Thursday, May 31, 2012

Keystone's Midday Market Action 5/31/12 EOM

Markets are moving along sideways, flatter than a newleywed's souffle. The RTH dropped under 41.16 but continues to not yet firmly commit to one side or the other.  Now at 41.10 so watch to see if the bears can hold it down, or not. If RTH stays under 41.16, the markets will deteriorate. Watch to see if the SPX drops under 1311 which will accelerate the downside and pave the way to 1300.  RTH printing 41.12....SPX printing 1311.60 and dropping........

Note Added 5/31/12 at 9:42 AM:  Looks like the road is being paved to 1300. RTH falling under 41.00 firmly favoring the bears. The 8 MA remains under the 34 MA on the SPX 30-minute chart signaling this bearishness so this tool carries clout.  SPX 1309 handle, 1308 handle...... Chicago PMI 52.7 lowest since Autumn 2009. Market weakness continues.  SPX 1307 handle......remember, the cliff is the SPX 12-month MA at 1292.83 now only 14 points away. SPX 1306 handle.......

Note Added 5/31/12 at 9:49 AM:  SPX 1305 handle...... RTH is 40.92, looks like the flighty retail gal finally made her committment--to the bear side. Here's a bounce but the minute charts want price to come back down again. AAPL is red adn tech is leading the downside providing the bears further street cred.

Note Added 5/31/12 at 9:53 AM:  SPX 1304 handle.....

Note Added 5/31/12 at 10:07 AM:  SPX 1303 handle.  Keystone took profits on TZA exiting the trade, will look to reenter. Also bot more CTRP. Also bot more EGLE.

Note Added 5/31/12 at 10:16 AM: SPX LOD is 1301.55.  Keystone bot SSO opening up a new long position. Also bot more ANR.

Note Added 5/31/12 at 10:52 AM:  SPX printing the lows for the day at 1300.49. The failure at 1311 led straight to 1300.  The bears are pushing today but the SPX minute charts are setting up with positive divergence. Oil Inventories may provide a pivot point in a few minutes. Keystone bot more SSO.

Note Added 5/31/12 at 11:05 AM:  SPX ruptures the 1300 level. Support is 1300, 1298, 1296, 1295, 1293, 1292.08 (12-mth MA cliff) and 1292. SPX 1292 is for all the marbles. Minute charts remain favorable to market buoyancy.

Note Added 5/31/12 at 11:20 AM: Keystone bot ERX opening up a new long position.

Note Added 5/31/12 at 12:40 PM:  Markets ran upwards for an exciting pop.  Note the inverted H&S on the SPX 5-minute chart; head at 1299, neckline at 1306-ish, so the target is 1312-1313, target achieved. The positive divergence in the minute time frames helped to bounce the markets for the mini-pop.  Keystone took profits on the SSO and ERX day trades. Also reopened the TZA position as a long (short small caps). RTH is sitting at 41.16, this fickle retail sector keeps playing around.  Wichever way the RTH moves, above 41.16 or below, it will take the market with it.

Note Added 5/31/12 at 1:12 PM:  Markets bounced on news that the IMF is planning to meet with Spain to discuss ways to help with funding.  The bounce occurs now everyone looks around at each other and says, "What now?" RTH is 41.24 above the 41.16 helping bolster the bullish case.  Keystone's algo, Keybot the Quant, is chomping at the bit to go long now but one rule it must overcome today would be to travel above yesterday's high at 1331 before flipping long, so the bears appear safe for today. Keystone took profits on the TLAB long trade exiting that position, it remains attractive, will look to reenter.

Note Added 5/31/12 at 1:29 PM:  The SPX 30-minute 8 MA/34 MA cross remains bearish.  Tech continues to lead the broad indexes to the down side, bearish.  RTH threatening 41.16 again.  Keystone bot TWM opening up a new long position (short small caps). Watch RTH 41.16.

Note Added 5/31/12 at 2:47 PM:  Fickle RTH sits at 41.16 and continues to be non-committal thus the markets stumble sideways. Here we go, RTH 41.14, is it simply another tease to the downside or is she about to break lower and take the markets along. Probably lots of sideways moving into the close since the Jobs Report is in the morning. Over the next hour you must place your bets on red or black for the jobs number, or, perhaps the smart traders are increasing their cash positions and simply willing to wait for the open tomorrow after the dust clears. RTH 41.12 liking the bears right now. SPX printed a LOD with a 1298 handle, note the 1298 support listed above, only about five points away from the cliff edge. Pebbles and rocks are falling down the mountain side as the bull's feet gingerly move along the trail occasionally slipping and sliding. RTH 41.11......

Note Added 5/31/12 at 3:09 PM:  Keystone's Inflation-Deflation Indicator is CRB/10-yr price = 273.05/101.75 = 2.68, well under the 2.90 level signaling that the U.S. economy is mired in deflation.  If/when the SPX loses 1292, that will serve as a trigger for Chairman Bernanke to announce QE3.  The Fed, ECB, China and Japan are likely working behind the scenes to set up the coming intervention. The FOMC rate announcement and press conference is 6/20/12 which serves as a bookend. Thus, QE3 may occur anytime over the next fourteen trading days.  RTH is 41.12 liking the bear side. Whoopsies daisies, fickle RTH now jumps above 41.16 again, what a soap opera. RTH refuses to pick sides but after the jobs number in the morning, the RTH will surely commit.

