you have to view the sites in Google Chrome. The data is current up through 2/11/18.

3020
3000
2890
2880
2873 (1/26/8 All-Time Intraday High: 2872.80) (1/26/18 Intraday High for 2018: 2872.80) (1/26/18 All-Time Closing High: 2872.80) (1/26/18 Closing High for 2018: 2872.80)
2874
2871
2867
2854
2853
2851
2849
2848
2846
2845
2842
2839
2838
2836
2835
2833
2832
2831
2825
2824
2823.81 February Begins Here
2822
2818
2816
2813
2810
2809
2808
2807
2806
2803
2802
2799
2798
2793
2788
2786
2785
2778
2776
2775.27 (20-day MA)
2770
2769
2768
2763.39 Previous Week’s High
2763
2760
2759
2759
2753
2751
2749
2748
2749
2748
2746
2743
2740.27 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2738
2736
2731
2729
2728
2724
2719.13 (50-day MA)
2719
2714
2713
2700
2698
2696
2696
2695 (12/18/17 Intraday High: 2694.97)
2693
2688
2686
2683
2682
2681
2679
2676
2674 (12/29/17 Intraday Low; 2673.61)
2672
2670
2668
2666
2665 (12/4/17 Intraday High: 2665.19)
2664
2663
2662
2661
2660
2659
2658
2657
2653 (12/13/17 Intraday Low: 2652.85)
2652.51 (20-week MA)
2652
2651
2649
2648
2646
2645
2644
2643.20 (6-month MA)
2642
2641
2640
2639.50 (100-day MA)
2639
2638.67 Friday HOD
2637
2635
2634
2630
2629
2628
2627
2626
2625
2620
2619.55 Friday Close – Monday Starts Here
2606
2605 (12/1/17 Intraday Spike Low: 2605.52)
2601
2600
2599
2597 (11/7/17 Intraday High: 2597.02)
2595
2591
2588
2585
2584
2581 (2/8/18 Closing Low for 2018: 2581.00)
2580.92 (150-day MA; the Slope is a Keystone Cyclical Signal)
2580
2579
2578
2575
2573
2569
2567
2566
2564
2563.63 (10-month MA)
2560
2555
2551
2549
2548
2545
2544 (10/25/17 Intraday Low: 2544.00)
2541
2540
2539.26 (200-day MA)
2538
2535
2534
2532.69 Friday LOD
2532.69 Previous Week’s Low
2532 (2/9/18 Intraday Low for 2018: 2532.69)
2531.94 (12-month MA; a Keystone Cyclical Signal; the cliff)
2530
2529
2521
2520
2519
2512.36 (50-week MA)
2512
2510
2508
2507
2500
2497
2496
2488 (9/25/17 Intraday Low: 2488.03)
2484 (7/27/17 Intraday High: 2484.04)
2483
2482
2481 (8/7/17 Closing High: 2480.91)
2480
2478 (7/27/17 Closing High: 2477.83)
2477
2476
2475
2472
2469
2468
2465
2454 (6/19/17 Intraday High: 2453.82)
2453 (6/19/17 Closing High: 2453.46)
2450
2448
2445
2443
2442
2441
2439
2438
2436
2434
2431
2429
2428
2426
2423
2422
2419
2417 (8/21/17 Intraday Low: 2417.35)
2416
2415
2412
2406
2405.12 (20-month MA)
2404
2401 (3/1/17 Intraday High: 2400.98)
2400
2396 (3/1/17 Closing High: 2395.96)
2394
2390
2389
2387
2382

HYG High-Yield Corporate Bond ETF Weekly Chart

Keystone called the top in the high-yield instruments with the negative divergence and rising wedge (red lines) and the spankdown occurs. It is hard, fast and nasty as the collapses from rising wedges typically are. Watch HYG and JNK since further weakness in the high-yield area will forecast further weakness for the stock market. 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 S&P 500 Daily Chart; Moving Averages Support/Resistance

The SPX collapsed down through the ribbon of moving average support lines. In late January, price was at nosebleed levels above the moving averages requiring a mean reversion lower and when it happened it was jaw-dropping. On Friday, the drama was around the 150-day MA at 2581 and this was not even reported by the business media. this battle continued until price lost the 150 which opened the door to test the 200-day MA at 2539 another important and key level.

