Friday, September 28, 2012

Keystone's Midday Market Action 9/28/12; EOM; EOQ3; Spain Stress Tests

Markets drop at the open printing an SPX LOD at 1436.30 thus far. Consumer Sentiment was a shade lower than expected. The bears need to drop under 1434 to accelerate the downside.  The euro is using the 129 level as support.  Gold continues to fight for the 1780 which would lead to 1820's if the gold bulls can push price higher and close over 1780. UTIL is at 473.61 over two points above the important 472.06 level for next week. This indicates that the bulls may try to simply weather the storm today, keep UTIL above 472.06, and mount a bull move early next week.

The Spain stress tests are due at noon time, which should result in a market pivot point, less than a couple hours away.  Markets may idle until then unless news leaks out ahead of time. Perhaps markets will settle in for the day after the news.  This week is on tap to finish on the down side which would be in line with seasonalilty that indicates this week after OpEx in September is down over 80% of the time. The full moon is tomorow which helps the bulls today.  Pay attention to UTIL 472.06 today and also the euro. The euro movement will dictate the markets; up euro = down dollar = up commodities, copper, gold, silver and equities. Down euro = up dollar = down commodities, copper, gold, silver and equities. The Spain stress tests will dictate the euro move. The euro has dropped back under 129, under 128.90, 128.80, 128.70, now printing 128.67.  The euro critical bull-bear line in the sand remains at 128.30.

Note Added 9/28/12 at 10:32 AM:  The SPX fell thru the LOD printing a new low at 1435.60 so keep an eye on this number.  The bears need 1434. Considering the impact of the imminent Spanish stress tests, the SPX may idle in this 1434-1438 range until the news hits. This would provide the area to either launch from, or collapse thru. Of course, if 1434 fails at any time forward, the broad indexes will accelerate lower and likely remain weak into the weekend. UTIL is 473.49. VIX is 15.60 back up and over the 20-day MA, see if it can move back up and over the 50-day MA at 15.94. A VIX 16 handle will be an all clear for market downside. Thus, all eyes and ears are focused on Spain's arena, will the bull live or die today? The euro is 128.55 continuing to leak lower now only 0.25 away from the danger line which will cause market turmoil.

Note Added 9/28/12 at 11:37 AM:  The euro is 128.44 now only 0.14 away from danger. The SPX sits above 1434 still holding the 1435.60 LOD.  UTIL is at 472.64 a hair above 472.06.  VIX at 15.60 between its 20 and 50-day MA's. The 8 MA is on the verge of stabbing down thru the 34 MA on the 30-minute chart. The table is set. Launch, or die.  What say you Spain?

Note Added 9/28/12 at 12:22 PM:  Spain says seven banks have needs, seven do not, overall the news is in line with the consensus so no great shakes.  The euro pops, albeit slightly, now printing 128.77. The SPX moves about three handles higher after the news thus far to 1442. Watch the 20-day MA at 1441.68, this serves as a great bull-bear indication for today.  UTIL is 473.67 which would put the bulls in the drivers seat come Monday.  Moody's typically announces downgrades after the markets close on Friday's so that serves as a wild card for Spain, and the global markets as the weekend approaches.  The bulls are going to set themselves up for buoyancy early next week unless the bears can step in over the next few hours to create negativity. If UTIL moves under 472, that will create negativity, likewise the SPX falling under the 20-day MA. Watch the COMPQ versus SPX, both down -0.45% fight now. If tech starts to lead lower today the bears will rejoice; if the COMPQ starts to outperform the SPX to the upside, then the bulls will send markets steadily higher into the weekend.

Note Added 9/28/12 at 12:54 PM:  The SPX is 1441.56 six pennies under the 20-day MA. The COMPQ is down -0.43% while the SPX is down -0.39%, bear friendly. Bingo. The 8 MA just stabbed down thru the 34 MA on the SPX 30-minute chart indicating that the bears will rule for the hours and days ahead. UTIL is at 474 keeping the bulls in business. Tricky markets.

Note Added 9/28/12 at 1:47 PM: The SPX jumps higher, over the 20-day MA, and now the 8 MA has recovered back above the 34 MA on the 30-minute chart, albeit by pennies, placing the bulls in charge again. Tech still leads the broad markets lower keeping the bears in business. Wishy washy, fickle markets, best to let them meander along today. Note how the euro is at 128.55-ish about where it was before the Spain stress test news.

