Friday, October 9, 2015

SPX S&P 500 2-Hour Chart

We were watching the 2-hour chart to find the market top a couple days ago when the MACD line rolled over--but--not so much. The tiny brown lines for the indicators show the MACD with that hair of a downside which is negative divergence as price printed the new high (see previous chart). Price fell as the long red candlestick shows but then recovered again due to what turns out to be more of a flat to ever-so-slightly rising MACD line. Add in the Federal Reserve dovishness and the bulls are off and running again. Now what?

Same set up is occurring. Bears need the MACD line to roll over to identify the near-term market top. The blue lines for the histogram, overbot stochasics and money flow are in the bear camp with neggie d wanting price to roll over and come down. The MACD line remains long and strong (green line). RSI is flat. So, price may retreat for a candlestick (2 hours of trading time) then come back up to the highs again due to the long and strong MACD line. At that time the indicators should be all negatively diverged, you will have to monitor the RSI as well, and that should provide the price top. Say 1 to 3 candlesticks so the market top would be projected anytime from now through Monday morning.

The upper band was violated (pink) so price needs to back kiss the middle band now at 1986 and rising. The Fed helped provide a day or two more of go juice but the stock market should roll over either this afternoon or first thing next week. This should be considered in reference to any recent gains on long trades or if there was a desire to unload any longs on the rebound move in stocks.

The HOD is 2020.13 thus far so watch for price to come back up to here and the MACD line to go neggie d and you will know the top is in. The CPC and CPCE put/call ratios have not come down so this hints that the equity rally can continue for another day or so. Ideally, a market top aligns with low put/call ratios and that gives you strong confidence that it is a market top. 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, October 8, 2015

GPRO GoPro Weekly and Daily Charts Oversold Falling Wedges Positive Divergence Lower Band Violations

MS (Morgan Stanley) downgraded GPRO yesterday but the company reaffirmed its guidance this evening. The hot dog vendor said he is short GoPro and he said his brother-in-law Frank, that trims the hedges in the park, just went all-in short. There are a lot of shorts in GoPro so any catalyst to the upside may create quite an upside launch. Reference the GPRO 2-hour chart posted this afternoon which Keystone was using to gauge an entry point. Keystone opened a new long position in GPRO today but it is a highly speculative and dangerous trade.

GPRO has crashed about -60% off its August top. No one likes or wants the stock as it prints an all-time low and threatens to lose its IPO price under 25. The daily chart shows positive divergence for all indicators. The MACD cross is positive. The green falling wedge is bullish. Stochastics and RSI is oversold looking for a rebound. Price has violated the lower standard deviation band so a move back to the middle band at 32 and dropping is on the table.

So the daily chart is set up for a bounce in price. The weekly chart shows the RSI, histogram, stochastics and money flow positively diverged over the last few months. However, the MACD line is weak and bleak and the histogram and RSI is flatish in the nearer term (September) so price likely wants to come back down again after any bounce occur. Price violates the lower band on the weekly chart so a move back to the middle band at 49 and falling is on the table.

The 33-ish level is upside price resistance. The middle band on the daily chart, which is also the 20-day MA at 31.98, call it 32, is an upside target. The projection is that GPRO will bounce due to the possie d on the daily chart so perhaps several days or a week or two of upside may finally provide relief for the beaten down GoPro; a short-covering rally may be quite dramatic. After the near-term rally, price will likely roll over again to the downside so you do not want to marry a long trade. The weekly chart is encouraging that a very firm and longer term bottom may occur in November. A strong bottom will be in once the MACD line bottoms and positively diverges on the weekly chart which is likely only a few weeks away.

Holiday sales may increase optimism with GoPro and the whole Chinese market remains untapped concerning action cameras. Perhaps GPRO will finally receive a relief rally after the two month bludgeoning. It will be an interesting trade to watch. 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.

GPRO GoPro 2-Hour Chart Falling Wedge Oversold Positive Divergence

The cab driver told Keystone this morning that he is short GoPro. Mabel, the waitress at the diner in the shopping plaza, says she is going short GPRO. Camera maker GoPro has fallen out of favor tumbling from 66 to 27 in only eight weeks time a -59% crash. Perhaps CEO Nick Woodman will post a video on the GoPro site showing his reaction to the tumbling stock price.

