Thursday, October 18, 2018

SPX S&P 500 Daily Chart; Battling at the 150 and 200-Day MA's

The SPX is coming down to back kiss the 150-day MA at 2774. There it is. As this is typed. Whoopsies daisies. The SPX flushes down to 2771 slipping below. The 200-day MA support is at 2768 so price faces another price or die decision at that level.

Now price is down to 2770 the LOD occurring as this is typed. 2 days ago, price poked up through the 150 and 200-day MA's so a back kiss would be expected and it is occurring right now. The S&P 500 will bounce or die from 2768-2774.


The 10-month MA is at 2765. Thus, the S&P 500 will bounce or die from the 2765-2774 confluence.

The 50-week MA is 2747. The key 12-month MA, the cliff edge for the stock market, is at 2748. Thus, a failure at SPX 2747 creates the start of the Armageddon scenario for the stock market for the days, weeks, months and perhaps several years ahead.


If the bulls receive a springboard bounce from the 150 and 200-day MA's and 10-mth MA at 2765-2774, price will seek the 100-day MA up at 2826.

Note the flat 150-day MA line. One of Keystone's key cyclical market signals is the slope of the 150-day MA. That flatness tells you that the S&P 500, which is the broad US stock market, is slipping away into a cyclical bear market pattern. The bulls need the 150-day MA to start sloping higher again pronto, otherwise, they have lost long-term control of the stock market.

At 11:54 AM EST, a couple minutes before munch time on the US East Coast, the SPX is at 2772 between the 150 and 200 making its bounce or die decision. 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 at 12:05 PM: The SPX is at 2771. Slap. Whack. Splat. Slap. The bull-bear battle continues. The 2765-2774 support is for all the marbles. If it fails, then 2747 will be tested and if that fails, Armageddon begins. Bulls need the SPX above 2774 as fast as possible. The drama continues. The tension builds.

Note Added at 12:09 PM: The SPX is at 2775........ 2774 ........ Who will win?

SMH Semiconductors ETF Daily Chart; Death Cross; Sideways Symmetrical Triangle Failure

The chips fall into a death cross on the SMH daily chart with the 50-day MA stabbing down through the 200-day MA (black circle). The SOX death cross is on tap for today or tomorrow. XSD will also likely follow in the days ahead. MU, AVGO, QRVO, NVDA and INTC are in death crosses. NVDA, AMD and QCOM are in a golden cross pattern with the 50 above the 200.

As Keystone always says, after a death cross occurs, the stock or index typically bounces and rallies. This behavior occurs due to the many days and weeks of softness needed to create the death cross; price is ready to bounce. Comically, this bounce usually occurs when every armchair technician is running around waving the death cross banner professing doom and gloom ahead. Investors will then diss the technical's saying the death cross did not create weakness instead a bounce occurs. Rookies. They simply do not understand the death cross.

The chips are trying to create that relief bounce after the sharp failure. Price fills the gap at 99-100. As long as the death cross remains in force, the SMH wil continue to weaken for the days and weeks ahead.

Price fails out of the sideways symmetrical triangle. Keystone had been highlighting that with the SOX this year as it formed and played out. The thick red line, the vertical side of the triangle, is about 13 handles so the downside target would be 105-13=92.

Note the false breakout higher in late August early September. This behavior is typical for sideways symmetrical triangles. About one-half to two-thirds of the way through the triangle price will breakout (or break-down) and traders will think that the path ahead has been chosen. But instead, price will sharply reverse, return inside the triangle and then move out the other side like the chart above shows. The false triangle breakout above resulted in price dropping back inside the triangle and then failure out the bottom. This behavior can occur the other way as well. If you would have saw a break-down in late August, you would have been suspicious that price would have reversed and moved higher for an upside breakout. But the bears won this triangle battle and the semi's are crushed.

Chips are in nearly every product manufactured nowadays so the retreat by semiconductors is a troubling sight for the global economy 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.

Monday, October 15, 2018

SPX S&P 500 Monthly Chart; Battling at the 10 and 12-Month MA's

The 200-day MA and other key moving averages remain in play. The most important levels for the S&P 500 are the 10-month MA at 2765 and 12-month MA, the cliff, at 2747. The SPX is at 2769. As long as the SPX remains above the 10-mth at 2765, the bulls are creating a relief rally. Markets deteriorate below 2765. If the SPX loses 2747, it is lights-out for the stock market for weeks, months and perhaps years to come.

Key moving averages are;
150-day MA = 2774
SPX is currently printing 2769
200-day MA = 2767
10-mth MA = 2765
12-mth MA = 2747
50-wk MA = 2747

A failure at 2765-2767 is a major problem and price will likely want to sink lower for another test of the support in the 2740's. A failure at 2747 is the Armageddon outcome for the stock market for the weeks and months ahead. Bulls need to push above 2774 which would provide more upside juice for equities. 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 12:03 PM: The SPX is at 2755 tumbling down through the 2765-2767 support. There may be a test of the 2747 support on tap which is a major bounce or die decision; the pivot from this key area determines the fate of the US stock market for many months ahead.

