Monday, January 23, 2017

RUT Russell 2000 Small Caps Daily Chart; Battle for the 50-Day MA

The Russell 2000 small caps (RUT) and the Dow Jones Industrials (INDU or DJI) have both lost their 20-day MA's. The S&P 500 (SPX) is testing its 20-day MA at 2265 and whoopsies daisies, the SPX falls through to 2262 as this is typed. The Nasdaq Composite (COMPQ) remains well above its 20-day MA.

The RUT is making a bounce or die decision at the 1346 and will likely take the broad indexes with it. Watch RUT 1346 and SPX 2265 as indications of the path ahead for stocks; both are making bounce or die decisions.

A bounce in the RUT will send price back up for a back kiss of that brown resistance line at 1358-1360 and the 20-day MA at 1364. A failure at 1346 will open the door to test the support down at 1315-1320. 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.

Thursday, January 19, 2017

Gold Daily Chart; Overbot; Negative Divergence Developing

Keystone pointed out the bottom in gold last month with the green falling wedge, oversold conditions and positive divergence (green lines). The lower standard deviation band was violated and price was below the moving averages needing a mean reversion higher. A launch in price was expected which occurs. Now what?

Gold moves up to tag the middle band line, which is also the 20-day MA at 1167 and rising. Price kept on moving higher as the US dollar index has pulled back down. Gold now tags the upper standard deviation band so the middle band at 1167 and rising is in play.

The high prints in gold over the last couple days result in overbot stochastics and money flow. Also neggie d with the histo, stoch's and money flow which conspire to spank gold down yesterday and today. Gold is at 1203 as this message is typed (blue dot). This is the weakness due to the neggie d. The RSI and MACD line, however, are long and strong and want to see another higher high in price after this pull back finishes in the daily time frame. 

Gold is running into a congestion zone from November at 1220-1230. The daily chart will likely top out in this range in the days and say, week or two ahead. Looking at the gold weekly chart, there is upward momo and the 20-week MA resistance is at 1231. Price came up off the bottom and is in the neighborhood so it is reasonable to expect gold to tag the 1231 on the weekly basis.

Sprinkling some magic dust on the above thoughts, gold will likely recover after more sogginess today and perhaps tomorrow but then top out in the daily time frame say next week (when the RSI and MACD line go neggie d). Then a week or two of softness may occur but then price will likely head higher again and target that 1220-1240 area perhaps in mid or the back half of February.

The money was made on the bottom call and rally and if you enjoyed the ride it would have been smart to take the money. If you did not, cash out when gold likely comes up in this daily time frame in a couple days due to the long and strong MACD line. Going forward, the sideways choppiness may be a frustration for traders so Keystone will likely not trade gold but will keep an eye on it. 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; H&S

The rising wedge, overbot conditions and neggie d (red lines forecasted the top in yields which occurs. If you remember, in early and mid-December, pundit after pundit stood on soap boxes on television proclaiming that 3.00% is on the way and likely to happen very quickly. Wrong. All they had to do was look at the neggie d and they would not have been making such foolish statements.

Yield trends lower into the falling wedge, oversold stochastics and positive divergence with the histogram and stochastics creating the couple-day bounce in yield. Yield is printing at 2.44% as this is typed (blue dot).

The RSI and MACD line are weak, sloping lower, hinting that there is unfinished business lower. The 20-day MA at 2.45% is overhead resistance while the 50-day MA at 2.35% is support and the moving averages are squeezing in so yield has to choose a direction. If yield breaks out above 2.45% the 2.50% resistance would be targeted next.

A H&S (head and shoulders) pattern is in play with the neckline at that 2.30%-2.35% range and head up at 2.60%. A failure from 2.30%-2.35% would send yield down to the 2.00%-2.10% area. There are some juicy gaps that need filling below 2.30%.

The pink box verifies that the rise in yields from October into this year was a strong trend higher. Until now. The ADX drifts lower to 25 signaling that the up in yields is no longer a strong trend in this daily time frame. There is likely sideways choppiness ahead through the 2.30%-2.50% range. Note and bond bears will rejoice if yield moves up through 2.50% and 2.60% (lower prices higher yields) while bond bulls will celebrate if yield falls through the 2.30% support (higher prices lower 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.

SPX S&P 500 30-Minute Chart; 8/34 MA Cross

The 8 MA remains below the 34 MA on the SPX 30-minute chart forecasting bearish markets for the hours ahead, however, the 8 MA is sloping upwards and the 34 MA downwards so a positive cross may occur today which would cause the bulls to throw confetti and imbibe in more Fed wine. The ECB rate decision and press conference takes place over the next three hours, then testimony by Steven Mnuchin on Capitol Hill, President-elect Trump's pick for Treasury secretary, which will impact the US dollar index and stocks all morning long.

Market bears need to curl that 8 MA to the downside and maintain the negative 8/34 MA cross. Bulls need the 8 to pierce up through the 34 to signal bullish markets for the hours 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.

Wednesday, January 18, 2017

NYMO McClellan Oscillator Daily Chart

The NYMO is comical these days. This chart was posted a few days ago pointing out the refusal to correct lower and the game continues. You really do not want to consider a long play on stocks until the NYMO drops into the green oval. The beat goes on. 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; Rising Wedge; Overbot; Negative Divergence

The SPX weekly chart is bear friendly. The red rising wedge is in play (very bearish). The collapses from rising wedges can be quite dramatic. The red lines show the negative divergence in play that creates the spankdown over the last week or two but the MACD line is long and strong wanting another high. This hints that price will come back up to say, the 2280-2285 for a look but at that time the MACD line will likely roll over with neggie d and send the index lower. The other path forward is for price to simply continue lower from here.

