Wednesday, September 12, 2012

Keystone's Midday Market Action 9/12/12; German Vote Creates Bounce

The German vote bounced the euro so the markets, gold, and other commodities move higher.  Note the weakness in utilities again today, very ominous.  VIX fell thru the 20 and 50-day MA bracket mentioned yesterday. The 50-day is at 16.54 and the 20-day is at 15.86. VIX is now printing 15.87, see if it holds the 20-day, or not. If VIX moves lower, markets move higher.  Watch SOX 393, UTIL 464.31 and VIX 18.25.  All three are bullish so if any one changes its stripes, the markets will sell off and Keystone's algo, Keybot the Quant, will likely flip to the short side.  The euro dipped under 1.29 but only by a smidge.  Markets may want to move sideways ahead of the Fed decision at 12:30 PM tomorrow followed by the press conference in the 2 PM hour.  The SPX needed to touch 1438 to accelerate higher and that touch just occurred. The critical 1440.24, the intraday high for 2008, is within sight now. The tension mounts.  Market bears need to push under 1429 today to accelerate a downside move. Whoa, look at utes dropping, this may be something serious......

Note Added 9/12/12 at 9:45 AM:  The 8 MA is under the 34 MA on the SPX 30-minute chart which is bearish moving forward but this indicator is in a sideways knock-down drag-out bull-bear fight.  VIX failed the 20-day MA so this is bull friendly today. UTIL is at 467.66 only three points away from causing major market damage. On top of that, the 50-week MA at 461.36 represents a trap-door for the equities markets, where prices will likely go into free fall. The polar opposites are amazing right now. "Don't fight the Fed" tells you to hold your nose and go long and do not worry about a thing, while at the same time, ominous market signals are appearing such as uber complacency, weak utilities and charts topping out. All you can do is keep the seat belt fastened and keep the heart pills nearby.

Note Added 9/12/12 at 9:53 AM: Keystone was just handed today's menu.  It says possible market pivot in a few minutes on the Wholesale Trade data, watch ag stocks on Crop Report, Oil Inventories 10:30 AM, 10-year Note Auction at 1 PM and iPhone announcement at 1 PM as well. All Keystone wanted was some apple pie.

Note Added 9/12/12 at 10:30 AM:  TRIN is at 1.00, dead on the bull-bear line showing no preference today to either side.  Oil Inventories are up, no great shakes. The SPX is up 0.17% and the COMPQ is up 0.10%; this is the fourth day in a row where tech no longer leads the broad markets higher. After four days, it looks like that major trend, that supplied the bull fuel each day, is broken. VIX jumped back inside the sideways range thru the 20 and 50-day MA bracket. The euro (now printing 1.2881 continuing to run out of gas) and utilities are key today. Gold, silver and copper are all red now.

Note Added 9/12/12 at 11:41 AM:  Markets are flatish waiting on the Fed tomorrow. SPX HOD is 1439.15 another new high for this year and sets up the potential for a key reversal today. Or, if the bulls receive the nod, price may attack the 1440.24 target and catapult higher from there. The 10-Year Note Auction and iPhone Announcement is on tap in an hour or so. It's a hazy lazy day of summer. Chairman Bernanke is ironing a shirt and trying to remove the jelly stains off his necktie before the big day tomorrow.

Note Added 9/12/12 at 1:29 PM: At noon time, the 8 MA poked above the 34 MA on the SPX 30-minute chart so the bulls want to drive the bus into the Bernanke decision. Tech is now leading the broad markets higher by a smidge and allows the markets to remain buoyant today. The SPX HOD remains at 1439.15, in the neighborhood to try to overtake the 2008 high at 1440.24 which would cause bells and whistles to sound.  The Apple conference reveals the new iPhone5.  Folks are looking at each other asking "Where's the beef?" The new phone is thinner, faster, has 4G capability, a larger screen, better battery, in other words, a Droid. It's a good thing they kept the room dark since many may not notice that it looks the same as the 4s. The release does not have the pizazz that Steve Jobs would always provide. Droids outsold Apple phones last month four to one. AAPL price is gyrating after the release trying to stay buoyant on the day at 661. Tim Cook, Apple's CEO, now dons a tophat and cane, tap dancing as he provides more details on the new rehashed 4s.

