Tuesday, January 31, 2012

SPX Daily Chart Bradley Turn Dates 2011-2012

A Bradley turn date occurred on Saturday 1/28/12 shown by the blue circle on the right hand side of the chart. The double circles are major Bradley turn dates, two in 2011 marked significant tops while the 12/28/11 major Bradley turn date resulted in only a stutter step, then market melt-up. A look back at 2011 shows how the Bradlley turns were very accurate at identifying market trend changes. Remember, the Bradley dates do not identify direction, the date only identifies where a trend change will occur. Thus, if the markets are trending up a reversal down would be in order, or visa versa, but once in a while an acceleration move occurs where the Bradley date results in a melt-up or melt-down move.

Watch the coming days closely to see if the 1/28/12 turn date remains a top as shown above. The erratic markets reflect the numerous turns to start the new year. The 2/16/12 adn 2/22/12 turns are coming fast as well. The next major turn date is 3/16/12. Keep yourself strapped in. For further information on the Bradley, reference Donald Bradley, Peter Eliades, Arch Crawford and the Amanita Market Forecasting sites for additonal information.

The 2012 Bradley turn dates are 1/11, 1/28, 2/16, 2/22, 3/16, 4/11, 4/23, 6/12, 7/28, 8/14, 8/25, 9/30, 10/9, 11/1, 11/14, 12/22 and 1/20/13. The major turn dates are 3/16/12, 6/12/12, 7/28/12, and 12/22/12. 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 Monthly Chart with 12 MA Cross Secular Bull Market

One of Keystone's secular signals is the cross of price versus the 12 MA for the SPX monthly chart. The SPX crossed up thru the 12 MA to signal a return to a Secular Bull Market pattern. The markets dropped into the Secular Bear Market pattern as the August 2011 waterfall crash occurred. The month-end print yesterday reversed this half-year bearish trend. February is critical since it will either confirm the switch back to the secular bull, or not.

Note how the markets flipped back and forth during the summer of 2010, resulting in failure and just when the markets were going over the falls, Chairman bernanke saved the day with QE2 in August 2011. Look at how, despite the indicator being a secular (long term think months and years) signal, the crosses are condensing over time with flips back and forth from secular bull to bear and back again occurring with greater frequency.

As of today, the bulls have a large long-term feather in their caps since markets are now in a secular bull again. February is key and will either confirm the secular bull, or cause markets to drop back into the secular bear; the month-end print occurs on Wednesday, 2/29/12, the leap day for this leap year. 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 finanical advisor before making any investment decision.

Fed's Operation Twist Schedule for February Released

The Fed released the new Operation Twist schedule for February.  The Fed plans to purchase $45 billion and sell approximately $43 billion in Treasury securities during February.  Use this link below or simply use the 'POMO Pumps' link in the right margin to reference the dates of sales and purchases moving forward.


Keystone's Midday Market Action 1/31/12 EOM

UTIL remains under 453 favoring market bears.  Keystone's SPX:VIX ratio jumped back above 68 so that nullifies any big market move down today, unless the ratio drops under 68 as the session plays out today.  SPX:VIX now printing 69.28. CRB is moving across 316 well above the 310 danger.  The dollar is red so commodities, copper, gold, etc..., all rock higher.

The SPX is up 0.55% while the Nasdaq is up 0.53%, thus, the upside should be limited. Tech is not leading today, perhaps the first day this year.  SPX took out the 1316 level so the acceleration upwards occurred in quick order with the SPX now printing over 1321. Watch for a potential market pivot at 10 AM with the Consumer Confidence number.

Note Added 1/31/12 at 9:56 AM:  SPX:VIX at 68.56 drifting lower, keep watching. SPX came down to test that 1316.16 area highlighted by Keystone. Watch the behavior at this level. If bulls hold, then the day will go their way.  Failure will open the door for market bears.  Consumer Confidence is minutes away.........

Note Added 1/31/12 at 10:26 AM:  The market pivot occurs at 10 AM as the Consumer Confidence data was far weaker than expected as well as a downward revision to last month's number.  The fact that tech, the Nasdaq, was not leading the upside helped bring the broad markets lower after the opening pop.  However, the SPX is now up 0.11% with the Nasdaq up 0.16%.  A flip-flop again.  This smidge of bullishness now showing in tech is helping the indexes move back to the green side.  Keep monitoring the tech strength, or lack of strength, today.  The SPX:VIX ratio dropped under 68, now printing 67.66, so this soap opera fight at 68 continues along. A large market down day is expected today, with the Dow Industrials down triple digits, as long as the ratio stays under 68. Heck of a prognostication since all the indexes are green now.

Note Added 1/31/12 at 10:35 AM:  The Golden Cross occurs for the SPX; the 50-day MA is 1257.82, the 200-day MA 1257.20.  What's it mean? As Keystone discussed in the comments on the previous posts last evening, do not use this indicator for trading. The only technicians that do are those that do not understand technical analysis. If anything, the cross may actually identify a short-term market top. Volatility, VIX, is higher which is bear-friendly not bull-friendly.

Note Added 1/31/12 at 10:40 AM:  The CRB has an 314 handle now, inching down only four points from the critical 310 level now. Dollar is recovering and moving up.  SPX:VIX ratio is under 68, now printing 67.25, so bears are smiling.

Note Added 1/31/12 at 10:48 AM:  SPX:VIX just lost the 67 level. Nasdaq and SPX moving lower in sync.  If tech accelerates lower, the selling will accelerate.