The upper band was violated so the middle band at 2192 and rising is on the table. The ADX line is low at 15.54. During the long one-year rally, the uptrend was never confirmed to be a strong uptrend by the ADX. The wild card for market bulls is the RSI may want to see overbot territory. But setting that aside, the chart is firmly bearish and should fall out of bed at anytime in this weekly time frame. Bears must make sure the MACD line rolls over and does not exceed the top from August so keep a close eye on that.

The SPX should sell off going forward in the weekly time frame due to the overbot stoch's, rising wedge and neggie d. A target perhaps a month or so out would be that 2200-2220 area. The ECB rate decision is tomorrow morning so that will impact the euro, US dollar and European and US stocks. 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; Negative Divergence; Rising Wedge

The new year is underway and the end-of-year stuff is out of the way. The markets in late December early January are typically higher due to seasonality effects and the Santa Claus rally. The trading volume is low so the choppy and sometimes odd behavior is a good time to take it easy and sip some eggnog and partake in some figgy pudding. Well, the party is now over and it is time to get back at it.

The SPX daily chart shows the standard deviation bands squeezing in tight so a big move is at hand. Tight bands, however, do not predict direction. Back in late August early September the tight bands squeezed out a downside move.

The ADX is interesting since it was elevated confirming the strong downtrend in October, and then the spike higher on the Trump election in early November catapulted price so high so quick that the ADX remained elevated to confirm that the upward move in price to end the year and into this new year was a strong upward trend. Until now. The ADX drops below the pink box so there is no longer a strong uptrend in play for the SPX price in the daily time frame.

The red lines show neggie d and a spankdown occurs the last three days of the year (by the way when a month is solidly up like December was, you usually see it finish weak the last few days and December was textbook) but a larger spankdown would have been expected and is expected. A wild card for tomorrow is the ECB and President Draghi press conference. He may pump markets with more QE stimulus talk. His words will directly impact the euro which moves the US dollar index which will move US stocks.

The chart is bearish in this daily time frame due to the neggie d, rising wedge and overbot stoch's. If the central bankers pump stocks higher tomorrow, the SPX may target the upper band at 2284, if so check to see if the neggie d remains in play for the indicators, which it probably will (negatively-sloping red lines), which would identify that as the top. If price begins moving lower right away, the lower band at 2246 is a target. 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.

BPSPX S&P 500 Bullish Percent Index Daily Chart

The BPSPX remains on a double-whammy buy signal. The last time it was posted the price was playing around the 70 level. The BPSPX punched up through 70, then back-kissed, then headed higher. For the BPSPX, the six percentage-point reversals are key and also the 70% level.

Thus, bulls are fine as long as the BPSPX stays above 70. Bears will growl if the 70 level fails; that would be a market sell signal. If 68.5 fails (74.5-6), that would be a double-whammy sell signal. 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, January 16, 2017

SSEC Shanghai Index Daily Chart; Testing 200-Day MA

The Beijing communists have been defending the 2800-3000 level in the Shanghai Index for the last two years. The PBOC stands ready to supply a money pump to keep the SSEC's head above water. The central bankers are the market. Price came down today to tease the 200-day MA at 3038, and bounced. That's the PBOC stepping in to defend the support level. Note that all of today's loss is completely recovered. The Chinese keep burning through their reserves to keep their garbage stocks floating and to control the yuan (renminbi) currency.

The 20-week MA is 3119 and price must immediately regain this level as the first priority. The  longer price stays under 3119, the heavier the tape will become.The 50-week MA is 3002. The 200-week MA is 2804.

The communists will want to keep defending the 2800-3000 area since confidence will be lost if price moves lower. China's economy is fragile now with the ongoing property bubble in play and if confidence in the PBOC is lost, all is lost. The 200-day MA at 3038 serves as an early warning indicator. Note that juicy gap (blue circle) that will need filled at some point forward.

The ADX stumbles sideways at 27-ish, call it a trendless market. Price is attempting to develop a downtrend for price but the communists will keep supporting stocks and prevent a strong down trend from occurring. Just like in Western nations where the central bankers print money to pump the stock market higher and reward the wealthy year after year.

The lower low in price occurs with the indicators not printing lower lows (positive divergence) so the Chi-com's should have an easier hand at keeping price elevated. The lower band at 3082 is violated so the middle band at 3128 is in play. The SSEC should bump along sideways especially with the communists hiding behind the curtain pulling levers to keep stocks buoyant. The global markets are a circus these days. 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.

FTSE London Daily Chart; New Record High; 14-Day Winning Streak Ends; Upper Band Violation; Overextended; Overbot; Negative Divergence Developing

The FTSE prints another record high at 7354.14 but falls on its sword unable to close at a new record above Friday's closing high. The 14-day winning streak ends. Price has been violating the upper standard deviation band during the rally so the middle band at 7157, and rising, is on the table. Price is overextended above all moving average lines and needs a mean reversion lower.

The FTSE is overbot with the RSI and stochastics so a pull back is needed for a rest. Negative divergence is developing and will create a spankdown now in this daily time frame but note the long and strong MACD line. This will create enough oomph for price to return back to the current highs in a few days after an initial pull back occurs. At that time all the indicators will likely be negatively diverged creating a more substantive top and sell off in the daily time frame. If the FTSE stalls here, then the pound (sterling) will likely not move much lower.

The ADX is off the charts verifying the very strong trend which is obviously up. This reinforces the forecast that price will likely return to current highs after a pull back occurs in this daily time frame. BOE Governor Carney saved the day after Brexit promising stimulus as far as the eye can see. This saved the stock market by pounding the pound. The central bankers are the market.  In recent weeks, UK PM May's rhetoric about a hard break for the Brexit creates further softness in the pound and more upside rally juice for the footsie. 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.