Now that everyone hates it maybe a bottom is in? Keystone never played GPRO on the way up it always seemed a bit gimmicky, however, now that GoPro is bludgeoned and in the emergency room, using a selfie-stick to record the event, it may recover. The daily chart is positively diverged and ditto the weekly chart except for one or two indicators; those charts can be posted later. For now, the possie d on the daily indicates that GPRO may be trying to find a base and recover.

GPRO is a highly speculative long play only to be bot if you are willing to lose all your money. Keystone opened a long trade in GPRO a short time ago. Looking at the 2-hour chart, a lower price is met with higher sloping indicators which is positive divergence (green lines) hinting at a bottom and pending bounce. There are a lot of shorts in this stock so a short-covering rally, should it occur, would be a rocket launch higher. The green falling wedge and oversold stochastics are also indicating a bounce in price is near. Price is extended below the moving averages requiring a mean reversion higher.

Keystone's 80/20 rule says 8's lead to 2's and 2's lead to 8's so the drop through 32 hinted that 28 was on the way which occurs so the 27-28 has potential for a bottoming area. Price will need to hold 27.20 otherwise 26.80 will likely be on the table. The RSI and stochastics show a lower low over the last few hours so it may take 2 or 3 candlesticks to create the bottom so say anytime between now and tomorrow morning.

Keystone is long GPRO as of today and  will likely add on further weakness. The trade is very dangerous. Further commentary can be added with the daily and weekly charts. The holiday season is upon us and folks will likely buy a lot of GoPro cameras and selfie-sticks. A -60% drops is a heck of a drubbing off the top and the stock does have value. 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 7, 2015

WTIC West Texas Crude Oil Monthly Chart

The oil collapse was dramatic from the summer of 2014 to present. Price violated the lower standard deviation band for five consecutive weeks before taking the initial bounce. The RSI, histogram and stochastics are oversold and positively diverged so price bounces and is ready to bust up and out from the bullish falling green wedge. So the daily, weekly and monthly charts are encouraging for the oil bulls. Mix in a huge amount of short sellers that are running to cover and bingo, oil launches higher.

However, note the very interesting weak and bleak behavior with the MACD line and money flow making lower lows as price made the new low on this monthly basis. These two indicators would prefer to see price come back down after the happy rally runs its course. So oil may play around at 48-60 this month and November, maybe into December, but the monthly chart hints that oil will roll back over to the downside again and come all the way back down say as the year ends and into early 2016.

This behavior should it occur would be in keeping with an ongoing global disinflationary and deflationary environment well into 2016. 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.

WTIC West Texas Crude Oil Daily Chart Sideways Triangle Upside Breakout

The big jump in oil over the last three days is sending oil, gas and energy stocks strongly higher sending the broad stock market higher. Russia and Saudi Arabia talked last week and are apparently planning to reduce production. Russia is firing missiles off its war ships into Syria so the unrest in the Middle East adds oil price lift. The jump in price cannot be due to greater global demand since the Baltic Dry Index, BDI, remains in the gutter and it should be moving higher if the global economy was healthy. The oil rise may simply be the mother of all short-covering rallies.

The tight standard deviation bands squeeze out the move. Price is already violating the upper band. The indicators are developing a long and strong profile wanting to see higher highs in price after any pull backs. The green sideways triangle has a vertical side of 6 or 7 handles so from the 45-ish breakout the 51-52 area is targeted. The 200-day MA resistance is 51.14 and serves as a price target.

The white dots show a potential two-leg bull flag pattern the first leg from 38 to 49 which is 11 handles, then sideways consolidation, then say the upside starts from 44 so 55 would be targeted. Typically you want to see the sideways consolidation move slightly lower whereas the oil price went sideways instead but it is close enough for government work.

Interestingly, price is at the late August highs but the histogram and stochastics are negatively diverged. So price may continue higher albeit at a slower rate as this upside energy burns away. Looks like the oil bulls will be in charge for a few days or weeks. The weekly chart indicators are long and strong pointing to more upside on that basis. So price may play in the 48-60 area over the next month. 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 battle at the 1985-1988 resistance gauntlet discussed from the weekend to now remains in play. Yesterday, the SPX stabbed up through to print at 1992 (short purple line) but collapsed from 10 AM EST into the closing bell ending at 1980. S&P futures are up +13 and ready to send the SPX up to test the uber strong 1985-1988 resistance at the opening bell. The stakes are high since 1988 should lead to the 2002 resistance.