Note Added 1/31/12 at 11:36 AM:  SPX:VIX hanging on to the 66 level by a fingernail. CRB has a 313 handle inching towards 310. The dollar is positive.  Same old asset relationship, moving in favor of the bears after the opening pop; dollar up=euro down=commodities down=copper down=oil down=gold down=equties down.

Note Added 1/31/12 at 12:00 PM:  SPX:VIX is under 66 now.  CRB touched a 312 handle continuing to inch towards 310 where big market trouble occurs. Nasdaq is not leading the down side, it is in sync with the SPX, lagging by a hair, thus, the broad markets are languishing at these levels.

Note Added 1/31/12 at 1:44 PM:  SPX:VIX is printing 67 remaining in bear territory. CRB touched an 311 handle about one-half hour ago.  Market bears need about two points lower for the CRB to seal the deal on substantial broad market downside. Remember, this afternoon, about an hour or so from now, Farm Prices are announced which will effect the ag trade. Perhaps the famous movie Trading Places will provide guidance today with "Sell Mortimer Sell!"?  ADM is down 4.4% today on weak earnings showing losses in all their divisions helping to cast a pall on the CRB along with the higher dollar. The Nasdaq turned green for a few minutes but is now red again. Nonetheless, the SPX continues to lead the downside rather than tech so the bears are having trouble pushing the indexes south. UTIL remains under 453 all this week thus far creating market bearishness.

Note Added 1/31/12 at 1:57 PM:  SPX:VIX ratio is printing 66.62 so continued market weakness is expected today.

Note Added 1/31/12 at 2:00 PM:  Utilities, UTIL just turned red on the day.  CRB coming down to look at that 311 handle again.  If CRB loses 310, now less than two points away, Keystone's algorithm, Keybot the Quant, will probably flip short after this six week bullish run from 12/20/11. An exciting finish should be on tap today.

Note Added 1/31/12 at 2:31 PM:  Nasdaq is positive on the day again, bears cannot move the markets lower if tech is unwilling to lead lower.

Note Added 1/31/12 at 5:53 PM:  SPX:VIX ratio came up to back kiss the 68 level minutes before the close and fell lower to close at 67.51 favoring bears.  Since the large down day did not occur today, markets actually dropped but recovered when banks and tech led the indexes higher today, then the large broad index down day should occur tomorrow, as long as the ratio stays under 68.  Perhaps AMZN weak earnings will finally dent the unstoppable tech machine this year. Bulls know if they can regain UTIL 453 they can stop this bearish move in the markets over the last four days. At the same time, the bears know if they can push the CRB under 309.50, the bulls will lose control of the markets. This is the battle ground for Wednesday; SPX:VIX 68, UTIL 453 and CRB 309.50.

NYMO NYSE McClellan Oscillator Daily Chart Losing the Bull Side

McClellan Oscillator shows the market bottoms occurring at the red line or lower. Double red cirlces are significant broad market bottoms. Above the green bar is solid bull markets with the double green circles identifying significant market tops. Price is on the verge of losing the green line. What do you think will happen moving forward? Do you think the double green circle on the right hand side is correct? Check tonight's print to see if the NYMO drops under the 20 level, or not. 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 finanical advisor before making any investment decision.

Keystone's Morning Wake Up 1/31/12 EOM

Today is the EOM so the print on the SPX monthly chart will be cast in concrete and with the index remaining above 1283, the secular bulls will wrestle back control of the markets from the secular bears. February will confirm this shift from the half-year secular bear market to a secular bull market, or not. The SPX 1283 number will remain key as February begins.

The market bears cannot gain any traction.  On both the Friday and Monday moves lower, the downside had no strength behind it since tech is not leading lower. Tech remains buoyant thus keeping the indexes buoyant. The short positions in the euro as the year began is helping to maintain the euro buoyancy as short sellers throw in the towel and have to buy back shares as the pain increases (short-covering rallies). The equities markets move with the euro.  The asset relationship, euro up=copper up=commodites up=gold up=dollar down, and visa versa, remains very much in place.

The UPS chart posted last evening shows that another of Keystone's secular signals turns bullish. This is not surprising considering the strong rally the last couple months. With the erratic nature of markets currently, the secular nature of the markets is less of a concern. Of more importance is the upcoming BOE and ECB rate decisions next week.  The ECB has to lower rates and weaken the euro due to the European recession so perhaps this market meandering will come to a decision point.

The markets are moving on vapor for volume.  The short-covering rally thru January is ending, the shorts that had to throw in the towel have already done so, the shorts destined to hold and add to their positions are remaining firm.  Thus, the markets need to see actual growth and positive economic developments moving forward to attract money into the markets to continue the upside, perhaps a formidable task.

The high gasoline prices are shocking lately and this sustained elevated oil price, as economies continue to struggle, will create serious damage moving forward. High gasoline prices cut into consumer spending since the weekly paycheck goes into the gas tank.  I am sure the European readers of this site, however, would be very happy to have the U.S. gasoline prices.

Case-Shiller will provide a gauge on the housing sector at 9 AM EST. Even the cab driver now tells everyone that the bottom is in for housing. (When the cab driver gives you investment advice, run!) In front of the 1929 crash, the shoe shine boy's told everyone you cannot go wrong with investing in the markets.  When the cab drivers, shoe shine boys, and even less experienced retail traders, form a consensus, it is typically the wrong one.

Consumer Conidence hits at 10 AM and this will create a market pivot point today. Thus, even with a joyous start to today's action, watch for a potential trend change at 10 AM.