However, the 12-month MA at 2532 was actually the most important support level and that is exactly where price bounced. The buy programs then went crazy launching price into the weekend. The SPX rocket launched up to the 100-day MA at 2639 and whack, price hits its head on the ceiling and crumbles lower remaining between the 100 and 150. The robots are in full control as evidenced by price pivoting at key moving averages. Use the moving averages as a guide for the week ahead.

The RSI and stochastic are oversold agreeable to a bounce in price. With the lower low in price, the RSI, histogram, and stochastics are positively diverged which creates the Friday intraday pop. The MACD line and money flow are weak and bleak wanting another low in price in this daily time frame, after a bounce, before the firm green light could be given for the upside relief rally. The markets are very emotional and news-driven at the moment, however, and still need a few days to settle. A key factor is if the short-volatility products stabilize. 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. 

SCO Daily Chart

SCO, the oil inverse ETF, receives the rocket launch forecasted. Remember the oil COT and candlestick charts were calling for a top in oil so SCO was set to jump. The indicators displayed universal positive divergence. The RSI and stoch's were coming off oversold levels. Price makes a double bottom. All these indications are bullish and voila, the possie d rocket fuel launches the SCO sharply higher.

Keystone is out of SCO; no use to get greedy past the 50-day MA at 24.05. Note the long and strong indicators so SCO will likely make higher highs in this daily time frame. This gels together with the US dollar chart that wants to see a bit  more lift. The stronger dollar slaps oil, gold and other commodities lower.

SCO should come back to kiss the 50 at 24.05. When it does, and is making its bounce or die decision, a bounce means the higher highs are on the way. A failure below the 50-day and price will likely drop to the 20-day at 21.62 which also needs back kissed.

Note the strong price support from mid-January at 22-ish. So perhaps SCO can be reloaded if it drops into the 21.62-24.05 area. The weekly chart is favorable to more up which means oil may stay soggy into spring time, also, the SCO will likely migrate towards and into that 26-30 congestion area (56-58 for WTIC crude oil; the 200-week MA support for oil is 56.28). 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. 

TNX 10-Year Treasury Note Yield Weekly Chart; Negative Divergence Developing; Upper Band Violation; Doji Candlestick

The TNX weekly chart prints a doji last week which typically hints that a trend change is on the table. The yield has printed above the upper standard deviation band for two weeks and desperately needs to back kiss the middle band, which is also the 20 MA, at 2.46% and rising.

Yield makes a higher high with the RSI and stochastics going negge d. The MACD line remains long and strong, however, wnating another higher high in this weekly time frame after a pullback.

Note that over the last year, the yield is higher but the indicators are negatively diverged. This tells you that over the intermediate and long term do not get excited about rates rising rapidly. The chart indicates more of a choppy sideways move for the months ahead.

The gray lines show the two-leg bull flag pattern that played out. Leg one is from 2.03% to 2.48% a 45 bip pop. Then textbook consolidation sideways with a slightly lower bias, then the second leg begins at 2.30% which targets 2.75% which was achieved. 

The weekly chart wants the yield to relax back to the 2.70% to 2.75% range in the days ahead, or week or two. The MACD line in the weekly above, however, will want to send the yield higher which will likely take out the 2.87%-2.89% resistance but any further upside in yield should be somewhat limited.

The 10-year may top out in the 2.87%-3.00% on this weekly chart then chop sideways for many months through 2.50%-2.90%. Things can change quickly. The CPI data drops on Wednesday and this inflation data may be the most important event of the week. Yields will immediately react at 8:30 AM EST Wednesday morning. The PPI drops on Thursday morning. 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. 

TNX 10-Year Treasury Note Yield Daily Chart; Overbot; Negative Divergence; Upper Band Violation

As December began, the standard deviation bands are squeezing in tight (pink arrorws) so youi know a huge move is coming but the tight bands do not forecast direction. And boinnngggg. The move is higher in yields (lower note and bond prices). The Aroon cross (green circle) was the go signal for higher yields ahead.

The red lines show overbot RSI and stochastics and negative divergence across the indicators. The MACD may have a tiny sliver of life left but that would likely only cause a bump higher in yield for one day or so then the 10-year yield should roll over to the downside. The chart is weak and wants lower yields ahead.

The upper band is violated so the middle band at 2.70% and rising is on the table. The daily chart indicates a preference for the 10-year yield to move downward towards the 2.70%-2.75% range. The 2.87%-2.89% resistance is key.