Note Added on Thursday, 10/18/18, at 11:39 AM: The bulls won out with a relief rally sending the SPX up through 2774 and back above 2800. On Thursday, today, the bears continue applying pressure with the SPX moving lower currently at 2782. A back kiss of the 2774 support (150-day MA) may occur where a bounce or die decision will again occur.

Saturday, October 13, 2018

XHB Homebuilders and ITB Home Construction ETF's Weekly Charts; Downward-Sloping Channels; Housing Sector in Bear Market


The housing sector data continues softening in recent weeks. With winter coming, housing activity in the northern states will subside. Housing and autos are the two key sectors that drive the US economy.

The XHB peaks at 47 in January and this week prints a 34-handle, a big -27% loss well into bear market territory which is a -20% drop off a top. The ITB peaks at 46 in January and this week prints a 31-handle, a huge -30% loss in a bear 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.

Friday, October 12, 2018

COMPQ Nasdaq Composite Weekly Chart; First Major Index Slipping Into -10% Correction

The COMPQ is the first major index to slip into a correction. The Nazzy Comp falls from 8133 to 7274, an 859-point drop, -10.6%, placing the COMPQ in correction territory. Price is trying to recover on Friday, 10/12/18.

A -10% correction off the 8133 top is 7320 so this is the correction line. Price rallies about 100 points back above 7320. Tech stocks do not want to remain in correction mode. 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 4:15 PM: The COMPQ recovers late in the Friday session ending the week at 7497 only spending one day in correction territory. The 200-day MA is at 7503 so the bulls needed another 6 points to regain this key level. COMPQ will bounce or die from 7497-7503 on Monday.

SPX S&P 500 Daily Chart; Moving Averages

As is always the case in the stock market when a crash occurs, everyone turns into an arm-chair technician flocking to the technicals and charts for answers, and many of these people are the ones that denigrate technical analysis otherwise. The SPX lost the 200-day MA at 2766 yesterday so the media waves this banner to and fro as novice traders shrink in fear of the almighty 200-day.

The 200 is important but there are other moving averages equally, or more important, such as the 50-week MA and 10 and 12-month MA's.

100-day MA = 2822
150-day MA = 2774
200-day MA = 2766
10-month MA = 2761
12-month MA = 2744
50-week MA = 2742
SPX Price = 2728 (10/11/18)
20-month MA = 2628

The failure of the 200-day is key and led to further weakness but the 10-month MA is far more important since it is followed by the old-timer trader's and used in many algorithms. The two form a confluence at 2761-2766 obviously a key overhead resistance level going forward.

The 12-month MA is one of Keystone's key stock market cyclical signals which indicates that the stock market has fallen into a cyclical bear market pattern for the weeks and months ahead. The bulls must regain the 2744 immediately, otherwise, stocks will continue to weaken and a crash scenario will be on the table. The 12-mth MA is programmed into many algorithms including Keybot the Quant.

The 12-month and 50-week form a confluence at 2742-2744 which is an uber important resistance level. This level tells you if the stock market will be weaker and trending far lower for the weeks, months and perhaps years ahead if under 2742, or, if equities will recover and the sideways to sideways higher trend continues for the stock market above 2744.

S&P futures are up +31 points about two hours before the opening bell for the Friday, 10/12/18, session. Futures pop a few points over the last half-hour due to the JPM earnings release. The SPX begins at 2728 so a move of about 31 points places price at 2759. Thus, the SPX should take the crash scenario off the table after regaining the 2742-2744 level this morning which will then become support but falls short of the critical 2761-2766 resistance level. It looks like the battle today may be in the low 2760's. You can use the moving averages above to see who is winning and to forecast the direction ahead for stocks.

Note the flatness to the 150-day MA. The slope of this moving average is key since if it flattens and rolls over it will send that stock or index, in this case the S&P 500, into a cyclical bear. 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 9:41 AM EST: The stock market opens and equities catapult higher with dip-buyers tripping over each other buying stocks with both fists. The SPX is up 41 points, +1.5%, to 2770. Price blew through the 2742-2744 resistance, now support, so the Armageddon scenario is off the table. The S&P 500 also takes out the 2761-2766 level albeit by a hair. Price is bouncing around in the high 2760's and low 2770's. As explained, the 2761-2766 level tells you a lot about the path ahead for the stock market. If price continues higher, watch the 2774 resistance. Above 2774, the SPX would have room to run higher.

Note Added 10:10 AM EST: There it is. The SPX is at 2774 testing the 150-day MA. Slap, whack, splat, slap. The SPX battles at 2774. Do the bulls have the juice to head higher or do the bears spank price back down to the 2761-2766 support?

Note Added 2:43 PM EST: The bulls try to break up through the 2774 resistance and thwack; the bears slap the bulls lower. The bulls stumble backwards falling below the key 2761-2766 support level, now becoming resistance, so a move to the critically-important 2742-2744 support level is next. Boom. The SPX falls below this key level printing the LOD at 2729 at 12:50 PM where the day started. The bulls recover and send the SPX higher up through 2742-2744 again but that fails at 1:30 PM sending price down to 2736. The bulls try to push higher again regaining 2742-2744 at 1:45 PM only to be slapped in the face once again losing this key level at 2 PM. The S&P 500 comes back up again to the key 2742-2744 level but is spanked lower. Price is at 2738. The bulls must recover the 2742-2744 level since it is a matter of life and death. The stock market is in for a world of hurt for weeks and months ahead if the SPX cannot recover above its 12-mth MA. The tension mounts with about an hour remaining in the trading day and in the week. SPX is at 2739.