Another interesting story today will be the commodities sector since Farm Prices hit in the afternoon and will effect the ag trade.  The market bears will create strength if the CRB drops under 310 today so this information, although typically a sleeper, may be pivotal. ADM earnings are released as well creating further ag sector drama today.

Watch UTIL 453, under is bear-friendly and over is bull-friendly.  Same-o with the SPX:VIX ratio 68 level.  The ratio sits just under 68 which is bear-friendly and forecasts a large down day on tap but with futures projecting about a 7 or 8 positive SPX point move at the open currently, the ratio will likely pop back above 68 nullifying the signal for a large down day. But, like putting off going to the dentist, you eventually have to face the music.  Thus, markets will remain bullish and buoyant as the ratio stays above 68 but once it drops under 68 again, and it will, that will signal market trouble.

The SPXA150R dropped under 80 yesterday which is market bearish. Check this after the close today to see if it remains under 80, or if it jumps back above, which would put the market bulls back in the drivers seat.

For the SPX today, starting at 1313, the market bulls only need three points higher, to move up and over 1316, and the upside will accelerate. At this writing, the futures are up enough to achieve this goal but there is a long time before the open and earnings releases will effect their development before the bell. Speicfically watch the 1316.16 number as the opening bell rings.  The market bears need to move under 1300.50 to accelerate the downside. A move thru 1302-1315 is sideways action.

To condense all this hot air into a succinct plan today, UTIL 453, SPX:VIX 68, CRB 310, and SPX 1316 and 1300.50 will determine broad market direction and the Consumer Confidence number at 10 AM is very important. AMZN earnings are after the bell and will provide insight into the retail sales strength during the holidays.  AMZN results will also determine if the tech strength continues to support the broad markets, or not.

The Fed releases the February schedule for Operation Twist purchases and sales today at 2 PM EST. China PMI occurs overnight and will greatly impact equities markets tomorrow morning.

Note Added 1/31/12 at 8:14 AM:  Futures show the S&P's up 0.50% while the Nasdaq is up 0.42%.  That's a change.  Tech, the Nasdaq, has led the broad markets skyward this month. Since the Nasdaq is not leading the upside currently, that hints that the upside move will be limited this morning. Pay attention to the Consumer Confidence data at 10 AM which serves as a potential pivot point.

European Bond Yields 1/31/12

The E.U. Summit says the Greece talks will be finalized this week so new found optimism enters markets.  But, considering that this is the sixteenth E.U. Summit in the last couple years, perhaps the leaders are more interested in the free buffet's and luxury room's provided rather than resolving the constantly growing Eurozone problems.

!0-Year Yields:
Greece 34.27%
Portugal 16.81%
Hungary 8.93%
Italy 6.00%
Spain 5.01%
Belgium 3.69%
France 3.06%
U.K. 2.03%
U.S. 1.87%
Germany 1.83%

Portugal continues to blow out, now to 17% for the 10-year. Leaders say do not worry, there is no reason for concern.  Sounds like the recent Carnival cruise liner wreck where the ship employees told everyone to go back to their cabins and not worry. Portugal 2-year yield is on the verge of overtaking the 5-year which will create yield curve inversion across the 2's to 10's.

The euro is up this morning thus far.  The LTRO program has greatly helped in smothering the flames in the near term but, next week the BOE and ECB rate meetings occur and considering that Europe will need to weaken the euro, and BOE will move towards quantitiative easing, this current action may be the calm before the storm. While all eyes are focused on Greece, and finally Portugal, as we highlighted here a couple weeks ago already, Hungary may be the trouble in the background no one is discussing now.  Hungary 10-year yields have jumped 16 basis points in the last 24 hours and now about to move above 9%.

The heat on Germany should increase moving forward in light of Germany's unemployment rate reaching a record low while Italy's unemployment rate reaches a record high. The dynamic is shifting away from the direct focus on Merkozy (Merkel and Sarkozy).  Changes are occurring in the Italy and Greece governments, and perhaps France in the coming weeks, which is placing a stronger spot light on Germany moving forward.

Monday, January 30, 2012

UPS Weekly Chart 20 and 50 MA Cross Secular Bull Market

Keystone's UPS Secular Signal uses the 20 and 50 week MA crosses to forecast secular bull markets versus secular bear markets. Today the broad markets signal a return to a Secular Bull Market for this indicator. As the 2009 QE1 rally continued along, this UPS signal forecasted a secular bull market in July 2009; it signaled the all clear and that bullish fun would continue a long time.  The bull rally did continue along for two years after that until the August 2011 waterfall crash.

The secular bear market began in August 2011 and ended, as of today. Before reading too much into the move, consider that in 2009 the bull market was in its infancy and the indicators were in a long and strong profile showing plenty of room for further upside.  The weakness that began early 2011 was ushered in by the red rising wedge, overbot conditions and negative divergence across all indicators shown by the red lines.  This created the malaise and spank down during 2011 leading to the August crash.

Since the Fall, UPS is now in a mini rising wedge again which is bearish, and overbot stochastics, also bearish.  In the one year time frame the purple lines clearly show negative divergence which is not encouraging for the weeks and months ahead.  However, the green lines for the indicators from November thru present, show a long and strong profile. Therefore, price should meander sideways as it tops off, placing another matching or higher high at some point forward, which then should result in negative divergence for the shorter term three month period as well as hte one year period creating the conditions for price to roll over again.