Note Added 5/31/12 at 3:40 PM:  RTH is 41.27 taking the broad indexes higher.  Keystone took profits on CTRP closing out the trade.  Also added more TWM. Utilities and Telecom were the only two positive sectors in May so T is enjoying buoyancy today going against Keystone's ongoing T short trade.

Note Added 5/31/12 at 3:52 PM:  SPX puking into the close, from 1320 to 1312 in 12 minutes. RTH decided it likes the bear side under 41.16 again jerking the markets to and fro. Keystone bot more EGLE.

Note Added 5/31/12 at 4:00 PM:  RTH finishes at 41.02-ish, things are settling out, so fickle retail jumped into the arms of the bears at the close.  The markets will write the story in the morning when the Jobs Report circus rolls thru town. Strike up the caliope.

Keystone's Morning Wake-Up 5/31/12 EOM

The VIX is over 24 so expect more of these large up and large down days with plenty of market excitement.  The ADP Jobs Report is usually on Wednesday's but it was delayed one day due to the holiday and wiill be released in about fifteen minutes. This will provide insight into the Friday jobs number.  Jobless Claims and GDP are on tap as well. Chicago PMI is at 8:45 AM. Natty Inventories are 10:30 AM and Oil Inventories are at 11 AM, delayed one day due to the holiday. Futures project a higher start on tap with the S&P's up about 4 or 5.

The NYAD printed an uber low -2100 number and the TRIN spiked higher so these hint that a quickie bounce move is needed. Watch the SPX 30-minute chart, however, the 8 MA and 34 MA cross, since it is currently bear friendly. Today is the EOM so the monthly charts receive a new print.  The SPX 12-month MA at 1293.24 is the cliff edge for markets but if the closing print today is above the bulls will log another bullish market month.  The RTH 41.16 level is key today. Yesterday we saw the fickle RTH unable to commit to a side spending equal time in bull and bear camps.  Whichever way the RTH goes, so goes the markets today.

For the SPX, starting at 1313, the bears only need a two point drop, under 1311, to accelerate the downside. Thus, the economic data is important before the open.  The bulls need to recover yesterday's losses to reignite the upside, a diffcult task, so instead the bulls will simply try to keep the RTH above 41.16 to keep the markets elevated.  A move thru 1312-1330 is sideways action.  Oil and the 10-year yield were too big stories yesterday. The euro, $XEU, has a 123 handle and the dollar, $USD, printing over 83.   Copper took a beating and this is ominous for markets. The utilities are remaining elevated so this remains a feather in the bulls cap.  When the utes head lower that will signal broad market trouble.

Keybot the Quant, Keystone's algorithm, shows the algo number directly in line with the signal line so the robot is open to the possibility of flipping to the long side.  However, any market bounce currently has the look of a bounce to short.  Bear flag patterns are in place on many charts. The big economic data push today and tomorrow continues into the Monthly Jobs Report tomorrow morning. In a nutshell today, watch RTH 41.16 which will dictate market direction. Market bears need to push the SPX under 1311 and the path to 1300 will be locked in.

Note Added 5/31/12 at 8:20 AM:  ADP jobs number is up 133K but the consensus expectation was about 150K; thus, a bit disappointing.  Futures lose a smidge.  Jobless Claims and GDP on tap.

Note Added 5/31/12 at 8:34 AM:  GDP prints 1.9% which is nothing to be happy about. The futures lost all their gains but recover to the slightly green side.  The 10-year yield drops under 1.60% printing a 1.59% handle, truly epic markets occurring in real-time.

TNX 10-Year Treasury Yield Daily and Weekly Charts Historic Record Low

The 10-year Treasury yield printed a historic record low number yesterday at 1.619%. Referencing the weekly chart over the last decade, a firm downward channel is in place and the low yield tapped on the bottom rail yesterday. The green lines show the positive divergence now in place except for the stochastics that are printing a lower low (red line). Therefore, the weekly chart wants to see a recovery in yields occur but the stochastics will want to see a weaker yield resurface after that recovery bounce.

The daily chart shows the steady eddy sideways channels in place since last summer, the overall range was 1.7% to 2.4%. The yield collapsed thru the bottom rail at 1.7% yesterday, however.  The daily chart also displays positive divergence across all indicators (green lines) so a recovery bounce for yields is on tap moving forward. Keystone called for yields to travel sideways this year and maintains this concept moving forward.  So much of the talk in media is about yields moving up and yields moving down but no one talks about the outcome where yields may maintain a flatish posture for a couple years or more going forward.  The proposed purple channel thru 1.6%-1.8% may stay in place over the short to intermediate term and yields may simply stumble sideways, staying under 2% for months or years.  This outcome would frustrate inflationists and traders that are calling for a bond top and positioned for hyperinflation.