The red rising wedge, overbot stochastics and neggie d (short red lines for the indicators) yesterday create the mid-day spank down where the 1973 support held. The 100-week MA is 1975. Note, however, the MACD line is long and strong and wants to see a higher high in price again and the S&P futures point to that outcome occurring. When price prints at 1992 or higher after the bell, monitor the indicators to see if negative divergence prints (the purple lines in the margin). If so price will be spanked down again and likely back kiss the critical 1985-1988 area which would be support if this scenario plays out. The thinking is that the MACD line may not roll over with neggie d on that price high so price will want to come up once more which places the test of the 2002 R on the table. The important 50-day MA is 1998.52 call it 1999.

But the bears should not be discouraged. Bears may need to be patient today but prices should relax lower as the weekend approaches. Price violated the lower standard deviation band (pink) in late September so you knew that price would seek the middle band and perhaps the upper band to revert to the mean which occurs with price leaping to the upper band now and violating this boundary for the last four days. This helped create the mid-day spank down yesterday and sets the course for price to return to the middle band now at 1942 (same as the 20-day MA) and rising. The blue circle highlights a gap that will need filled at some point in the future and this is also where the critical 200 EMA on the 60-minute chart is at 1957; the positive cross above 1957 signals bullish markets for the hours and days ahead (see previous chart).

Thus, the projection is that the SPX will likely float up into the 1988-2002 zone today but roll over as soon as the MACD line goes neggie d which may be about 3 to 6 candlesticks in the future which is 6 to 12 trading hours. Thus, a market top may be on tap this afternoon or tomorrow. Then price will seek the lower support levels.

The 1985-1988 S/R gauntlet is key since, in general, bulls win big above 1988; bears win big under 1985. The BPSPX is on a market buy signal. The CPC put/call ratio is 0.93 not yet down to a complacent level that would help identify a near-term top. The CPCE put/call ratio is down to 0.68 and was 0.62 the day before. That low CPCE at 0.62 helped create the mid-day market top yesterday. So a market top is not likely until the CPCE drops under 0.62 and the CPC will need to fall below 0.82. Check these charts this evening.

Keybot the Quant remains long with a focus on chips, retail stocks and copper. Watch the bull-bear lines identified by the algorithm at SOX 618.34, RTH 75.58 and JJC 27.91. SOX is above creating market bullishness while RTH and JJC are under the level shown creating market negativity. Market bears need SOX under 618.34 or they got nothing. Market bulls need RTH above 75.58 and JJC above 27.91 to confirm a continuing rally in the broad stock market. As the stock market rallies watch to see what RTH and JJC does, if they do not turn bullish then stocks will roll over and retreat. If RTH and/or JJC turn bullish it is party time for more stock market upside and the SPX will target 2002 perhaps higher.

The SPX S/R brown lines shown above are 2019, 2011, 2002, 1988, 1986, 1985, 1978, 1973, 1965 and 1961 (see the SPX S/R missive on the weekend for the key levels). 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 11:27 AM:  The SPX tops at 1999.31 and all the indicators on the 2-hour chart turn neggie d including the MACD line so the spank down occurs. Price moved above the 50-day MA at 1997 but was smacked down unable to hold above. JJC turned bullish as described above for the Keybot algorithm so copper created the early strength. RTH was also trying to turn bullish and SOX was up big. Right now, both JJC and RTH return to the bear camp and SOX drops. Watch SOX 618.40, RTH 75.56 and JJC 27.96 as the bull-bear lines in the sand. The algo is constantly recalculating these values. SOX is above creating bullishness while RTH and JJC are below creating bearishness. This status quo will send stocks sideways. If SOX falls under 618.40 the stock market will take a leg lower. If RTH or JJC turn bullish, the stock market will rally. One of these three will flinch and it will tell you the market direction answer.

Monday, October 5, 2015

SPX S&P 500 Daily Chart 150-Day MA Slope is Negative Signaling Cyclical Bear Market

Remember during the spring and summer Keystone would point out the flattening of the 150-day MA but the bulls kept moving the important moving average higher. The slope of the 150-day MA is key in determining if a stock or index is in a cyclical bear or cyclical bull market pattern. In the green square, the 150-day MA is sloping upwards so the stock market was in a cyclical bull market pattern and the wine was flowing like water. Not anymore. The 150-day MA slope is negative now signaling a cyclical bear market. Stocks would be expected to be lower in price in the weeks and months ahead unless the 150-day MA curls upwards and starts sloping higher again.

