Thursday, June 30, 2011

GHL Greenhill Daily Chart Inverted H&S Gaps M&A

GHL Greenhill has been bottoming the last couple months, notice the oversold conditions, falling wedge and positive divergence that launched it off the bottom in early June (blue lines). Now an inverted H&S is shown by the pink lines. Head at 47.5, neck line at 55.0, that is 7.5 difference, thus, 55.0+7.5=62.5 target.

Note the gaps shown by the green circles which are attractive targets as price moves up. The weekly chart is constructive to the upside as well. Price needs to punch up thru the neck line to place the inverted H&S and 62.5 target in play. GHL will move up on M&A news by other companies so keep your ears open for M&A talk, especially on the 'merger Monday's (mergers are typically announced on Monday's after the deals are finalized on the weekend, sometimes on the golf course).

Once the neck line at 55 is touched, GHL should rock to 62.5 as the summer plays along. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

Wednesday, June 29, 2011

XEU Euro Daily Chart Sideways Symmetrical Triangle ECB Meeting 7-7-11

XEU euro daily chart shows a sideways symmetrical triangle squeezing things sideways. Trichet was instrumental in bouncing the commodities and equities markets the last couple days since he released a communique implementing his 'strong vigilance' words which means he plans on hiking rates come the 7/7/11 ECB meeting. Once he announced strong vigilance, the euro took off to the upside and the following asset relationship plays out; euro up=dollar down=commodities up=equities up=treasury prices down (yields up).

Thus, Trichet is a big part of the reason markets ran up this week and the media gave it little attention. Trichet promised a pony (rate hike) so he better deliver a pony in four trading days, otherwise, the euro will plummet. During the May downtrend move, the ADX was starting to show a strong trend in place, but once the euro bounced off the lower rail, there has been no strong trend for the last five weeks, price is simply moving out to the apex of the triangle along with the MA's.

The euro is going to break hard out of this triangle in the following days, the ECB meeting next week will probably be the climax. Note the hanging man candle printed today indicating a potential trend change, which would bring price down a bit to keep it in the triangle until next week. This chart is not tipping its hand, that is the nature of a sideways symmetrical triangle pattern, but, considering the weak weekly chart, the euro should move lower. Sometimes the intial move out of the triangle is a fake out so you will not know the official move until Friday, 7/8/11, and do not be faked out if you see price sneak above the top rail in front of the ECB meeting.

Watch to see if the 20 MA stays under the 50 MA, bearish, and if the RSI and stochastics fall under the 50% level, which would pave the way for the downside. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

Keystone's Evening Nightcap 6-29-11

What a remarkable week for the bulls so far.  Only one more day remaining for QE2 and the last POMO pump tomorrow.  The Fed is exiting quantitiative easing in a blaze of glory as they forced the retail sector higher yesterday as well as the NYA back up and over the 40 week MA, nullifying the move into a secular bear market, for now. Today retail stayed bullish while copper was targeted and took off like a rocket, the bulls never looked back, shortly thereafter the volatility dropped to favor bulls as well. By mid monring, the bulls were running and not looking back.

Trichet's communique yesterday stating a return to 'strong vigilance' is his promise to raise rates on 7/7/11 at the next ECB meeting.  If Trichet balks, the euro will tank. But that move by Trichet boosted markets more than the Greece distraction via the asset realtionship; euro up=dollar down=commodities up=equities up=treasury price down (yields up). As the yields move higher, the ten year moving from 2.8% handle to 3.1 % in only two days!

This move in the ten year, while the two year moved up less so, expanded the 2-10 spread to negate any bad affects on banks and the broad markets due to the spread falling below 255, Keystone's 2-10 Spread Indicator value.  At this writing, the ten year is 3.1%, the two year is 0.46%, thus 310-46=264.  The spread was at 256 early this morning; that is a move of 8 basis points in a few hours!  More importantly, some serious distance was placed from the 255 number, thus, the yield curve is starting to steepen and favor the banks, allowing them to go back in to make easy money.  The financials responded strongly, catapulting higher, moving from garbage two days ago to glory today.

The bulls are further buoyed by the SPX:VIX ratio moving back above 68. As if all this bull euphoria is not enough, markets are typically buoyant the two days in front of a three day holiday weekend.  That means markets should move sideways or sideways up into the weekend.  A rest is needed considering the strong move in the indexes thus far this week.

If you went long Monday or Tuesday you were rewarded.  The energy and steel plays this week ran nicely as well but it is best to book those profits.

For tomorrow for the SPX, things keep going the bulls way.  Bulls only need two points higher to move above 1309.21 after tomorrow's open, and if this occurs, the bulls will be running several handles higher in the indexes again, the SPX will be on its way to test 1314.  The market bears, stunned and shell-shocked from the action this week, must push the SPX 10 points lower to get under the 1297 handle to restart any significant bearishness.  SPX 1298 thru 1307 tomorrow represents sideways slop and will give the indexes a chance to catch their breath.

Some of this bull move is no doubt due to the end of the quarter, Q2, and first half of 2011, H1, which closes out the books tomorrow. The Greek drama continues with the 5-year inplementation plan approval on the table, and then the Euro Finance Ministers will meet to approve the funding for Greece on Sunday, 7/3/11.