Thus, the secular bulls are happy tonight and will enjoy a secular bullish trend as long as the 20 MA is above the 50 MA. See the Secular Signal page on this site for further information.  Monitor this cross closely here on out.  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 1/31/12 at 7:46 AM:  UPS reports earnings beating the bottom line but falling short with top line revenue.  Guidance is in line although UPS forecasts 'mixed growth' ahead.

Keystone's Midday Market Action 1/30/12

UTIL drops at the open so bears are favored moving forward.  SPX:VIX ratio gapped down to a 64 handle at the open and has flat-lined ever since forecasting a large down day on tap today.  The monthly print tomorrow is very important since the SPX closing above 1283 signals a switch into secular bull markets moving forward.  If the SPX drops under 1283, only 20 handles lower now, by tomorrow's close, substantial bearishness will appear in the markets.

Watch the NYA 7650 level as well since a drop under this level, now printing 7785, would usher in stronger bearishness.  The SPX is down -0.97% while the Nasdaq is down -0.92%. This is why you see a flat malaise in markets now.  The utilities and the SPX:VIX ratio are favoring the bears and further weakness, but, since the Nasdaq is not leading the down side, the move south is limited.

Note Added 1/30/12 at 10:49 AM:  SPX failed the 1307-1308 after the bell rang, thus, a back kiss of this critical level would be in order to help the indexes decide what level of weakness is in store today.  A back kiss resulting in collapse will move the SPX down into the 1290's towards the 1295 support. If SPX punches back up thru 1307-1308, the move down will only be a blip on the radar.  Bears need tech to develop more weakness. Bulls need to regain the SPX:VIX 68 level and also breathe bullish life back into the utes.

Note Added 1/30/12 at 11:05 AM:  SPX is coming up for the 1307-1308 back kiss now.

Note Added 1/30/12 at 2:31 PM:  SPX regained the 1307-1308 support/resistance which is a feather in the bulls cap. Price continued up further and overtook Friday's LOD at 1311.72 which is another feather.  A large gap was left behind at 1309.34 so that would be a target before the day ends. The Nasdaq simply did not lead the downside so the bearish move stalled and the bulls recovered, similar to Friday's action when tech would not lead down. UTIL has a 446 handle well under the critical 453 level for this week so this is a feather in the bears cap and will limit the upside for the market bulls.  Interestingly, Keystone's SPX:VIX ratio has recovered, and keeps knocking on the 68 door from the underside, but has not yet punched up thru.  Thus, despite the bullish recovery today, the market bears remain firmly in the game with the weak utes and SPX:VIX under 68. For the SPX watch 1311.72 and also the huge gap at 1309.34. The bulls win if the SPX:VIX regains 68.  If the SPX:VIX ratio stays under 68, and if the markets do not experience the large sell off expected today, then the broad indexes should sell off large tomorrow, as long as the ratio stays under 68. CRB has a 313 handle inching closer to the 310.50 level which will usher in serious market selling, but, for now, the bulls continue to run.

Note Added 1/30/12 at 2:55 PM:  SPX is flirting around with the 1311.72. SPX:VIX is now printing 67.58.  Look at that.....SPX 1311.72........markets are deciding........

Note Added 1/30/12 at 2:59 PM:  SPX 1312.40, the bulls bounced it. See if it comes down again for another look at 1311.72.

Note Added 1/30/12 at 3:01 PM:  Fast markets.  SPX now testing 1311.72 support again.

Note Added 1/30/12 at 3:03 PM:  Failure at 1311.72.  The weak utes and SPX:VIX ratio under 68 are two strong feathers in the bears cap moving forward.

Note Added 1/30/12 at 3:14 PM:  The bulls recover again, up and over 1311.72. This is light volume erratic market action.

Note Added 1/30/12 at 3:58 PM:  Low volume erratic action continues into the bell. The market bears remain in the game as UTIL stays under 453 and the SPX:VIX stays under 68. This sets up a wild Tuesday.  As the old Wall Street adage says, today was a waste of a clean shirt and cab fare.

Keystone's SPX:VIX Ratio Indicator Fails 68

The SPX:VIX ratio dropped under 68 at the opening bell.  A large down day is on tap today for the broad indexes, typically a strong triple digit down day for the Dow Industrials, as long as the ratio stays under 68.  Moving forward, market bears are favored under 68.  Market bulls will only regain favor if they move the ratio back above 68.

UTIL Utilities Weekly Chart Flips to a Weekly Downtrend Signals Trouble

Did Keystone mention the importance of the utilities this week?  Only in each of the last half dozen posts.  The chart graphically depicts the drama to unfold within a half hour as trading begins. The utilites sector has remained in an uptrend, week after week, for quite some time.  This action provides bullish support underneath the markets and allowed the broad indexes to float upwards in January.

Today, however, the world has changed.  Actually, the Friday 4 PM print was the tell.  As today's trading begins, UTIL starts at 449.  If UTIL remains under 453, the red line, the broad markets will remain weak moving forward. This print under the red line indicates that the utes have now fallen into a weekly downtrend pattern which in turn indicates that the broad markets are in trouble moving forward.

For any day this week, if UTIL pops above 453, the market bulls have regained control of the markets and a new bull party to the upside will begin.  If UTIL meanders sideways thru the 449-ish level, the broad markets will maintain a sideways posture with a bearish bias. If UTIL ventures lower, 448, 447, 446 and lower, the broad indexes will weaken substantially and the selling pressure will steadily increase.

