Friday, August 31, 2012

Keystone's Midday Market Action 8/31/12; EOM; Chairman Bernanke Talks from Jackson Hole Symposium

SPX moves up thru the 20-day MA at 1407.60, a feather in the bulls cap, and moves up to 1410 to signal the all clear for more upside, but considering the Bernanke talk is only minutes away, price is idling for now. Copper, JJC, moved above 43.70, now printing 43.78, so the bulls are determined to have a happy weekend. With JJC above 43.70, today will belong to the bulls. Chicago PMI slightly disappoints. Consumer Sentiment is 9:55 AM then Bernanke and Factory Orders at 10 AM. Consensus is that Bernanke will not offer much today. Hang on to your hat, it is time to venture into the lion's den.

Note Added 8/31/12 at 9:49 AM:  JJC loses 43.70 now printing 43.63, this is more important than what you see in the broad markets, it signals bearishness today but lots of fits and starts should occur over the coming minutes.

Note Added 8/31/12 at 9:55 AM:  Note the back kiss of the SPX 20-day MA at 1407.45. Consumer Sentiment is better than expected. Keystone needs his heart pills as the palpatations increase. Nurse Cratchett is wheeling the difibrillator closer to the computer.

Note Added 8/31/12 at 10:30 AM: Keystone wants a refund form the Jackson Hole Symposium. As usual, an event can never live up to its high expectations. Bernanke says a whole lot of nothing. Markets sold off a few points but are now traveling sideways. Tech is not leading higher today so the upside does not have oomph.  Copper remains weak with JJC at 43.47. The 8 MA remains below the 34 MA on the SPX 30-minute chart which is bearish for the hours and days ahead.  The TRIN is printing uber lows this morning, now at 0.41, so this will beg for a snap back move of broad market selling either this afternoon or on Tuesday. NYAD printed +1900 today, high, but not uber high, it does show bullish enthusiasm, so there remains many complacent traders afoot. Watch the key parameters today, since JJC is under 43.70, the market bears only need one of the following to cooperate, SOX 390, VIX 18.35, UTIL 464 or NYA 7836, but alas, all four continue to prefer the bull camp, so the market sideways malaise continues. The 20-day MA is an important support and resistance (S/R) level for all tickers and indexes, use it for all your plays. The SPX 20-day MA is 1407.45 and the current print is 1407.54.  The price action above or below the 20-day MA is important.

Note Added 8/31/12 at 11:07 AM:  Markets move higher with the SPX testing the strong resistance at 1413 but JJC remains bearish.  Tech and the broad markets are up the same amount so tech continues to not lead the markets higher. Looks like a hazy lazy day of summer is shaping up as traders think about the weekend barbeque and potentially sneaking out the back door when no one is looking. Markets are stumbling sideways but if JJC moves above 43.70, the SPX will run towards 1419. VIX is at 17 printing a LOD of 16.92.

Note Added 8/31/12 at 11:21 AM:  The 8 MA is coming up to cross up thru the 34 MA on the SPX 30-minute chart, perhaps over the next hour, which would be a feather in the bull's cap for the coming hours and days. The ony way the bears can stop the upward move in the 8 MA would be if the SPX price sharply reversed to the downside now. JJC is at 43.60, bearish by ten cents and preventing the markets from moving higher. TRIN is down at 0.36. The prior times that TRIN was this low marked the top in the SPX in mid-June and the top in the SPX in late July.

Note Added 8/31/12 at 1:37 PM:  The SPX is dancing around the strong 1403 S/R level. JJC is at 43.69 playing around at that 43.70 level. UTIL is at 467.36, remember, Keystone said to watch for 467.35 at 4 PM (since this number is important for next week), perhaps the utilities are already setting up that fight.  The 8 MA moved up thru the 34 MA on the SPX 30-minute chart at 12 noon, bullish, but the 8 MA is now curled back down again. Watch this chart thru the close to see if the bears wrestle back control, or not.  The SPX is under the 20-day MA at 1407.27 which is bear friendly. Tech continues to move with the broad markets, both are up about 0.3% today, not providing an advantage to either market direction. JJC 43.70 is important, the fight continues. Gold obviously believes in QE3 catapulting higher to 1690 today.

Note Added 8/31/12 at 3:30 PM: The pre-holiday upward bias continues. JJC is sitting directly on top of 43.70.  The 8 and 34 MA on the SPX 30-minute chart are on top of each other now as well. The resolution of these two tools will tell a lot for the set up for next week.  Also, if UTIL closes under 467.35, that portends bearishness when markets begin trading again on Tuesday.

Note Added 8/31/12 at 4:07 PM:  JJC closes at 43.71, bullish. The 8 finishes above the 34 MA on the SPX 30-minute chart, bullish. UTIL closes above 467.35, bullish to start next week (watch this number all next week). Helicopter Ben, pre-holiday happiness, the blue moon tonight, it is all coming up roses for the bulls today. The entire week the SPX moved sideways thru the 1399-1413 range, thus, the move from this range will be significant. SPX closed below the 20-day MA at 1407.40, bearish. Gold hits the highest level in five months at 1694 breaking out, moving up and away from the descending triangle pattern and now far above its important 65-week MA. Bernanke pushed the dollar lower today which pushes gold, commodities and equities higher. Happy Labor Day. Time to light the barbeque.