The hyperinflation is coming, due to all the quantitative easing, but may not appear until towards the end of the 18-year cycle [1982-2000 Bull; 2000-2018 Bear; 2018-2036 Bull], say 2015-2019, rather than 2012-2013 as the majority of traders now predict. In fact these are the same traders that predicted that runaway inflation would occur from 2009 thru the present--and now we print low historic yields instead. Projection is a flat yield behavior thru 1.5%-2.0% for months, perhaps years, with hyperinflation arriving after the inflationists give up, sometime after 2014. 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 decison.

Wednesday, May 30, 2012

Keystone's Midday Market Action 5/30/12

The SPX fell thru 1319 so more downside is to be expected, but, the RTH is not cooperating for the bulls. RTH remains stuck at the 1315-1318 area.  Markets weakened on the hosuing data a short time ago.  If RTH drops under 41.15 and heads lower markets will tumble lower.  If RTH stays between 41.15 and 41.18, the day will be a long painful sideways agony.  If the RTH moves above 41.18 and heads higher, the markets will float upwards today. NYA is at 7500 far away from the bull goal of 7646.  SPX is about twenty points away from the critical cliff edge for markets at 1295.

Note Added 5/30/12 at 10:54 AM:  RTH leads the way lower, now printing 41.09.  Keystone took profits on TWM. Always try to exit a short play on a TICK at -1000, or conversely, exit a long play on a +1000 TICK, this way you squeeze the last bit of juice out of the trades. (If you want to go long try to time your long entry at a -1000 TICK and if you want to go short try to place your short trade as the TICK prints +1000, again, to provide a little advantage over other traders). Also took profits on SRS, will look to reenter both of these.  Also bot TLAB opening up a long position in this one again.  Also increased short position in T.

Note Added 5/30/12 at 11:06 AM:  RTH is under 41.15 and will keep the bears in the drivers seat moving forward.  On the SPX 30-minute chart, note that the 8 MA is about to stab down thru the 34 MA which will firmly place the bears in control moving forward. Watch it closely.

Note Added 5/30/12 at 11:27 AM: RTH is back in the 41.20's so today is shaping up to be a bull-bear sideways struggle.  Keystone bot CTRP and SVU opening new long positions in each.

Note Added 5/30/12 at 12:32 PM:  The 8 MA crossed under the 34 MA on the 30-minute chart, bearish.  RTH is under 41.15, bearishSPX is printing at the lows for today, 1311 handle. The 10-year yield now at 1.62%. Note the red utilities sector, UTIL.

Note Added 5/30/12 at 2:27 PM:  The pesky RTH refuses to make a committment, dancing to and fro around the 41.15-41.18 level. VIX is higher which says the large up and down market moves will continue day after day.  NYAD is printing uber low -2100 numbers and the TRIN spiked higher today hinting at a quickie recovery bounce on tap for this afternoon or tomorrow.  Since the 8 MA crossed down thru the 34 MA on the 30-minute chart for SPX, this keeps a bear move in progress. Thus, the markets may want a quickie bounce to relieve the NYAD and TRIN uber negativity but the bears should be able to work thru it--unless the 8 moves back above the 34. Oil is under 88.

Note Added 5/30/12 at 3:34 PM:  Sideways agony continues since RTH is a flirty fickle girl, not willing to choose a side but instead oscillating in the middle between 41.15 and 41.18. This RTH behavior creates a sideways funk today with the SPX traveliing between 1312 and 1318 all day long.  Keystone bot EGLE opening up a new long position in this one.

Note Added 5/30/12 at 3:43 PM:  RTH continues the sideways tease.  FB falls under 28. Keystone bot ANR, the dangerous coal sector, opening up a new long position.

Note Added 5/30/12 at 3:54 PM: Keystone bot more ANR.

Note Added 5/30/12 at 4:00 PM:  Fickle RTH finishes a hair on the bull side but things are settling out and the smoke needs to clear.  The flightly RTH will dance again tomorrow as the bulls and bears vie for her attention. Whichever way the RTH moves, so goes the markets. NYAD prints -2232 and TRIN prints 2.11 with a sipke to 3.4, both indicating that a quickie bounce is needed. Despite any bounce, the 8 MA under the 34 MA on the 30-minute SPX chart says the bears are in control over the coming days.

Keystone's Morning Wake-Up 5/30/12

Yesterday started the holiday-shortened week with a short-covering rally. Overnight, China says that extensive stimulus measures are not planned. This tanked futures and the worsening Spain situation continues to keep futures lower.  News hit a short time ago with the European Union is calling for direct bank recapitalizations. This brings the European markets up towards the unchanged levels far off the lows today. U.S. futures moderate on the news but remain bearish.

The RTH moved above 41.15 yesterday providing the bull fuel so watch this closely at the bell to see if the RTH moves back below. If so, the bears got game today, if not, the bears got nothing. Also important is the NYA 40-week MA at 7646 (price is below and bearish for markets) and the SPX 12-month MA at 1295 (price is above and bullish for markets). The SPX begins today at 1322. The bulls need to touch the 1335 handle and the markets will accelerate higher. The bears need to push the SPX under 1319 to accelerate the downside.   A move thru 1320-1334 is sideways action.

