The economic data did not bump the needle except for sentiment. Consumer Sentiment was a blowout positive number at 79.2, the highest since 5/25/12, four months ago, and catapulted markets thru the 1468 resistance and higher. The bulls broke thru SPX 1464 after the open so this led to the acceleration higher. Watch the high prints here on out, today's HOD at 1474.51. Tech is leading the broad markets higher so this provides strong support for the bull case today. AAPL is approaching 700. TRIN remains low, now printing 0.60, so a market pull back will be needed to remedy this situation as highlighted with this morning's chart.
Since the markets will likely remain buoyant all day, watch the utilities sector for some excitement. The market bulls need UTIL to close above 478.48 today otherwise it will set the markets up for a sell off on Monday. If the bulls can at least get UTIL into the vicinity of 478.48, they could give themselves a chance for Monday's open, but, if UTIL closes at, say, 475 or lower, that will be a bearish signal for the markets come Monday morning. UTIL is now printing 474.22; watch to see if UTIL holds the 20-day MA at 472.08. The low CPC and VIX continue to signal a signficant market top now in place, which flies in the face of the bullish euphoria, and makes for interesting markets in the coming days.
Note Added 9/14/12 at 10:56 AM: SPX now back testing 1468. VIX turned positive. UTIL just dropped under 472, interesting. The COMPQ is up more than the SPX, so tech is leading, thus, the bulls are wearing the pants today and wil continue unless tech weakens. XEU, the euro, is now well over 131 and has filled the gap on the weekly chart, as well as piercing the gap at 132-ish on the daily chart. It needs a pull back but the chart is very bullish for yet more upside after the pull back occurs. The euro has benefited greatly first, from the ECB not lowering rates at their meeting a week ago, and now, with the Fed easing greater than the ECB easing, which sends the euro higher. The currency move with the euro is obscene, from 125 to over 131 in only six days, 5%, that is phenomenal. The euro shorts are continuing to cover.
Note Added 9/14/12 at 11:42 AM: UTIL drops under 472, losing the 20-day MA. SPX likes the strong S/R level at 1468. SPX 1468.36 was the closing number for 2007 and started the 2008 year of trading. 1468 was a key S/R level from November 2007 thru the first couple days of 2008.
Note Added 9/14/12 at 1:48 PM: UTIL is under 471, interesting. SPX is now back to the 1464 support. Telecom is getting whacked today on T and VZ downgrades. VIX is near the highs of the day. TRIN remains low at 0.77 which favors bulls but begs for a market sell off to relieve this uber bullish euphoria. Euro sideways across 1.31. Gold slightly positive, silver negarive. The Tunisia Embassy was attacked today, that makes four countries involved in rioting.
Note Added 9/14/12 at 3:33 PM: UTIL is at 471.43, about seven points under where it needs to be to allow the market rally to continue next week. Of further interest, is that the UTIL 50-week MA is 461.44, only ten points lower, which represents where the equity markets go over the falls and sell off in earnest. This is all very bazaar considering the QE3 bazooka fired off yesterday which pionts to blue skies forever. It would be interesting to see how markets react if a Chinese bank failed over the weekend.
Note Added 9/14/12 at 3:48 PM: UTIL is flirting with sub 471 into the close. See if it closes under the critical 20-day MA at 472.02 which would be a very bearish signal. The 20-day MA is one of the key moving averages to monitor for all tickers and indexes, check the price of all your positions against the 20-day MA so you can judge how each position is performing.
Note Added 9/14/12 at 4:12 PM: NYHL shows an obscene 848 print, that is ridiculous, and would hint at a snap back market sell off is needed to relieve this uber bullishness. TRIN closes at 0.77 still needs a market sell off in the near term. SPX dropped before the close on a downgrade of U.S. debt by Egan-Jones rating agency but snapped back just as fast closing at 1465.77. The 8 MA is above the 34 MA on the SPX 30-minute chart which is bullish but the 8 MA is now curling down. The SPX candlestick shows a long upper shadow where price closed a shade under the mid point today, a hammer. That shows there was a bull-bear fight all day long and the market bears actually won out in the end, albeit barely. The SPX was up 6 today similar to the second day response last week when Draghi fired his bazooka; Draghi's move was 29 SPX points Thursday and about 5 on Friday; Bernanke's bazooka was 23 SPX points yesterday and 6 today. SPX HOD is 1474.51; this number is important for Monday trading. Financials are up big since Bernanke takes care of his bankster buddies. The CRB is 317.45 and climbing which shows inflation climbing. The final tally on the utilities sector is interesting. Well look at that. UTIL 472.13 and the 20-day MA is 472.07, the bulls not letting the close under the 20-day MA occur. However, since UTIL needed a close above 478.48, the utes will have to rocket launch six points at Monday's opening bell to stop the broad market selling that should now begin. If UTIL remains under 478.48 next week, the markets will be weak. Lots to look at this weekend, but as a quick aside, if UTIL stays under 478.48 come Monday, and the SPX loses six points and prints under 1460, it is extremely likely that Keybot the Quant, Keystone's algo, will flip to the short side, perhaps only seconds after Monday's opening bell. If UTIL recovers above 478.48 and/or the SPX stays above 1460, the bulls will be fine on Monday. The markets sure can dish out the drama day after day.