Jobless Claims are 8:30 AM and a sliver of good news will result in more bullish action for the broad markets.  Bullard speaks tomorrow at 9 AM and he has favored the hawkish side.  Chicago PMI is 9:45 AM and a possible market inflection point.

The bulls did a heck of a job this week thus far and if no surprises occur, this action should ride at least sideways into the July 4th weekend.

Greece Austerity Vote

UPDATE 9:15 AM: Vote passes in Greece, futures pulled back down, giving the appearance that it was all baked in.


UPDATE 7:00 AM: Vote to take place 'sometime' between 7 and 10 AM EST, obviously no one knows for sure.


UPDATE 5:30 AM:  Athens time is five hours difference compared to U.S. East Coast.

Latest news is that the Greece austerity vote is scheduled to occur in one and one-half hours which is 7 AM EST.

Tuesday, June 28, 2011

Keystone's Evening Nightcap 6-28-11

Traders stepped in today to front run the Europe/Greece austerity vote, currently scheduled for 5 AM EST.  The modern-day Greek tragedy was so much the focus today that the big reason for the stock jump went unnoticed.  Looks like the powers called Trichet and told him to to do the strong vigilance strut today, so he releases a communique invoking his hawkish stance and patented strong vigilance wording. Trichet will have to walk that walk on 7/7/11.  The euro immediately jumped higher, and commmodities and equities quickly followed.  Treasury yields took off vertically, the biggest move higher in recent memory.  The ten year had a 2.8 handle yesterday and now sits at 3.03%. In play today, the asset relationship; euro up=dollar down=commodities up=equities up=treasury prices down (yields up). 

President Obama announces after the close that he will conduct a press conference tomorrow at 11:30 AM, just what markets need, more drama.  So look at that timing as a possible pivot point for the indexes.  Other market movers for tomorrow include housing with KBH earnings and the Pending Home Sales numbers at 10 AM.  SRS (inverse housing) is shaping up for an entry. Keystone's algorithm placed housing back into a double dip two or three weeks ago so there will be sad news moving forward no matter what tomorrow says. Oil inventories at 10:30 AM.  Commodities and ag will be affected by MON earnings. FDO earnings will help gauge low end retail and consumer spending, along with GIS.

The energy trade discussed here on the weekend for the lead up into the ISM number Friday worked like a charm; there is no reason to risk that type of two-day return, those positions should have been cashed out at the close today.  Steel is jumping as expected as well, that should have a little more legs to it but SHAW projected low earnings moving forward tonight, receiving a 13% haircut after hours, thus, poor infrastructure guidance means a lack of need for steel so those stocks are simply a quickie trade like most things nowadays.

The markets finally put together a close that did not pare back gains; this is a feather in the bulls cap. The NYA is back above the 40 week MA preventing a slide back into a secular bear market, albeit perhaps a temporary reprieve.  SPX:VIX ratio remains under 68 (67.64) which means we are in a short the rally mode for the indexes so traders with long exposure would have been wise to hedge with VIX calls or buying some VXX in case things go haywire overnight tonight. Note how close the SPX:VIX ratio is to Keystone's 68 level, only pennies away, watch that tomorrow, if the ratio goes over 68 the bulls will be running long and strong, if the ratio remains under 68, short the rallies.

The sectors were all over the map today, financials in the gutter, staples flat but discretionary up like a rocket, basic materials and industrials strong but utes much less so.  The financials are a victim of Keystone's 2-10 Spread Indicator.  At this writing, the ten-year is 3.03% and the two-year is 0.47%, thus, 303-47=256, exactly on top of the 255 line in the sand between happy and sad financials.  Broad markets will not go substantially higher without financials and financials will not go higher unless they overcome a 255 spread; they are now one basis point in the bulls favor.

Some traders are touting long plays on oil but it is probably best to stay away until oil explores the upper 80's which should come in the next few days.  There are already rumors on the street that another release of the SOR is planned.

Obviously, the Europe/Greece vote overnight carries a lot of weight for tomorrow. In addition, since retail enabled the markets to move higher today, FDO numbers are critical.  Watch the RTH, now at 107.51.  If it stays above 107.29, the market bulls are in clover, drinking champagne as the SPX will regain the 1300 level on its way to 1307.  Market bears need to see the RTH fall under 107.29 after the open and that will place a smile on their faces.

For the SPX tomorrow, the bulls are holding the cards.  Any green in the futures is going to launch the indexes higher over 1300.  The market bears simply need to have red futures to stop the upside run.  Doesn't matter what they are as long as they are red.  As the day moves along, the bears would need to touch 1280 below to restart all the negativity.  The 1282 thru 1296 range tomorrow, without a move out either side, is sideways slop.

Seasonality says Thursday and Friday should be buoyant and bull-friendly in front of the holdiday weekend so keep this in mind as tomorrow plays out into Thursday morning.  Well, good ole Keystone needs his rest, set the alarm clock for 5 AM tomorrow, that's when the fireworks begin, six days early.

SPX S/R for 6-29-11

The critical resistance at 1298 placed a lid on the bullish action today.  For tomorrow, the bulls have the wind at their backs since the indexes closed near the highs.  If the futures are positive by any amount, the market bulls will be accelerating the indexes higher, attacking 1298, the psychological 1300, and then on to 1307 and 1314.

The market bears need the futures to be red before tomorrow's open, the amount does not matter, any red numbers will do, even pennies lower. As the day progresses, the bears would need to move lower to touch a 1280 handle to get the true negativity restarted. SPX moving thru the 1282 to 1296 range tomorrow is sideways slop.

