Monday, June 29, 2015

CPC and CPCE Put/Call Ratios Daily Charts Signal a Market Bottom at Hand


Remember that Keystone highlighted the low CPC and CPCE put/call ratios over the last couple weeks or so expecting a market top due to the uber complacency. The top occurs. The idea was to wait for the put/calls to spike where a tradeable bottom can be placed. That occurs today as traders are experiencing fear and panic. The CPC jumps to 1.38 and CPCE to 0.94. The uber high readings match up with the October market low and also the early August low. It may take a day or few to place a rigid bottom for stocks but with these high readings, long positions can be nibbled on and the scaling in process for long plays can be started. A stock market bottom will occur at anytime in the next few days.

The Federal Reserve and other central bankers are the market. Interestingly, the PBOC cut rates and lowered the triple R's on the weekend but the SSEC sold off anyway. The ball is in ECB President Draghi's court; he was quiet today. The market bottom in stocks will likely occur when Draghi proclaims that he will run the printing presses full tilt to mitigate Greece turmoil. The central bankers are the 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.

Saturday, June 27, 2015

SPX S&P 500 60-Minute Chart 200 EMA Cross

The SPX is below the 200 EMA on the SPX 60-minute chart at 2107 signaling bearish markets for the hours and days ahead, however, the move lower is not yet convincing. As highlighted in the previous message, several moving averages and the June starting number all converge at 2095-2108. The importance of this range cannot be understated. Bulls need to push above 2107-2108 to reassert their dominance and send stocks strongly higher. If so, the SPX would move above the 200 EMA signaling bullish markets ahead.

The bears must keep the SPX under 2107-2108 with all their might. As long as they do they are fine and markets will weaken and slip away to the downside. Under 2095 and stocks will collapse strongly lower immediately to 2091 then to 2086. It is reasonable to expect a back kiss of the 200 EMA although a successful back test has already occurred three days after price fell through the 200 EMA. June began at 2107 so there may be a push higher to challenge this area as the month ends on Tuesday and 2107 determines an up or down month.

Bears are fine and in charge under 2107-2108. The bulls will take over above 2107-2108. 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 Rising Wedge Versus Ascending Triangle

The battle between the red rising bearish wedge and bullish green ascending triangle patterns continues. Bears win below the red lines while bulls win above the green lines. This battle is high drama for the last couple months. The bulls broke up and out of the green triangle in May only to receive a spank down from the upper red trend line of the rising wedge. Then price falls through the lower rail of the red wedge causing bears to cheer but bounces at the bottom trend line for the green triangle empowering the bulls again.

The bears receive another successful back test of the wedge failure which lights the way lower only for the SPX to bounce off the lower green trend line again. The SPX then ran higher only to fail at its 2120 base line a few days ago. Price appears unable to move above the red trend line with several successful back tests occurring so price weakens and drifts lower. The bulls are still fighting, however, with price at 2101 since the lower green line support is at 2091. Under 2091 will be big trouble for bulls and the 2078-ish area will be likely on tap.

Note how price respects the 100 and 150-day MA's support levels this year. Price bounced directly up off the 100-day MA support at 2095 on Friday. The 20-day MA is 2103. The 50-day MA is 2107. June started at 2107 with only two trading days remaining that will determine if the month is positive, or negative. The 200 EMA on the 60-minute chart, a key short-term signal, is, yes, you guessed it, 2107 (SPX is under the 200 EMA indicating bearish markets for the hours and days ahead; bulls need the SPX above 2107-2108 pronto or they will lose their grip). The 20-week MA is 2098. Thus, a serious gauntlet of support/resistance is at 2095-2107. Market bulls win big above 2107-2108. Bears win big under 2095. The 2095-2107 range is noise.

If bulls take out 2107-2108, price will run to 2110, then 2118-2120 to test the ascending  triangle baseline break out, then 2130 and 2135 and higher to 2145 then 2180. The bears must take price under 2091 which should lock in the bearish rising wedge pattern which would typically result in a dramatic collapse. The 1980-2030 level would be easily doable over the next couple months. If 2091 fails, price will immediately test 2086 and if that fails, the 2072-2081 range is next then much lower. Greece talks appear to be breaking down which is a negative for stocks but the PBOC (China's central bank) cut rates a few hours ago which will reinflate the Chinese stock bubble and cause buying around the globe. 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.