Now for Part 2 of this dicey scenario.  If UTIL loses the blue line, representing the 50-week MA at 432-433, this represents a trap door for the broad markets and substantial and extended broad market downside will occur.  If the 50-week MA is lost, extra caution is required, since the markets will typically collapse from zero to within 30 minutes after the 50-week UTIL failure occurs.  This information is for educational and entertainment pruposes only. Do not invest based on anything you read or view here.  Consult your finanical advisor before making any investment decision.

Note Added 1/30/12 at 10:55 AM:  AEP is down about -1.6%, ED down -0.8%, and DUK down -0.6%, contributing to the UTIL weakness.

Keystone's Morning Wake Up 1/30/12

Key action in China and Europe overnight.  The two-month market rally received its oomph from traders front-running the China triple R (bank reserve requirement ratio) ease. China started trading again today, the first day of trading for the Year of the Dragon. China is now hesitant with their triple R easing measures; five are projected over the next ten months, about one, probably a 50 basis point lowering each time, every two months. China is concerned over the creation of asset bubbles due to the fast easy money pumping.

In the States, QE2 in late summer 2010 resulted in a commodities bubble that peaked in 2011. Quantitative easing pumps the commodities, copper, gold, silver, oil and equities higher. China probably became concerned over the action thus far in January, simply look at copper, sky rocketing as traders front run the triple R easings that are anticipated.  Thus, on this China news, futures turned red Sunday evening and remain red into the open today.  If China is not willing to supply the punch bowl, then traders may as well book profits and run for the exits.  China banks were weak overnight contributing to the 1.5% drop in the Shanghai Index.

The other news is Europe, the E.U. Summit meeting overshadowed by this continuing Greek drama.  The concern is real and palpable especially since Portugal yields continue to blow out signaling a need for a second bailout as soon as the Greece deal occurs.  As they say in Brooklyn, "Good luck wit dat."

The Fed last week excited markets to the upside but when traders had time to think about it was there rany real news? Is keeping rates low to late 2014 much of a difference as compared to mid 2013? It is all pie-in-the-sky worlds away from the present problems. Keystone does not know what he's having for lunch today let alone think about 2 or 3 years in the uncertain future. Chairman Bernanke also said further quantitative easing is on the table; why is that news worthy? Sounds like more of the same. Thus, when you view the Fed statement with a skeptic eye, the FOMC Emperor is not wearing any clothes.

Keystone commented last week that soul-searching was needed to assess all long positions.  A Bradley turn date occurred on Saturday indicating a potential market trend change is at hand so watch to see if the Thursday morning top holds.  The futures show the SPX down -0.67% while the Nasdaq futures are down -0.64%, somewhat in line.  The market rally has been led by tech.  The market bears will only be able to accelerate the downside if the Nasdaq leads the way down, at this juncture this morning, Nasdaq is not leading the weakness so the downside may be muted.

Watch UTIL 453 today and all week long.  At the open this number is uber importantIf UTIL stays under 453 the broad markets will continue to experience weakness. If UTIL moves above 453, the market bulls plan on taking markets another leg skyward.  In fact, the utilities, UTIL, must remain above the 451-453 area for the next month, every day, otherwise, the broad indexes will maintain steady bearishness, and the week starts at 449, already under these critical levels.

Watch SPX:VIX ratio 68 level. If that fails at the open the broad indexes will experience a strong down day, Dow Industrials likely down triple digits, as long as it stays under 68.  If the ratio stays above 68, it starts at 71 this morning, the bulls will not be concerned about any market down move today. If 68 is lost, bulls will be plenty worried. After the close today, check to see if the SPXA150R fell under 80 (favoring bears), or not.

For the SPX today, starting at 1316, the weak futures hint that  a drop of about 8 spoo's are in order, so that would target 1308.  SPX 1307-1308 is strong support.  If price drops under 1311-1312 at the open, that will accelerate the move lower to take a stab at that 1307-1308 support. Support below is 1314, 1311-1312, 1307-1308 and 1295. Note the importance of the 1307-1308 support since failure results in a likely drop of over ten more handles. Thus, high drama on tap this morning.

For the market bulls, they need to push the SPX upwards to touch 1320 to set off accelerated upside but the futures, and the tone of the market, as well as the new developments with China's approach to the tirple R easing, makes this outcome less probable today.  A move thru SPX 1313-1319 is sideways action today. Thus, in a nutshell, UTIL 453, SPX:VIX 68, and SPX 1311-1312 support and 1307-1308 support will dictate broad market direction today.

Note Added 1/30/12 at 8:51 AM: Merkel (Germany) making statements that the Greece talks need further discussions, futures took the additonal leg south. A loss of the 1307-1308 support appears on tap, look for a back kiss, then a move towards 1295, but, the Nasdaq is not yet leading the down side so the move lower may be limited.

European Bond Yields 1/30/12

Italy bond auctions were acceptable; 10-year bonds went well on a healthy demand.  Pattern of decreasing yields continues so all and all an acceptable auction result for Italy.

10-Year Yields:
Greece 33.66%
Portugal 15.63%
Hungary 8.77%
Italy 6.18%
Spain 5.08%
Belgium 3.73%
U.K. 2.00%
U.S. 1.86%
Germany 1.86%

The E.U. Summit is ongoing today. Euro leaders will make a pledge to pursue growth policies.  Considering this news, what have they been doing for the last two years!!?  Portugal continues to blow out, the 10-year is now 80 basis points above Friday morning's yield. Portugal's yield curve is inverting signaling recession ahead, the 5-year is at 20.64% and 10-year at 15.63%. The Portugal 2-year is over 18% moving up.

