Sunday, August 12, 2018

AAPL Apple Weekly Chart; Overbot; Upper Band Violation; Negative Divergence

Apple popped on earnings which are always a crap-shoot for any company. The charts are pricing in the move and showing that not much has changed as compared to before the earnings release, except of course the price jumping above two hundo.

The weekly chart tags the upper band so a move to the middle band, at 184 and rising, is on the table as well as the lower band at 160. A doji candlestick prints for last week hinting at a trend change. The RSI and stochastics are overbot agreeable to a pullback. The chart indicators remain in negative divergence although there is a sliver of near-term strength in the MACD line that may try to create buoyancy in price for a few more days. The expectation remains for lower prices for mighty Apple.

The daily AAPL chart shows price bumping along with a 207-209 ceiling. The chart indicators are all negatively diverged except for the MACD line still sloping a touch higher. This hints that Apple will likely top out in the daily frame, say, mid-week. Price has penetrated its upper standard deviation band so a move to 197 is on the table as well as down to 182.

On the AAPL monthly chart, price has also violated the upper band so a move down to 161 and perhaps the lower band at 120 are on the table for the monthly time frame (a few months in the future). The monthly chart indicators remain negatively diverged except for the MACD line and a touch of near-term strength for the RSI.

Combining the charts, Apple should top out this week on the daily chart and sink for a few days. The weekly chart will likely roll over in a week or two with a few weeks of downside on tap. At that point, say in mid to late September, Apple should bounce as per the monthly chart (MACD long and strong) and rally to the highs once again, however, the MACD on the monthly will likely negatively diverge at that time, say in October, which will mark THE top for the tech giant.

Nothing much has changed as compared to before the earnings. The charts are pricing in the euphoric joy on the earnings release mainly driven by young tech professionals caught up in the hype buying Apple stock with their paychecks afraid they are missing out on big gains ahead. The smart money is very happy passing shares off on the future bagholders.

Keystone still does not have a position in AAPL. The thought was to look for an attractive entry but that did not appear and then earnings came up fast where it is best to simply sit back and watch instead. If you are a very nimble trader, you can play the top in the daily chart say this week, that will last a few days say into next week. The AAPL 2-hour chart displays tight standard deviation bands so a big move is likely coming in that time frame the presumption would be down.

Since Apple is such an emotional stock, it is likely better to let the weekly chart top out, say in a week or two, and perhaps play the retreat to 184-ish. Also, since the stock has momentum on its side, it may be most prudent, on a longer term basis, to simply wait for THE top in Apple which is likely on tap in the September-October-November time frame. The highs seen in this period will likely not be seen again for many months and likely for a couple years or more. Going into late this month and early September, it is reasonable to expect Apple in the 185-195 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.

UTIL Utilities Weekly Chart

Keystone has not posted the utes in a while. The old-timer's follow the utilities from the Norm Fosback days of technical analysis decades ago. There are two key levels to watch; the 50-week MA and the closing price 15 weeks ago to determine if the utilities are in an up or down trend. The utilities drop either coincidentally or two months ahead of the stock market when a major move lower is on tap.

Keystone explained this in real-time late last year. The red rising wedge, overbot conditions and negative divergence (red lines) made the top an easy call in early December. The utilities collapsed late last year as the broad stock market moved higher. The failure of the 50-week MA as the year began was an ominous signal ahead. The stock market topped-out on 1/26/18. The utilities forecasted the major top and spankdown about one to two months in advance.

The bulls came in and jammed the utes higher from February forward to prevent the stock market from falling into an extended bear market. The sideways chop continued for much of the year and then the breakout higher occurs in June. That was the tell that the stock market had more upside juice. If you count 15 weeks back for each candlestick starting late June, the utes are in a weekly uptrend reinforcing the idea of an upward-moving stock market.

The brown ascending triangle is 20 handles on the vertical side so if price breaks above the baseline at 730, the 750 level will be on tap. Stock market bears must hold the line at 730, otherwise, stocks will remain buoyant for the weeks ahead despite any near-term pullback.