If the SPX is down today 8 or 10 points or more then typically Thursday morning would be expected to be weaker since markets tend not to bottom on a Wednesday after a strong sell-off. There are only two days remaining for trading in the month of May; the SPX monthly chart is providing drama in reference to the 12-month MA just like the end of April.  The 12-month MA is critical, now at 1295, representing the cliff for markets. This level represents where markets fall back into a tactical bear market and will signal an official end to the ECB's LTRO1 and 2 money-pumping rallies.

RIMM laid an egg last evening warning of a large loss coming.  The surprise was the announcement about retaining JPM to review strategic options for the company.  What?! Were not they doing this already?  Apparently not. One of the reasons Keystone was playing RIMM was due to the potential for great news occurring overnight on any night concerning a sale of the company, partial sale, or further agreements concerning patents. It turns out that RIMM management has been sitting back picking their noses all this time. It is best to allow the smoke to clear with this one. Keystone exited RIMM after yesterday's open dodging the late day bullet; in trading it is always better to be lucky than good.

FB continues its faceplant stumbling along like a drunken sailor. New lows occur each day for FB. The news about a Facebook cell phone was not well received. Not only the idea but also the new fear that this idea is even being considered. The sharks are circling the FB water but it is near levels where a bounce should be expected soon. The bounce, however, may simply provide an entry for shorts ganging up on the stock moving forward.  AAPL was up yesterday on Apple tv hype but this remains a broken soldier.

Yesterday the CRB dropped under 280 signaling deflation firmly in place and opening the door to QE3 which will likley be a coordinated global intervention with QE3, LTRO3 and China stimulus all rolled into one package. The wine will be flowing like water once Chairman Bernanke steps up to the mic and exclaims "QE3!" but the booze will run out and the punch bowl will likely run dry again by Labor Day into the elections. The summer rally on tap due to stimulus is analogous to the Last Supper. The 10-year yield fell under 1.70% to a 1.67% historic low yield this morning showing that traders continue to look for safe havens to park money.

Keeping it technical and keeping it simple, RTH 41.15, NYA 7646, SPX 1295, and the SPX 1319 and 1335 levels dictate broad market direction today.

European Bond Yield Summary 5/30/12

10-Year Yields:
Greece 29.82%
Portugal 11.96%
Hungary 8.47%
Spain 6.67%
Italy 5.98%
Belgium 3.13%
France 2.58%
Austria 2.30%

Netherlands 1.76%
U.K. 1.71%
U.S. 1.70%
Finland 1.62%
Germany 1.32%

Spain is crumbling. Bankia bank continues to fall.  Confidence is lost in the Spain banking system. In addition to worries of bank runs on Greece and Spain, now there are worries about Italy. Spain 10-year yield has now blown out above 6.5%. The 6.5% to 7.0% area is where big trouble occurred last Autumn. Italy is now at 6% heading up. The Euro mess is the major driver of global markets with the news flow immediately impacting markets.  Note how the perceived safe haven countries continue to see yields dropping as money seeks safety. Each day brings a new Germany record low in yields. The Germany 2-year yield prints 0.416% this morning, a record low.

Watch the spreads. Spain-Germany 10-year spread is 535 points! Italy-Germany spread is 466 points. Please provide Keystone a chair so he can sit down and catch his breath from this dire news.  U.S. futures are lower today poised to give back much of yesterday's gains. China said that traders are getting too bulled up about potential stimulus coming and there are no plans for any significant stimulus measures.  This is code for it is not time yet.  Behind the scenes, the Fed, ECB and China are likely working together to set up a coordinated intevention that will include QE3 and LTRO3.  The FOMC rate announcement day and press conference is 6/20/12.  Greece elections 6/17/12.  Euro summit 6/28/12.  If conditions continue to deteriorate further into deflation, the CRB is now under 280, the quantitative easing intervention is not far away, and 6/20 provides a target date for the coordinated announcement, if not sooner. Equity markets will soar and the bond yields for the safe haven countries above will rise once the easy money printing presses are turned on again for a summer rally. After that, in late summer into the Fall, around the elections, the globe will likely be in worse shape as the punchbowl goes empty again and everyone realizes that the money pumps have less and less of an affect.

Tuesday, May 29, 2012

Keystone's Midday Market Action 5/29/12

SPX punches straight up thru 1324, now playing around at 1326 S/R, further upside would be expected today. RTH is 41.45 well above 41.15 favoring the bulls and encouraging more upside. The NYA, however, is at 7590, remaining far short of the critical 7645 (note the subtle change from 7637 since the moving averages, ini this case the 40-week MA, are constantly recalculating) the bulls need to guarantee a strong recovery. Markets are waiting for the Con Con at 10 AM. Tech and the broad markets are moving in lock-step today so neither bulls or bears can claim the tech push. When tech favors a direction this will ripple thru for the broad market direction.

Keystone took profits on CTRP and RIMM, will look to reenter both.  Also shorted more T. Also bot more TWM.