SSEC Shanghai Index Weekly Chart Approaches Bear Market

China has seen better days.  Look at the spectacular rally in 2006-2007 when the wine flowed like water. Then the crash in October 2007 forward, this is also the top in the U.S. markets. China bottomed in late 2008 as the U.S. stock market was crashing. The U.S. markets bottomed in March 2009 when QE1 was announced. If China is leading the parade, the recent action does not show a pretty path forward for world markets.  The recent down move from 2475-ish to 2000-ish is a near 20% down move which is considered to be a bear market.  The 1980 level would lock in the 20%.  There are gaps from early 2009 that are of interest shown by the neon green circle. Current price levels are at 2009 levels. The indicators show positive divergence so this signals a basing and turn around coming as the weeks play out. The sideways triangle verifies the overall sideways movement in price. A move thru 1800-2500 may be on tap for the considerable future. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Morning Wake-Up 8/31/12; EOM; Chairman Bernanke Talks from Jackson Hole Symposium

Today is the last day of trading for August, the end of the month, EOM, and the SPX is set for three straight months of gains reflecting the July-August rally. The monthly charts receive new prints today. Chairman Bernanke is on the mountain right now receiving the tablets. He will bring them down from on high and deliver the announcements at 10 AM EST. The first hour of trading should be a circus. Fifteen minutes after the opening bell, the Chicago PMI number is released, followed by Consumer Sentiment at 9:55 AM, then Factory Orders and Bernanke at 10 AM. Keystone tested the seat belt on the computer chair to make sure it is ready to handle the drama expected early in the session. Expect multiple market pivot points up thru 10 AM.  Markets should settle in for the day after 11 AM.

Markets tend to be bullish in front of a three-day holiday weekend and the futures reflect this bullishness. Markets also tend to be bullish moving into the full moon, which is this evening, a Blue Moon in fact, two full moons are occurring this month, the full moon tonight deemed the blue moon. It does not occur often, hence the old adage, 'once in a blue moon'. Continuing with the esoteric, a Bradley turn date occurred last Saturday and the window for that potential trend change closes today. The ECB rate decision is next Thursday and Jobs Report next Friday, so Bernanke's words today may dictate market direction into late next week.

If JJC, copper, stays under 43.70, markets will remain weak, and if one of the following parameters, SOX 390, UTIL 464, VIX 18.35 or NYA 7835, also turn bearish, the markets will be selling off strongly and Keystone's algo, Keybot the Quant, will likely flip to the bear side.  If JJC moves above 43.70, the bulls plan on floating the markets upwards into the weekend. For the SPX today starting at 1399 support, the bulls need to touch 1410 and an acceleration to 1419 would occur in short order.  The bears need to push only two points lower, under 1397, to accelerate the downside to 1391.  A move thru 1398-1409 is sideways action today. Pay attention to the SPX 20-day MA at 1406.62, the early futures are likely targeting this level for an early test.

Markets are closed on Monday for the Labor Day holiday. U.S. trading will resume at 9:30 AM EST on Tuesday. Now that the seat belt is ready, Keystone must test and check his helmet in preparation for the early trade today; it may be a busy morning. In a nutshell, JJC 43.70, SOX 390, UTIL 464, VIX 18.35 and NYA 7835, as well as SPX 1410 and 1397, tell you everything you need to know for broad market direction today. Copper and semiconductors are most important.

Thursday, August 30, 2012

Keystone's Midday Market Action 8/30/12

Watch JJC 43.70, VIX 18.35, SOX 391, UTIL 464 and NYA 7837.  All are contributing bullishly to the markets except for copper, JJC, which starts the day under 43.70, watch this closely.  If JJC stays under 43.70 and one of the other parameters fail, Keystone's algo, Keybot the Quant, wil likely flip to the short side. Otherwise, more sideways action into Chairman Bernanke at 10 AM EST tomorrow. For the SPX, bulls need to see 1414 (note that yesterday the high printed at 1413.95 running out of gas a nickel short) to launch an upside acceleration. The bears need to see sub 1407, if so, the strong 1406 support should give way accelerating the downside, as well as 1403 and price will be on its way below 1400 in short order.  A move thru 1408-1412 is sideways action. The futures show that a test of the 1406-1407 is on tap for the open. Watch the SPX 30-minute chart to see if the 8 MA curls over and stabs back down thru the 34 MA to verify bearishness for the hours and days ahead, or not. The day begins with the 8 above the 34 MA which is bull friendly.

Note Added 8/30/12 at 9:37 AM:  Utilities are collapsing out of the gate, UTIL printing 468 moving closer to the 464 danger line. JJC recovers today, now over 44 again, back in the bull camp. SOX is at 393 also edging close to its danger signal at 391. VIX is 17.60. The SPX prints a LOD of 1401.86 thus far, the 1406-1407 collapsing in the opening minutes. All of the parameters on watch are in the bull camp so the downside would be limited. Tech is leading the downside so this does provide bearish strength.  The 8 MA just stabbed down thru the 34 MA on the SPX 30-minute chart which signals market bearishness for the hours and days ahead, if it holds. Gold is 1664 above the 65-week MA at 1659 favoring the gold bulls.