The Greece talks with bondholders continue. Leaders say that an agreement is reached and will be announced this week.  Promises, promises.  With the goal line continual pushed forward, the Greece talks have now become a joke. The 3/20/12 deadline date for funding for Greece remains in place and the deal should occur before then even though they only inch slowly towards an agreement each day. Hungary is flat.  Italy is back above 6%. France remains above 3%. The flight to safety to the U.S. and Germany continues, the perceived strong economies, both now sporting matching yields at 1.86%.

Sunday, January 29, 2012

Keystone's Market Turn Signals Summary

As the new trading week begins, let's take a look at Keystone's four short-term trading and turn signal indicators:

SPX:VIX Ratio Indicator; Bullish at 71, but on a Crash Signal Alert currently, if the ratio falls under 68 a Crash Signal is Triggered.
SPXA150R Indicator; Bearish now since it is above 80 but below 85, if the indicator falls under 80 market bearishness is indicated, if the indicator moves above 85 further bullishness is ahead.
SPX 30-Minute MA Crosses; Bearish now indicating further market weakness ahead.
SPX 60-Minute Price Versus EMA Cross; Bullish now indicating further market strength ahead.

So here we have a mixed bag as well but more bearish leaning for the shorter term action ahead. Watch the SPX:VIX ratio at the opening bell tomorrow. A drop under 68 will indicate serious market trouble ahead and a large market down day is on tap with the Dow Industrials expected to drop triple digits.

Check SPXA150R after tomorrow's close to see if it drops under 80 to indicate bearishness in the days ahead. A move above 85 indicates continued bullish strength. For the short-term, the bears have a slight edge although the indicators are mixed.  This week's trading, especially early in the week, is very important.  If bears are going to push lower, now would be the time.

Keystone's Secular Signals Summary

As the new trading week begins, let's take a look at Keystone's six secular signals:

SPX Daily 150 MA Slope; Bullish, secular bull market ahead
SPX Weekly MACD Zero Line; Bullish, secular bull market ahead
NYA Weekly 40 MA Cross; Bullish, secular bull market ahead
UPS Weekly 20 and 50 MA Cross; Bearish, secular bear market ahead, but a switch to a Secular Bull market may occur at any time.
SPX Monthly 12 MA Cross, Bearish, secular bear market, but will switch to a Secular Bull on Tuesday unless the SPX falls under 1283.
SPX Monthly MACD Cross; Bearish, secular bear market ahead

So three signals forecast a secular bull market ahead and three signals forecast a secular bear market ahead.  But, upon closer inspection, for UPS, the 20-week MA is on the verge of popping up thru the 50-week MA which would change that secular call to bullish.  Also, the SPX is above the 12-month MA now and the month-end print on Tuesday will cast this in concrete changing this indicator to a secular bull.

Thus, as 2012 began, the secular bears were in firm control but as January plays out, the bears have steadily lost grasp of the situation.  This week is critical for UPS and the SPX 12-month MA cross. For now the secular signals are mixed and unable to commit to a firm secular direction moving forward but they will resolve and align in one direction or the other as the next few weeks play out.

Keystone's Key Events and Market Movers Week of 1/30/12

© 2012 The Keystone Speculator™. All Rights Reserved. No part of this document may be copied although links to this site are encouraged.

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.

Summary for the New Trading Week Ahead:

Technology continues to lead the markets higher and keeps the market bears at bay.  Tech’s strongest quarter is Q4 seasonality-wise but as we are now nearly one month into 2012, January is a very bull-friendly month for tech as well. Tuesday is the EOM so the month-end prints for the monthly charts will be cast in concrete. Chairman Bernanke greased the quantitative easing skids last Wednesday afternoon and the markets had a large run-up but have already given the bulk of it back on Thursday and Friday.  The Fed should request their money back since they did not get much bang for their QE buck.

Thus, the bulk of this rally is due to the China anticipated easing.  Continue to look for an easing move by China in the coming days but the markets may have already priced in the boost that would be expected.  Markets love quantitative easing, money printing, stimulus, whatever you want to call it, and the lowering of the triple R’s boost copper prices, commodities, and equities.

The projection remains that should the broad markets sell off, the China announcement, when it occurs which is anytime over the next two weeks, will result in a temporary market bottom with markets then rallying back up to the current highs.  If the broad markets move sideways to sideways up thru the SPX 1314-1319 resistance cluster, as the new week begins and moves forward, and China announces the triple R ease as this market buoyancy continues, it may develop into a sell the news event and broad markets will leak lower.

The European bond markets calmed down although Portugal did rocket higher in yield signaling that it will need a second bailout very soon.  For the ongoing European crisis, continue watching the Italy, Spain and France 10-year yields to gauge the creeping contagion. Greece continues to promise a resolution with bondholders but with the E.U. Summit occurring tomorrow, Monday, hours away, the time is now to deliver the goods.  The German, U.K., and U.S. 10-year yields show money seeking safety in these countries.  Italy and Belgium bond auctions are important on Monday morning as well.

Continue to watch the following asset relationship, which occurred when Chairman Bernanke announced more easy money last week; euro higher=dollar lower=commodities higher=gold higher=U.S. equities higher=treasuries price lower and yields higher, or, the visa versa, euro down=dollar up=commodities down=gold down=U.S. equities down=treasuries price higher and yields lower.  Interestingly, however, the treasury market is showing steady interest even if the equities markets rally.  As long as the U.S. 10-year yield stays under 2%, disinflation remains a threat moving forward.