oil future may be putting in a spinning top... So one more day over todays high then we could see that pull back to 76.3% of the recent run... Conjecture of course but I have been shorting the 30MIN setups and scalping.
ReplyDeleteWTIC oil weekly chart is bullish but it needs a pull back, the 50-week MA is 96.04. Daily chart shows the indicators negatively diverged, and a gap fill from May, so this would be an attractive area to reverse, but the shorter term move will likely require another higher high in concert with the weekly. So, perhaps oil down to the 200-day MA at 96.63, say a landing target at 96.0-96.6, then back up again to 100+, then take another look. It is a difficult trade with the Middle East and Northern Africa turmoil, now QE3, lots of wild cross currents. Long term the weekly chart may favor a sideways symmetrical triangle so the move over the next 2 or 3 weeks would top out at say 102-103-ish before moving down for an extended move down.
ReplyDeleteKS, with the action in the markets today, where do you think the S&P and DOW will be next week, keeping the weekness in UTES in view and also the low VIX. How deep will be a pull back?
ReplyDeleteThx.
If any of them are still sober, the bulls might want to wake up and notice the utes and the deep selloff that's developing.
ReplyDeleteCNBC "experts" gushing over this market is gonna climb. I offer a couple of caveats:
ReplyDelete(1) Gas moves toward 45 or NORTH of thatt price, there goes unemployment recovery because consumers will shut down.
(2) If Treasuries start to sell off to capture "projected" gains in commodities, interest rates begin to rise. O Baby! (Remember, the Fed is buying Mortgage backed securities in QE 3; once Treasury rates begin to spike, will they just increase Operation Twist? Then what, HIGHER prices at the pump??!!)
This Fed-created and Business Media fanned scenario is unsustainable and it will not end well -- and it will end FAR sooner than what many people think.
Sean
Above Line 3 should read $5 (not 45)
ReplyDeleteWe may as well wait for the final prints on the charts today and then look at everything during the weekend. UTIL 478.48 is important today, also keep watching CPC, VIX, SPXA150R. One day is strange as the next, NKE is down 3% today, $200 tennis shoes all of a sudden do not seem attractive to folks. It's a good thing Bernanke plans on kicking in the 'wealth effect' again with his grandiose machinations, Don Quixote Bernanke.
ReplyDeleteThe big question is that will a pull back be a mini pull back where you need to get out of all shorts and go long after only 10 or less than 20 handles of downside, say 1440-1450, or, does the downside have legs where it will take more patience to add longs, say from 1425-1440, or, 1390-1420, which would likely result in a CPC above 1.2 to verify that it is a sturdy bottom. It is a haunting dichotomy, the low CPC, it says the market top now is a significant top, while at the same time, the bulls are dancing in the aisles, the drunken weekend spree already beginning yesterday and continuing, with the Fed pouring booze into the punchbowl.
Trust your charts.
DeleteMethinks the pullback has to be 35-45 handles before we can get long again. Won't really know till we get there I guess...
DeleteImagine it tanks I'm short ES (SP-500) and HG (Cooper)on edge waiting for the fractal on the 30 to set new lows in confluence - perhaps we just rip sideways bringing he RSI down and then a power up melt up again. Otherwise the futures are in serious divergence.
ReplyDelete"TRIN remains low at 0.77 which favors bulls..."
ReplyDeleteCould you explain how you use the TRIN please?
My understanding was that anything above 2 was a buy signal, and anything under .6 was a sell signal.
Do I have it backwards?
Thanks!