Note Added 8/30/12 at 10:09 AM:  Tech continues to lead the broad markets lower, a sea change from the continuous tech bullishness throughout the recent rally. The 8 MA is back under the 34 MA as described above favoring the bears. However, none of the parameters listed in the first line of this missive are bearish, a couple are in the neighborhood, but all remain bullish which will create underlying bullishness in the broad indexes. Therefore, a standoff occurs at the SPX 1402-1403 area, the 1403 resistance is holding for now. 1399 serves as the next support level.  The broad indexes will not be able to develop downside oomph unless at least one of the parameters listed in the first line fails. The NYA has slipped under 8K. Perhaps it is a good time to tend to the garden, the cucumbers are the size of watermelons.

Note Added 8/30/12 at 12:42 PM:  The SPX falls lower as per the bear game plan this morning and continues to play around with 1399 support. The LOD is 1397.01 so this level takes on importance for today and tomorrow. The COMPQ leads the SPX lower today which is a large feather in the bear's cap. Tech leading the broad markets lower has been missing in action for the last month so this is a key development.  The 8 MA is down thru the 34 MA on the SPX 30-miniute chart is a very bearish indication.  JJC stays under 43.70, although it is only a couple pennies as this is typed. The SOX level to watch now is 390, rather than the 391 mentioned this morning. At the opening bell, Keystone's algo recalculated the SOX number, and the algo continuously adjusts the semi number, so at a LOD of 390.33, the semiconductors were only 33 pennies away from verifying a more extensive bearish move lower and causing Keybot the Quant to go short. Watch SOX 390 closely as well as JJC 43.70 since they are most greatly effecting the broad market direction right now.  VIX fell under 18 but the elevated readings portend larger movements up and down in the broad markets going forward. Thus, JJC 43.70 and SOX 390 directly tell you market direction today. JJC is now printing 43.70 on the dot.......if JJC moves above 43.70 there will be a noticeable lift to the broad indexes. If JJC fails from this 43.70, that portends more serious downside on tap for today, and, if SOX loses 390, Katy bar the door. Otherwise, the markets keep sliding sideways from here into Bernake Friday. Gold is 1658 wrestling with the descending triangle trend line and 65-week MA as per this morning's chart.

Note Added 8/30/12 at 1:06 PM:  Note how the JJC back tested the 43.70 and fell on its sword, now down at 43.59. This sets the table for the semiconductors. If SOX loses 390, the broad indexes will slip on a banana peel and fall all the way down the steps. With copper recommitting lower, SOX 390 is the most important thing to watch the remainder of the day. The Fed's Lockhart, in a television interview on CNBC Business channel this morning talks of the need to see deflationary forces in play to initiate quantitative easing.  This is Keystone's mantra. Chairman Bernanke will not announce QE3 unless the CRB is under 270 and likely between 250 and 260. The CRB is over 300 so disinflation and deflation are not ocurring currently, so there is no reason to use the remaining bullets in his cap gun. Bernanke may announce the extension of the low rates from 2014 now into 2015 but a full-fledged quantitative easing program would be a huge surprise. Bernanke will also react independently of the politics, says Keystone, against the main stream pundits that say he needs to remain distant from the presidential race.  He has shown to have some guts in the past, despite his academia-type milk-toast image, so if the CRB falls under 270 next week, he will do QE3 next week, if it occurs in November, he will do QE3 in November, if the CRB stays elevated above 270 into 2013, then Bernanke will not announce QE3 until 2013. Easy as pie.  Speaking of pie, there is another piece of blueberry remaining, but not for long.

Note Added 8/30/12 at 3:18 PM: Status quo. JJC is under 43.70, bearishSOX is over 390, bullish. The SPX stumbles sideways thru 1399-1403. Watch SOX 390.

Gold Weekly Chart Descending Triangle 65-Week MA

Keystone always preaches about the 65-week MA for gold, a key level to watch, and yesterday's print shows why. The 65 is like Mom's home cookin'. No matter how long you are away, you always return home for a great meal. Gold price may venture away from the 65-week MA, for even two or more years at a time, but price always comes back to the 65-week MA, think of it as a long term magnet line.  Price had spent a couple years above the 65 and after a quick intraweek test in December, finally fell thru in early May this year. Price continues the struggle with this vital S/R level and yesterday's close is exactly on top of the 65-week MA at 1659. Watch this closely, obviously if you are a gold bull you need price to move above 1659 and stay there. If a gold bear, you want price to collapse from here.

The other drama with gold is the descending triangle we have been discussing here for a half-year now. The descending triangle in blue is textbook and a collapse seemed inevitable, but, once Chairman Bernanke and Draghi started talking stimulus in July, booiiiinnng, gold explodes upwards (stimulus drives the dollar lower and gold higher), stopping the triangle failure at 1575 and driving price up to the current levels. Note how price has now morphed into a new descending triangle shown in red.  The confluence of the top trend line and the 65-week MA, and price, all now at 1660-ish, is the set up for the climax that is about to occur. Gold bulls win above 1660. The sideways malaise and indecision continues thru 1575-1660. Gold bears win if price collapses thru 1575 since the downside target for the descending triangle pattern would be in the 1200's, or lower. The importance of the triangle base line support across 1575 cannot be underestimated; if 1575 gives way, gold is lost.