Note Added 5/29/12 at 9:49 AM:  NYA is at 7604 now 42 points away from the critical 7645 that will launch markets into a bullish frenzy, and likely cause Keystone's prprietary algo, Keybot the Quant, to move to the long side. This is the drama ahead of the Con Con number. Consumer Confidence is always an important monthly indicator but considering how the markets are on a bull-bear line fighting it out right now, this number in about ten minutes takes on huge importance. As an initial indication of whether or not NYA wants to continue higher, watch the 200-day MA at 7623 which price, now at 7610, will want to back test. If NYA takes out 7623 the bulls are probably going to make a run at 7645 as the broad markets continue higher. If the Con Con dampens today's mood, and the NYA fails from here, the bears will wrestle back control focusing on pushing the RTH back under the 41.15 level.

Note Added 5/29/12 at 10:20 AM:  Con Con disappoints with a weak 64.9.  The revisions this year tend to be lower while late last year the revisions were higher. So perhaps the 64.9 will be revised lower next month.  Markets momentarily weakened but then moved higher. Note the SPX testing the 1331 resistance level discussed this weekend, punching up thru, now printing over 1333. This behavior can be considered a back kiss of the neckline fialure at 1340 ten days ago for the H&S pattern. The SPX 20-day MA is sloping down now at 1344 so the 1340-ish level is firm resistance. COMPQ is now leading SPX to the upside, thus tech is leading the broad markets higher, which provides the bulls additional street cred today.  RTH is now at 41.62 printing the highs for the day.  NYA is now printing 7621 testing the 200-day MA at 7623, this is very important right now. The bears can hang their hat on the fact that the NYA has not been able to overtake 7646, at least not yet. VIX is only down a hair, for this type of rally, it should be down a lot more. Keystone opened new long positions in SRS and SDP. SRS is a double inverse ETF that is short real estate. 90% of traders now say the real estate market is in recovery so this is obviously a contrarian play. Case-Shiller Index did not provide much clarity this morning. SDP is a double inverse ETF that shorts the utilities. This is a thinly traded ETF so extreme caution is needed. SRS can easily move lower to a better entry at 28.70-28.90 and SDP lower to 30.70-30.90 but Keystone wants to establish a beach head now shorting these sectors and building on the positions as time moves along. SRS is now forming the right shoulder for an inverted H&S which is a bullish pattern.

Note Added 5/29/12 at 10:42 AM:  NYA overtakes the 200-day MA at 7623, a big feather in the bulls cap that keeps the bullish fun on tap for today.  NYA HOD is 7632.48 only fourteen points from the big-time bullish recovery rally signal that will launch markets far higher. Watch to see if the NYA maintains the 200-day MA as support here on out, or not. Traders were bearish going into the holiday weekend so much of today's move is short covering as traders exit taking the minor losses making sure they do not grow into major losses.  SPX S/R is 1347, 1344.30 (20-day MA), 1344, 1343, 1341, 1338, 1337, 1336, 1333, 1332, 1331, 13291326 and Friday's HOD at 1324.20. SPX moving thru 1333-1336 S/R for the last half hour.

Note Added 5/29/12 at 12:35 PM:  Good ole Keystone was out in the strawberry patch as the euro fell out of bed at 11:30 AM, the broad indexes fell since the euro and the U.S. equity markets, as well as commodties, all tend to move in the same direction, the dollar moves opposite and to no surprise, is up.  The SPX is now at 1324.49, price is testing support at the HOD from Friday listed above ever since noon time.  The bulls must hold 1324.20 and the bears must push down thru. RTH lost some steam but remains above 41.15 at 41.35. Note how tech lost its leadership to the upside so the bears took that feather from the bulls cap and placed in their own.  The NYA fell on its sword, dropping back down thru the 200-day MA, now printing 7574 about 70 points away from 7646--bull's hopes for a sustained recovery rally growing more dim as time passes.  Euro news dominates the market. Stay on guard to see if Merkel picks her nose or if Hollande coughs. It is ridiculous. Europe needs to take care of business or get off the pot.  There is still a wee bit time for central bankers to save the day.  The CRB is about to lose 280; QE3 will occur between CRB 250 and 280, as the U.S. is now mired in deflation.

Note Added 5/29/12 at 12:57 PM:  SPX held the 1324.40 support and is now wrestling with the strong S/R at 1326. RTH is above 41.15 so the bulls remain in favor today. On the SPX 30-minute chart, the 8 MA remains above the 34 MA which is bullish. FB is under 30 now at a LOD at 29.23, what a shame, poor Ma and Pa are holding those shares riding them down. The 27.70-29.20 area may start to provide an entry for a possible FB long.

Note Added 5/29/12 at 1:33 PM:  Volatility, VIX, is now up 2.5% today. Equity markets should be down with this move. Volatility shows that worry and fear remains elevated due to the Euro mess. SPX now testing the 1324.40 support once again. RTH is 41.38 so the bulls should be able to hang on today. That will change if RTH drops under 41.15.

Note Added 5/19/12 at 3:44 PM:  RTH is 41.61 well above 41.15 supplying bull buoyancy all day long. NYA is under the 200-day MA. VIX moved lower to agree with the higher market. The volume on the NYSE is only about two-thirds of an average day's volume. Keystone took profits on TLAB and will look to reenter, this is an attractive long.