Keybot the Quant Turns Bearish

Keystone's trading algo, Keybot the Quant, flipped to the short side this week at SPX 2106. The stock market remains a coin-flip in a sideways choppy pattern. More info is found at Keybot's site;

Keybot the Quant

Sunday, June 21, 2015

SPX Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 6/22/15

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for trading the week of 6/22/15. Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and important S/R. The SPX all-time intraday high is 2134.72 on 5/20/15 and the SPX all-time closing high is 2130.82 on 5/21/15. The low for this year is 1980.90 which identifies the starting point of the huge February rally.

For Monday with the SPX starting at 2110, the bears only need one point lower, under 2109, to create a downside acceleration in the stock market so keep an eye on the S&P futures overnight. The bulls need to touch the 2122 handle to create a quick acceleration to 2130. A move through 2110-2121 is sideways action to begin the week. The SPX began the year at 2059 so stocks are positive on the year up +2.0%. Interestingly, the key 10-month MA is at 2059 as well. The last day of trading for June, EOM, is seven trading days away, Tuesday, 6/30/15, so the 2107 level will gain importance each day forward since it determines if the month is positive or negative.

Important and direct support/resistance levels are 2135, 2131, 2126, 2121, 2118, 2108-2110, 2104-2105, 2099 and 2091. The support gauntlet at 2108-2110 is key as well as 2104-2105 since the 50-day MA at 2105.57, 20-day MA at 2104.30 and the 200 EMA on the 60-minute chart at 2104.22 is within this range. If 2104 fails, 2099 is next, then 2095 then 2091.

Looking at the big picture the strongest S/R is 2135, 2131, 2126, 2121, 2118, 2108-2110, 2104-2105, 2099, 2091, 2086, 2081, 2079, 2076, 2072, 2067, 2061, 2046, 2040, 2038, 2032, 2030, 2023, 2019, 2011, 2002-2003, 1997-1998, 1993, 1988, 1985-1986 and 1982. The SPX moves choppy sideways through the 1990-2120 (130 handles) range for the last seven months, 2061-2120 (59 handles) for the last five months and 2072-2120 (48 handles) for the last three months, with price attempting to break out above the top of the ranges at 2120-2130 late last week.

Bulls win big above the 2121. Bears win big under the 2104-2105 level. The battle continues between 2106-2120. Pay attention to June’s starting number at 2107.

2135 (5/20/15 All-Time Intraday High: 2134.72)
2132
2131 (5/21/15 All-Time Closing High: 2130.82)
2129
2126.65 Previous Week’s High
2126 (4/27/15 Intraday High: 2125.92)
2123
2121.64 Friday HOD
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)
2115
2114
2113
2111
2110
2109.99 Friday Close – Monday Starts Here
2109.38 Friday LOD
2108
2107.39 June Begins Here
2107
2105.57 (50-day MA)
2105
2104.30 (20-day MA)
2104.22 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2104
2103
2100
2099
2097
2095.32 (20-week MA)
2094 (12/29/14 Intraday High: 2093.55)
2091 (12/29/14 Closing High: 2090.57)
2090.75 (100-day MA)
2089
2086
2081
2079 (12/5/14 Intraday High: 2079.47)
2076.19 (150-day MA; the Slope is a Keystone Cyclical Signal)
2076 (11/28/14 Intraday High: 2075.76)
2075 (12/5/14 Closing High: 2075.37)
2073 (11/26/14 Closing High: 2072.83)
2072.49 Previous Week’s Low
2072
2071 (11/21/14 Intraday High: 2071.46)
2069
2067
2065
2063
2061
2058.90 Trading for 2015 Begins Here
2058.71 (10-month MA; a major market warning signal)
2057
2056 (11/18/14 Intraday High: 2056.08)
2053
2050.36 (200-day MA)
2050
2049
2046 (11/13/14 Intraday High: 2046.18)
2043.43 (12-month MA; a Keystone Cyclical Signal) (the cliff)
2041
2040
2039.46 (50-week MA)
2038
2034
2032
2030
2024
2023
2021
2019 (9/19/14 Intraday High: 2019.26)
2018
2016
2014
2012
2011 (9/18/14 Closing High: 2011.36) (9/4/14 Intraday High: 2011.17)
2009
2007 (9/5/14 Closing High: 2007.71)
2005 (8/26/14 Intraday High: 2005.04)
2004
2003 (8/29/14 Closing High: 2003.37)
2002
2001
1999
1998
1997
1995
1993 (1/15/15 Closing Low for 2015: 1992.67)
1992
1991 (7/24/14 Intraday Top: 1991.39)
1988 (7/24/14 Closing High: 1987.98)
1986 (7/3/14 Intraday Top: 1985.59)
1985 (7/3/14 Closing High: 1985.44)
1983
1982
1981 (2/2/15 Intraday Low for 2015: 1980.90)
1979
1978
1976
1973
1970
1968 (6/24/14 Intraday Top: 1968.17)
1965
1964
1963 (6/20/14 Closing High: 1962.87)
1962
1961