Note the neon green lines that show a long and strong profile remaining, although the RSI and histogram have already seen enough with higher prices and now want price to fall. This behavior should set up some stutter step action sideways and then the expectation would be that price stays inside the triangle possibly setting up the failure at 1575. For the very near term, today, watch the 65-week MA as a direct guide on the price action forward. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 8/31/12 at 9:15 AM:  Gold closed yesterday at 1659 and the 65-week MA is 1659, the drama continues.

XLV Healthcare Weekly and Daily Charts Rising Wedges Overbot Negative Divergences


The XLV healthcare sector is displaying textbook rising wedges on the weekly and daily charts. The indicators are showing universal negative divergence across the board. Nasty set up, XLV is on marked time right now and should receive a serious smack down any day.  The short green lines show a tiny amount of upward strength remaining so a stutter step or two as price tops and rolls over would be in order. An initial downside target is 35-36 within the next couple months. Note the weaker volume participation as price moves higher.  As price drops, the buyers in June will be jumping off like rats leaving a sinking ship.

Over the last three months, since the June bottom, the media pundits and analysts have been pumping healthcare as a safe haven play, just like the Dividend Stock Bubble pumping, as well as utilities and other high dividend plays. Every run higher needs a bag holder so the best way to do that is to pump XLV on television and in print to attract Ma and Pa, always the last ones to the party. Higher volume down days are occurring after an up day showing that the smart money is distributing to the sucka's. Call Ma and Pa today and have them reconsider healthcare holdings. XLV has had a fantastic run since the June low, take the money and run. Healthcare can be reentered after the negative divergence performs its deeds in the coming days and weeks. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Wednesday, August 29, 2012

Keystone's Midday Market Action 8/29/12

Same drama on tap today, markets are moving sideways, watch JJC 43.65, UTIL 464, SOX 391 and NYA 7737.  The dollar is buoyant today sending copper and commodities lower. JJC appears to want to make a run lower at the 43.65.  The futures have recovered back to the flat line after the GDP number, which was 1.7%, what the consensus expected. If one of the four parameters above fail, perhaps JJC, the markets will be selling off. If two of the four fail, Keystone's algorithm, Keybot the Quant, will likely flip to the bear camp. For the SPX today beginning at 1409, the bulls need to touch 1414 which will accelerate a move higher to test 1419.  The bears need to stab thru the strong 1406 support to accelerate a downside move that will fall thru the strong 1403 and continue along to 1400 and 1399.  A move thru 1407-1412 is sideways action today. The 8 MA fallilng thru the 34 MA on the SPX 30-minute chart yesterday says the bears will rule for the hours and days ahead. The only way the bulls can turn the tables is to spike the indexes higher after the opening bell. Watch the Nasdaq versus SPX percentage relationship, tech versus the broad markets, respectively, tech will lead and tell you the favored direction.

Pending Home Sales are at 10 AM so markets may pivot. Oil Inventories are 10:30 AM. 5-Year Note auction at 1 PM. The Beige Book is at 2 PM which should result in a market pivot point. Hurricane Isaac is spewing chilly air while the political convention spews hot air, and the markets remain suspended in air, for now.

Note Added 8/29/12 at 9:41 AM:  JJC is teasing 43.65 but remaining a nickel or more above. UTIL now has a 470 handle. Semiconductors, SOX, jumped higher. The 8 MA remains under the 34 MA on the SPX 30-minute chart so the bears have a feather in their cap.  Tech, however, is leading the broad market higher, as the SOX shows, so this is a feather in the bulls cap.  The beat goes on. If JJC loses 43.65, markets will sell off, but, barring that, more sideways stuff is on tap. Whoa....JJC 43.66.....it's teasing......this is looking good for bears....if JJC stays under this 43.70-ish for the next few minutes you will notice the broad markets selling off, if not, the bulls will float the markets sideways to sideways up today.

Note Added 8/29/12 at 10:28 AM:  The 10 AM data resulted in an intraday bottom and markets pivoted upwardsJJC is 43.66, consider this bearish and use the 43.70 here forward for today.  Markets will weaken and sell off if JJC stays under 43.70.  VIX is positive on the day which is bear friendly. The 8 MA remains under the 34 MA as discussed above, bear friendly, but the 8 MA  may be wanting to curl upwards.  Tech is leading to the upside of the broad markets so this helps the bulls hold back a big sell off due to weaker copper. SOX is now printing the lows for the day. Whoa....the COMPQ is now leading the SPX a hair to the downside making market bears happy. The drama continues.

Note Added 8/29/12 at 12:07 PM:  JJC 43.63. The 8 MA remains under the 34 MA on the SPX 30-minute chart. The SPX is up 0.06% and the Nasdaq is down 0.01%, thus tech is leading the broad indexes on the downside. All systems go for the bears, but, only one thing, the markets are not selling off. Perhaps some more time will help.  VIX 50-day MA is 16.92 and has been tested three times in the last few hours, perhaps the fourth time is the charm. A VIX move over the 50-day MA would seal the deal for bears.  Watch the SPX 20-day MA at 1404.88. The 5-year auction is at 1 PM then the Beige Book at 2 PM. Markets may want to extend the clock until 2 PM to see what the Fed is thinking, then react. The bears have the ball, and they are running with it, but they are running cross-field instead of down field.