Stock market bears need the 50-week MA at 712 to fail; that will immediately indicate trouble ahead for the stock market. The purple circle shows that 704.38 is the 15-week look-back number for the week ahead (the week of 8/13/18). In recent weeks, the utes remain above the closing highs from 15-weeks prior, so an uptrend remains in play making for happy bulls. If both the 50-week at 712 and the 704.38 fail in the week ahead, the stock market will be in serious trouble going forward.

However, note that the 15-week look-backs become easier for the bulls. The week of 8/20 will compare back to 689.49, the week of 8/27 will compare back to 667.79 and the week of 9/3 (Labor Day) will compare back to 689.67. The 15-week look-backs remain favorable to the bulls for three more weeks which would be the weeks of 9/10, 9/17 and 9/24. Then the look-backs will begin favoring the stock market bears since that is when the utes began jumping higher in June. If UTIL retreats and falls into a downtrend, and will be under the 50-week MA, it will signal major stock market trouble occurring or about to begin in earnest, say, in late September and through October and November.

Back to the near-term, price is bumping along that 730 ceiling debating whether or not it wants to break out higher to honor the brown ascending triangle. The indicators are neggie d so there is not much fuel or gumption to move higher, however, the MACD line remains long and strong so it does want price to remain at the 730 level or higher for the next one to three weeks. That would put price in the apex of the triangle and force it to make a decision.

What does all this mumbo-jumbo mean? If UTIL begins dropping and takes out the 50-week at 712, the stock market is in trouble. If the 15-week look-back at 704.38 fails in the week ahead, the stock market will be set up to be dropping significantly. Then it will be a question of whether a downtrend can be established with the utilities collapsing sharply lower through 700, then 670 and lower. That will portend extremely bad times coming for stocks and pain for anyone long the market.

If the utilities hold-up over the next few weeks, the major pull-back in stocks will be more likely in the October-December time frame. Watch that 50-week MA; if it fails you will see the stock market retreating sharply lower. Keystone can repost this chart as it progresses if the viewers of the K E Stone blogs want to see it. If not, that is fine, you will have to figure it out on your own. 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.

SOX Semiconductor Index Daily Chart; Sideways Symmetrical Triangle; Tight Standard Deviation Bands

The chips sunk the stock market on Friday, 8/10/18. The stock market bulls were celebrating last week as price was ready to break up through the upper channel line. Their heads were delivered on a platter on Friday. Note the tight standard deviation bands (pink arrows). A huge move is about to occur in the semiconductors. Tight bands forecast a big move but do not predict direction. Price began jumping higher but reversed on Friday so the big move may be lower.

The blue sideways symmetrical triangle illustrates the sideways chop that has been occurring over the last year after the neggie d top (red lines). The vertical side of the triangle is two hundo points (1250 to 1450). Thus, if the SOX breaks above 1400, it will likely be on its way to 1600 over the next year, or, if price breaks down from 1320, the chips will seek 1120. Note the support at the 1120-ish level from last Fall.

The chart is not tipping its hand due to the choppy sideways pattern. The tight bands and sharp reversal on Friday, however suggests that the path lower has a slight advantage. Bears would need the failure at 1320 before they could claim victory. The purple lines show the rock solid support at 1210-1245. If this level fails, it is over for the semiconductors and the stock market. The brown box shows gaps that need filled from last October. As the chips go, so goes the marrket. 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, August 11, 2018

Keybot the Quant Turns Bearish

Keystone's proprietary trading algorithm, Keybot the Quant, flips to the short side on Friday afternoon at 2827. The semiconductors collapsed creating the bulk of the negativity in the stock market. As always, watch for a potential whipsaw next week. More information is found at Keybot's site;

Keybot the Quant

Thursday, August 9, 2018

SPX S&P 500 2-Hour Chart

The opening bell rings and stocks are off and stumbling sideways. Price came up almost to a matching or higher high but not quite so the indicators are not officially negatively diverged across the board but the peaks yesterday were in limited neggie d when the price candlesticks printed matching highs. The expectation is for a pullback in this 2-hour time frame targeting the middle band for starters at 2846 and rising.