·        1319
·        1316
·        1314
·        1311-1312
·        1306-1307
·        1300
·        1298
·        1295
·        1292-1293
·        1289
·        1286-1287
·        1282
·        1277-1278
·        1272-1273 (LT S/R)
·        1270
·        1267-1268
·        1262

Keybot the Quant Turns Bullish at SPX 1285

Keybot the Quant, Keystone's proprietary trading algorithm that handles the short to intermediate term trading, flipped to the long side at 9:36 AM at SPX 1285.  Once 1285 was touched, the indexes took off to the upside. The NYA has moved back above the 40 week MA preventing the move to a secular bear market again, at least for now, and the retail sector is moving up helping the bulls.

Caution is warranted and you must stay on guard for a potential whipsaw since the recent action is low volume, high volatility and the Europe/Greece austerity vote occurs overnight tonight in front of tomorrow's session.

More information can be found at Keybot the Quant's site:

http://www.keybotthequant.blogspot.com

Monday, June 27, 2011

MITL Mitel Networks Daily Chart Falling Wedge Positive Divergence

Keystone entered MITL today, the falling wedge and positive divergence was too compelling to pass up and price bounced at the close. Upside targets are 4.75 (20 MA and resistance), 4.80, 5.00, but, as always, take the profits if they are there, you can always reenter on a pull back. The weekly chart is constructive, unlike many other stocks and indexes that are showing positive divergence for the daily chart but the weekly charts are weak. Therefore, this increases the liklihood that MITL should have the gusto for some higher numbers moving forward. Stochastics went above 50%, watch to see if the RSI does. MITL is a less liquid stock so this increases the liklihood of wild swings. MITL hosts its Analyst's Day on July 6th so the stock should be jumpy into next week. This information is for educational and entertainment purposes only. Do not trade based on this information. Consult your financial advisor before making any investment decision.

Keystone's Evening Nightcap 6-27-11

The market bears could not push the SPX lower by that one measly point to reinitiate the selling, so the bulls took over today.  The positive divergence on the daily index charts bounced price.  The rally is not impressive, however.  Low volume stuff, volatility remains elevated, so the indexes can be pushed around like jello on a plate, and that goes for down as well as up.  Recent behavior has shown large down days following large up days, and visa versa, so the jury's out on what tomorrow brings.

The market bulls need to pump retail tomorrow if they want to run the indexes higher.  RTH, now at 106.44, would need to move above 107.10, if so, the broad markets will run strongly higher.  If not, the bulls got nothing, and today is verified as nothing special.

The energy and ISM trade theme Keystone talked about on the weekend played out today. ERX, XLE, XOM, COP all went up. Natty stocks took a little bit of a hit due to bad press on shale gas.  Keystone simply daytraded ERX instead of holding it until this Friday or the following Tuesday.  On weakness, the trade will probably be reentered for another ride. When the volatility comes up like it has, a traders dream, you cannot wear out your welcome with trades, if the money is there, take it, because in these fast moving markets, bloop, the profits will be gone if you hesitate.

MT popped over a percent today, and in the steel sector, NUE did not feel any love, but considering the postive divergence on the daily chart, price will bounce any time.

A feather in the bears cap was the news that copper and other metals demand will not be robust moving forward.  The bulls need to push copper higher if they want to get something going, and it looks like this rug was pulled out from underneath their hooves. Another feather in the bears cap is the 2-10 spread, remaining under Keystone's magic number of 255. Ignore any talk of bank book value, if this spread remains sub 255, the banks are garbage, and the broad markets will not make any substantial move higher without the banks.  Conversely, if you see the spread jump back above 255, that is a clue for you to start looking for that more sustained broad market rally.

For the SPX tomorrow, starting at 1280, the bulls need to touch 1285 and the rout will be on, buyers will be coming into the indexes in force, driving the markets much higher. The bears have a harder task ahead, they need to push about 11 points lower simply to touch a 1268 handle, this critical support level, if they touch it, they will be going down thru it.  1262 will follow in quick order, and then potentially a test of the starting year numbers at 1258. If the SPX oscillates between 1270 and 1284 tomorrow with no breakouts from either side, this will be a sideways slop day with everyone going home unhappy, then having to wait on pins and needles for the Europe/Greece austerity vote for Wednesday's trading.

Today's action did not mean much.  Markets remain unstable.  Stay on guard. Case-Shiller will depress the markets at 9 AM tomorrow morning. Consumer Confidence is a key monthly indicator so expect the market to pivot at 10 AM.

Sunday, June 26, 2011

Keystone's 2-10 Spread Indicator Failure

Keystone uses 255 as a 2-10 spread number that separates happy banksters using a steep yield curve to their advantage (over 255), from sad bankers that no longer have an advantageous yield curve (under 255).

Latest numbers; 10-year is 2.86% and 2- year is 0.33%

286-33=253 

Financials and banks are in a heap of trouble right now, Keystone's 255 spread number has failed; that means this sector will be weak and sick for quite some time. Broad markets cannot move up with sad banksters.

Keep watching the spread to see if it stays under 255. If market bulls want to move the indexes upward, the bulls must get the 2-10 spread back up and over 255.  If they cannot, then the broad market weakness will continue.