Note Added 8/29/12 at 12:50 PM:  Keystone sold the APKT position which will result in a loss; it's all in the timing and Keystone was too early on this one, now taking advantage of the two-day pop in APKT to exit.  Also bot UVXY opening up a new long position.  Also bot more RETS.

Note Added 8/29/12 at 1:00 PM:  Staus quo, the bears have all systems go but the markets travel sideways.  JJC is printing 43.65 remaining under 43.70 and contributing to bearishness for the makets. This will be the first tell if the bulls are gaining strength. 5-year note auction is uneventful. Beige Book in less than an hour.

Note Added 8/29/12 at 2:16 PM:  The Beige Book comes and goes with little fanfare. The SPX is moving along the strong 1413 S/R, the bulls are pushing higher despite the underlying negativity today. JJC is 43.60 remaining in the bear camp.  The 8 MA remains below the 34 MA as per above, also remaining a bearish influence.  Tech, however, has gained ground and is now moving coincidentally with the broad indexes, so tech is neither leading down or leading up.  Nonetheless, the bulls keep pushing. Perhaps touch them with a feather and see if they fall over. Bulls are going nowhere without pushing the JJC back above 43.70, pushing the 8 MA back above the 34 MA on the 30-minute chart, and pushing the SPX over 1414 to launch the upside (HOD is 1413.95). Watch to see if they can do it into the close, or not. Referencing this morning's chart, the SPX collapsed thru the sideways triangle to start the day, then returned back inside, then broke out the top side of the triangle, where price now sits pondering which side to favor.

Note Added 8/29/12 at 3:30 PM:  The 8 MA is poking back up thru the 34 MA on the 30-minute chart so the fight continues. JJC is 43.57 showing that copper likes the bear camp and will continue to effect markets negatively despite any buoyancy seen today. Tech is not leading the upside so the up move does not have any oomph, but, at the same time, with the 8 MA above the 34 MA, the bulls continue to push hard. Keystone took profits on UVXY, using it as a day trade, nice upside move over the last half hour, it remains attractive moving forward, will look to reenter.

Note Added 8/29/12 at 3:38 PM:  Keystone shorted more RTH.  Shares were available today. Perhaps shorts are giving up on this sector, it is riddled with corpses trying to fade the great American consumer.

Note Added 8/29/12 at 4:05 PM:  Bulls succeeded in keeping the 8 MA back above the 34 MA.  JJC is well under 43.70 closing at 43.57.  The sideways drama with wishy-washy mixed signals continues. Markets are stumbling into the Bernanke finish line on Friday.  Bernanke will then decide if the markets cross over the line and claim bullish victory, or, if they collapse on the finish line falling to the pavement, signaling that the party is over. It is interesting that the SPX threatened the important 1414 for today but could not push above. VIX closes above 17 (now up thru the 50-day MA) signaling that the ride is going to become far more turbulent with larger point swings in the indexes. Keystone shorted more RTH into the close.

SPX 30-Minute Chart 8 MA and 34 MA Cross Sideways Symmetrical Triangle

Traders are lulled into the sleepy sideways vibe this week but the market bears are ninja's yesterday, at 2 PM EST, sneakily and stealthly pushing the 8 MA under the 34 MA to signal bearish markets for the hours and days ahead. The only way the bulls can stop the slide is if the markets bounce strongly at the open causing the 8 MA to curl back up and head higher back up over the 34 MA.  The bears took control a week ago late last Tuesday, then the bulls took over last Friday, then the bears took the reins again yesterday afternoon (red and green circles). Keep watching the 8 MA and 34 MA cross; it tells you the near term market direction.

The sideways symmetrical triangle pattern is in play and price will likely decide the direction today.  The vertical side is about 30 handles so using 1410 as a pivot, this targets either the 1440's on the upside, or 1370's on the downside. The price move out of the triangle is obviously extremely important. With the 8 MA under the 34 MA the move should be lower but, with GDP on tap this morning, the market bulls may reverse the negativity on a happy number.  Price closed at 1409, the 38% Fibonacci retracement shown on a previous chart. The indicators all display the sideways nature of price over the last week. Chairman Bernanke provides the answer for markets on Friday but the triangle wants to decide today.  Sometimes sideways triangles may stretch out further which may occur since the big decision is two more days away.

Note the smaller triangle (thin blue lines) shows price falling thru the lower trend line already and this triangle would project about an 18 handle move to 1391-ish. The 8 and 34 MA cross tells you everything you need to know moving forward. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Tuesday, August 28, 2012

Keystone's Midday Market Action 8/28/12

The same four key parameters are in play today as yesterday; JJC 43.61, SOX 389, UTIL 464 and NYA 7808.  Copper is selling off this morning and appears to want to test the JJC 43.61 level. These sectors and indexes are identified by Keystone's algo and are subject to continuous recalculation so the JJC and SOX numbers may change slightly today. UTIL 464 is the number to watch all this week, it will not change. The NYA is simply the 40-week MA, one of Keystone's cyclical indicators, so you can monitor that easy enough.  If any one of the four lose the levels shown, think copper, the markets will be selling off, if two are lost, the markets will be selling off substantially and the SPX will be under 1400 and dropping and Keybot the Quant will likely flip to the short side. The market bulls need to keep all four parameters above the levels listed.