Keystone's Morning Wake Up 5/29/12

The charcoal smolters, the party hats are in the trash and the holiday weekend quickly comes and goes. Worries over Greece are now only overshadowed by Spanish banks that are under serious stress. The Spain 10-year yield is at 6.5% signaling trouble, the 6.5%-7.0% area is where the pain began last Autumn. The Asian and European equity markets, however, with the exception of Spain, are buoyant this week after China announced a cash for clunkers program and promised more stimulus. U.S. futures were over 10 handles higher in the overnight session.  But, China released a statement a couple hours ago stating that extensive stimulus measures are not planned. This dampened the mood pre-market although the S&P's are set to jump about six or seven points higher at the open.

Sticking to the technicals, with the SPX starting at 1318, the bulls need to move above 1324 to accelerate the upside for the broad markets. The futures place the bulls at the cusp of this goal. If 1324 gives way, the strong 1326 resistance will likely give way as well and price will target 1331 resistance. After that, a move to 1340 would be in order to perform the back kiss of the H&S neckline. The bears need to push under the strong support at 1314 today to accelerate the downside. A move thru 1315-1323 is sideways action.  Markets are at the mercy of Euro news.

The retail sector joined the bull camp on Friday and the RTH is a key market driver when the bell rings in an hour.  Watch RTH 41.15, if price stays above, the bulls will be in full control all day today and watch NYA 7637 to see if the bulls can regain the 40-week MA, if so, the relief rally will become a strong full-fledged upside bullish recovery rally.  If the RTH falls under 41.15 after the bell, this places the bears in the drivers seat despite what the broad indexes may be printing at the time.  If RTH fails, watch to see if SPX 1314 gives way, if so, a test of the SPX 1294 level, the critical 12-month MA, would be in order. If RTH stays above 41.15 and NYA stays under 7637, like it is now, markets will stumble sideways.

Typically when a month is down all month long, the last couple-few days finish with an up move.  The problem is that the markets bounced a week ago, prematurely, so the jury is out as the month of May finishes over the next three trading sessions.  The monthly charts receive a new data point this week at 4 PM Thursday.  Case-Shiller Home Price Index is important within the half-hour and the Consumer Confidence number, one of Keystone's key monthly numbers of interest, will create a market pivot point at 10 AM. Thus, the market move after the opening bell may reverse sharply at 10 AM.  Some window dressing may be in order but this is more important for the quarter which will be the last week of June. To keep things simple today, simply watch RTH 41.15, NYA 7637 and SPX 1324 and 1314; these four will dictate market direction today. Preliminary indications suggest the RTH will stay above 41.15 so watch NYA 7637. Otherwise, hang on, since any Euro news will immediately impact markets. Continue taking profits as they occur as markets become more choppy and erratic as volatility rises.

Keystone's Inflation-Deflation Indicator Signals DEFLATION

Keystone's indicator now shows an economy mired in Deflation. The CRB (Commodities Index) continues to drop. Taking a look at the numbers;

CRB/10-Year Price = 281.95/100.281 = 2.81

Over 4 = Inflation
Between 3 and 4 = Neutral; inflationists and deflationists fight it out
Between 2.90 and 3.00 = Disinflation
Under 2.90 = Deflation

The U.S. 10-year Treasury yield is at 1.72%. Chairman Bernanke will announce QE3 when the CRB prints in the range of 250 to 280-ish. The CRB is now printing 282. The commodities markets are bouncing higher today so a relief rally may be on tap for the equities markets. Nonetheless, the economy is in trouble currently.  The CRB needs to fall further before Bernanke will announce QE3 and the move will likely be in coordination with other global central bankers such as the ECB announcing LTRO3. Global leaders are likely working behind the scenes now developing a global intervention program.  The global recovery is stalling or has stalled. China starts a cash for clunkers program and promises more stimulus measures but they are already backing off the stimulus talk to tamp down expectations.

Market turmoil and nervousness is ongoing since Keystone's indicator is under 2.9 with a deflationary spiral a serious theat moving forward. Interestingly, middle range automobile sales are showing that buyers are hesitant willing to wait a week or two, or more, since prices will probably be lower.  This is what happens in deflation and what scares Bernanke. Consumers stop spending since anything you buy will be cheaper next week, the essence of a deflationary spiral.

European Bond Yield Summary 5/29/12

10-Year Yields:
Greece 29.24%
Portugal 12.11%
Hungary 8.48%
Spain 6.46%
Italy 5.71%
Belgium 3.09%

France 2.50%
Austria 2.26%
U.K. 1.77%
Netherlands 1.76%
U.S. 1.73%
Finland 1.65%
Germany 1.35%

The Greece drama continues and Spain is an increasingly larger problem as the hours pass. Bankia bank mess continues to drag the Spanish equity market lower. The Spanish banks are acting as a drag on Europe. The Spain 10-year yield is 6.46% at that dangerous 6.50% level which caused the headaches in Fall 2011. Portugal moved higher towards 12.50% yesterday but is moving lower today. France yields are printing historic lows now well off the 3% danger level.  Germany yields continue to print record lows at 1.35%. The Spain-Germany spread is 511 points yesterday setting record highs.

China announced a 'cash fo rclunkers' program and promises other stimulative measures which is bouncing Asian and other markets. U.S. futures are looking for a higher open as trading resumes after the Memorial Day holiday yesterday but have pared the early gains by almost one-half; the S&P futures are up about 6. Case-Shiller is important before the bell and Consumer Confidence will create a market pivot point at 10 AM.