Keystone's Sunday Commentary for Week of 6-27-11

……….if it’s Sunday, it’s time for Keystone’s Commentary………..

Interesting how the seasonality worked out sa projected last week.  The week after June OPEX is down 18 of last 20 times, and, after last week, now down 19 of last 21 times, so mark your calendars for June 2012 to be aware of this market behavior and use it to your advantage next year.

Well, that was last week, ancient history, what about this week?  Markets are typically buoyant and bull-friendly the two days before a three day holiday weekend.  Independence Day is next Monday, thus, this Thursday and Friday should favor bulls.

We received the QE3 in quick order with the release of the SOR, or SPR, news. POMO pumping ends this week but it looks like the administration is going to now try to stimulate the economy with driving oil prices lower.  This central planning stuff is worrisome, the oil reserve is for an emergency; I guess low poll numbers are now an emergency.   The oil news already has traders questioning the oversupply concerns, more uncertainty moving forward, not less.

Keystone’s secular signals show the first sign of breakdown with the NYA.  The NYA 40 week MA cross has failed (now two weeks in a row) placing the broad markets back into a secular bear market.  This is one of four secular signals Keystone monitors.  The SPX 12-month MA cross is 1236 currently, thus, at 1268, the SPX remains 32 points above failure into a secular bear. The monthly chart receives a new data point on Thursday evening.  The SPX 150 day MA slope indicator teeters every day with a flattening slope, but for now, it remains as a secular bull market.  The fourth secular signal is the UPS 20 and 50 week MA cross, shipping provides a reliable secular call on the markets, and this shows the 20 MA rolling over and starting to come down towards a cross.  The distance between the two MA’s is the closest since the last big market scare in November 2010, so this requires watching, but, like the other three secular calls, it still shows that the broad markets are in a secular bull.

The utilities stopped a broad market collapse last week.  Keystone’s comparison number for UTIL price was the 418 level and UTIL came down within a couple bucks of this level before rebounding up and away.  A failure of 418 last week would have sent the broad markets over a cliff so the market bulls wrestled back control.  This week, Keystone’s comparison number for UTIL is down much lower at 393, so UTIL has to fall 30 points this coming week to signal that the broad markets are going into a free fall.

Keystone has been waiting for the utilities to lead the broad markets down, which is a sign of an extended bear market and serious selling ahead, but, as of yet, the utes have maintained buoyancy up above the fray.  Watch 408 this week; if UTIL falls below here, the markets will be selling off large.  If UTIL then loses 393, the broad markets will be in free fall. If UTIL stays above 408, the market bulls will muddle through in the short term.

Lots of negativity to close out the Friday session, many traders did not want to be long over the weekend.  Well, you never know what traders are actually doing, but, considering the contrarian view, the negativity was thick so the markets will probably surprise with a strong Monday, but, it all depends on Europe/Greece.  At this writing Sunday evening, a red opening is setting up but there are a lot of hours before New York’s open.  The numbers will not matter until the morning.  Greek vote for austerity is Wednesday, 6/29/11, so tension mounts.

For the SPX tomorrow, the Monday session, the market bears only have to push one measly point lower after the open and they will open the door wide for accelerated selling, which would test the 1262 level, and then perhaps test the starting year numbers of 1258-1259.  The daily charts are setting up with positive divergence so a bounce is coming.  The goal for the market bulls tomorrow is to not let 1267.24 give way. If the SPX loses this level the bear scenario plays out.  If the bulls can stay above 1267.24, they can at least muddle thru the day sideways.

Copper will probably be targeted for upside by the bulls tomorrow, perhaps some of the remaining POMO pumps will push this metal higher; the bulls will try to push copper higher thereby pushing the indexes higher. China, $SSEC, has jumped four days in a row, and considering that the daily chart is positively diverged, but the weekly charts remain weak, just like the U.S. charts now, Shanghai may be in leader mode now so this will require close watching; see if $SSEC leads the U.S. indexes as we move along.

As the early week plays out, factor in the likelihood that Thursday and Friday will be up days.  A possible scenario that will of course change as the hours tick by this week, would be an up Monday, with selling coming in Tuesday or Wednesday, possibly to Thursday morning, then up Thursday and Friday into the holiday weekend. Study Keystone’s Key Events and Market Movers to see how this week trades against the potential pivot times.  Volume will trail off as the week plays out and many traders will sneak out the back door on Friday to get an early start on the barbeque.

MT Arcelor Mittal Steel Daily Chart

MT Arcelor Mittal shows the falling wedge and positive divergence that bounced the price a week ago. Now price is moving down to gather strength for the next continued constructive move higher. Note the gap at 31.6-31.7 which is an attractive entry target. The steel stocks, X, NUE, all have the same look as MT. More short term upside ahead but the weekly charts remain weak, sideways at best, so after the up move in the steels is enjoyed over the coming days, do not wear out your welcome, it would be prudent to take profits and move on as the weak weekly charts take over again in July. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

HD Home Depot Daily Chart H&S Hurricane Season

HD Home Depot moves up as the broad markets headed lower. Why? Clever traders looking to enter at a good price bot shares in anticipation of the hurricane trade. As soon as the first hurricane comes towards Florida or New Orleans, folks will run to HD and LOW, buying up plywood and generators, news outlets will roll the same film file footage as last year increasing the fear factor.