Watch for a market pivot point at 10 AM with the Consumer Confidence number; if markets are selling off they may favor a reversal back up at 10 AM, or visa versa.  For the SPX starting at 1410, the bears only need to drop under 1409 to acelerate the downside and that appears to be on tap. The sub 1409 level will need to hold for about ten minutes to lock it in. That leads to an immediate test of the sturdy 1406 and 1403 resistance levels. The bulls need to move above 1416 to accelerate an upside move.  A move thru 1410-1415 is sideways action today. Draghi cancelled his trip to Jackson Hole due to a busy schedule so the Saturday comments expected from the ECB head will not occur. Chairman Bernanke remains on tap for Friday. JJC 43.61, SOX 389, UTIL 464, NYA 7808 and SPX 1409 and 1416 tell you everything you need to know today for market direction. The first hour of trading should be entertaining. Tech is not leading the broad markets lower in the futures so the projected market down move does not appear to have much oomph.

Note Added 8/28/12 at 9:40 PM:  A quick start lower for markets but the bears do not have much oomph. Nasdaq is higher, tech will not cooperate to the downside so markets move sideways. VIX is slightly down, bullish. Copper, JJC, stays above 43.61. Utes are weaker. Keystone took profits on the MCP trade, benefitting from a strong pop. Also took profits in the UVXY overnight trade, will consider reentering both plays.  Also bot more HPQ increasing that long position. Con Con is on deck.

Note Added 8/28/12 at 10:17 AM:  The 10 AM pivot point resulted in a recovery move for markets. The ConCon was weak (lowest confidence number since November 2011) and markets intially knee-jerked lower.  The JJC level to watch is now 43.65 and at 43.83, the bulls remain in control.  If copper weakens and the JJC 43.65 level is violated, the markets will be selling off substantially, but, if JJC remains above 43.65, the markets will simply float along sideways to sideways higher all day long. Utilities are weak but UTIL remains eight points above the 464 danger level. It is shaping up to be a lazy hazy day of summer.

Note Added 8/28/12 at 10:56 AM:  Keystone wants to add to the RTH shorts but there are no shares available.  Instead, Keystone added to the RETS position which is a dangerous and thinly-traded leveraged ETF that moves opposite to the retail sector. The RTH negative divergence on the daily and weekly chart says a major smack down is on tap for retail, but, betting against the American consumer is always tricky.  Likewise, as would be expected, RETS, and SZK, both are inverse retail ETF's, exhibit very attractive positive divergence on the daily and weekly charts, the idea is to short the retail sector.

Note Added 8/28/12 at 3:21 PM:  Markets are flatter than the notes from Keystone's guitar playing.  Trading volume continues the vapor trend at a run rate of about 60% of a days expected volume.  UTIL may print a hanging man candle today. JJC is 43.86 remaining above the important 43.65 so markets meander sideways. Well look at that. The SPX 30-minute chart shows the 8 MA now stabbing down thru the 34 MA. Watch to see if the bears can takeover the reins thru the close, if the 8 remains under the 34, the broad indexes will be weaker for the hours and days ahead.

Note Added 8/28/12 at 3:42 PM:  With such a sleepy day today, it is stealth-like for the bears to gently push the 8 MA under the 34 MA on the SPX 30-minute chart while no one is looking. Keep an eye on it. RTH prints a multi-year high at 12:30 PM today at 44.20, now rolling off the pedestal at 44.08. The retail sector must be watched closely moving forward since it carried the markets this year along with tech.

Note Added 8/28/12 at 4:01 PM:  The SPX 1413 resistance held strong all day long. The 8 MA falling thru the 34 MA on the SPX 30-minute chart is a big deal, the bears plan on driving the bus forward.  This action sets up drama for the opening bell tomorrow morning since the bulls will have to spike markets higher to prevent the 8 MA from dropping significantly lower locking in the VST bear trend forward. For now, the bears are like ninja's today, sneaking in to cause the cross in the moving averages and no one is any wiser, except the readership here of course. The VIX is closing around 16.50 up on the day.  JJC is 43.89, settling out at the close, so bulls can hang their hat on JJC staying above 43.65 today. Keep watching copper. Reference the FXE chart from this morning, today's print is a hanging man candle with a matching high compared to three days ago, and the indicators are negatively diverged. The MACD line may want to see one more hurrah, so another stutter step is ahead for the euro, down, then up, then roll over down as all indicators should be negatively diverged at that point.

FXE Euro Daily Chart Inverted H&S

A month ago Keystone highlighted the falling green wedge and positive divergence that signaled launch time, and price leaped higher as would be expected in late July.  During August, higher price highs are printed, and the RSI and MACD line are long and strong, but, the histogram, stochastics and money flow are not as enthusiastic about the price move higher. This caused the mini spank down over the last couple days but today the euro is moving up again.  Once price hits the first green dot where it makes a higher high, check to see if the red lines showing negative divergence remain in place, or if any of the indicators want to see yet another higher high in price, perhaps the second green dot which is the gap fill from early July, or the third dot which tests the neckline of the inverted H&S and threatens a break thru which would catapult the euro higher.