16 comments:

  1. Heart pills indeed KS. You may want to charge up the defibrillator as well. Seems like the market has "bought the rumor" and overpaid at that.

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  2. Well said MEM. I am a bit surprised at the weakness of the pop here. The Fed has boxed itself into a corner with all its promises of QE. Anything less than a massive QE will disappoint. If the Fed does a massive QE at the top of the market, what will it do at the bottom? The Fed looks like the market's handmaiden here, and I doubt Bernanke wants to kow-tow to the market every meeting. But he's over-promised and will under-deliver, a bad move.

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  3. That is a good point about the perception of the Fed acting in response to the markets, very important. Bernanke may flex his muscles and disappoint simply for that reason, to let the markets know not to play that game with the Fed and that the politico's need to dig in and find solutions, do not look at the Fed. Or, it may be business as usual where Bernanke shows up with a huge bazooka and also asks the markets if they need the car washed.

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  4. I'm thinking perhaps a little profit taking the EUR.USD has a sell signal on it as per my algo so I decided since I'm short anyway why not play the fear that may arise latter today.

    Low cost way to play with a little fire.

    10:08:15 SEP 14 '12 10 Call Option VXX BOT 10 0.15 NASDAQBX false 4.39

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  5. signals are slow to setup... I was just saying am I looking at two different screen here or what!

    If EUR.USD gets below 128.875 we will see as KS say EUR down -everything else down- :)

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  6. ERY contineus to set up nicely with positive divergence. Daily chart wants a bounce now, weekly will want a bounce as well but it also will want to see price come back down for another look at these levels and then it should be satisfied this is the base area. So, it should jump anytime, up a few days, then back down over following days, then up and should be good to go for sustainable up.

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  7. Buy the options cost less and defines the risk consider the option cost your max loss... Covered calls arent a bad strategy either alows you to revover draw down.

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  8. Do they even bother to teach stock market theory in university anymore? KS, will you please talk about the possible SPX ranges for tomorrow, depending on what Helicopter Ben does? (Remember that famous WKRP episode where they dropped turkeys from a helicopter? Do you suppose....?)

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  9. TLT broke again this week, perhaps resuming the downtrend break it started 7/31. signs of a major bottom are forming in TBT. is the market setting up for a major disappointment from QE3?

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  10. And another thing, how do technical and cosmetic changes to the iPhone qualify as news? Would the Wall Street Journal also report on Smuckers adding ten percent more berries to their strawberry jam? What if Ford got another 2 miles per gallon out of its Focus? Apple always gets a free pass. No questions asked. No real journalism. No wonder it has so much money - it never has to pay for publicity.

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  11. Id really like to get a consulation on how to short bonds safely here for the long run...is it as simple at covered calls on TBT

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  12. That is funny about the iPhone. The release is like walking someone out to the car and proclaiming that the car has four tires, two headlights, one hood and four doors. The stock is holding up, however, traders are probably still waiting for a surprise. Keystone will probably post the SPX, dollar, maybe euro charts to set up tomorrow's big day. Best to let today play out first.

    TLT looks sideways thru 118-130 (gap fill at 119 needed) moving forward and TBT sideways thru 14-18 (17.5 gap fill needed) moving forward.

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    1. Ha ha I wasn't thinking literally but thank you I'm a big believer that will be a trade you can get a serious 5 fold on your account if you can get it right.

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  13. KS,
    UVXY has a recent gap around $49....do you think it will be filled shortly (within 1 week) after the FOMC announcement?

    Zig,
    Do you have an updated SPX forecast chart yet? The latest one I saw only goes to Se;t 25th.

    Tks in advance.

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  14. Voaltility typically places a bottom in August, the VIX continues to troll at the lows. Along with the CPC showing uber complacency, the tides will turn. Volatility has lots of upside ahead, but with the Fed today, you simply have to wait it out. If the Fed disapoints, then up and away for volatility, if the Fed delivers the QE3 bazooka, volatility will languish further but then recover in the days and weeks ahead. Up is the direction but you have to maintian flexibility on the timing.

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