SPX is drifting lower, losing the 1310 level which represents the neck line of the H&S pattern shown on the 30-minute chart. A rupture of 1310 should lead to the high 1290's. The bears need to lose the 1306 handle to accelerate the market selling. The strength in the Nasdaq, due to strong AAPL earnings, may be difficult for bears to overcome.
Keystone's SPX:VIX ratio dropped under 68 at the opening bell. This forecasts a large down day on tap for the indexes, as long as it stays under 68, yesterday we saw it recover after lunch time. Take serious note of the collapse in utilities today. Reference last evenings missive discussing the utes. UTIL is now printing a 442 handle, only three above the 439 level, which if lost, will usher in serious broad market negativity. See if UTIL drops down to a 441 handle..............
Note Added 1/25/12 at 10:43 AM: SPX:VIX ratio came back up to test the underside of 68, now traveling flat, looks a lot like yesterday. Bears win under 68, bulls win above. UTIL now printing 443.58, four and one-half points above the 439 signal of broad market danger. Markets may idle along until the Fed announcement at 12:30 PM. A 5-year note auction occurs in between.
Note Added 1/25/12 at 11:12 AM: SPX:VIX ratio moved back above 68 at 10:48 AM, now favoring the bulls again and negating any large market sell off today, thus the SPX bumps higher and hangs out at SPX 1312, probably meandering sideways until 12:30 PM.
Note Added 1/25/12 at 1:16 PM: The Fed extends the easing into 2014 so the markets rally on the news. All asset classes are rallying, equities, commodities, copper, gold, and even bonds. Markets love this stimulus like a junkie loves drugs. The 1316 level gave way so the upside acceleration occurred. SPX now testing the 1322 resistance. Utes, UTIL, have shot up and over 450, the threat of moving towards 439 now a distant memory. The SPX:VIX ratio is well above 68 at 71.60 so it is all going the market bulls way again today.
Note Added 1/25/12 at 2:00 PM: The SPX:VIX ratio now at 72 four points above danger so the market bulls have no worries. Chairman Bernanke is on deck.
Note Added 1/25/12 at 2:28 PM: The SPX peaked at 2 PM and has trailed lower ever since from 1324 to 1319. Quick, someone tell Bernanke to cut it short, the more he talks the more the markets leak lower.
Note Added 1/25/12 at 3:34 PM: The SPX travels higher, punching thru the 1322 target and now stabbing at the 1326 resistance target.
Note Added 1/25/12 at 4:03 PM: The SPX closes smack dab on the 1326 resistance target identified in last evening's missive. The bulls keep trudging higher. Keep an ear out for news addressing Portugal's blowout in yields, or China's announcement on a triple R easing. Either event may result in an overnight market incident. Italy bond auctions are tomorrow morning, another event to watch closely.
I've been short the S&P and long VIX since the holidays. Way too late to back out now. But it sure takes a lot of backbone some days.
ReplyDeleteWeaver, it is never too late to make any trade. Simply ask yourself if you would move into the positions today if you did not own them.
ReplyDeleteChairman Bernanke sure did hand the bears the business today. SPX now trying to punch up thru strong 1326 resistance. The bears want to see the SPX:VIX fall under 68, until then, the bulls keep winning.
Pay close attention to Portugal (yields blowing out) and China (triple R easing announcement) since overnight news may drastically impact markets. This market may experience an overnight event that may make short positions quite attractive to hold. Keystone's algo has been long since 12/20/11 over five weeks now; the rally does appear long in the tooth but the bulls are the Energizer Bunny.
Italy bond auctions occur early tomorrow morning so that may initiate a market event as well.
What is your next target of resistence?
ReplyDeleteWhat's the update on Greece?
ReplyDeleteFor Thursday, watch SPX HOD today at 1328.30 for resistance, then 1329, then 1331. 1329 and 1331 are very strong R so price should really have to work hard to try to get thru these levels. The SPX support nad resistance levels were updated to provide a guide for the remainder of trading this week.
ReplyDeleteConcerning Greece, isn't it amazing how the Euro leaders can kick things forward day after day, even punt agenda items to the next meeting and never seem to suffer any ill effects? Greece remains in limbo. The LTRO program has helped to stablize Europe-temporarily. Portugal may explode into the news at any time.
The E.U. Summit is on 1/30/12, Monday, so it appears that the markets will give Europe, Greece, Portugal, Italy, the whole gang, enough rope until early next week. So the markets may produce some wild erratic action over the coming days. Hang on.
This is a GREAT website! and the market analysis helped me alot with my positions..
ReplyDeleteThank you for the wonderful work
Danke Anonymous, the idea of the site is educational so it is nice to hear that it helps folks. Perhaps the playing field can be leveled for traders, especially novice traders, that do not yet realize that they are swimming with sharks, like good ole Keystone, everyday. Keystone is a friendly shark, however, with worn down teeth.
ReplyDelete