The inverted H&S has a head at 120-ish, neckline at 126-ish, it will need a right shoulder as time moves along, but a move up thru 126 would target 132-ish, important resistance above. Once all the central banker stuff occurs in September, perhaps some clarity will be provided. The euro moves in the same direction as the SPX currently, so up euro means up markets but it is unknown exactly how the euro will react once all this casino stimulus stuff is mixed in. Time will tell.  Perhaps the QE3 money pump, should it occur, will correlate to a weaker dollar, stronger dollar and stronger equity markets allowing the FXE to target the 132 level.

The 20 MA is about to pierce up thru the 50 MA which is a bullish indication.  Projection is a pull back for the euro from any of the three green dots with price moving lower to place a  right shoulder for the inverted H&S pattern in the 120-124 area, then price will come back up to test the neckline of the pattern at 126-ish after that. For now, follow the same trend, up euro = up markets, down euro = down markets. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

KOL Coal Sector ETF Weekly Chart Downward-Sloping Channel Inverted H&S

The coal ETF is cleverly named KOL just as many other ETF's are cute with names such as FAN for wind and TAN for solar. Coal has been beaten like a rented mule. Note the top in coal in 2011 identified with the red rising wedge and negative divergence. The pink head and shoulders (H&S) also formed and once the neckline at 43 gave way, it was over, or 'ovah' as they say in Brooklyn.  A head at 53-ish, neck at 43-ish, targets 33-ish which was easily achieved.  Coal tumbles lower thru the downward-sloping channel producing lower lows and lower highs. Very ugly chart; each day coal is beaten to a pulp. President Obama's dislike for the coal industry has performed extensive damage to this vital energy sector.

But, the future is much brighter than the past year.  Price produced a falling wedge and positive divergence, along with the oversold conditions, that launched KOL off the bottom. The indicators show a long and strong profile moving forward. In addition, KOL now exhibits an inverted H&S with head at 22-ish, neckline at 27-ish, so the upside target would be 32-ish should price move up thru the neckline.  The daily chart shows the inverted H&S much more clearly as well as gaps left behind when price came off the bottom, therefore, a move down to 22.5-ish to fill the gap must be considered.  Overall, the projection for coal is very positive moving forward and KOL is set up bullishly. Even in a large market melt-down, coal would be one sector that has already received a severe punishment so it would not have as far to fall.  If the president is reelected, weakness will reappear in coal. If Romney is elected, coal will catapult strongly higher. In the shorter time frame before the election, September-October, KOL could easily work up to the 30+ area, and then the story would be written once the new U.S. leader is decided on 11/6/12. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Monday, August 27, 2012

Keystone's Midday Market Action 8/27/12

Markets start the day sideways but move up thru the 1413.50 which opened the door to a three point move to the 1416.17 HOD thus far.  SPX is now playing around at the 1415-1416 62% Fibonacci retracement discussed this morning for the 30-minute chart.  For the 30-minute chart, the higher high in price results in continued negative divergence--except for the MACD line, so price wants to continue to test this current area before rolling over.  The 8 MA is above the 34 MA on the SPX 30-minute chart so the market bulls are driving the bus for the hours and days ahead.

JJC is 44.03, UTIL is 473.38, SOX is 398.41 and NYA is 8062, thus, the bulls are on easy street, and the bears got nothing today.  The VIX moved above 16 today causing bears to salivate but is now printing back below 16.  TRIN is 1.09, basically flat at one providing no advantage to either side today.  AAPL is feeling love today after the Samsung verdict, also NOK and RIMM. Keystone was looking for a top in AAPL at 680 or lower, today's HOD is 480.87. It is very important whether or not AAPL closes above or below 680 today since 680 should lead to 720 according to Keystone's 80/20 rule where 8's will lead to 2's. An AAPL 2% pop is not impressive for a veridict that is supposed to be a big deal. Perhaps it is all hype, one billion is peanuts to these companies. A licensing agreement down the road will allow them to kiss and make up. Tech continues to lead the broad markets higher, due to the happy Apple talk, so when tech leads the bulls are happy, and the markets remain buoyant. CDXS is bouncing off the positive divergence.

Note Added 8/27/12 at 12:12 PM:  SPX daily chart would set up with across-the-board negative divergence with a print at 1420-ish in the coming days, which would also print an M Top for the broad markets on that chart. Keystone took profits on CDXS, the market maker grabbed it quick so there is likely more upside for this move, will look to reenter but would prefer a pull back. Keystone bot UVXY opening up a new long position.  Also likes ERY but 8.2 may lead to 7.8, thus, perhaps wait a bit to see if ERY will provide a lower entry at 7.7-7.8. For ERY, any buy in here at 7.70-8.22 is attractive for a long play. 8.22 is the current print.

Note Added 8/27/12 at 1:32 PM:  SPX appears very attractive for developing negative divergence on the minute charts, including across the board confirmation with negative divergence on the 30-minute chart (reference that chart from this morning), if 1415.50 and higher will print in the time ahead. The 1415.50-1417.00 area may prove tastey for bears contemplating the short side. Trannies are down continuing to show a Dow Theory non-confirmation. TRIN is exactly 1.00 indicating a stone-flat trading day today. Gold closes at 1675 still debating the breakout from the descending triangle on the weekly chart to the upper side which would negate the ominous descending triangle pattern.  The important gold 65-week MA is 1657 so the gold bulls have a feather in their caps, albeit by less than 20 bucks. Interestingly, CPB and SJM are up, which are comfort food type stocks, sometimes indicative of troubled times, terrorism and/or other drastic events occurring, or on tap. Of course Hurricane Isaac is motoring along but perhaps the need for soothing soup portends much more serious U. S. or global events moving forward.