If price moves higher, the indicators will likely remain sloping negative and lock in the negative divergence and create downside ahead. Watch the thin red lines shown for the indicators. A positive news bite may create more joy in markets and a potential new record high above 2872.87 (the 1/26/18 all-time high) but if a news bite does not save the day, stocks should retrace. 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; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; SPX Teasing the Record High at 2872.87 from 1/26/18

Here is an update of the S&P 500 daily chart. Earlier this week, the potential double-top was highlighted but the bulls keep running higher with price printing higher highs taking that pattern out of the picture. Remember, the idea was to watch the behavior of the RSI and MACD line should price move higher.

The SPX gaps higher on Tuesday printing a hammer candlestick and yesterday printing a doji both hint at a trend change on the table. Price tags the upper standard deviation band at 2861 so the middle band, the 20-day MA, at 2821 is on the table as well as the lower band at 2781.

Stochastics are overbot and RSI was overbot 3 week ago and now near-overbot agreeable to a pullback. The red rising wedge pattern is a bearish indication.

As price prints the higher highs the last three days, the red lines show negative divergence remaining firmly in place. In other words, the fuel tank is empty and price rise on fumes. The expectation is for stocks to retreat in this daily time frame.

Markets are very emotional nowadays responding to the non-stop news flow. Just as AAPL received a push higher (especially from retail traders caught up in the hype) to attain the $1 trillion valuation last week, traders are abuzz that the SPX will overtake the prior all-time and closing record high at 2872.87 from 1/26/18. The HOD yesterday at 2862 is only 10 points away and the SPX begins the Thursday, 8/9/18, trade at 2858 only 15 points away.

The chart says a top is in place in the daily time frame but investor emotion continues to cheer for a new record high. The Federal Reserve and other sick central bankers are maintaining their jack boots on the throat of volatility to drive stocks higher. The VIX sinks to 10.85 in yesterday's trade with a LOD at 10.52. VIX is currently trading at 10.60 as this message is typed 3 hours before the opening bell. S&P futures are +3 so the bulls are performing their stretching exercises wanting to take the SPX towards the new record high. The bulls are trying to send the VIX below yesterday's low at 10.52 which would create more upside joy.

The PPI inflation data is on tap at 8:30 AM EST and will influence the futures. If the bulls can push either the RSI or MACD line above the highs from late July, the rally will have a few more days of legs before rolling over. If the RSI and MACD remain neggie d as the chart displays, stocks will roll over to the downside targeting 2820-2830 for starters. Watch volatility closely. 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 7, 2018

VIX Volatility Daily Chart; VIX Prints 10-Handle

As this is typed, minutes ago, the VIX prints a 10-handle at 10.99. The stock market bulls throw confetti and line up to buy stocks with both fists. Volatility drops so US futures pop with the S&P up +6 before the Tuesday trade. The VIX is down to levels not seen since the euphoric high in the stock market in late January. Of course that ended with a big flush lower in stocks and the fear and panic was evidenced by the spike in the VIX to 50.

The firm stock market bottom in April began as the hand-wringing, angst, fear and worry was elevated with the VIX at 22-27. The rally over the last six weeks began with a tinge of fear and panic with the VIX a hair away from 20 in late June.

Price is below the 20-day MA that is below the 50-day MA below the 200-day MA and will need a mean reversion higher going forward. Market bears got nothing until the VIX moves above the key 200-day MA at 14.43, one of Keystone's important short-term market signals.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 Weekly Chart

The red lines show negative divergence developing for the S&P 500 weekly chart. Neggie d cannot occur until price takes out the late-January record highs but nonetheless the lagging indicators as compared to January is striking. There is near-term momentum with the RSI, MACD line and money flow trying to maintain an upward move in stocks.