Note Added 3:09 PM EST: Boooiinngg. Stocks bounce. The SPX moves up through 2742-2744 staving off Armageddon again. The S&P is at 2755 and may mount a charge at the important 2761-2766 resistance again as the day draws to a close.

Note Added 4:19 PM: The stock market rallies during the last hour of trading the SPX glides higher fro 2732 to 2775.77 the HOD. In the final 2 minutes, the 2774 resistance spanks price lower. The SPX falls backwards landing on the 2671-2766 support ending the day at 2767. The circus continues on Monday.

SPX S&P 500 Monthly Chart with 12-Month MA Cross; Equities Fall into Cyclical Bear Market

One of Keystone's key stock market signals is the SPX 12-month MA cross which dictates whether the stock market is in a cyclical bull market pattern or a cyclical bear. The 12-month MA is a cliff-edge for equities. Yesterday, the SPX fails below the 12-month MA at 2744 ushering in a cyclical bear market for weeks and months ahead.

This is extremely serious. The 12-month MA is the edge of the cliff and a failure creates the potential for a crash event to occur in the stock market. The bulls must push the S&P 500 back above 2744 as fast as possible, otherwise, the stock market will crumble into oblivion.


The S&P 500 price is at 2728 which is 16 points below the critical 40-week MA. The bulls have work to do if they want to regain the good times. Three hours before the opening bell for the Friday, 10/12/18, session, as this message is typed, the S&P futures are up +26. A move for the SPX of this magnitude would place the S&P at 2754 above the 12-month MA. It would signal that the bulls fell off the cliff-edge, but grabbed a branch, and now pull themselves back up onto the cliff.

For now, this is serious technical damage to the stock market and equities will trend lower for weeks, months and perhaps years ahead as long as SPX price remains below the 12-mth MA. 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 4:23 PM: The SPX ends the week at 2767 back above the critical 12-month MA at 2747. The market bulls avoid Armageddon by 20 points. The cyclical bull market remains in play (according to this tool). Note that the NYA 40-week MA cross signal indicates a cyclical bear market below 12802. One of these two indicators will flinch, joining the other, and firmly telling you the stock market direction ahead for the intermediate term.

NYA NYSE Composite Weekly Chart with 40-Week MA Cross; Equities Fall Into Cyclical Bear Market

One of Keystone's key stock market signals is the NYA 40-week MA cross which dictates whether the stock market is in a cyclical bull market pattern or a cyclical bear. This week, the NYA fails below the 40-week MA at 12800 ushering in a cyclical bear market for weeks and months ahead.

This is serious. Note the teases this year with the NYA proclaiming a cyclical bear only for the bulls to smack them around a little bit and resume the cyclical bull. The drop this week is more drastic. The NYSE Composite price is at 12350 which is 450 points below the critical 40-week MA. The bulls have work to do if they want to regain the good times.

For now, this is serious technical damage to the stock market and equities will trend lower for weeks, months and perhaps years ahead as long as NYA price remains below the 40. 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 4:15 PM: The NYA finishes the week at 12439 well below the critical 40-week MA at 12802. The stock market is in a cyclical bear market going forward (according to this tool). Note that the SPX 12-month MA cross signal indicates a cyclical bull market as the SPX fights at the 2747 level. One of these two indicators will flinch, joining the other, and firmly telling you the stock market direction ahead for the intermediate term.

CPC and CPCE Put/Call Ratios and SPX S&P 500 Daily Charts; Near-Term Bottom Approaching



Here is an update of the put/calls. The sentiment is panic and fear as evidenced by the higher put/calls and higher VIX now in the 20's. The higher volatility creates the wilder intraday and day to day price swings. As long as volatility remains elevated, the wild market moves will be a daily event.

The high put/calls continue hinting that a relief rally is on the come. S&P futures are up +22 as this is typed. That was a wild drop this week. The SPX collapses from 2942 to 2728, a big 214 points, -7.3%, in only six days

The rampant complacency in September into early this month created the market top and foretold the collapse. The SPX had the run of the mill pull back of 20 or 30 handles to begin this week, but that quickly led into the crash. Note the purple rising wedge pattern on the SPX that Keystone has highlighted too many times to recall. Now do you see how the collapses from rising wedges can be dramatic? That qualifies as dramatic.

The put/calls are indicating that a tradeable bottom is likely in play. The CPC is at levels not seen since the late June market bottom. The CPCE is at levels not seen since the February bottom which were the low prints of the year for the S&P 500.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, October 10, 2018

Keybot the Quant Turns Bearish

Keybot the Quant whipsaws this morning flipping back into the bear camp at SPX 2846. Retail, banks, copper and the NYA Index all lost key levels creating the stock market carnage. As always, more information is found on Keybot's site;

Keybot the Quant