Saturday, August 27, 2016

Keybot the Quant Turns Bearish

Keystone's proprietary trading algorithm, Keybot the Quant, flips to the bear side about noon time Friday at SPX 2166. Retail stocks failed late last week creating broad stock market weakness. Retail, volatility and commodities are the three key parameters currently controlling market direction. Keybot may whipsaw back to the long side early next week if retail stocks recover.

As always, more information is found at Keybot's site; Keybot the Quant

Thursday, August 25, 2016

VIX Volatility Daily Chart

The low volatility creates bull market joy. The green circles show market bottoms and the red circles are market tops. The 200-day MA is a critical signal and it remains higher at 16.91 giving the bull's the nod. Keystone's algorithm, Keybot the Quant, calls out VIX 14.45 as a key line in the sand. If the VIX moves above 14.45, bad things are going to start happening to the stock market. The bulls are happy and content as long as they keep the VIX below 14.45. VIX is currently trading at 13.83 inching 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 Saturday Morning, 8/27/16: The dust continues to settle after Yellen tries to flap a hawkish wing but everyone knows she is a dove, so Fischer grabs a microphone to double-down on hawkishness which creates a soggy Friday stock market. The VIX spiked above the critical 14.45 level which is very bad for stocks. Late in the Friday session, the VIX drops back below 14.45 and closes at 13.65. The bulls are not worried or concerned as long as VIX stays under 14.45. Now that it poked above, if it pokes above 14.45 again early next week, stocks will begin falling in earnest with the bears slapping the bulls silly. If the VIX stays below 14.45, stocks will recover and the bulls will be smoking expensive cigars with their feet up on the desk.

YC2YR 2-10 Treasury Yield Curve Spread Weekly Chart Flattening Yield Curves May Subside

The yield curve continues to flatten across Treasuries the chart shows the 2-10 spread at 80 bips (1.55% for 10-year yield minus 0.75% for 2-year yield equals 80 basis points). At this writing the 2-year yield is up one bip to 0.76% so the 2-10 spread flattens further to 79 bips. The yield curve has not been this flat since late 2007 (pink line). The spread came down and filled that gap from back then.

The spread between the 5-year and 30-year yields are at multi-year flatness as well. Ditto the 2-year to 30-year spread. Global yield curves are flattening. Note the flatness in the spread in 2006-2008 which led into the recession and market crash. The green lines show the rising wedge, oversold conditions and positive divergence that want to see a bounce higher in the yield spread reflecting a steepening yield curve. Banks love a steeper yield curve.

The rise in the 2-10 spread can manifest itself in a few ways. First, the 2-year spread could remain anchored while the long duration Treasuries sell off (lower prices higher yields). Second, the long duration yields can remain anchored and the 2-year yield drops. If Yellen flaps her dovish wings, the 2-year yield will drop. If she is hawkish, the 2-year yield will rise. Note the dilemma facing Yellen. If she is hawkish touting a strong economy, the 2-year yield will rise creating a flatter yield curve, hurting the banks, and stifling any economic recovery that she believe's is coming. The Federal Reserve and other central bankers are getting tangled up and caught in their sick Keynesian webs.

Another way that the spread can rise, as the chart above predicts on the weekly basis, is all yields moving higher with the long end yields, 10's and 30's, moving up at a slightly quicker pace than the short end (long end notes and bonds selling off creating higher 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.

GDX Gold Miners ETF Daily Chart

The gold miners were slapped silly yesterday down -7.1%. The junior gold miners, GDXJ, were punished -7.8%. The red rising wedge, overbot conditions and negative divergence make the top call easy a couple weeks ago. Price collapses through the 20-day MA and lost the 50-day MA at 29.06. Look for a back kiss to the 27.80-ish and 29-ish levels.

The indicators are weak and bleak. Stochastics are in the cellar, oversold, so that will help price to bounce, however, lower prices would be expected in the daily time frame. The weekly chart is nasty receiving the spank down from a rising wedge and universal negative divergence. Things do not look good for the gold miners going forward. They may receive a reprieve after Yellen's comments tomorrow morning  if so and you have wanted to exit, it is likely a good time to jump ship.

