Keystone's SPX:VIX ratio pop above 68, now printing over 70, so the bulls have control of the broad markets again. Bulls will remain incontrol unless the ratio drops under 68. CRB is remaining buoyant placing another feather in the bulls cap. The utilities, UTIL, however, bumped its head against 452 and fell back, for now, so market bears can take comfort in this action. If UTIL moves above 453, the bears will feel serious pain, barring that, the market upside may be limited.
The SPX is leading the upside as compared to the Nasdaq so this should limit the market up move as well. The SPX moved above the 1321 level so the upside was quickly ignited, but, as this is typed the 1321 handle is printing again. Typically, for any levels that Keystone forecasts, the level should be held from 7 to 10 minutes or more, to lock in the projected result. The opening maket pop with SPX moved above 1321 and then back down in about eleven minutes. Sometimes the guidelines have to be relaxed and this is one of those times. Watch the SPX, if it stays above 1321 for the following ten minutes or so, it should seal the upside move in place today. Bears need to push hard if they want to rain on the parade. UTIL already backing down to a 450 handle.
Note Added 2/1/12 at 10:19 AM: SPX rockin' higher, it took out the 1321 and held support so it launched, now printing over 1326. SPX:VIX ratio is over 71, almost 72, signifying full bull control. Watch UTIL, however, now with a 451 handle. The move upwards in the broad indexes will only serve as a spurt, unless, UTIL moves above 453. UTIL above 453 will signal a much stronger bull leg upwards on tap.
Note Added 2/1/12 at 1:40 PM: SPX is up 1.34%, just printing the HOD at 1330.52 minutes ago. The Nadaq is up 1.40%. Note the change where this morning tech did not provide leadership but tech is now leading upwards again like the whole month of January so the broad indexes are propelled higher, this tech strength providing the additional push skyward over the last couple hours. Oil inventories came in higher than expected so oil price sold off. Gasoline usage is at the lowest level since September 2001, a bad harbinger for the retail sector, so the RTH is lagging the broad market today. If folks are leaving their cars parked in the driveway they certainly are not spending any money to help the economy. SPX:VIX ratio is at 73 verifying the bullish fun; bears will not be happy until the ratio moves under 68. UTIL is now printing 451.67, so one buck under the critical 452.66 level. Today's HOD is 452.19, within 47 cents of the 452.66 which would trigger bullish euphoria and a new leg higher for bulls. For now, despite the large up day for the indexes, the market bears remain in the game--as long as UTIL does not exeed 452.66.
Do you suggest short positions should be covered for this week? It looks like market ignoring the bad news all week and moving upwards
ReplyDeleteMike
Hello Mike, good ole Keystone does not suggest any positions be held, SEC will not like that. But in keeping with this as an educational and entertainment site only, the 30-minute chart provided may clarify the current markets.
ReplyDeleteKeystone's algorithm, Keybot the Quant, remains long the markets but this operates a more short to intermediate term time frame, think days and weeks. Positions are always about time frames since a trader can be long and short at the same time simply because each trade is targeting a different time frame.
If Keybot sees the UTIL stay under 453, and the CRB lose the 309.50 level, the algo will likely go short.
In the more hourly and daily time frame, day trading and holding positions for a few days, the SPX does appear quite toppy. The chart above shows price tapping up against resistance at the top rails of the megaphone and channel patterns. A move above 1333 would further embolden bulls but it appears that a temporary top is at hand. The move up had lots of momo so it would not be surprising to see a down up down move, which is sideways a couple few days, this should set up strong negative divergence for price to roll over.
Any trader that enjoyed profits on this nice bull run would be foolish to at least not take, say, half their positions off and book the profits. But, this is not advice, everyone has to make their own decisions.