The bulls are throwing a big party today ahead of the weekend. The July 4th holiday is Wednesday so it may not be difficult for the bulls to maintain the buoyancy into late next week. The markets were shot out of the circus cannon today, straight up. Keystone's SPX:VIX ratio jumped above 68 and is now printing 75, bullish for markets moving forward. Keystone's short term signals, the 30-minute SPX chart with 8 MA and 34 MA cross, and 60-minute SPX chart with 200 EMA cross, jumped to the bullish side as well. The four key parameters laid out this morning immediately gave way to the upside at the opening bell. RTH jumped higher, XLF, VIX fell below 18, and NYA is over 7700, all bullish. The confetti is in the air and the wine is flowing like water for the bulls. Merkel was so resolute in her position that when she softened and agreed to this new European TARP-like solution, the markets launched and are not looking back.
For further upside, watch to see if the semiconductors, SOX, move above 383, they are almost there. Above 383 will add more bull fuel for markets. Watch JJC 44.35, now at 44.21. JJC moving over 44.35 will launch markets higher. Watch CRB 280.65, only a hair away from here as well, where more bull fuel will create more market upside.
Note Added 6/29/12 at 11:30 AM: European markets are closing strong, they are a sea of green, Spain and Italy 10-year yields fall, Germany's yields rise. There is already confusion on the agreement between the Spain-Italy alliance and Germany. The market does not care, it is in the middle of a party. The details will sort out on the weekend. Note the SOX coming up for a look at 383, now printing 382.73. And here comes JJC, now at 44.24, approaching 44.35. If semi's and copper now join the party, this move will erupt into a full-fledged upside orgy.
Note Added 6/29/12 at 11:36 AM: SPX S/R is 1372, 1370.58, 1370, 1369, 1366, 1363.61, 1363, 1361, 1360 (20-week MA), 1359.50 (100-day MA), 1359, 1358, 1356, 1351, 1347, 1344 and 1343. Price is currently printing 1355.18 with a HOD today at 1355.90. Thus, the 1356 R is holding for now. Note the strong resistance cluster at 1358-1361. If bears prevent this area from giving way that will say a lot. If bulls punch up thru this 1358-1361 gauntlet that will say a lot.
Note Added 6/29/12 at 11:55 AM: Note the slap down from 383 the SOX just received. This is key to the bulls moving higher so pay close attention to SOX the remainder of the session. This will give you an early indication that markets are moving towards the 1358-1361 gauntlet if SOX 383 gives way to the upside. Markets are robbing from the start of Q3 buoyancy that would be expected for Monday and Tuesday.
Note Added 6/29/12 at 1:09 PM: Note the SOX piercing 383. See if it holds, if so, the attack of the 1358-1361 resistance gauntlet would begin. JJC just jumped higher, this should send the markets another leg higher. CRB punching up thru. Markets should take another leg higher now that these new levels are falling by the wasteside. Tech is leading the broad markets higher today as well, providing more bull street cred.
Note Added 6/29/12 at 2:32 PM: It is a full-fledged bull orgy today. A remarkable day. The semiconductors, copper and commodities now providing the additional bullish thrust which pushes the SPX to now attack the 1358-1361 resistance gauntlet. The first thrust up in price receives a smack down from 1358 R. Another test will follow.
Note Added 6/29/12 at 3:28 PM: The bear fortress at 1358-1361 provided a strong wall of resistance at 1358. The importance of this R level and the 1358-1361 gauntlet is now cast in stone. Semi's, SOX, are losing their grasp of 383.
Note Added 6/29/12 at 3:50 PM: SOX came down for a look at 383 and it turned out to be a simple back test, a successful test, and price catapulted upwards again. This enables the bulls to charge at the 1358 wall once again. Boom. Price punches thru the 1358 R, and is now up and over 1360 trying to run straight thru the 1358-1361 gauntlet. The bulls brought game today.
Note Added 6/29/12 at 3:53 PM: Here it is SPX 1361; for the bulls to get thru here would truly be a remarkable achievement.
Note Added 6/29/12 at 3:57 PM: SPX 1361.01 ... 1361.02 ....
Note Added 6/29/12 at 4:00 PM: Booiiiinnnnng. SPX 1362.15, holy smokes. Gauntlet, schmauntlet. The bulls ran thru 1358-1361 like a hot knife thru butter. What an ending to the quarter and H1. Quick, are there any doctors in the house? Grab your satchel and head over to the bear camp. Triage is already underway and surgeries will be required well into the evening. The bear carnage is serious.
Given that next week should at least start out buoyant and with low volumes, would it not be wise to resist bringing on shorts now despite a NYAD over 2200 and TRIN starting to move well under one? Just ride the rally using trailing stops?