Monday, May 28, 2012

Keystone's SPX 12-Month MA Cross Indicator Secular Bull

A look at another one of Keystone's fave secular charts (reference the Secular Signal page on this site), is the SPX price cross of the 12-month MA which identifies secular bull versus secular bear market patterns.  No need to recap the same stuff as the NYA 40-week chart just posted for the 2009 to present time period, the same shpeal applies.  This chart shows the secular bull that started when the first bombs hit for the Iraq War in March 2003.  Seasoned traders such as Keystone knew the war trade was in place and were positioned uber long with a smart trade, as others worried over the coming global conflict and either went short or stayed neutral waiting to see what happens. Shamefully and sadly, war is money. The SPX then sliced down thru the 12-month MA at the October-November 2007 market top signaling that the party was over and a new secular bear market had begun.

Of interest on this chart is the weak and bleak profile in late 2008 early 2009. The market bounce occurred due to the QE1 money printing. Chart-wise, this profile says it wants to see the lows in March 2009 tested again at some point in the future. Are folks prepared to see prints of 600 and 700 for the S&P 500 again? Time will tell. The negative divergence now in place created the spank down we are now experiencing.  The month-end prints occur at Thursday's close this week so this chart will receive a new data pointBad things happen if the SPX prints below 1293.61. The SPX would fall into a secular bear market, verifying the move by the NYA 40-week MA cross, providing street cred for market bears, and big trouble for markets moving forward. The 10-month MA is also important and note that the 10 MA has been under the 12 MA for several months and this is a bearish signal. Since the month-end print only allows three days of trading until the number is cast in concrete, look for high drama in the 1291-1296 area this week.  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.

Keystone's NYA 40-Week MA Cross Indicator Signals Secular Bear

One of Keystone's key secular signals (reference the Secular Signal page on this site) is when the NYA price crosses the 40-week MA.  Markets began the QE1 rally in March 2009 into the April 2010 top. The secular bear was back in the summer of 2010 and markets stumbled lower mired in serious deflation. Chairman Bernanke, always pledging to avoid deflation at all costs, jumped into action with QE2 that saved the markets from going over the falls and created the secular bull into the August waterfall crash late last summer. Once again, stimulus to the rescue. The Fed began Operation Twist and other shenanigans but more importantly, the ECB runs their printing presses with LTRO1 and 2 which created the secular bull move from December 2011 until two weeks ago.

This NYA indicator says the broad markets have fallen into a secular bear market pattern here forward.  Price can reverse course this week so watch the 7637 level like a hawk.  Note that last week, the shadow on the candle shows a successful back kiss of this critical moving average so this opens the door to lower prices now. The red lines for the indicators are all weak and bleak as well, with the lower low in price, indicating that lower lows in price would be deisred (no positive divergence). Last week may have simply been a dead cat bounce. If NYA retakes 7637 heading higher, the index shorts will feel a whole lot of pain and the bulls will throw confetti. If the NYA stays under 7637, the bears are cruising along on easy street creating further negativity day after day.  This information is for educational and entertainment purposes only. Do not invest based on anythng you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Key Events and Market Movers Week of 5/29/12

© 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.

Key Dates and Times for the Week Ahead:

·         Monday, 5/28/12:  U.S. Markets are closed in Observance of Memorial Day today. Thank you to all the veterans! The European debt crisis drama continues. Greece, Spain, Hungary and Italy are the major current worries. European equity markets start the week off on a happy note as Greece is showing more willingness to go the bailout route and stay in the euro.  Spanish debt, however, is near the critical 6.5%. The Spain-Germany 10-year yield spread is at a record high. Greece elections are 6/17/12 fourteen trading days away.  Watch the European spreads closely in relation to Germany; higher spreads mean increased turmoil and trouble. Bank runs in Greece and Spain remain a major worry. Bankia bank was given a bailout but the funding needed was much larger than expected keeping equity markets in check today. Congress is on another recess, taking it easy, but this is actually market bullish since the politicians are away from Washington (they can do less harm). Watch for further China triple R cuts or interest rate cuts that would pump markets higher with liquidity. Earnings continue this week but the Q1 reporting season is all but over.  The shipping industry will be in focus this week as well as some retailers.  About 70% of the earnings have beat lowered expectations which is in line but the lackluster guidance, as well as top line revenues that disappoint, are not providing bullish oomph for markets. 
·         Tuesday, 5/29/12: U.S. markets reopen for trading. Case-Shiller House Price Index 9 AM. Consumer Confidence 10 AM.  Dallas Fed Mfg Survey 10:30 AM.  FB drama should continue beginning the week at 32 six dollars under the 38 issue price. Earnings: AMSC, DRYS, JDAS, JOSB, SHIP, GAME.
·         Wednesday, 5/30/12: Mortgage Purchase Applications 7 AM.  Challenger Job Report 7:30 AM-provides a preview for the Friday Jobs Report. Pending Home Sales 10 AM. Fed’s Dudley speaks 1 PM, Fisher 1:20 PM and Rosengren 4:30 PM. Earnings: CWTR, DAKT, GRZ, IHT, LGF, SINO, SYSW, TIVO, YGE.
·         Thursday, 6/31/12: EOM. Chain Store Sales. ADP Employment Report 8:15 AM. Jobless Claims and GDP 8:30 AM. Fed’s Pianalto speaks 8:30 AM. Chicago PMI 8:45 AM. Natty Inventories 10:30 AM. Oil Inventories 11:00 AM (delayed one day due to holiday). Farm Prices 3 PM.  Fed Balance Sheet and Money Supply 4:30 PM.  Earnings: CIEN, JOY, OVTI, PRGN, SABA, SAI, SBLK, TOPS, VRA.
·         Friday, 6/1/12: Personal Income/Outlays and Jobs Report 8:30 AM. Construction Spending and ISM Manufacturing Index 10 AM. ISM will impact the energy and broad markets. Markets tend to be bullish about two-thirds of the time in front of the full moon. Earnings: MOD.

