Wednesday, October 24, 2012

Keystone's Midday Market Action 10/24/12; Fed Decision 2:15 PM EST

The session is off and stumbling.  Surprisingly, the RTH remains under 44.47 contributing bearishly to markets. Ditto the GTX.  Therefore, when the SPX popped at the open to test the strong 1419 resistance, the RTH and GTX told you it was a fake out.  The housing data was positive at 10 AM but the markets are not impressed taking a leg lower from the data forward.  Utilities remain weak; UTIL has a 475 handle.  JJC (copper) drops under 45. VIX remains elevated at 18.53. Keep an eye on the financials, XLF, moving forward. XLF is now printing 15.90. A break below 15.60 means the broad indexes will take another leg lower. Thus, bulls want to see RTH 44.47 or GTX 4895 to provide hope for the bull case. The bears need XLF under 15.60 to take another large market leg lower. If the status is quo, the markets will idle sideways thru SPX 1413-1419.  Chairman Bernanke calls ahead to make sure his favorite donuts are available for the 2:15 PM Fed announcement which will create a market pivot point.

Note Added 10/24/12 at 10:31 AM:  Oil Inventories surprise with more inventory, less demand, so the oil price leaks lower. WTIC oil is 85.80 dropping from 86.50-ish minutes ago. Tech is not leading the downside today so that stops the downside from occurring in force. But watch closely since COMPQ is now up 0.16% and SPX is up 0.13%, coincidental in nature. If the Nasdaq starts to lead the SPX lower the markets should move into a strong down draft move with the SPX headed towards the strong 1403 support. AAPL is up four bucks today helping the Nasdaq.  Look at that, COMPQ and SPX are both up 0.12% now. Tech is losing steam, it is perhaps best to fasten helmets and place seats in the upright position. SPX is at 1415.

Note Added 10/24/12 at 11:56 AM:  Markets are idling sideways with a downward bias ahead of the Fed. Note the weakness in commodities, GTX. RTH is 44.32 liking the bear camp. SPX broke 1413 support thus, watch the new range thru 1409-1413. WTIC oil is now 85.45.  Traders must be taking China's hint of no impending easing measures seriously. Copper, gold, commodiites all leaking lower. Whoa Nellie.  The Nasdaq is now leading the broad markets lower. AAPL is negative. The euro is 1.2944. The market bears are growling again. Keep that helmet on. The 8 MA remains under the 34 MA on the SPX 30-minute chart which signals continued bearishness but keep an eye on it today. Perhaps Keystone can continue the Fall clean-up before the Fed decision; the oak leaves are now knee deep.

Note Added 10/24/12 at 2:00 PM:  The oak leaves are winning.  The Trannies are puking 2% today.  Fed decision is in fifteen minutes. Markets are stumbling sideways thru 1413-1419. RTH is 44.33 happily bearish.  SPX is sitting on 1415. Oil is 85.67. Copper is turning green. Gold is 1700. Dow 13120.  Nas 2992. TRIN is 1.00 stone-cold flat neutral not favoring bulls nor bears today, but the early buoyancy in markets helped relieve some of that uber bearish pressure from yesterday with the uber high TRIN and uber low NYAD.

Note Added 10/24/12 at 2:21 PM:  Nothing surprising with the Fed news.  SPX 1414. Oil is 85.76. Gold 1704. Dow 13112.  Nas 2991. Gut reaction was a big drop but then markets recovered and are the same as before the announcement.  The dollar is at 80.03 ($USD). The Fed announcement is a yawner. See if SPX can maintain the 1413 support and 1419 resistance; a move out either side will provide a hint on which side is favored moving forward. The SPX 20-week MA is 1403 forming a confluence with the uber strong 1403 horizontal support. Sometimes this will act as a magnet for price. Price is so close a test of 1403 would be prudent at some point this week where the bull bounce can occur, or the bear failure.

Note Added 10/24/12 at 2:34 PM:  Watch the 8 MA and 34 MA cross on the SPX 30-minute chart currently signaling bearish times ahead. The 8 MA appears in no rush to cross up thru, but if it does, that can set up a quickie long as a potential play. If the 8 MA stays below the 34 MA, the bears rule.

30 comments:

  1. Already re-entered the chunk of my shorts I cut yesterday, bounce is even more pathetic than I expected. There certainly could be more upside action, but options are also open for simply crashing, so I would rather suffer a drawdown from a bigger rally than miss the opportunity to ride a real move down. Still somewhat looking to cut a few short dated puts though.

    Thanks for keeping us up to date Keystone, this market just keeps getting faster. Are we all having fun yet?

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  2. Hit 1420 and retreated - perfect intraday bounce and fade.
    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=6&dy=0&id=p78332615173&a=279991597&listNum=2
    Benie will cool his jets - USD over 80 is looking mighty bearlicious!@

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  3. Yep Trader, neve a dull moment. Scott that lower horizontal support looks to be right at the important and uber strong 1403, if that fails look out, it will likely lock in the 1380's. Bernanke does not want to cause commmotion in front of the elections so he will try to downplay today's meeting and be quiet as possible. This probably encourages the bears today.