Note Added 9/28/12 at 4:03 PM:  Tech led the downside today helping weakness reenter the markets as the day played out. AAPL fell 2%, bearish for markets. The SPX finishes under the 20-day MA, bearish. XLF finished under its 20-day MA, bearish.  UTIL will start next week above 472.06, bullish. The 8 MA finishes above the 34 MA on the SPX 30-minute chart, bullish.  TRIN is 1.82 verifying the market selling today but not obscenely so, so it would be open to further selling pressure moving forward. VIX closes at 15.61 smack-dab between the 20-day MA and 50-day MA.  A mixed bag all the way around. The SPX high print today at 1447.13 is important for Monday.  Listen for any potential Moody's downgrades, especially for Spain, if it occurs it will likely hit over the next hour or two. The euro is 128.46 a measley 0.16 above the 128.30 bull-bear danger line that will create strong broad market selling. Gold is very interesting; note how it cannot seem to close in the 1780's, which would lead to the 1820's, price keeps balking at 1780. This can only be viewed as bearish. Watch gold closely moving forward to see if it can close and stay above 1780 since it will also serve as a proxy for other PM's. Q3 ends. Q4 (October-November-December) begins.

21 comments:

  1. KS, just as you mentioned yday: yday was a bull trap. Soon we'll have a bear trap too, lots of whipsawing. Stay nimble.

    IMHO, yday saw a classice 4th wave retrace, with the 50% Fib level KS posted as a great example. Now wave 5 down is under way. Either it is completed or only wave 1 of 5 is done. But since wave 1 down was 20-25 points, wave 5 is often same length. From 1450 that would mean 1430-1425ish. Time will tell.

    ReplyDelete
  2. Spanish Bank Test = Verifying that the Revolving Doors work ;-)

    ReplyDelete
  3. KS, a few weeks ago you mentioned FB and how it showed some nice positive divergence. I think it's double bottom is in and it may set up for a classic W-shape.

    Based on EWT, the move up from sept 4 to sept 19 was an impulse wave 1, which clearly consisted of 5 waves:

    wave 1 up: sept 4-7
    wave 2 down: sept 7-10
    wave 3 up: sept 10-17 (with a classic break away gap on sept 12, with huge volume)
    wave 4 down: sept 17-18
    wave 5 up: spt 18-19

    The length of this wave is thus around $6.
    Wave 2 down then commenced from sept 19-26, retracing down to $19.8, which is almost exactly a fib retrace of 62%.

    IMHO wave 3 up started Sept 26. Each wave up in an leading wave consists of 5 waves. 1 of 3 was sept 26 to open sept 27: 19.8 to 21 (21 is also R1 resistance). Then yesterday was wave 2 down to 20.16 (again a classic ~72% Fib. retrace). Notice how FB today cleared the R1 resistance nicely, likely in wave 3 of 3.

    Since wave 3 is often 1.62x wave 1, it could end on a higher degree at: 19.8 + 1.62x 6 = ~$29-30. this would close the big late July gap as well as be around previous pivot point level of $30.

    IF you have time, please check and comment.

    ReplyDelete
  4. I think you've got to consider finding a place to get long. Maybe we get more downside on Monday, maybe not. But by the end of next week we will be higher.

    ReplyDelete
    Replies
    1. Watch the SPX 20-day MA at 1441.62 and UTIL 472.06 which will provide valuable input as to how Monday may look.

      Delete
    2. Zig I thought your cycle has a low around the 4th and then a high around the 9th which would put a low around end of next week. has that changed?

      Delete
    3. Not sure I said that, but EWT can and does change. Anyway, currently I am seeing a still possible ES 1415ish on Monday or Tuesday. That doesn't mean it will happen. As Key says, markets are tricky. Here's what I am doing. I took a long position at ES 1430 today. I will take another one at the end of the day Monday, and maybe end of day Tuesday. That's for swing positions, not daytrading. My target is 1480ish. Good luck!

      Delete
    4. Zig,
      Are you the same person as ZigZag on Anthony's blog or are you a totally different Zig? This may be why I am confused. Tks.

