The C news is all the rage this morning. Obviously, Pandit's $1 salary was perceived as paying him too much. Utilities popped strongly at the open. UTIL is now printing 480.80 well above the 478.43. The 478.43 remains important all week long so the story probably has yet to be told. When Friday at 4 PM EST rolls around the utility number for next week will be important which is UTIL 485.67. You can use this as a guide this week. If you see UTIL move up over the next couple days, 482, 484, and move to the 486, that will tell you the bulls have legs. If UTIL lingers around these current 480-481 levels that will show there is not much oomph and by next week the market bulls will be in the pickle again since UTIL will be under 485.67.
Watch SOX 386, now printing 377. Bulls need 386 to guarantee an extended rally and lots more upside. Bears need to push UTIL back under 478.43 asap. If SOX remains below 386 and UTIL above 478.43, markets will move sideways with an upward bias. AAPL was down a couple bucks as trading was underway but then turned positive, now negative hugging the flat line. COMPQ is up only 0.46% while SPX is up 0.75% so tech is not leading the upside placing the up move in question. The SPX is above the 20-day MA at 1447.36 so this is a plus for bulls. A back test to the 20-day MA will probably be needed today. The 20-day is also the middle Bolinger Band so price fulfilled its need to return to the middle BB after the lower BB was violated. Thus, the BB and 20-day MA back kiss tasks are now completed. Price continues higher, however, instead of collapsing, after these critical tests, at least so far, so the bulls are winning this little wrestling match currently. The SPX is now printing the highs at 1451.80-ish. Punching thru here leads to 1452.20-ish (Keystone's 80/20 rule). SPX S/R is 1460, 1457, 1453, 1451, 1447.36 (20-day MA), 1446, 1445.62 (10-day MA), 1444 and 1441. The VIX is under 15. Remain cautious on the markets, do not take the long side for granted. For now, however, the bulls are driving the bus again. INTC and IBM earnings are after the bell followed by the Presidential Debate in the evening. Type 'Presidential' in the search box above to bring up the prior post that shows the expected trading results depending on who wins the election. This information can serve as a guide for tomorrow morning should either Obama, or Romney, appear the clear winner tonight.
Note Added 10/16/12 at 12:09 PM: AAPL announced the event for the iPad and immediately jumped three bucks. The COMPQ is now up more than the SPX so the bulls are happy with tech now leading the broad indexes higher, which is bullish for today. TRIN is 0.67 verifying the strong bullishness. The Dow Industrials are up triple digits. VIX is at 14.51. The SPX ran thru the 1453 resistance which opens up the path to test 1457 R. The 1460 would be the important test for price since it is very strong resistance. Just as price needed to back kiss the 20-day MA after it failed over the last few days, price will need to back test again now that it ran above the 20-day today. UTIL is 479.87 with some wind coming out of its sails but remains above 478.43 allowing the bulls to kick back today and congratulate each other. For the path forward, bears get back in the game with UTIL moving back under 478.43. Bulls verify the rally and will test the closing highs this year if SOX moves above 386 (now at 380). Otherwise (UTIL above 478.43 and SOX below 386), markets will move sideways with an upward bias.
Note Added 10/16/12 at 2:51 PM: UTIL teased 479 a few minutes ago well off the highs earlier in the day. Bulls are above UTIL 478.43 so they have no complaints. SOX is a buck off the highs at 379. VIX is sneaking upwards, now over 15. This occurs with some slight leaking in the SPX. The bulls are floating the SPX sideways thru the 1451-1453 zone having pulled back from the 1453-1457 zone. The NYSE volume today is at a run rate of less than 75% of a days average expected volume, not exactly a ringing endorsement of enthusiasm. See if AAPL performs an island reversal on the daily chart if it leaps thru the gap down from seven days ago, jumping from 648-649 up to 653 and higher in a heartbeat. The 648-649 is sturdy resistance for AAPL. INTC and IBM earnings will create theatrics after the close.
Note Added 10/16/12 at 8:30 PM: IBM took the pipe after hours dropping from 211 to 203, almost 4%. That is going to leave a mark. After IBM committed hari-kari, INTC borrowed the pipe to suck in some more gas; INTC drops over 3% in after hours trading. AAPL is down about one percent after hours. Therefore, tech may take it on the chin in the morning and this may dampen the bulls hopes to push the SOX above 386 to continue the rally. The Presidential Debate begins shortly. The crowds are gathering, an electricity is in the air. It is like auto racing, everyone is tuning in to see if a wreck occurs.
looks like the 200ema spxtheory has proven like your Q3 logic....pie in the face
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DeleteAAPL: Look for reaction at gap fill @ 651.28
ReplyDeleteGood eye, Keystone was just checking that out, the 648-649 is strong resistance, an island revesal would occur with a jump to 653 and higher, or, like you said, price may simply fill the gap. Since the 648-649 is strong R, price should make a decision here, right now.
DeleteThis market is exhausting to keep up with, waking up every morning and rushing to figure out the massive overnight moves. Pattern is playing out nicely though, both my targets now hit. The waves can't get much more textbook. I am not sure whether prices will take some time to turn around, but when they are ready I expect a swift crash. Even if my count is wrong and we see new highs eventually we have screamed from the lower bollinger to the upper and should expect at least a pullback first anyway. IMO very little upside remains and I am building my short position as I think its a great setup.