Price tapped the upper standard deviation line very briefly three weeks ago and remains near the upper band. The SPX will likely venture towards the middle band, the 20-week MA, at 2735, and rising, in the weeks ahead.

The blue boxes show the earnings reporting seasons where the bulls clearly create upside in the stock market on the orchestrated beats. The brown circles show several weeks of distribution this year where the smart money is dumping off shares to the dumb money. When stocks pop one week, the next week Joe Sixpack runs into the stock market all hyped-up on news reports and the smart money hands the sucka some shares.

For the big rally the last few weeks, note that none of the volume candlesticks are stronger than the volume in early June at 2775-ish. Price may want to revisit this area. The last few weeks of volume has also not overcome the two strong selling week's volume in late June. This hints that the retail investor is likely caught up in the market hype and buying stocks afraid that he is missing the train leaving the station.

The stochastics are overbot agreeable to a pullback going forward. The ADX was in a strong uptrend (purple box) late last year into early this year and the record top on 1/26/18, but that strong uptrend is no longer verified and has petered out with the ADX dropping to 22.3. Despite the big six-week advance in stocks, the trend is not strong.

The SPX is near its record high at 2873, only about 20 points away, so the euphoria and daily hype may take her there, much like AAPL last week where the $1 trillion valuation goal fed on itself and price migrated there. Overall, the expectation would be for stocks to stall in the weekly time frame and roll over going forward.

The new moon peaks on Saturday (as well as the Perseid meteor showers so get outside in the evening to watch the shooting stars), and stocks are typically bearish through the new moon each month. OpEx is next week so stocks may rally from Tuesday, 8/14, into a Wednesday, 8/15, high. Keystone's eclipse indicator points to a potential major top occurring in the stock market between 8/13 and 9/10. 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, August 6, 2018

SPX S&P 500 Daily Chart; Overbot; Negative Divergence; Upper Band Violation

The SPX floats higher to 2848 teasing the upper standard deviation band at 2850. Price may tag the 2850-281 level which opens the door to a retracement to the middle band, the 20-day MA, at 2814, and rising. The SPX matches the high from late July and you can see the universal negative divergence across all indicators (red lines) so the S&P 500 should run out of gas in this daily time frame. Price is extended above the moving averages and needs a mean reversion lower. Stochastics are overbot.

The ADX line is in the cellar at 11.82. This is very interesting because it says the uptrend is not a strong uptrend despite the big rally from late June and actually from the April bottom.

The chart hints at a double-top, or M top, in play with price likely wanting to target the 2814-2828 level. Stocks are very emotional and news-driven lately. Today, oil is goosed higher which creates the run higher in equities. Volatility is slapped lower to levels not seen since the late January early February time period. VIX is down to 11.28.

The SPX tags 2849 as this is typed continuing to tap on the upper band. Check that, now surging above 2850. Check that again. Price now tags the 2851 level with a HOD at 2851.13 officially tagging the upper standard deviation band. As long as the RSI and MACD line do not overtake the prior high, the expectation would be for stocks to top out in this daily time frame. 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 2-Hour Chart

The SPX 2-hour chart created a W pattern as July ended and August began. The base is 2800 and breakout level is 2822 so the upside target to satisfy the W pattern is 2844 (2822+22) which is now satisfied. Price is hugging the upper standard deviation pattern so it will need to return to the middle band, at a minimum, at 2822. The lower band at 2798 is also on the table.

The stochastics are overbot agreeable to a pullback. The RSI is not yet overbot so that door remains open and must be respected for the next couple-few hours. The red lines show negative divergence in play as price comes up to print the matching high from a couple weeks ago. The RSI and MACD line show a sliver of long and strong juice for today but over the last couple weeks or more are neggie d. The expectation would be for the S&P 500 to top out and roll over in the hours ahead and target the 2822-2828 level as an initial downside target. The SPX prints 2845 as this message is typed just before munchtime in the States.

Watch the Russell 2000 which will either punch up through the 20-day R or fail through the 50-day S. The SPX will move in sync with the RUT. 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.