      Delete
    5. haha def not me. I only have time to bore people on one blog ;-)

      Delete
    6. my apologies then for thinking you had stated a low of Oct 4th. I had the wrong Zig...:)

      Delete
  5. KS, I don't know where you find the information, but I read somewhere today that more Europe/overseas PMIs are due Monday before NA market openings. They can't be very good, I would think. So as Zig says, maybe some early Monday weakness (Mondays have usually been down lately) before the bulls take over?

    ReplyDelete
    Replies
    1. If UTIL finishes above 472.06 today, then the string of down Monday's will probably not matter much. If UTIL finishes under 472 today, the string of down Monday's will probably continue.

      Delete
  6. For FB, simply from the TA perspective, it shows an inverted H&S on the daily chart; head at 18-ish, neckline would be at 23-ish, thus 23 is a very important line in the sand. A break up thru would place the inverted H&S pattern in play and it would target 28 and sure enough, you can see a congestion S/R zone at 28-ish during mid-July. If price breaks up thru 23 it will should back kiss to 23 before then heading higher in earnest. All this is based purely on the inverted H&S only.

    There are a lot of swiss cheese gaps underneath, the gap at 20 is big enough to drive a truck thru, a reversal down thru here could be an island reversal if it drops from 20.0 to 19.5 in a heartbeat. There are more lockout periods that will expire that will probably send more shares to market as some investors run to the exits to take their dough, more supply would make price leak lower. The 50-day MA is 21.31 so pay close attention to that, bulls rule if price stays above, if it falls below, the lower gaps may need filled. The positive divergence did lift price over the last month and it does appear another higher or matching high is on tap so the neckline at 23-ish should be tested. The ticker is still not old enough for the weekly chart to provide insight. On hte 30-minute chart note how price is now back up to 22 which creates a potential island reversal pattern which would cause price to jump from 22 up to the 22.75-23.00 neck line in a heartbeat. FB came out of the duldrums but there may be some more sideways in it moving forward, a test of the 23 neck line is likely but price will probably be rejected and it will drift sideways to sideways lower until it can build up a new head of steam. Looks like a move to 23 then sideways thru 20.50-23.00 for a while. So, as far as trading, not much there to work with. Overall it does appear that this 18-21 area will serve as a base for FB moving forward, it does not appear that it will want to move lower than that although the gaps may need filled, perhaps if a strong market sell off occurs, it will come down to do that.

    ReplyDelete
  7. FWIW, I concur with Arnie - time to get long some FB if you play equities.

    ReplyDelete
    Replies
    1. thanks. yep, again FB put a clear 5 wave up today. very impulsive. from the 19.80 low to the 21 high, (1 up) with a retrace to 20.16 (2 down) over the past 2 days, today - according to a 1.62x relation between wave 1 and 3-, wave 3 should have gone to 22.08. It got to 21.95 (1.5x), so not bad.

      Delete
  8. There is no correlation between the eight and 30 moving average crossover and where the SPX will be in the coming hours and days. I am running cross correlation analysis on half-hour data going back three years and there is virtually 0% correlation

    ReplyDelete
    Replies
    1. You are correct, there is none. But there is for the 8 and 34 MA cross on the 30-minute chart. In addition, remember that the markets have been sideways thru 1400-1470 for two months, that will create more crosses due to the sideways nature of markets. The sideways action is due to all the central bank and European tape bombs which leads to the corresponding indecision. The SPX is where it was a month ago.

      Delete
  9. KS, SOX at 382 currently is "lightyears" away from 395, but UTIL currently at 474, is above the 472 you mentioned, but well-below the 483 level for this week. What are the implications of this, if any? Is the 483 more important than the 472 price?

    ReplyDelete
  10. Arnie, the importance of UTIL 483 was for this week and it expired at 4 PM EST. This is now replaced with UTIL 472.06 for all days next week, into next Friday, where it will jump higher to 481. This is important for the Keybot the Quant algorithm since it will likely trigger the robot to stand ready to flip long as soon as Monday's opening bell rings. There are other programming rules that the algo will have to click thru and satisfy to actually make the move to the long side. A key element would be overtaking today's high at 1447.13. So Keybot will want to go long but one of the key things it will also need on Monday is the SPX above 1447.

    ReplyDelete

Note: Only a member of this blog may post a comment.