ReplyDeletegreat to see KB turned bullish as well. I front ran the whole move (which I tend to do... and sometimes that does cost me... lol) and was already sold all my shorts last Wednesday and was moving into longs Wednesday and Friday, with an average SSO at 60.38. Looking nice and green. IMHO this is a wave 1 up, with a 2 down to follow, where I will load up the longs again. 2 should bring it down to ~1440ish. For a corrective wave 4 up, with a wave 5 down to new lows; this move over the past 2 days looks waaay to impulsive and strong. 4th waves are messy weird creatures, nothing like this.
ReplyDeleteAnother alternative is that the move down from 1470 to 1425ish was a wave 1 and this is a wave 2 up with a massive wave 3 down to follow. Me no think so either. One of the reasons is that KB often remains long or short in a 2nd wave... unless it's a very deep retrace. Also for a wave 2, I can clearly count 5 waves... not 3... Also, MACD is losing momentum on the daily, not increasing which it should do. SSTO on 5, 13, 21 time scale all pointing up from massive oversold. $NYMO had positive divergence between Wednesday and Friday, with a breach of -40, and a sharp move up yesterday; and I am sure today too. That are often great buy setups.
You are almost correct in your second half, wave i ends at 1431 from 1471, 1425 is [B] of an expanded flat, the impulse from there is [C] of ii and we collapse from here. The fibos on the flat are stunning and it has retraced right where I expected it to. I see this as a very high probability short setup with clear invalidation at 1471.
DeleteArnie,
DeleteYou have a wave count with Wave1 Up, Wave2 Down & Wave4 Up, Wave5 Down. You have Wave1 up and Wave5 down. I am not an EW guy so what am I missing here? thx
than the collapse you mentioned should start right about now. With all due respect, FIBs can be read many ways, unfortunately, and should be accompanied with other TI's. KS is a master at that, for example. IMHO the TI's don't suggest a collapse, rather the opposite. But, time will tell.
DeleteAnon, I think you misinterpreted my clumsy writing... I apologize.
DeleteI meant that the move from 1470 to 1425 could have been a wave 1 down and yesterday and today could be a wave 2 up. Then wave 3, as TK refers too, should commence right about now.
However I am off the opinion that the momentum and stochs don't support such a massive move down. 3rd waves and especially 3 of 3s are relentless with huge momo and rapidly dropping stochs, but the (daily) TIs have decreasing momo and increasing stochs...
No problem with a disagreement, that is what makes a market, however, you have confused me with your last post about the momentum. This is the top of the second wave after the first, how can you know there is not enough momentum for 3 when we haven't had a 3 yet?
DeleteAs a side note, the market looks to have turned around nicely for the first subwave 1 so far. Hoping to see a nice sell-off into the close for confirmation.
Though nothing is more boring than debating EWT points, I have Wave 4 ending 1416.5 - Wave 5 up to 1500+
ReplyDeleteIn between, we have minor wave 3 ending here or a little higher, wave 4 down to 1440ish, wave 5 up to 1470 - then we'll see whats up.
I am talking futures of course, which has a slightly different wave count than the s&p.
Deletethat's exactly what I have in mind too. Keep an eye on KB and the "market internals' levels" KS mentions (e.g. UTIL, SOX, JJC, RTH, VIX etc)! Those are great internals that do match the waves. If these internals go astray from the prefered count, than something is wrong with the count. The "internals" are the real deal, a count is just theory and needs to be adjusted to the real deal!
DeleteI agree; I watch all those things and more - and enjoy reading Key's blog, it's much better than the WSJ.
DeleteInteresting stuff. UTIL 478.43 and SOX 386 appear to be the most important two sectors to Keybot currently. Ditto copper, retail and volatility but it looks like utes (UTIL) lower bears win, or, socks (SOX) higher bulls win. If, say, UTIL drops under 478.43 tomorrow morning, Keybot will flip back to the short side more than likely. Volume is very light today, only at 75% regular volume.
ReplyDeletethanks KS! Yes your comments are much better than the WSJ!! Given the 8-2 "rule"; AAPL is now at 649ish and should go to 652ish. Right? That'd nicely match the Oct' 8 gap fill. Personally I am still long AAPL since 635, as I think AAPL needs to do the 8-2 rule on a larger scale; i.e. go to 720ish since the 705 high hasn't satisfied the rule yet.
Delete1453 ish is also good S/R, so I don't expect the SPX to punch through that at once. May first want to back test 1443s to see if it likes where it is before moving through 1453ish. Thoughts???
Yep Arnie, the 80/20 rule works well but it is always a question of timing. Use the closing highs, so if AAPL pulls back and closes under 648 that may take the immediate move to 652 off the table. The 648-649 resistance is key. Big battle is ongoing as this is typed.
DeleteSPX appears ready to roll over but as long as UTIL is above 478.43 the bulls are okay. Tech is leading up today so that makes the bulls happy as well. With the all-important Summit only a day away now, perhaps markets simply idle sideways until the news comes out of the Summit. In general, it would not be surprising to see the markets drop at anytime, but, for now, the bulls are driving the bus. AAPL now at 649.75, the high of the day, looks like a gap fill occurring, that will help markets finish strongly.
KS, could you please sneak a peak at the daily chart for $XEU? The BBs had been coming together and price is now well above the top BB. The Euro still hasn't touched the lower BB since July (thank-you Draghi). The inverted H&S was pointing towards 133.5, but you mentioned two weeks ago some weakness to that pattern. Will everything will become clearer after the Euro meetings this week? And as you frequently point out, as goes the Euro so goes the markets.
ReplyDeleteOn XEU, today's candle is a hanging man as well. There are some interesting things to look at there.
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