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    1. :) and the industrials are retesting important support giving back all of yesterdays strength

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  4. KS, I want to thank you for bring FB to our attention a while back. Today was a killer score for me. I already made a decent profit on it once, when you pointed out all the divergences going on late august early september. Now I made 20% overnight. I was long from $20.16 and sold right at the open today at $24.12. No brainer!!! I am now looking for a nice re-entry level somewhere down the road. No rush, the patient trades have been most rewarding to me!!

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    1. Excellent, taking the profits is what locks it all in since if you turn your head for an instant, bloop, they are gone. There are always winners and losers in the big city each day. These remain tricky markets. Some plays work out faster than others.

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    2. What are the odds we see sell off enough to see FAZ back in upper 20's??

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    3. FAZ has just based and the positive divergence is starting to send it higher, watch price at the 20-day MA at 17.15 right now. Targhet would be the 50-day MA at 18.27 next, the 18.3-18.5 zone, then up to the congestion zone at 20. As a guess, FAZ 20 probably in Nov-Jan.

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  5. Agreed it all looks pretty grim out there - seasonality turn seems baked in - and yet, the wave count, which has worked every year since whenever, says higher. But it will take some big event, of which I am not aware of lol...

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  6. so is today the market just taking a breather for more selling to come, or is it "basing" for an upside launch???

    me not know... what do your "internals" suggest KS?

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  7. Today is status quo day so far. RTH under 44.47 and GTX weak says markets should stay weak. Copper is trying to turn green, however. The 8 MA is under the 34 MA for the 30-minute chart but watch it since the Fed move may cause a cross to occur, if not bears will drive things lower. Overall, the bears have a strong choke hold on the markets right now.

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  8. My count says launch for a tiny [iii] of C of (Y) after the Fed meeting (something like 1418 ES for all of C). I don't see any reasonable count for the action of late yesterday to today other than a correction, so we will need at least one more low as far as I can see afterward.

    As Keystone has reiterated a few times, this market must be taken hour by hour. I have closed some short dated puts as I noted above, and I may or may not close a chunk of my shorts again after the next push down.

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    1. Well that was obviously wrong. This is why I am not trying to play every squiggle.

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    2. Maybe I spoke too soon here, as often happens, the market continues on the path it was already following after a brief exaggerated swing from these kinds of announcements. Since there was no follow through, I can't recognize any meaningful change to the count, so a resumption of the small correction, then more downside action appears to still be the most likely path.

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  9. Fed was uneventful--at least so far. Markets are frozen like a deer in the headlights. Bears remain in favor moving forward.

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  10. It's like sitting in front of the Christmas tree with all these stock symbols flashing from red to green and back again. But I wonder if we don't finish green for today - and tomorrow. The catalyst Zig mentioned might just be greed. Besides, NYMO was already -47 going in to today, and CPC was 1.06. One more leg down to 1396-1403 would make adding a long even more irresistable.

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  11. got a bear flag on the 2hr spx chart
    http://stockcharts.com/h-sc/ui?s=$SPX&p=120&yr=0&mn=4&dy=0&id=p74887796064&a=279991213

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  12. man I wish the 10 and 30 year would stop being so firm!

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    1. http://blog.kimblechartingsolutions.com/wp-content/uploads/2012/10/30yearyldgomeroct24.gif

      haha and lol!

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  13. I think the moment of truth will come at 1390-something...

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  14. Anyone else seeing GDX as being about to close under a descending triangle on the daily chart with a target of ~47? Or is that not a proper technical triangle? It certainly doesn't look like a valid Elliott Wave one. Was kind of thinking the metals need a bounce here soon, but maybe not.

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    1. http://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=0&mn=8&dy=0&id=p74772337798&a=275428000&listNum=1


      http://stockcharts.com/h-sc/ui?s=GDX&p=60&yr=0&mn=2&dy=20&id=p90052351589&listNum=2&a=280538675

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    2. In your first link where you have the dashed black horizontal line at 51 is what I'm calling the bottom of the triangle, which I see now is more significant than just that.

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    3. There is a descendig triangle vibe there, so from Scott's chart, the base is say, 51, and top at 55, so that is four difference, and would target 47 now that the 51 failed. The 80/20 rule hints that the loss of 52 would lead to 48. The 200-day MA is 48.63. Sturdy horizontal support and gap fill needed at 48. GDX daily chart indicators are all weak and bleak pointing to lower prices needed. GDX had a nice W pattern bottom that created the bounce in the summer. Weekly chart price and moving averages all converging on the high 40's. GDX probably to come back down to 47-48 at which time it is likely a buy, and a two-leg bull flag, the second leg, may begin from there. So perhaps down to 46-48, then up to 66-70. But wait for the pull back since price may come down to 47-48 and keep going down.

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  15. more distribution today than yesterday...rates, dollar, bonds and miners all very interesting today

    http://stockcharts.com/h-sc/ui?s=$TRIN&p=D&yr=0&mn=7&dy=0&id=p40472452473&a=279237522&listNum=1

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  16. Ha, almost had me there for a second. Out of that chunk of shorts again looking for some upside, turned into an expanded flat as I thought might happen, very sneaky. Impossible to explain in text, so:
    http://i.imgur.com/SwmiN.png

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    1. Oops, make that a "regular" flat, no new lows, same implications.

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    2. That expansion pattern is what Keystone typically calls a megaphone pattern. Futures are looking at an 8 or 10 point pop for the S&P at the open with the bell for Thursday about 3 or 4 hours away.

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