Monday’s trade starts with Personal Income data at 8:30 AM, but all eyes will be focused on Europe, the E.U. Summit, the Greece bondholder talks and Portugal’s yields blowing out.  A Bradley turn date occurred on Saturday so a window remains open for a market trend change.  A market top occurred after Thursday mornings open so watch to see if the trend change down continues.

Tuesday begins with the Case-Shiller Housing Index, very important since everyone including the cab driver is announcing a bottom in the housing market.  One of Keystone’s key monthly numbers is the Consumer Confidence number at 10 AM which will likely result in a market pivot point.  Earnings will provide a great cross section of economic strength including tech, retail, insurance, ag, pharma, biotech, manufacturing, industrial, engineering and construction, infrastructure, shipping, steel and oil, something for everybody.  UPS is key since it is one of Keystone’s secular signals and the 20-week MA is on the verge of moving above the 50-week MA to signal further bullishness. ITW is a key indicator of the global economy since they produce the pumps, fans, and parts for engineering projects everywhere. A gauge on the existence, or not, of a Dividend Stock Bubble will be highlighted as well with companies such as XOM and LLY reporting, so watch earnings closely this day. Tuesday’s 4 PM close provides the EOM prints. Check Keystone’s SPX 12-Month MA Cross after Tuesday’s close.  If the SPX is above 1283 at 4 PM Tuesday, that is a big feather in the market bulls cap.

On Wednesday morning the final China PMI data hits and will impact markets greatly.  Perhaps by then China will make an announcement concerning the triple R ease? The energy trade will be in play since the ISM number will be released as usual, on the first of each month.  The Facebook announcement concerning a future IPO will gain media attention but there are far more interesting things to watch. More key earnings occur which will effect the tech sector.  WHR will provide a gauge on this housing recovery that everyone, underline everyone, says is underway.

Jobless Claims and Natty Inventories are important on Thursday morning, especially since President Obama hinted that more efforts will be provided towards natty gas in the future.  Chairman Bernanke testifies before the House Budget Committee at 10 AM so traders will focus on each word. BZH earnings provide further insight into the housing recovery.  The earnings will be coming fast and furious with a vast cross section of industries reporting again.

On Friday morning, the circus comes to town with the Monthly Jobs Report. MOD and WY will again provide insight into the strength of the housing recovery.

Despite the continued market bullishness, there is plenty to worry about, especially Europe with Greece, Portugal and Hungary major concerns.  Another interesting news event may be S&P or other rating agency downgrades of Japan and how this may throw a wrench into the global economic and currency machine.

Keystone’s Eclipse indicator targeted the January period as having a high potential for a large market selloff, but this window is now closed.  If the turn down did occur it would have had to be the top that occurred late last Wednesday and early Thursday morning and we will find out if the market downside continues this week. Keystone’s algorithm is posted in the left margin on this site so any move to the short side for the markets will show up there. For now, Keybot the Quant motors along on the long side since 12/20/11, about six weeks.

Market bulls have made serious gains in the broad markets over the last month, overtaking the moving average lines as well as key levels indicating a secular move back into more steady bull markets.  The bulls are in good shape as long as they stay above SPX 1283 as of Tuesday’s close. The dollar dictates the markets, up dollar = down markets and down dollar = up markets. Chairman Bernanke crushed the dollar last week.  Pay extremely close attention to the utilities, the UTIL 453 level.  UTIL is now at 449.  If UTIL stays below 453, the broad markets will weaken. If UTIL moves above 453, the market bulls will begin a new leg skyward.

Key Dates and Times for the Week Ahead:

·         Monday, 1/30/12: Markets remain at the mercy of Europe news moving forward.  E.U. Summit occurs today and a Greece resolution with bondholders is needed immediately.  A deal has been promised each day for the last two weeks. Italy and Belgium bond auctions.  Portugal yields are blowing out so a second bailout will be needed there and look for this to gain attention. Hungary is another concern and although the bond auctions have went well the last few days the France 10-year yield remains above 3%.   Watch for a China easing of the triple R’s, anytime over the next couple weeks. A Bradley turn window is open thru 2/3/12 and watch to see if the trend change towards the down side continues from last Thursday.  Congress has returned to Washington from the holiday break so this typically casts a negative tone for markets. Personal Income and Outlays 8:30 AM.  Dallas Fed Mfg. Index 10:30 AM. Earnings: ALGN, BIDU, CEG, EEP, GCI, HAYN, MCK, NLY, PCL, SCCO.
·         Tuesday, 1/31/12: EOM. Case-Shiller House Price Index 9 AM.  Chicago PMI 9:45 AM. Consumer Confidence 10 AM. Farm Prices 3 PM-watch ag sector and CRB Index.  Earnings: AFL, AMZN, ADM, ARMH, BIIB, BXP, DHR, LLY, XOM, HRS, HP, ITW, ILMN, LLL, LXK, MTW, MAT, OSK, PCAR, STX, TLAB, UPS, X, VLO, WDR.
·         Wednesday, 2/1/12: Final China PMI. Motor Vehicle Sales data. Mortgage Purchase Applications 7 AM. Challenger Job Report 7:30 AM. ADP Employment Report 8:15 AM. Fed’s Plosser speaks at 8:30 AM. Treasury Refunding Announcement 9 AM.  Construction Spending and ISM Manufacturing Index 10 AM.  Watch the energy sector in response to ISM.  Oil Inventories 10:30 AM.  Facebook files for IPO? Earnings: AET, ALL, AMP, AOL, BMC, CMG, CVLT, CLB, COCO, CCK, EA, EPD, HAIN, HSY, JDSU, LVS, MAN, MRO, MPC, NOC, QCOM, TMO, TSCO, TUP, WHR.
·         Thursday, 2/2/12: Groundhog Day. Merkel arrives in Beijing. Chain Store Sales.  Jobless Claims and Productivity Costs 8:30 AM.  Fed Chairman Bernanke testifies before the House Budget Committee 10 AM. Natty Inventories 10:30 AM.  Fed Balance Sheet and Money Supply 4:30 PM. Fed’s Fisher speaks 7:15 PM. Earnings: APKT, AFFX, ALKS, AGN, BZH, BEBE, BX, BSX, CI, CME, CMW, CMI, CYTK, DO, DRIV, DOW, EVR, FISV, FLXS, GNW, GILD, GR, HPOL, IP, IRF, K, KEM, KEX, MA, MRK, MCHP, NOV, NYT, NVLS, PCX, PTEN, PENN, PHM, RCL, RGLD, R, SLE, SE, HOT, SUN, TTWO, TE, TSO, THQI, TDW, TRMB, VRTX, VIAB, XEL, Z.
·         Friday, 2/3/12: Monster Employment Index. Monthly Jobs Report 8:30 AM. Factory Orders and ISM Non-Mfg Index 10 AM.   Earnings: AXL, BEAM, EL, MOD, SPG, SEP, CLX, TSN, WY.

