The broad indexes launch at the opening bell. The positive FDX news has the bulls smiling. See if the SPX can punch up thru 1442.50 to create an upside acceleration and establish the bulls in control for the entire day forward. The utilities sector jumped at the open, then promptly fell on its sword. UTIL is 478.28 well under 481.36 so bears smile. Watch the VIX action at the 50-day MA at 15.44. The bears wil be happy above, and bulls below. The bears need to see VIX 16.90 to create strong market selling action. The 200 EMA on the 60-minute chart is 1440.44 so pay very close attention to this, now bullish, it will tell you a lot about the strength, or weakness, of markets. Above 1440 and bulls are happy, below and bears are happy. The 8 MA remains under the 34 MA on the 30-minute chart which indicates bearish markets for the hours and days ahead. The Nasdaq is up 0.63% with the SPX up 0.58% so tech is leading, give the bulls their due, albeit by a smidge. The first and only Vice Presidential Debate takes place tonight, a cage-match between Biden and Ryan.
Note Added 10/11/12 at 9:47 AM: The bulls know the importance of UTIL 481.36 so they keep pushing. Also, the bulls need SPX 1442.50 and higher today. The fight rages on. Keystone looks outside to see the mountains of leaves that require Fall clean-up attention.
Note Added 10/11/12 at 11:12 AM: The bulls are trying to keep the SPX above 1442.50 to start an upside party. UTIL is under 481.36 but climbing and now printing the highs of the day at 480.35, now only a buck away. The SPX is up 0.67% while the Nasdaq is up +0.63% which shows that tech lost its upside leadership, this is why price is having trouble moving thru 1442.50. If the bulls can move UTIL above 481.36, that will launch everything. Bears must prevent UTIL 481.36 with all their might and keep the SPX under 1442.50. Whoopsies daisies. The SPX fell under the 200 EMA on the 60-minute at 1440.45, bearish.
Note Added 10/11/12 at 1:58 PM: Keystone was busy losing the battle with the oak leaves and missed the excitement with the utilities. Do you think UTIL 481.36 is important? Price punched up thru at 1:20 PM-ish but failed after three minutes. Then UTIL came up for another back kiss at 1:29 PM exactly tapping 481.36, resulting in failure. UTIL now has a 479 handle. The Nasdaq is red, silver is red, the SPX is at 1435 S/R. The SPX 50-day is 1427. VIX is 15.76 where bears have a slight edge since price is above both the 20 (15.10) and 50-day MA's (15.44).
Note Added 10/11/12 at 3:58 PM: Keystone took profits on TWM exiting the trade. Will look to reenter tomorrow. Also bot FAZ as a dangerous 3x ETF inverse trade on the financials ahead of the JPM and WFC earnings in the morning (FAZ is a bearish bet looking for weak earnings; FAS would be a bullish bet looking for blowout earnings from JPM and WFC).
Note Added 10/11/12 at 4:15 PM: When Wednesday is down from 8 to 10 SPX handles or more, markets will typically not bottom on Wednesday since Thursday usually provides a lower print 80% of the time. Price did come down to print at the same levels as the close yesterday so we will say the guideline worked. Interestingly, this guideline has ran into trouble over the last three or four times; this is probably due to the nature of the odd market action this year with European drama and central banksters causing market mayhem. The bulls made a run at UTIL 481.36 and failed. How does Keystone know these numbers to watch in advance? Tomorrow at 4 PM the UTIL 478.43 number will become important since Keystone's algorithm will track 478.43 all next week. So there will be lots to sort out tomorrow, with the banksters JPM and WFC reporting before the bell and setting the tone for the day. Markets will pivot on the Consumer Sentiment number at 9:55 AM EST so pay attention thru the first half hour of trading tomorrow, which is setting up to be a pivotal market day. The new moon is on Monday where markets would tend to be weak, as well as the trend of weak Monday's may continue. OpEx Tuesday into Wednesday is usually an up move, so markets should place a very short term bottom perhaps late Tuesday morning or afternoon, so tomorrow's action will help set up the market flow into early next week.
Note Added 10/11/12 at 7:46 PM: AMD took the pipe AH's tonight down 9% after they lowered their Q3 forecast by 10% rather than the previous 1 to 3% due to across the board chip weakness. This sector is wild these days with AAPL, HPQ, INTC, DELL, MRVL and others providing lots of drama. HPQ, DELL and AAPL are all providing weaker guidance due to either slowing demand or production and parts issues. Keystone holds AMD on the long side, the 3.2 level was always suspect for a potential drop to 2.7-2.9 and this news will likely send price there tomorrow. The stock is already beaten beyond recognition so it will be interesting to see how the stock reacts tomorrow. Earnings are next Thursday and the thought would be that they threw the kitchen sink at it tonight so the news will not surprise to any great extent next week, but, with the spec plays you never know what may happen. Keystone will continue to hold AMD. JBHT popped 6% after hours so this is encouraging for the trucking industry, Trannies and shipping. The Veep Debate is about an hour away this evening. JPM and WFC will set the tone tomorrow.