The TNX weekly chart will likely top out during this month and early March. The daily chart above shows a pull back in yields for the coming days or week or so but then yield will likely move higher again to satisfy the weekly chart. A more significant top in yields should occur late this month or in early March so the 10-year may move up to 2.90%-3.00%. However, at that point the yield will likely spend many months bumping along sideways through 2.50%-3.00%.

After a few months of sideways, yields should then sneak higher into the end of the year. Of course the charts will have to be monitored. A recession or other events can change the direction of yields quickly. The CPI data drops on Wednesday and this inflation data may be the most important event of the week that will move yields.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. 

USD US Dollar Index Daily Chart

The rise in the US dollar sends the commodities lower including oil that smacks the energy stocks lower. The green lines show the falling wedge pattern, oversold RSI and stochastics and positive divergence across all the indicators which made the bounce an easy call. Plus, the drumbeat of negativity from pundits and media for the dollar created the conditions for price to pop instead.

The Aroon has not yet crossed so watch that to see if the upside move in USD continues. The stochastics punch up into overbot territory which hints that day or two of rest will be needed for price in the days ahead. The RSI is crossing above 50% which is bullish. The indicators are long and strong wanting higher highs in price after any pullback occurs in this daily time frame.

The lower band was violated so the middle band was on the table and the dollar tapped that at 89.66 with no problem. USD continues higher now seeking the upper standard deviation band at 90.94 and falling. It is reasonable to expect USD to move up into those resistance lines at 90.4-90.9 in the days ahead.

Typically, the US dollar is weak from July to December and strong from January to April which gels together with the technical analysis presented here.

The USD weekly chart bounced price with positive divergence and is agreeable to more up ahead on the weekly basis. The USD monthly chart is setting up with positive divergence but the MACD line remains weak and bleak. Thus, the dollar will likely move sideways to sideways higher for the days and a few weeks forward. However, USD will then likely roll over again and then retest the lows for this year. That would be expected to be a long-term bottom for the dollar say it forms in the March-June time frame. So the dollar should then be rising through through the back half of this year and into next year. A buoyant dollar will stop the euro from rising which will make ECB President Draghi happy.

The dollar should move through 90.0-91.5 for the coming days and weeks say a month or two. Then the dollar will roll over to the downside again and come down to 88.0-89.5 say April-May. Then after that, the dollar should trend slowly higher, sideways to sideways higher through this year and probably all through 2019. It will depend on how the chart progresses. 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. 

NYA NYSE Composite Weekly Chart; 40-Week MA Cross Dictates Cyclical Bull Market Versus Cyclical Bear Market

During the market excitement last week, on Friday, the NYA lost the key 40-week MA at 12240-12246, which will usher in a cyclical bear market. The bulls managed to rally stocks into the closing bell and the NYA recovers above the critical 12240-ish. Watch the NYA 40-week MA since it tells you a lot about the direction of the stock market 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. 

SPX S&P 500 Monthly Chart; 6, 10 and 12-Month MA's

While everyone was focused on the 200-day at 2539, the real test that was occurring was for the 12-month MA at 2532. The SPX LOD was 2532 on Friday and price bounced. The algo buy programs kicked in since the 12-month was defended. The SPX 12-month MA cross is a major stock market signal; Keystone calls it "the cliff." A sustained failure of the 12-mth MA is the official stake through the stock market's heart that guarantees bear market weakness ahead for many months and perhaps a year or two. The test was key. And price may come down to test again.

The 6-month MA is important from a general market-trend basis. You want to watch it since price falling through the 6-month MA is negativity that must be appreciated and respected going forward for the months ahead. The SPX price is under the 6-mth MA at 2643 which is extremely problematic for the stock market. You may see drama around this level in the week ahead.

The 10-month MA at 2564 is very important and followed by Wall Street old-timer's. The 10 and 12-mth MA's are also programmed into many algorithms. The Keybot the Quant algorithm has the SPX 12-month MA programmed into its model. Friday's price action obviously proves how important these support levels are. The 10-mth MA is an initial warning that the stock market has cracked and in serious trouble. Watch for potential drama around 2564 this week and the bounce or die decision that may occur there will immediately tell you the fate of the stock market going forward.

The bulls have lots of homework to do to right the stock market ship. For starters, the bulls need to boost the price above that 6 MA at 2643. That would be a sign of upside strength. The bears need to push price lower under 2564 which will create further market carnage. If 2532 fails, it is over for the stock market. 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.