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.

8 comments:

  1. went short at SPX 1313 (figured it be an awesome dare devil number ;-), waited for 8MA to cross under 34MA for confirmation. Aiming for intermediate term gains.

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  2. Arnie, what product are you using to short this market (SDS, SPXU, TZA, etc.)? KS, any thoughts about going into SSO for a quickie bounce tomorrow? Thanks.

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  3. Hello Arnie and Anon, RTH keeps fighting in the 41.15-41.18 and will not give up its hand. The 8 MA stabbed down thru the 34 MA on the 30-minute chart so that is bear friendly. The NYAD is printing under -2100 as this is written so that hints at a quickie bounce needed to relieve the uber negativity. TRIN spiked to a high number as well favoring a quickie bounce. Very tricky markets. VIX is high saying that large up days will be followed by large down days that will be followed by large up days, etc...., so roll with the flow on both sides and take profits as they appear. So NYAD adn TRIN would like a bounce now but as long as the 8 stays under the 34 then the bears will win the game over the coming days..

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  4. Anon; I mainly trade SH and sometimes DOG to short. These are less leveraged and thus less risky. SDS is nice too IMHO

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  5. Thank you again for great feedback. I have a question regarding after hours /premarket trading. It is more convenient for me to follow a stock and buy it after hours and sell it next day @ premarket when it pops up and go away w a profit even if it would be less than regular hours. There are times like today the big part if the move was already done at premarket. How do I identify such days using charts etc. .Thank you !

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    1. Hello Serenay, sounds like you need to change your schedule. By limiting your exposure time to markets, you are placing yourself at a disadvantage. If working find ways to take a break in the mornings so you can spend fifteen minutes addressing the markets, use your lunch time, a break in the afternoon. Use technology to your advantage with a smart phone or laptop. Pursue solutions to allow more trading time. Use the divergence set ups in all time frames to aid your trades.

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  6. When you enter a trade you need momentum to accelerate in your direction in order to profit from your entry. Otherwise you get a whipsaw. Had you been able to eliminate those 3-4 whipsaws this year your returns would have been much higher.
    Is it possible to evaluate (at the time of entry) the potential of any given trade in order to eliminate the whipsaws? I struggle with whipsaws trading in much shorter time frames.Thanks

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  7. Hello Anon, Keystone is unsure if you are referencing Keybot's whipsaws? If so, they go with the territory. The markets are very tricky this year as exhibited by the sideways behavior all year long. We watched the rolling top form Febrary-April where Keystone took all the heat over the call but the markets finally did comply and roll over.

    So the whipsaws are more a function of the sideways nature of the markets. More sideways = more whipsaws, this would be true in any time frame. The SPX has basically moved thru 1300-1400 for four months, a 100 handle range, which accounts for about 7% of the entire range. Once markets return to trending markets, trending down or up, it does not matter, the whipsaws go away. Keybot flipped short on 5/4/12 already 3 1/2 weeks committed to one direction as markets are trending lower. The whipsaws are a part of trading, one of the keys to trading is exiting a trade going the wrong way early on before the losses grow. Taking a percent or two loss is no biggie at all.

    On the shorter time frames, focus on divergences so you can be more sure that you are entering at or near the top in any time frame (if shorting due to negative divergence), or you can be sure you are entering the bottom in any time frame if going long due to positive divergence. Watch the interplay of price movement in reference to moving averages as well.

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