ReplyDeleteWeaver, after this type of move it is best to let the smoke clear for a few sessions. The NYAD would simply be a quickie trade for a snap-back, timing is everything, Keystone will likely not play this, the short exposure with current positions provides comfort should any reversal gain steam to the downside. The bulls are in control, most of this rally is short-covering, however. Thus, either stay out for now, trim back on any positions that provided nice gains today, or move towards neutral, use the 1358-1361 gauntlet as an important level. Markets will move higher if they overtake this zone, if the bears keep providing resistance here, then shorts can be brought on as this resistance zone holds. The holiday and low volume will make trading challenging in the days ahead, so paring back and spending some time taking it easy into the week of 7/11 is probably what the smart traders will do. Once the markets settle down over the next day or so, perhaps some quickie trades can be explored based on NYAD or TRIN. TRIN is steady eddy BTW today, this move should see a TRIN at 0.5 or 0.6 but instead it reflects steady eddy move up. NYAD is pegged, however, signaling the uber bullishness.
ReplyDeletecan't fill a bid here we go again another melt up again robots are taking inventory at 1350... once the offer if gone we launch 2 handles easy ...
ReplyDeleteArnie, what's your EWT take on this rally? Does this rally invalidate the 5-wave downtrend based on EWT? If so, does this begin a 5-wave uptrend? KS, what are you using to long this market? Will Keybot ever use 2x longs (SSO, etc.)? Thanks for your insights guys. This has been one crazy rally. Makes no sense. Just more band-aid into the debt problems. I'm underwater on my TZA now.
ReplyDeleteSteve
You can't play TZA in this environment. Robots are not taking even 10 cent bounces. They will pound you liek rock em sock em. Only cover is TNA on dips.
ReplyDeleteThe Keybot algorithm is long SSO as of today which is a 2x. If a whipsaw occurs before 10 AM Tuesday morning, Keybot will drop down into single ETF's, if the long side remains in place, Keybot will continue to use the 2x ETF's.
ReplyDeleteThis SPX 1358-1361 is a very strong resistance cluster. Price is now testing, it received a spank down at 2:30 PM, now coming up for another look. Above 1361 and the bulls will be running for the foreseeable future. Market bears have to prevent price from moving thru this 1358-1361 gauntlet.
NYHL at 316!
ReplyDeleteYep, same level as the early February market top and mid-March market top.
Deleteone good thing for the bears today you would have thought that util would have made a new high but did not. maybe rally going to be short lived...dale
ReplyDeletedid keystone or any of you guys short the close?
ReplyDeleteTempted to play TZA so I bought at 18.18 and quickly sold at 18.28 as I thought 18.30's would not get penetrated and it didn't. Was tempted to get back in and thank goodness never did. kicking myself for not buying TNA at 53.50's and selling into that close. That close was scary, like Europe and the economy never existed. It's a cage fight between republicans and Democrats. The spoiled republicans threw a fit yesterday and Obama won today. Brutal. Anyone notice that when 1314.10 was not breached yesterday a few minutes later Merkel came out of the beer garten. Meanwhile the news kept saying yesterday the market was down because of Europe. LOL. Notice the MLP's down today and the frackers, Romney's little butt boys look like they received a blow to the face.
ReplyDeleteI added more TZA today at the close. Russell about to gap fill the 803 level on the charts. I still don't believe in this light volume rally but having said that, rolling tops are difficult and painful to short. Just have to hang in there. GLTA (especially those who are short like me)...
ReplyDeleteSteve
guys, hopefully it works now. Yesterday I tried to post many, many, many, times and every time I refreshed the page, all my posts were gone. Apparently, something was wrong with my Google account since it locked me out due to "unusual high activity"... Maybe it got hacked? I did change my password though.
ReplyDeleteKS can you please look into this mal function????
Hence, before I write anything more and see it vanish into cyberspace' blackholes again. I'd like to see if this post stays when I refresh....
Ok, so now my post doesn't disappear when I click refresh... Yipeee.
ReplyDeleteSo to summarize all my replies: Yesterday blew out all my stop losses, set at 1345, and wave 3 down never appeared (please note my "warning" that a trade below 1306 was needed to confirm a 3rd wave down). Instead we've gotten another ABC fractal (double zig zag) added to the correction. This was surprising, since thursday saw a true 5-wave decline... but this is how the markets work: maximum pain for everybody. Now the bears got worked, soon when everybody is long the bulls will get worked.
This will likely run to 1390s before rolling over: note that we'll have a set of lower highs then (1422, 1415, ~1400), which is bearish in the long term.
In the mean time, I will probably stay cash next week, letting the dust settle (KS advice is very, very valid!!!), and it's a light week. Also, I am looking for a lower risk entry point.
All in all, in June my account grew 10%, I've only lost on 2 trades, with yesterday being the 2nd. Great month, thanks KS for your invaluable insights, as the make me a better trader!