The S&P 500 (SPX, Dow Industrials (INDU), Nasdaq Composite (COMPQ) and Russell 2000 small caps (RUT) all display 150-day MA's sloping downwards all in cyclical bear markets. The Nasdaq just rolled over so watch that one closely since if the broad indexes are turning around to mount a sustainable rally, the 150-day MA on the COMPQ may flatten and start to curl higher which would tell you the market bulls have beans. As long as the 150-day MA's slope downward for the four major indexes, stock prices will be lower for the weeks and months ahead.

Use the same technique on all your trades. If you are long a stock and the 150-day MA slope is negative, your trade is in bad shape. If the 150-day MA is sloping higher for your long trade, you are happy. 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 bears are punched in the face today as the bulls receive a market buy signal with a six percentage-point reversal in the BPSPX from 29.40 to 35.40. The bulls are in charge going forward unless the bears can send the BPSPX under 30.40 (a six point reversal from the current 36.40 price). Today was a big day for the market bulls. 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-Minute Chart Battle at 1985-1988 Price Resistance

Do you think the 1985-1988 price resistance gauntlet is strong? (Scroll back to study the information in the SPX S/R missive.) Today's action tells the tale as the bulls were trying to punch up through but did not have enough gas, so far. The bulls will rest up tonight and give it another try tomorrow. The support below is 1978 and 1973. Note how price punched up through 1978 and performed a successful back kiss so it was on its way to 1985. For Tuesday, if 1985 fails price will drop back to 1978. The thin red lines show how when price made the intraday high it came with negative divergence so price retreated; it did not have the oomph to continue higher.

The purple lines show a potential diamond pattern. The diamond looks like it will make a decision at 10 or 10:30 AM EST tomorrow. Sometimes a diamond continuation pattern takes hold and sometimes price collapses in a diamond reversal pattern so no prediction can be made on direction only that potentially price will make a firm directional commitment tomorrow morning.

The battle at the strong 1985-1988 S/R gauntlet will determine the winner. Bulls win big above 1988 as price will then seek 2000+. Bears win under 1985 as price will seek 1978, 1973 and perhaps set its sights on back testing the critical 200 EMA on the 60-minute chart at 1957. The SPX moving above 1957 is a major victory for bulls today. The 20-day MA support is at 1948 and the 50-day MA overhead resistance is at 2000. Thus, if price breaks up through 1988 resistance it will seek the 50-day MA at 2000. 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 60-Minute Chart 200 EMA Cross

The market bears are dealt a serious blow today with the SPX moving up through the 200 EMA on the 60-minute chart at 1957 which signals bullish markets for the hours and days ahead. The bears need SPX under 1957 or they got nothing. The bears were happy during August and September but now the bulls are taking over--as long as they maintain the positive 200 EMA cross. The bulls were celebrating on 9/17/15 but it was premature as the bears quickly slapped them in the face. Will that fractal play out again now?

The Keybot the Quant algorithm, Keystone's proprietary trading algo, is long and tracking SOX 618.34, RTH 75.58 and JJC 27.91 the key bull-bear levels impacting overall broad market direction. SOX is 621. RTH is 76.06. JJC is 27.64. So semiconductors and retail stocks provide bull market fuel and copper continues to create negativity. Thus, bears need either SOX under 618.34 or RTH under 75.58 to stop the stock market rally. Bulls need JJC above 27.91 which will light the way to SPX 2000.

The 1983-1988 level is an uber strong gauntlet of resistance. Bears win if they can keep price under 1983. Bulls are going to 2000+ if the 1988 is taken out 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.

Note Added 2:07 PM:  The SPX comes back up to stab at the 1983-1988 resistance gauntlet printing a HOD at 1983.70 but retreating to 1981. The battle continues as the bulls keep pounding on the 1983-1988 ceiling trying to bust up through.

Note Added 2:23 PM: The SPX has pierced the 1985-1988 gauntlet printing a HOD at 1985.05..... now 195.40. The bulls mean business and are poking at the ceiling to weaken it. Interestingly, copper is not moving higher with JJC at 27.64. Bulls need more fuel to bust through that strong resistance gauntlet. The SPX prints another HOD above 1986 as the SOX prints at highs teasing 622.

Note Added 2:53 PM:  The SPX jumps above 1988 then retreats, then back up to the HOD at 1988.58 but retreats again. This is for all the marbles. The bulls are strong almost busting through the formidable 1985-1988 gauntlet. The bears muster up all their possible strenghth and hold the line at 1988 resistance. Price now at 1986..... 1985 ......