The miners are on an island above the 26.4-ish level so an island reversal pattern may occur if price falls to 26.4, then immediately gaps down to 25.4 and lower. The July-August price behavior is an M Top, or double-top, as well. Gold miners have been an orgy of joy this year with GDX rallying from under 13 to 32, a +150% gain, a double and more. The miners will likely enter a choppy sideways pattern that has a lower bias for the days and weeks 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 Daily Chart Negative Divergence Tight Bands Ready to Squeeze-Out Big Move

The market bears have all systems go for lower stock prices ahead except for one thing; Fed Chair Yellen, Queen of the Doves, speaks from the Jackson Hole Economic Symposium at 10 AM EST Friday morning (3 PM London; 4 PM Frankfurt and Paris; 11 PM Tokyo). Thus, anything can happen. Charts can only price in what is known up to the minute.

The red lines show the rising wedge patterns that are bearish patterns. The indicators are coming off of overbot conditions. The indicators display universal neggie d which wants to create a severe spankdown in price but once again, Yellen may flap her dovish wings and foil the bear's hopes. The MACD cross is bearish.

The brown circles show distribution taking place the smart money handing off shares to the dumb money. The tight pink standard deviation lines remain squeezed in tight. There is likely a very large move coming once price is squeezed out from the tight bands but tight bands do not predict direction only that a 50-handle and more is likely in the days ahead, say through next week, one way or the other.

The SPX slides below the 20-day MA at 2178 another feather in the bear's cap. Price remains elevated above its moving averages requiring a mean reversion lower. If Yellen was not speaking tomorrow, the chart would already be rolling over to the downside. The low CPCE put/call ratio has not been respected as yet; the complacency predicts a market top at hand.

Yellen just picked up her white dove wings from the cleaners and plans to fly around Jackson Hole and drop money from the sky. Can Yellen walk a tightrope tomorrow 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.

SPX S&P 500 5-Minute Chart Diamond Pattern Sideways symmetrical Triangle

Here is an update of the 5-minute chart from the other day with the pink diamond pattern in play as well as the blue sideways triangle. Price breaks out at the blue circle so the bulls throw confetti but the joy was very short lived as stocks rolled back over to the downside. Price reentered the tip of the triangle and collapsed out the bottom.

The vertical sides of the blue triangle are 20 to 26 handles. If price continues breaking down from the 2181 level, the SPX will target 2155-2161.

Fed Chair Yellen speaks tomorrow at 10 AM EST so markets will probably churn into her words of wisdom. Stocks are in a low volume environment. Asia trading volume is down big-time. Everyone is waiting on Yellen to tell global traders how to trade. It is a sickening world the central bankers have created. Anything can happen tomorrow morning once Yellen opens her pie hole.

For sideways symmetrical triangle patterns like the blue triangle above, it is very common to see a false breakout, or breakdown, which typically occurs about two-thirds of the way through the triangle. Price jumped up and out at the blue circle and it was a false breakout. Price then returns to the triangle and collapses out the bottom. This is common behavior for the pattern. Conversely, if the initial move was a breakdown, many times price will reverse quickly and recover back inside the triangle and then breakout to the upside. 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 33 Days Without a Move of More Than 1%

The SPX has gone 33 days without a move of more than +/- 1%. Today would be 34 days. At 2175, a 1% move is 21 or 22 points. The last time a move over 1% occurred was on 7/8/16 which was to the upside (blue circle). This type of tight behavior has not been seen in two years. 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, August 23, 2016

SPX S&P 500 5-Minute Chart Sideways Symmetrical Triangle

The 5-minute chart shows an interesting sideways triangle in play in blue. Price is teasing the upper rail now for a potential breakout. The vertical side is 20 handles tall. If price breaks out at 2183-2185, price will seek 2203-2205. If price breaks down from 2178-2180, the SPX will target 2158-2160.

Fed Chair Yellen speaks on Friday but the triangle cannot wait that long for her words. Price is going to breakout or breakdown from the triangle today. Note yesterday's choppy sideways move. The SPX moved through 2.5% of its entire point range yesterday and ended the day flat. That is choppy sideways action and very erratic and unstable market behavior. Stocks are in a low volume and low volatility environment.

The pink diamond pattern is in also in play and is looking for a breakout or breakdown from this 2178-2185 area. 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.

Sunday, August 21, 2016

SPX S&P 500 2-Hour Chart Diamond Pattern

The 2-hour chart shows the red rising wedge, overbot stochatics and negative divergence that create the spankdown last week (red arrow). The blue arrow was a last spurt higher on weak Chinese data since the PBOC will print more money to goose stocks higher. The brown circle is the recovery last week due to the big oil rally (oil was up +10% last week), higher copper and lower volatility (record lows).