1960

BDI Baltic Dry Index Weekly Chart

The Baltic Dry Index is an excellent indicator of the global economy as grains, ores, powders, resins and other materials are shipped across the ocean and the demand sends shipping rates higher and the BDI into the thousands and higher. That is not happening. Thus, the global economy is sick. The BDI topped out in late 2013 that was highlighted by Keystone at the time due to the negative divergence (red lines). The BDI has languished ever since. The Fed, BOJ, ECB, BOE, PBOC and other global central bankers as many as 14 key countries this year and more, are pumping stock markets higher by debasing their currencies. Higher stock markets do not reflect a successful economy but instead reflect obscene Keynesian money printing that has gone on for over six years.

The BDI was beaten down so low it had to perform a dead-cat bounce with possie d (green lines) helping to provide a boost. Shipping activity should stabilize from here on out so the shipping stocks can be explored for potential long plays. There is very little stocks of interest on the long side in the market these days but the shippers are worth a look. The sub 1000 BDI verifies a sick global economy and the gains in stocks, that serve to make the wealthy filthy rich at the expense of the middle class and poor, are purely a function of global central banker money printing. 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.

German Bund 10-Year Yield Daily Chart

The German 10-year yield is a remarkable story this year. Money flocked into the bund sending yields down to 0.04%-ish, under the 0.10% level, then whammo, the yield skyrockets to 1.04% in only six weeks time. It is shameful how the Fed, BOJ, ECB and other global central bankers have destroyed the markets over the last few years.

The green channel lower ended due to the positive divergence with the indicators that bounced yield higher off the bottom. The neon line shows a two-leg bull flag pattern playing out from 0.04 to o.70%, call it 0.6% difference to keep the math simple, for the first leg, and then the sideways consolidation with a slightly downward bias, then the second leg began at 0.50% targeting 1.10% (0.50%+0.60%) which was basically tagged a couple weeks ago. The selloff in bunds is historic (traders ran from the bund so prices drop like a stone rocketing yields higher). Traders abandoned the so-called safe haven.

The red lines show the top in yields due to the negative divergence, and the spankdown sends yields lower to currently test the 0.75% 20-day MA support. The 50-day MA is ramping  higher and will intersect the 200-day MA at 0.59% over the coming days forming a confluence of support. The indicators remain weak and bleak so any bounce that occurs will likely give way to lower yields perhaps targeting the 0.55%-0.60% area. Bunds may stabilize after that moving sideways. If Greece turns sour and general turmoil in global stock markets develop, traders will seek the bund safe haven again and a sideways move through the 0.30%-0.65% range would be in order. 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.

GS Goldman Sachs Weekly Chart

GS technical analysis is another request; Goldman Sachs is the latest favorite of long traders is the financials sector receives a boost. Regional banks are on fire. Everybody and his bro are throwing money at the banks proclaiming higher rates will lead to great things for financials ahead. GS price is shooting vertically higher to eight-year highs over the last few weeks up inside the rising wedge pattern. Negative divergence is in play over the long term (red lines) but the nearer term, this year and especially the last few weeks, the momo is clear with the green lines for the MACD line and money flow. The RSI, stochastics and money flow are all overbot indicating a topping pattern on the come.

Keystone's 2-10 spread rule needs to see a 255 basis point level to truly signal good times for banks ahead taking advantage of a steeper yield curve. The 2-10 spread, however, continues to print at the 160-170 area remaining about 80 bips or more below Keystone's key level. Thus, the hype about successful banks due to the steepening yield curve is currently misplaced optimism. Keystone will be the first to cheer lead the banks if the 2-10 spread exceeds 255 but not before then.

The stochastics and RSI over the last three weeks want to see a short pull back in price say to finish the month of June into early July but the momo and constant daily cheer leading by strategists, pundits and traders advising everyone to buy banks with both hands will bring price back up again until the MACD line and money flow indicators can form negative divergence and roll over which will create a top and roll price over to the downside. The red lines are not impressed with the move higher; the sharp move higher in price is mainly momentum due to the prospect of higher yields going forward. As seen by the previous TNX chart it is likely that the 10-year yield will stall going forward, especially in a stock market pull back, so those expecting a 3% 10-year yield in the months ahead may be disappointed which shoots a leg of the stool out from the banks.