KS, why are we rallying? Wait, hmmm, market is so skittish about not being long they cover any short position without even thinking
ReplyDeleteAapl red on the day.
ReplyDeleteWatch UTIL 481.36, bulls win above, bears win below. UTIL is now printing 480.14. Yep, AAPL causes tech to lose its leadership today so the bulls are losing oomph. Utilities should provide the answer today.
ReplyDeleteFood for thought, something I have been watching: watch the daily on Copper, Gold and Silver to see if a Cup&Handle pattern plays out over the next month or so. If so, equity prices will likely soon follow, especially on a breakout of Copper. As far as JJC goes, $46.35 is a tough nut to crack as a C&H pattern formation isn't as obvious on JJC.
ReplyDeleteAnon, things can work out that way but you typically want to see a less huge pattern form for the C&H and you want to see it at the bottom of a long down move. If you bring up the copper daily chart, it has more of a sideway symmetrical triangle vibe with price breaking out the top side over the last month, a back kiss down to 3.6-ish would be prudent. Interestingly, copper just played out a C&H with the cup in June, the handle in August, base was 3.3, the breakout line is 3.55, so target is 3.8 which was achieved. If copper comes down to 3.6 for hte back test then moves back up forming a handle that would fulfill what you mentioned and could very well lead things higher, that would need the rest of the year to play out. Copper price should come down to test the 200-day MA at 3.62, which wouls also back test the trend line of the long term sideways triangle.
DeleteKS, am I missing something, what is causing today's rally? Up almost 1% on soon to be revised initial claims? Today's market has been reduced to someone yelling fire in a crowded theater.
ReplyDeleteWhy is $UTIL climbing as the market falls?
ReplyDeleteInteresting bottoming action. UTIL over 281 while the markets sag. A double-bottom is one possibility, that would provide a nice base. Some stumbling around would be expected; VIX has dropped. We might launch tomorrow or Monday once the bottom has been tested/established.
ReplyDeleteApple is falling from its tree, and dragging the market down
ReplyDeleteMarket is losing steam...
ReplyDeleteUTIL provided some excitement coming up to tease the 481.36 and failing. It is now 479.85, keep an eye on it. Bulls know they need it or they have no hope. They made a run and failed. They may or may not have the strength to try again. We shall see if they do in the final time remaining. Keybot did not whipsaw since a couple days have passed since the move occurred; if it would flip long now that would not be considered a whipsaw.
ReplyDeleteLooking for a little lower Friday/Sunday night.
ReplyDeleteSince Wednesday was a large down day a lower low than the close for the SPX would be expected today 80% of the time, but alas, it has not occurred, although the 2 PM low at 1433.50 is within a buck of yesterday's close.
ReplyDeleteWe may get a further flush down toward the SPX 50MA over the last hour of trading. (Can't understand why TRIN is still just 0.80 or so. No fear!) Might be time to add a long before closing.? KS, please let us know if you're buying anything.
ReplyDeleteWeaver, yes, TRIN is 0.85 representing steady-eddy buying that may continue. However, early in the day, the TRIN printed 0.48 and spent time early in the day in uber low numbers which indicated the buying was overdone.
ReplyDeleteInto the close the TWM profits were taken and FAZ was added. This is the dangerous triple x ETF that runs inverse to the financials. This is a speculative trade ahead of JPM and WFC in the morning. All these plays are shorts on the market so a lot of it is six in one and half dozen in the other. UTIL closed at 478.57 well off the 481.36 so the bears have the upper hand. This is going to get interesting tomorrow, however, since the UTIL number that Keystone's algo will track next week is 478.43, and tonight's close is only pennies away. It is interesting to see these numbers called out ahead of time and price migrate there. Tomorrow is an extremely important day for markets. The immense impact that JPM and WFC will have on markets tomorrow morning cannot be underestimated.
Spain news will also be big, either a potential bailout, or perhaps a Moody's downgrade. Consumer sentiment hits at 9:55 AM and despite how the markets move in the first 25 minutes, they will pivot when sentiment hits.
AMD down big after hours...they just warned on earnings. Will probably get hammered tomorrow even more? Are you selling before the open KS?
ReplyDeleteRich, nope, Keystone will hold AMD thru earnings next Thursday. We will see how it reacts tomorrow. If it holds 2.7-2.9 it should be fine. The spec plays are always unpredictable. It's a shame since it was trading beautifully today in a lacluster market. HPQ, DELL and now AAPL production and lack of demand problems are hitting chips. But when the markets bounce, the semiconductors should jump as well including the USD semi ETF, AMD, INTC and others.
ReplyDeleteOkay, thanks for your stance and reply. Ouch, that is a huge loss if it goes to 2.7, about 20% for me. I watched it acting well for several days, really caught me off guard when it went south so fast.
ReplyDelete