The blue lines show a diamond pattern in play now. The 2183-2184 level serves as a pivot point area. Diamond patterns are not good predictors of direction only that a commitment to direction will occur. The indicators are stumbling sideways not hinting at a firm up or down outcome. Considering the low CPCE put/cal ratio, the bears have to be given the advantage going forward so the resolution would be expected to break lower 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.

SPX S&P 500 Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 8/22/16

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for the trading week of 8/22/16. 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 prints last Monday, 8/15/16, at 2193.81. The all-time closing high is 2190.15 on 8/15/16. The SPX has taken out the May 2015 highs after this stock market top held in place for 15 months. The bulls, that continue to remain complacent due to non-stop central banker money-printing, are correct in their cheer leading the stock market higher since new record highs keep printing. 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 2016, the intraday high for this year is the 2193.81. The closing high for this year is at 2190.15. The intraday low for this year is 1810.10 on 2/11/16 and the closing low thus far this year is 1829.08 on 2/11/16. The intraday low in 2015 was 1867.01 on 8/24/15 and intrayear closing low for 2015 was 1867.61 on 8/25/15. Obviously, a failure under the 1810-1868 zone would lead to a catastrophic path ahead for stocks but this concern is not even on the map as equities print new all-time record highs near SPX 2200.

Keystone’s 80/20 rule says 8’s lead to 2’s so the close above 2180 at 2190 hints that 2220-plus is on the table. The SPX begins August at 2174. The SPX is up 130 points, +6.4%, above the starting year number at 2044. The central bankers saved the markets in February and the coordinated global money printing creates the multi-month rally. After the Brexit vote in late June, the BOE promises stimulus as far as the eye can see creating the spurt higher in stocks over the last month. The BOJ, PBOC and ECB also plan to keep on printing easy money to make the wealthy wealthier. Weak China data kept the stock market elevated last week since the PBOC will provide more easy money. The central bankers are the market.

For the new trading week ahead, Monday, 8/22/16, with the S&P 500 beginning at the important 2183-2184 pivot level, the bulls need to push above 2194 to create an upside acceleration that guarantees 2200+. Upside price action can be assessed at the 2188, 2190 and then 2194 levels.

For the bears, the SPX will need to fall under 2175 to accelerate the downside. The 2175-2178 confluence provides support for price. If it fails, 2169 is next then 2164 where the critical 200 EMA on the 60-minute chart is at 2164. This level determines who is the winner in the near-term; currently it is the bulls. A move through 2176-2184 is sideways action to begin the week. 

The CPCE put/call ratio remains at uber lows verifying market complacency and a near-term market top at hand. The top can occur any minute any day forward and since the CPCE already printed one other low a few days earlier, the stock market top is likely at hand right now, say early this week. The drop in the S&P 500 would be expected to be from 40 to 200 handles over the next month; a 40 to 100-handle drop is easily doable.

Fed Chair Yellen provides a speech at noon time Friday, 8/26/16, from Jackson Hole, Wyoming, USA, where all the world's who's-who in economics, business and central banks meet in a rural atmosphere. Markets are going to likely move significantly on Friday afternoon, either way up in a rally as Yellen flaps her dovish wings as usual, or, stocks may collapse if Yellen expresses hawkishness (that a rate hike will occur in September). She will likely hint that one hike will occur before the end of the year (December) to try an keep that thinking alive. This may reinforce the status quo.

Since Yellen will be spewing on Friday, there is a nice window open for bears early in the week and into mid-week. Typically, when there is a Fed meeting or event, stocks rally but the Fed events are usually a Tuesday or Wednesday rather than all the way at the end of the week on a Friday afternoon. Thus, the bears have to be given a slight advantage going into the new week of trading. The move down in stocks may be fast and sharp. Take the low put/call ratio serious.

Looking at the near-term picture the strongest price support/resistance is 2194, 2190, 2188, 2186, 2183-2184, 2174-2178, 2169, 2164, 2156-2157, 2152, 2135 and 2131. The bulls do not have a care in the world unless the 200 EMA on the 60-minute at 2164 fails; if this level fails, stocks will begin dropping in earnest. As long as price is above 2156, the bulls are in control of the stock market for the hours and days ahead. The test at 2164 which will likely occur this week will be an epic and important test and bounce or die decision for the stock market.