Thus, some astute traders are making a bet that the price they got in at, 33-34, should be rewarded as the skies darken with a 'cane comin'. The chart is constructive in the near term, at least it should have a sideways vibe at worse, the 50 MA at 36 should provide an overhead ceiling. Thus, price has moved up two bucks already in short order so the rewards for a hurricane trade greatly diminish as price climbs. The traders that bot at the positive divergence bottom at 33 were the smart ones.

All that said, what if this summer is nothing but blue skies and sunny beaches? The H&S is in play and the back kiss of the neck line is occurring now. Thus, if a hurricane's a comin', the 33 to 37 range is in focus, but, if the weather is calm, the luster will leak out of HD over time, and the H&S target at 31-ish will eventually be explored as the summer moves along into fall. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

XOM Exxon Daily Chart Falling Wedge Positive Divergence Bounce H&S ISM Trade

XOM Exxon daily chart shows the rising wedge and negative divergence creating the top in late April and the spank down that was expected and followed. Note how the white lines show a falling wedge and positive divergence now so a bounce is in order. The XOM weekly chart is weak and bleak so after the bounce occurs the intermediate and longer term down trend will resume.

The 200 MA will act as support so the bounce should occur this week from the 76.1-76.8 area. Note the H&S in play now which targets the big gap below at 70, which will probably be achieved as summer moves along. The ISM Trade buys energy the last few days of the month going into the ISM number (Friday) on the first of the month. This quickie trade has trended like this and been a winner for many months and considering the positive divergence in place now, this week should be no different.

This same near term positive divergence look and quickie long energy trade is visible across other energy and oil stocks so there are many things to play including XOM, XLE, ERX and OIH to name a few. Trading must be nimble since you do not want to remain long after the pop occurs--you'll want to take your money and get out of Dodge since the weekly charts will take over again with intermediate term weakness ahead. Thus, the idea is to buy energy tomorrow, on weakness is preferred, but these levels are fine, and sell on Friday or the following Tuesday, taking your profits-- or lumps if markets do not cooperate. Seasonality helps as well since Thursday and Friday should be bullish days ahead of the holiday. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

XLE Energy Daily Chart Falling Wedge Positive Divergence Bounce Gaps ISM Trade

XLE energy shows positive divergence and a falling wedge in this daily time frame so a bounce will occur. The weekly chart is weak and bleak, however, so the bounce will simply be a rest in the selling action that should then resume and continue thru the summer. The upward-rising 200 MA should serve as support in this near term so the bounce will occur now, or at the very worst, from the 69-70 gap fill areas.

A weak Monday start would open energy up as a nice quickie long play, many ways to play it including XLE, ERX, the triple bull, other ETF's, and individual energy and integrated stocks. Energy is in a trend that moves up at the end of the month into the ISM manufacturing number, which is Friday. Thus, the potential trade is entering long early week, on a potential dip, or from right here, and then selling on Friday or Tuesday of next week. The BPENER is positively diverged as well verifying the coming pop. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

Saturday, June 25, 2011

CRB Commodities Daily Chart H&S Two Leg Bear Flag Patterns Positive Divergence

CRB commodities daily chart siting on top of the 200 MA support. The blue lines show positive divergence lined up now so price will want to head back up and recover. The two leg bear flag, or pennant, is in play now, from 370 to 335 was 35 difference, then, after the consolidation zone, the second leg began at 355, thus, 355-35=320 target.

So the 200 MA is trying to support price now, but the bear flag wants to see a little lower, say, the 320-330 area is the bounce zone. The pink H&S is in play now as well, the neck line at 335 failed, this neck line was also the botom of the first leg of the bear flag. Thus, the H&S targets 300-ish, the 295-305 is a hefty support zone and, considering the sustained weakness showing on the weekly charts, a likely target as we move towards Labor Day.

Back to the near term, however, markets should be buoyant in front of the holiday weekend coming, so a bounce is in order now; either from the 200 MA here, or, in this 320-330 area as described above. After price takes a respite from the selling over the last month, the weekly weakness will resume as July moves into August, and the H&S 300 target zone comes into focus, perhaps as the pool's close for summer, or sooner. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

Keystone's Key Events and Market Movers Week of 6-27-11

Keystone presents the following underlying market currents, sometimes subtle sometimes turbulent, that move global markets in real time.  The key dates and times below typically correspond to market pivot points.

The euro crisis continues.  China rate hike should occur any time which will stir up an already jittery market--although China toned down the inflation talk last week. Seasonality-wise, markets are buoyant the two days preceding a three day holiday weekend, thus, look for some bullish buoyancy Thursday and Friday.

Euro news will dominate the week and the market action. Commodities and equities move up with an increasing euro, and visa versa.  The dollar moves opposite of the euro, commodities and equities, so an up dollar means down euro, down commodities and down equities.

Personal Income data at 8:30 AM Monday and the 2-year Note Auction at 1 PM will affect markets.  On Tuesday, Case-Shiller hits 9 AM and this has been depressing news for the last few months, no change is expected, so be prepared for gloominess.  At 10 AM, the market will pivot since Consumer Confidence is one of the key monthly numbers.  Oil Inventories will be watched closely on Wednesday at 10:30 AM since the SOR release news occurred last week.  Claims are Thursday morning as well as Chicago PMI. The week ends with Consumer Sentiment, ISM Manufacturing and Construction Spending on Friday.