Anon, on the TRIN, you have it in the ball park but not quite. The 1.0 level is the important bull-bear line. Above 1.0 means the sellers are in full control that day and the markets are dropping. Under 1.0 means the bulls are driving the bus and the markets are running higher (the action over the last couple days). When the bullishness is at a ridiculous pace, the cab driver parks his cab and runs into the exchange to buy stocks, and the hairdresser is telling everyone what stocks to buy, it is out of hand, that is represented by numbers under 0.6. It is strongly bullish but at the same time it tells you the tide is about to turn at anytime. Like stochastics under 20, or RSI under 30 when they are in oversold levels. Thus, the back to back low TRIN numbers yesterday and today points towards the market needing a selloff that should be a half day or more, to remedy this uber bullish euphoria and move ther TRIN into a more normal range of 0.8-1.2. Same idea goes on the top side when the TRIN is over 2. If over 3 or 4 and higher, traders are jumping out of windows, convinced the end has come and stocks will never go up, of course, that is when the markets will bounce.
ReplyDeleteMessed you up on the RSI and stochastics, meant that when stoch's are over 80 and RSI over 30 at overbot levels for when the markets are on the verge of selling off and snapping back. Overbot RSI and stochastics corresponds to the TRIN under 0.6, too much bullishness.
DeleteClear as mud. LOL
DeleteToo funny, good ole Keystone must be tired. Let's try it one more time. Uber low TRIN under 0.60 is uber bullish looking for market reversal, just like RSI over 70 and stochastics over 80, overbot territory. TRIN over 2 signals panic selling and a market rally imminent which would be similar to the RSI at sub 30 and stochastics at sub 20 levels, oversold. Finally, that is what was meant to say.
DeleteEgan Jones downgrades US credit.
ReplyDeleteInteesting. Sean Egan downgraded U.S. debt a few months in front of the early August debacle in 2011. They appear more reliable than Moody's, S&P, etc..., that were no where to be found before the 2008 market crash. The others always appear to be attacking Egan-Jones as small timer's and know nothings. If they are saying that, it means Egan-Jones is good in Keystone's book.
ReplyDeleteHello KS or Arnie. How much of QE has already been priced into this market? Do we see 1500 this year? Markets don't care about downgrades these days. KS, why did you sell your RETS at such a significant loss? Are you long on retail or just got tired of waiting for Godot? Have a good weekend guys.
ReplyDeleteSteve
Steve, honestly I really don't know. All I know is that some selling needs to occur to get rid off some of the uber bullishness. How much selling? I don't know. KS asked that question too. Can be anywhere between 10 and 100 SPX points. Could be continued meltup...
DeleteSteve, note the CPC now under 0.7 that locks in the complacency. No where to go from here except towards fear. Retail shorts are still in place. RETS fund is delisted and went bye-bye, no longer availabe so position was liquidated. Keystone was in too early on that one and the great American consumer lives on. Loss will simply help go against the gains this year for tax purposes. Godot is in the shoe department, Keystone can see him, he should arrive at anytime. Retail should top out but with the recent momo, it may churn a bit at the top before roll over. There were some other ETF's that were canned and delisted but all are very thinly-traded ones and not popular. As a rule, sticking with the more liquid ETF's is always best.
DeleteLots to look. If UTIL stays under 478.48, markets will be selling off, if SPX 1460 fails on Monday, markets will sell off strongly. A significant market top is in place now, despite the 'don't fight the Fed' atmosphere also in place now.
A path forward must be developed in light of all the drama, but for the shorter term trading, all shorts will likely remain in place moving forward, especially if Keybot flips short come Monday. This market top has the potential to be somehting very serious, that no one expects now that QE3 was announced. It appears markets may drop easily back under 1400 setting up October to be the time to go long.
October-ish would be the time to buy the QE3 long plays for another run higher such as long small caps, short the dollar and long gold, PM's, all that stuff.
But first, the markets appear that they will plummet in the coming days and weeks, so everyone that jumped in long over the last week will be hosed. As markets drop strongly, those folks will panic and sell, then in October, the markets will probably bounce strongly and come back up for another look at the current SPX levels, with many traders missing the move back up.
This is an outlier market call that flies in the face of 95% or more of the traders on the Street, but, Keystone can only follow what the charts and TA says. Keybot is long so when the algo turns short that will indicate there are problems ahead for the next month and would verify the bear suit. Volatility is expected to jump strongly higher thru the end of the year causing the markets, such as the Dow, to move in large 200+ point days one day, followed by 200+ days the other way on the next day. The coming days, couple weeks and next month promises to be some wild trading, and very likely not the straight up and thru 1500 that 95% plus traders expect in light of QE3.