Note: If the list below displays any blank spaces, view it in a different browser.

2194 (8/15/16 All-Time Intraday High: 2193.81) (8/15/16 Intraday High for 2016: 2193.81)
2193.81 Previous Week’s High
2190 (8/15/16 All-Time Closing High: 2190.15) (8/15/16 Closing High for 2016: 2190.15)
2185.00 Friday HOD
2183.87 Friday Close – Monday Starts Here
2175.80 (20-day MA)
2175.13 Friday LOD
2173.60 August Begins Here
2168.50 Previous Week’s Low
2163.70 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2135 (5/20/15 Intraday High: 2134.72)
2134.64 (50-day MA)
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)
2111 (4/20/16 Intraday High: 2111.04)
2110 (11/3/15 Closing High; 2109.79)
2106.91 (20-week MA)
2105.14 (100-day MA)
2104 (12/2/15 Intraday High: 2104.27)
2103 (12/2/15 Closing High: 2102.63)
2102 (4/20/16 Intraday High: 2102.40)
2094 (12/29/14 Intraday High: 2093.55)
2091 (12/29/14 Closing High: 2090.57)
2079 (12/5/14 Intraday High: 2079.47)
2076 (11/28/14 Intraday High: 2075.76)
2075 (12/5/14 Closing High: 2075.37)
2073 (11/26/14 Closing High: 2072.83)
2071 (11/21/14 Intraday High: 2071.46)
2067.51 (10-month MA)
2058.70 (20-month MA)
2056.21 (12-month MA; a Keystone Cyclical Signal) (the cliff)
2056 (11/18/14 Intraday High: 2056.08)
2053.60 (150-day MA; the Slope is a Keystone Cyclical Signal)
2050.34 (200-day MA)
2049.56 (100-week MA)
2046 (11/13/14 Intraday High: 2046.18)
2044 (12/31/15 Closing High: 2043.94)
2043.94 Trading for 2016 Begins Here
2041.98 (50-week MA)
2019 (9/19/14 Intraday High: 2019.26)
2011 (9/18/14 Closing High: 2011.36) (9/4/14 Intraday High: 2011.17)
2007 (9/5/14 Closing High: 2007.71)
2005 (8/26/14 Intraday High: 2005.04)
2003 (8/29/14 Closing High: 2003.37)
1993 (1/15/15 Closing Low: 1992.67)
1991 (7/24/14 Intraday Top: 1991.39)
1990.68 (150-week MA)
1988 (7/24/14 Closing High: 1987.98)
1986 (7/3/14 Intraday Top: 1985.59)
1985 (7/3/14 Closing High: 1985.44)
1981 (2/2/15 Intraday Low: 1980.90)
1968 (6/24/14 Intraday Top: 1968.17)
1963 (6/20/14 Closing High: 1962.87)
1956 (6/9/14 Intraday Top: 1955.55)
1951 (6/9/14 Closing High: 1951.27)
1924 (5/30/14 Intraday Top: 1924.03) (5/13/14 Closing High: 1923.57)
1902 (5/13/14 Intraday Top: 1902.17)
1897 (5/13/14 Closing High: 1897.45) (4/4/14 Intraday Top: 1897.28)
1891 (4/2/14 Closing High: 1890.90)
1884.18 (200-week MA)
1884 (3/21/14 Intraday Top: 1883.97) (3/7/14 Intraday Top: 1883.57)
1878 (3/7/14 Closing High: 1878.04)
1868 (8/25/15 Closing Low: 1867.61)
1867 (8/24/15 Intraday Low: 1867.01)
1859 (1/20/16 Closing Low: 1859.33)
1856.31 (50-month MA)
1851 (1/15/14 Intraday Top: 1850.84)
1849 (12/31/13 Intraday High Top for 2013: 1849.44)
1848 (1/15/14 Closing High: 1848.38) (12/31/13 Closing High for 2013: 1848.36)
1829 (2/11/16 Closing Low for 2016: 1829.08)
1814 (11/29/13 Intraday Top: 1813.55)
1812 (12/9/13 Intraday Top: 1811.52) (1/20/16 Intraday Low: 1812.29)
1810 (2/11/16 Intraday Low for 2016: 1810.10)
1809 (12/9/13 Closing Top: 1808.37)
1807 (11/27/13 Closing Top: 1807.23)
1799 (11/18/13 Intraday Top: 1798.82)
1798 (11/15/13 Closing Top: 1798.18)