Energy may pop this week considering the standard buoyancy it experiences ahead of the ISM number each month.  Manufacturing data all week long will either confirm or reverse the recent trend of weaker data.  Four Fed heads will be out and about all week speaking as well which is simply another fly in the ointment; Bullard at 9 AM Thursday should be watched.

We continue along in a Bradley turn windows now, and with volatility on the increase, this equates to jumpy markets ahead.  A New Moon appears on Friday further adding to the overall emotion.

Keystone’s ‘Short Term’ Key Dates and Market Movers Week of 6/27/11 and on:

·         Monday, 6/27/11: Eurozone news front and center effecting the euro, dollar, commodities and equities. Personal Income and Outlays 8:30 AM. Kocherlakota speaks 11 AM. 3 and 6-month bill auctions 11:30 AM. Hoening speaks 1 PM. 2-Year Note Auction 1 PM. Earnings: NKE (retail, consumer spending). Keep your ears open for preannouncements for Q2 earnings; F guided lower, look for others, or not, to assess markets.
·         Tuesday, 6/28/11: Retail Sales data before the open.  Case-Shiller 9 AM. Consumer Confidence 10 AM. Richmond Fed Mfg 10 AM. 4-week and 52-week bill auctions 11:30 AM. 5-year note auction 1 PM.  Earnings; SHAW (infrastructure).
·         Wednesday, 6/29/11: Greek lawmakers vote on austerity measures today.  Pending Home Sales 10 AM. Oil Inventories 10:30 AM. Bloom-Raskin speaks at noon.  7-year note auction 1 PM. Farm Prices 3 PM.  Earnings; FDO (low-end retail), GIS (food), KBH (housing), MON (commodities, ag, fertilizer, seeds).
·         Thursday, 6/30/11; EOM; EOQ2; EOH1; and end of QE2: The data closes out for the first half of the year.  Chairman Bernanke’s punch bowl is now empty. Greek 5-year implementation law plan approval deadline today. Jobless Claims 8:30 AM. Bullard speaks 9 AM—traders watching for a hawkish or dovish tone.  Chicago PMI 9:45 AM.  Natty Inventories 10:30 AM. Kansas City Fed Mfg 11 AM. Fed Balance Sheet and Money Supply 4:30 PM.  Earnings; APOL (education), CHNR (commodities), DRI (restaurants, consumer spending), MITL, SCHN (steel, scrap), XRTX (data storage).
·         Friday, 7/1/11: First day of H2, first day of month. Auto Sales data.  Consumer Sentiment 9:55 AM. ISM Mfg and Construction Spending 10 AM. Earnings:  LBIX (beverages).

·         Coming Days:  PBOC (China) Rate Hike. Probably 25 bips again.  Last week, however, China toned down the inflation talk.
·         Coming Days:  Europe/Greece mess continues to move markets.  Resolution needed before mid-July.
·         6/22/11:  Bradley Turn date. Market turn window 6/15/11 thru 6/29/11.
·         6/30/11:  QE2 Ends.  See the POMO information below. Only four more POMO pump trading days remaining.
·         7/4/11: Independence Day Markets Closed.
·         Mid-July:  Moody’s considering a review of U.S. for downgrade unless Congress shows progress with raising the debt ceiling.
·         7/15/11: Eclipse Sell-off Technique targets this time frame as a potential large market sell off area. The May time frame that was targeted sold off substantially thru June.  This may mute any negative effects in July, but, remain on guard for a substantial July sell off nonetheless.
·         7/29/11 and 7/30/11:  Major Bradley Turn date. Major market turn window 7/22/11 thru 8/7/11.
·         8/9/11:  Fed FOMC Rate Decision and Policy. No change expected.


Keystone’s Short Term to ‘Intermediate Term’ Key Dates and Market Movers July and on:

·         Earnings:  We are in the confessional season, companies will lower QE2 estimates or H2 guidance to give investors a heads up for weak numbers.  F lowered their guidance last week, look for others, and use this as an indicator for economic strength and market direction.
·         POMO Pumps for QE2 thru 6/30/11:  Markets receive bullish pumps between 10:00 AM and 11:30 AM each trading day favoring market bulls.  Pumps continue thru 6/30/11 which is the completion of QE2.  Chairman Bernanke saved equities in August 2010, the QE2 rally lasted 10 months.  When will he announce QE3?  The punch bowl is empty in four trading days. POMO pumps=bullish equity markets. POMO pumps end=bearish equity markets.
·         FOMC Meetings and Rate Decisions:  8/9/11; 9/20/11; 11/1-2/11; 12/13/11. Fed should keep the Zero Interest Rate Policy (ZIRP) in place for the foreseeable future.
·         Congress to Raise Debt Ceiling: Geithner said 5/16/11 first, then 7/8/11, but now he really, really means it, with a drop dead date of August 2nd. Geithner’s moving of the goal line has some believing that there is no big deal to miss the deadline making this situation very dangerous.  Congress never makes a decision until the deadline looms so look for this to heat up the back half of July.  Congress clowns now only have 5 weeks to raise the debt ceiling, tick, tock, tick… A nearer term deadline is Moody’s considering a review of U.S. for downgrade unless Congress shows progress with raising the debt ceiling by mid-July.
·         Congress In or Out of Session:  Market bullish when not in session, market bearish when in session. Congress is in session, so market bearish.
·         Europe Debt Crisis Continues:  Portugal, Ireland, Italy, Greece and Spain (PIIGS).  Italy’s bad paper may become exposed due to Libyan War.  Greece paper probably worth 30 cents on the dollar, Ireland 50 cents, Portugal 85 cents but no one knows for sure. Greece, Ireland and Portugal are currently in stabilization programs. Spain’s high unemployment is an issue. Look for more demonstrations against austerity. Greek austerity vote 6/29/11, 5-year implementation plan approval 6/30, European finance chiefs decide on Greek payment 7/3/11.  Weaker euro=stronger dollar=weaker commodities=weaker U.S. equities.
·         ECB Rate Hikes:  Trichet announces next rate decisions 7/7/11, 8/4/11, 9/8/11, 10/6/11, 11/3/11, 12/8/11, 1/12/12.  No change occurred 6/9/11 or 5/5/11.  Trichet returned to a more hawkish tone on 6/9/11 mentioning ‘strong vigilance’ again, which were his words prior to the 4/7/11 hike by Trichet of 25 bips. Trichet may have unwittingly called another top in the commodities markets just like he mistakenly did by raising rates at the wrong time in July 2008.  Trend has been euro up=dollar down=commodities up=equities up.  Euro is propped up by Trichet’s hawkishness, thus, if euro now reverses, euro down=dollar up=commodities down=equities down.
·         Ongoing Wars: Libya, Iraq and Afghanistan. Libya not a big oil producer; Saudi’s can easily step up production to handle any Libyan oil loss.  Any positive resolution to the Colonel Qaddafi situation will cause oil to fall further.  Rational price of oil is low to mid 80’s and with the SOR release, an 8 handle should be explored.  Wars and M.E. problems continue=bullish for commodities, gold, silver and oil, or, visa versa.
·         Continuing Geopolitical Events other than Ongoing Wars: Egypt, Syria, Saudi Arabia, Bahrain, Yemen, N. Korea:  Dollar bullish and equity bearish.  Gold, silver and oil bullish.  Bahrain is the big worry since, unlike Libya, further unrest will impact oil supply.  Emergency rule now lifted in Bahrain and it appears that things have settled down.  Yemen is important since it is a southern Saudi border. News wires impact commodities in real time.  Any bad news=higher gold, silver and oil prices, or, visa versa.
·         State and Muni Crisis; Union Busting:  Muni’s should experience pain first.  Muni’s rely on State funds.  Many State budgets turn over in June and July.  Colleges relied on State funds. Lingering unemployment lessens government tax inflows. U.S. will probably see an increase in the cash society, due to higher taxes, hurting government coffers more.  Multiple U.S. cities now experiencing budget fights and protests.  Governments trying to reduce burden of high union costs.  California financial decisions are occurring now.  Will these decisions spook the country? State and Muni problems are an H2 2011 and 2012 story. Prices on MUB chart appear to be topping and ready to roll over again now like Fall 2010, thus, Meredith Whitney should be vindicated in the months ahead.
·         College Debt Bubble: Students continue to take on mountains of debt and cannot get a job after education. One poll cited 80% of college graduates moving back home to live with parents.  No effect near term but in the months forward the loan defaults will develop into a big problem.
·         China Property Bubble and China Contagion:  When it pops, anytime now, it will be extremely negative on global markets causing contagion in Asia and elsewhere. China has built uninhabited cities to fuel their explosive growth during this century. Some evidence of Chinese now using hoarded copper supplies as collateral to continue the building.  Additionally, China is now targeting margin regulations to slow down the commodities and PM bubbles. This is going to end very badly. Keystone agrees with Jim Chanos’ view on China. China bubble pops=global markets down.
·         PBOC; China Rate Hikes:  China rate hike should occur any day. First hike 25 bps on 10/19/10; second hike 25 bps Christmas 12/25/10; third hike 25 bps China New Years on 2/8/11; fourth hike 25 bps on 4/5/11.  China said in 2010 that it will project about five hikes into June 2011.  Hikes have occurred October, December, February, April so the pattern reinforces the June hike next.  Bank reserve requirements are now ratcheting up continuously to slow down inflation but these appear to have less of an effect now.  Rate hikes cause commodities, gold, silver, PM’s and copper to sell off.  The 4/5/11 rate hike had a muted effect since Chairman Bernanke’s hot easy QE2 money is more powerful. Typically, rising rates reflect a countries currency, economic and market strength, but, China growth is slowing now, not increasing, which creates an odd rate raising environment. Target for China rate hike is now although last week they turned more dovish.  China raising rates and reserve requirements=lower commodities=lower US equities.
·         China New Premier:  Chosen in 2012, will it be a smooth transition?
·         India, Brazil, Taiwan, South Korea and other Emerging Market Rate Hikes:  Same effects as China rate hikes; commodities will sell off.  China, India and Brazil hikes are most important to global markets. Some emerging countries now choosing to stay on hold reinforcing the belief that inflation is transitory in nature. Chairman Bernanke’s hot easy QE2 money pumped up emerging markets and commodities for the last ten months creating new asset bubbles.
·         Japan Disaster; Yen Currency Intervention:  The global markets are treating the quake/tsunami/nuclear disaster as a Japan problem with limited global impact.  Supply and parts concerns are occurring now due to Japan factory outages; automobile and technology markets most affected.  Additionally, Japan is performing policy manipulation and coordinated currency intervention to target the 85-86 dollar/yen area.  This could not be maintained so far, or 83, or 81, now at the 80 level.  Expect further coordinated intervention now. Dollar/yen up=dollar up=euro down=commodities down=equities down.
·         Oil; OPEC; Strategic Oil Reserve (SOR); Strategic Petroleum Reserve (SPR); Hurricane Season:  SOR adding some supply each month due to renovations.  OPEC meeting 6/8/11 ended in mass confusion with lack of unified agreement on production, the producers will do whatever they want as they always have.  Hurricane season now so that may keep oil price buoyant. Higher oil supply=lower oil price. Hurricane=lower oil supply=higher oil price=good for construction material companies. Rational oil price is 80-85 but oil price will probably move across the low to mid 90’s as the year progresses, or lower.
·         Wiki Leaks:  Embarrassing government information and bank information on ongoing basis, rumored to affect BAC most of all.  Weak financials places a cap on broad market upside. Also, financials and technology go hand in hand, thus, weak financials weakens technology further limiting upside potential for the broad market indexes. Watch Keystone’s 2-10 Spread Indicator; the 255 spread identifying the line between happy bankers and sad bankers, once this fails, financials are in serious trouble. Note: Friday shows failure. 10-year is 2.86%.  2-year is 0.33%.  286-33=253.  Bingo. Sad banksters.