·         Monday,6/4/12: Full Moon.
·         Wednesday,6/6/12: Beige Book 2 PM.
·         Thursday,6/7/12: Jobless Claims 8:30 AM. Chairman Bernanke speaks 10 AM.
·         Wednesday,6/13/12: PPI (Producer Price Index) and Retail Sales 8:30 AM. 10-Year Note Auction 1 PM.
·         Thursday,6/14/12: CPI (Consumer Price Index) and Jobless Claims 8:30 AM. 30-Year Bond Auction 1 PM.
·         Friday, 6/15/12: OpEx. Industrial Production 9:15 AM.  Consumer Sentiment 9:55 AM.
·         Sunday, 6/17/12: Greece elections.
·         Tuesday,6/19/12: Housing Starts 8:30 AM. FOMC Meeting begins. New Moon.
·         Wednesday,6/20/12: FOMC Rate Decision and Press Conference-will QE3 be announced? Equities will experience a rip-roaring rally once additional stimulus programs are announced by Chairman Bernanke.
·         Tuesday, 6/26/12: Consumer Confidence 10 AM.
·         Thursday, 6/28/12: Euro Summit. GDP.
·         Friday, 6/29/12: EOM. Consumer Sentiment 9:55 AM.

SPX S/R Week of 5/29/12

SPX support, resistance, moving average and other important levels are provided. The SPX is under the 20-day MA and 50-day MA which is bearish. The 20-day MA is under the 50-day MA which is bearish. Price closed Friday pennies above the 150-day MA so watch this moving average closely.  Strong support and the 10-day MA coincide at this 1318 level so the move above or below is important.

For the SPX on Tuesday beginning at 1318, the bears need to break under the strong support at 1314, if so, the downside will accelerate.  The bulls need to push the SPX above 1324 to accelerate the upside. Note that 1326 is uber strong resistance but if 1324 gives way, price will likely stab thru 1326 and move higher to fight the 1329-1331 level. A move thru 1315-1323 is sideways action.

The cliff for markets is the 12-month MA at 1293.61. If this level fails, markets are likely going back to the 1258 starting year number in short order. Considering the strong levels of support in the low 1290's, as well as the 10-month MA, the confluence at 1291-1296 represents the cliff edge where if markets fail, the only way they will recover is with QE3, otherwise the markets will continue far lower. For the bulls, if 1326 resistance is taken out, a test of 1331 R should come, then, once above 1331, the 1340 neck line back kiss of the H&S pattern should be on tap.

·        1378
·        1375
·        50-day MA 1374.78
·        1372
·        1371(5/2/11 Intraday HOD for 2011: 1370.58)
·        1370
·        1369
·        1366
·        1364 (4/29/11 Closing High for 2011: 1363.61)
·        1363
·        1361
·        1359
·        20-week MA 1358.57
·        1358
·        100-day MA 1356.28
·        1351
·        1349
·        20-day MA 1347.49
·        1347
·        1344
·        1343
·        1341
·        1338
·        1337
·        1336
·        1333
·        1332
·        1331
·        1329
·        1326
·        Friday HOD 1324.20
·        1321
·        1319
·        10-day MA 1318.39
·        1318
·        Friday Close 1317.82
·        150-day MA 1317.04 (150-Day Slope is One of Keystone’s Secular Signals)
·        1316
·        1315
·        Friday LOD 1314.23
·        1314
·        1312
·        1308
·        1307
·        1305
·        1300
·        1298
·        1296
·        1295
·        12-month MA 1293.61 (One of Keystone’s Major Secular Signals)
·        1293 (10/27/11 Intraday High 1292.66)
·        1292
·        10-month MA 1291.05
·        1289
·        1287
·        1286
·        1285
·        50-week MA 1283.07
·        200-day MA 1282.11
·        1281
·        1278
·        1277
·        1275
·        1272
·        1270
·        1268
·        1267
·        1265
·        1261
·        1258 (1257.64 start of 2011; 1257.60 start of 2012)
·        1257 (3/16/11)
·        1255
·        1252 (9/14/08 pre-LEH bk)
·        1249 (LOD 3/16/11; failure at this level 8/4/11)
·        1247
·        1244
·        1242
·        1240
·        1238