The projection is for a pull back in GS over the coming days say to finish June into July but price will come back up again to current highs, which are record highs comparing all the way back to 2007, then with the MACD line and money flow turning neggie d, a top will be in probably in July leading into a multi-week pullback. The same analysis can be applied to the regional banks such as the KRE chart gong forward. The regional banks should print a significant top between July-September and roll over. 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.

AAPL Apple Weekly Chart

Apple is another request; all market participants are watching AAPL since it impacts the Nasdaq indexes and Dow Industrials. AAPL is not an attractive stock on the long side going forward. Nearly every fund owns Apple and the cheer leaders appear on television daily to pump the stock. Apple enthusiasts continue to cheer the Apple Watch and Apple Pay despite their limited success to date and detailed numbers not released by the secretive tech company. Apple Watch was in the news daily a couple months ago, then that faded to every few days now. You may see hot-shot tech workers proudly donning the Apple Watch, or television celebrities that want to appear hip, but in your local community how many have you seen? One of the greatest outcomes of the cellphone and smartphone era over the last decade is the ability to ditch a wrist watch. Those that work with their hands, or that live in cold climates with lots of layers are not in a rush to buy the watch. The high-tech employees, that sit behind desks all day, and maintain lily hands without blisters and callouses proudly display their watches; the watch is a lot more useful if you never get your hands dirty.

All that aside, the daily, weekly and monthly charts are all rolling over. For the weekly above, price received the negative divergence spankdown starting three weeks ago as the red lines clearly predicted. The rising wedge pattern is bearish as well as the overbot levels late last year and this year. Price is trying to maintain the 20-week MA support at 126.73. The money flow would like a bounce so a move higher to the 128-132 area is on the table which would also satisfy a back kiss of the lower red trend line. The other indicators, however, are weak and bleak wanting lower lows in price going forward. The stochastics slip under 50% into bear territory. Watch to see if the RSI slips under 50%, or not. Note how price prints well above the moving averages requiring a long-needed mean reversion lower. Over the coming couple years, price will want to explore the lower 80-100 range again.

Apple maintains momo and everybody and his bro continues to blindly believe and cheer everything the company does. No one expects AAPL to falter; instead they expect great things forever. The Apple Watch will be available in stores beginning on Friday which may add some hype and create the move higher into the 128-132 range discussed above. If you enjoyed the ride higher in AAPL it is prudent to take the profits on the bounces and exit. There is no reason to play Apple short since it is too susceptible to hype and quick upward moves. If long, it is prudent to exit the stock and look for opportunities elsewhere going forward. It is a distinct possibility that the top for AAPL is already in with the May high and a pattern of sideways to sideways lower would be expected for price for the months and couple years 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.

NFLX Netflix Weekly Chart

A viewer would like a read on NFLX the darling of long traders this year. Netflix is the top performing chart of this year. Traders are throwing money at NFLX as it continues printing record highs. Long-time readers of the site will remember Keystone calling the exact bottom in NFLX in August-November 2012 due to the positive divergence. Ditto the pull back starting late summer last year due to the negative divergence. The stock has lots of momentum now. The daily chart wants price to pull back and take a rest for a week or two so a reasonable expectation is a retreat to 630-650 to finish June but note in the weekly chart above the long and strong MACD line, money flow and RSI exactly as price topped intraweek so price will likely want to come back up again to the current highs say in July.

In July, the weekly chart above will likely form with universal neggie d across all indicators which will allow a more substantive pullback. The monthly chart is cooked over the multi month and year time frame, however, in the very short term, say one to three months, the door remains open for price to print at the current highs or higher, call it 680-ish. A breach above 680 will lead to 720. The expectation is that NFLX will top out sometime in the July-September period at 670-720. It would not be surprising to see NFLX at sub 550, even sub 525 to end the year.

To  recap, a pullback to finish the month of June is on the table say about 15 to 30 points lower, then a quick recovery higher again to 650-680. At that time reference the above weekly chart to see if negative divergence exists across all indicators (especially the MACD line rolling over) and that will lead to more of a multi-week pullback say into late July. Price should make another run higher after that and top out sometime between late July and September. Choppy sideways is the order of the day through the summertime and then a roll over and weak finish to the year with price well off the top. In early 2016, NFLX would be expected to be around the 500 level.

If contemplating a short play, which is extremely dangerous for a momo stock, in the VST to finish June, a nimble trader may squeeze out a successful trade but the preference would be to wait until the first few days of July and make sure the MACD line goes neggie d on the weekly chart above and that will greatly increase the chance for success on a short trade over the short term. 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.