SPX Daily Chart

The blue lines show the positive divergence and falling wedge that bounced price seven days ago. Money flow, however, wanted to see price come back down to test this area again, and price did, over the last couple days.

The two red circles show tests of the 200 MA that held. The 10-month MA also held at 1268 which is Friday's closing price. The indicators look constructive for some continued buoyancy. For official positive divergence to click in for the last eight days, including tomorrow, price needs to close between 1257 and 1262. Since the blue lines already show the positive divergence that bounced price, price may not have to come down to these levels, the short term trend may already be in place and price will bounce from this 1268 area.

Monday will tell a lot but price buoyancy should occur from one of the support levels; 1268, 1262, 1258, 1252 or 1249. Losing 1249 is a whole new ball game and opens the door to 1233. Seasonality ahead of a three day holiday weekend says that Thursday and Friday should be bull-friendly days. Use this to help project broad market direction as the early week sessions play out.

Thus, the indexes should bounce moving into July but then broad market weakness should resume. The current sideways consolidation move may serve as a bear flag moving forward, thus, first leg is 1370 to 1260 or 110 points, and, say the consolidation finishes at 1307 (taking a guess), 1307-110=1197 target. But, as always, simply take things day to day and constantly fine tune your technical analysis. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

SPX S/R for Week of 6-27-11

SPX starts the week at 1268.45.  If the futures are red and the bears come to play, all they need to do is push one point lower, to get under 1267, and the selling will accelerate downward a few handles to test support at 1262 and 1258-1259 which is where the SPX started the year.

If the futures are green with happy Europe/Greece news, the market bulls would have to drive the SPX up to touch 1284, about 15 points higher, to develop any momo for the day, and that would be a formidable task.  Markets are typically bullish the last couple days before a three day holiday weekend, thus, Thursday and Friday sessions should be bull-friendly.  Use this seasonality as a guide once the week begins.

SPX daily chart is in a positive divergence profile, so a bounce off any of the support levels from 1249 and higher would be in order now. This would provide the indexes a path to move higher into the holiday weekend and take a small rest from all the June selling.  If 1249 is lost, that is a big deal, 1233 will then be in play.

SPX monthly prints are very important moving forward, the June print will be Thursday after the close.  The 10-month MA is a critical support level, as is the 12-month MA which serves as Keystone's Secular Signal for the SPX.  The 10-month MA is 1268; price held a few pennies above at the Friday close which gives the bulls a little feather in their cap.  The 12-month MA is 1236.  The NYA 40 week MA cross has already indicated that the markets have now fallen into a secular bear market.  The 12-month MA cross for the SPX, at 1236, would confirm the NYA signal and confirm a return to a secular bear market.  Above 1236, you have to continue to give the bulls the benefit of the doubt.

·         1389
·         1370
·         1365
·         1360
·         1357
·         1354
·         1350
·         1345
·         1337
·         1333
·         1331
·         1329
·         1326
·         1323
·         1321
·         1319
·         1316
·         1314
·         1311-1312
·         1306-1307
·         1300
·         1298
·         1295
·         1292-1293
·         1289
·         1286-1287
·         HOD Friday 1283.93
·         1282
·         1277-1278
·         1272-1273 (LT S/R)
·         1270
·         1267-1268
·         LOD Friday 1267.24
·         1262
·         1258-1259 (1257.64 is the starting number for 2011)
·         1257 (3/16/11)
·         1252 (9/14/08 pre-LEH bk)
·         1249 (LOD 3/16/11)
·         1247
·         1242
·         1235 (12/15/10; also HOD 12/7/10 large volume)
·         1233 (LOD 12/16/11)
·         1227 (HOD 11/9/11)
·         1226 (11/5/11)
·         1224 (12/7/10 large volume)
·         1220 (HOD 4/26/10)
·         1217 (4/23/10)
·         1209 (HOD 4/29/10)
·         1207 (4/29/10 Top)
·         1197
·         1192 (9/15/08 post-LEH bk)
·         1140
·         987
·         666 (3/6/09 bottom)