Key Dates and Times for the Months Ahead:

·         Thursday, 2/9/12:  ECB Rate Decision and Press Conference.
·         Monday, 2/20/12:  Euro Zone Finance Ministers meet in Brussels.
·         Tuesday, 2/21/12:  Ecofin meeting of European Union finance ministers in Brussels.
·         Thursday, 3/1/12: EU Summit for heads of state in Brussels begins.
·         Friday, 3/2/12: Monthly Jobs Report
·         Thursday, 3/8/12: ECB Rate Decision and Press Conference.
·         Monday, 3/12/12: Eurogroup meeting of euro zone finance ministers in Brussels begins.
·         Tuesday, 3/13/12: Ecofin meeting of European Union finance ministers in Brussels.
·         Tuesday, 3/20/12: Greece deadline for financing.
·         Friday, 3/30/12:  Informal meeting of EU finance ministers in Copenhagen begins.
·         Thursday, 6/28/12: EU Summit for heads of state in Brussels begins.

SPX S/R Week of 1/30/12

Lots of drama in the markets these days and the support, resistance and moving average levels help make sense of it all.  Note how price placed a low on Friday by finding support with the 10-day MA. Any breach of the 10-day MA would signal trouble for the broad indexes.  Thus, the 1316, 1314, 1311, 1307-1308, and 1295 support levels are important as the new week of trading begins. On the top side, 1320, 1326, 1329, 1331 and 1331 resistance are key.

The end-of-month (EOM) prints occur at Tuesday's close as January disappears into a leap-year February. The broad indexes fell into a secular bear market pattern when the August waterfall crash occurred. Markets then languished on the bear side until recently. As seen in the day to day commentary here, Keystone's secular indicators continue to flip back in to the secular bull market pattern as a result of this recent bullish strength.  A key test of this shift to bullishness occurs with the Tuesday print.  Keystone's SPX 12-Month MA Cross Indicator shows the 1283.27 level to be pivotal for the first two days of trading this week.  As of 4 PM EST on Tuesday, the SPX final print will cast the monthly number in concrete. If above 1283, the market bulls have officially wrestled back control of the broad indexes and the pattern shifts into a secular bull market pattern for the weeks and months ahead. If the market bears want to push lower, there is no more time, they must drop the SPX by 36 handles in two days to reestablish bearish authority. So this mini soap opera will come to a conclusion on Tuesday afternoon, be sure and watch.

Focusing on Monday's action, the SPX, starting at 1316, if the bears lose the 1312 handle, the broad index selling will accelerate.  The confluence at 1311-1312 will put up a small fight, but once price ventures under 1312, the bulls will be losing control, and a test of 1307-1308 support should occur in short order.  For the market bulls, all that is needed is a touch of the 1320 handle and that will trigger the large block buyers to enter long accelerating the indexes higher, 1326 will come quickly.  A move thru 1313-1319 is sideways action.

Note how price, at 1316, sits directly in the middle of the bullish and bearish outcomes described.  Perhaps the Sunday overnight futures will provide insight into which side is preferred as the new week of trading begins.  Markets are highly unstable currently.  In addition to the SPX discussion here, watch the SPX:VIX ratio 68 level and UTIL 453 level since these two characters will provide broad market directional insight within the opening minutes of trading.

·        1336
·        1333
·        1332
·        1331
·        1330
·        1329
·        1327
·        1326
·        1323
·        1322
·        1321
·        Friday HOD 1320.06
·        1320
·        1319
·        1318
·        Friday Close 1316.33
·        1316
·        1315
·        1314
·        1312
·        Friday LOD 1311.72
·        10-day MA 1311.22
·        1309
·        1308
·        1307
·        1306
·        1305
·        1300
·        1298
·        1296
·        20-day MA 1295.34
·        1295
·        1293 (10/27/11)
·        1292
·        1289
·        1287
·        1286
·        1285
·        12-month MA 1283.27 (One of Keystone’s Major Secular Signals)
·        1281
·        1278
·        1277
·        1275