Note Added 8/27/12 at 3:26 PM:  SPX drifts lower from the 1415.09 high printed at the last message. SPX 1409-ish was the 38% Fib retracement from this morning's chart so watch to see if the bears make a run at it.  The SPX is now printing 1411.64.  VIX is at 16. JJC sits at 44 well above the 43.61 level that would signal serious market selling.

Note Added 8/27/12 at 3:55 PM:  Keystone took profits on UVXY as a day trade, will look to reenter.  Also bot HPQ opening up a new long position as it shows attractive positive divergence on the daily and weekly charts.

Note Added 8/27/12 at 3:59 PM:  Keystone reentered UVXY at the close reopening a long position in this one.

Note Added 8/27/12 at 4:29 PM:  Uneventful day, sideways thru SPX 1410-1415, the week begins with a sleepy tone.  The ConCon in the morning will liven things up.  The bulls pushed the SPX above 1413.50 to provide upside juice and tech led upwards all day which helps maintain market buoyancy. Into the close, however, volatility ran higher, the VIX closing well above 16 at 16.35.  The four key parameters listed this morning, all bullish, remain all bullish, so the markets floated sideways to sideways up. MCP is up over 5% AH's on news that operations at a California plant are cranking up; that will be excellent to see after tomorrow's opening bell.

UPS United Parcel Service Weekly Chart 20 and 50 MA Cross M Top

One of Keystone's cyclical indicators is the UPS 20 and 50-week MA cross.  Shipping is a key indicator of global economic health; if lots of parts, products and paperwork are moving to and fro, the economy is booming, instead, if the UPS guy is spending time during the day to drop off his short pants at the cleaners, followed by sitting in SBUX all afternoon, with nothing to deliver, then the economy is in the tank.  Use the 20 and 50 cross on the weekly chart to help gauge this premise. 

The market top occurred in October 2007, UPS was already stumbling lower to sideways indicating the economy was in trouble. The 20 stabbed down thru the 50 in October 2006 indicating economic trouble ahead, briefly recovered just as the market topped in Fall 2007, then crossed lower again in early 2008 to indicate that major trouble is on its way.  Of course the crash occurred Fall 2008.  In March 2009 the markets bottomed as word of stimulus, QE3 hit the markets, and the love affair with easy money crack cocaine stimulus was born.  The 20 crossed above the 50 in summer 2009 to verify the long bull rally ahead.

Last summer the 20 fell down thru the 50 again as global and U.S. shipping languished. This prompts the Fed and the ECB to save the day with Operation Twist and LTRO 1 and 2, respectively, and the 20 moved above the 50 to start this year signaling the bull rally ongoing and continuing.  The 20 is now curlingover and heading down so watch the cross closely especially over the next month.  A cross of the 20 down thru the 50 is very ominous for markets in the short, intermediate and long terms.  Note the M Top that printed this year.  Price made a matching high but note the drastic negative divergence that created the smack down ealier this summer.

Note the low print with the MACD line in March 2009 that was never resolved. This indicator wants to see a test of the March lows some day in the future. Watch this chart closely moving forward and it is updated on the Cyclical Signal page on this site (look at the list in the right margin), especially if a long term investor. If the 20-week MA fallls thru the 50, and you are an investor for the long-term, you will lose a lot of money. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

FB Facebook 30-Minute Chart Sideways Symmetrical Triangle

Faceplant staggers along sideways into the apex of a sideways triangle so price is likely making a decision now.  The veritcal side is 1.5 points so whichever way it decides to move, the 21 is the upside target and 18 the lower target.  Keystone's 80/20 rule says 2's lead to 8's so the rupture of 22 a couple weeks ago hints at a need to see 18. A rupture of 18.20 would lead to 17.80.  Thus, there remains no compelling reason to own Faceplant. The best thing that can happen for the FB bulls is for price to collapse out the bottom of the triangle and tag the 17.70-17.90 area which is likely an attractive entry point potentially setting up.

The 8 and 34 MA cross is in a tug-o-war, the cross will verify the price direction moving forward with the bears a single hair in the lead for now.  Best to wait and see if the 18 print occurs. If FB runs higher from here so be it, it will continue to be an unattractive stock to own. At 18 or lower, that should change the story, and perhaps the stock can finally pick itself up, and dust itself off, removing the humiliating Faceplant moniker moving forward.

Quarterly window dressing occurs at the back half of September and also a lock-up or two will expire moving forward so these may provide more pressure on the stock. If Faceplant languishes for the next two or three weeks, companies may want to ditch it so it does not show up on the quarterly report. The perfect set up for FB would be a 17-18 print in the last two weeks of September, less than a month from now, which would likely prove to be a very attractive entry area. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Morning Wake-Up 8/27/12

Keystone's algo, Keybot the Quant, is tracking four key parameters which are most greatly impacting the broad indexes; JJC 43.61, UTIL 464, SOX 389 and NYA 7808.  Copper is buoyant lately on stimulus talk from China, the Fed and ECB so JJC remains buoyant.  We watched the drama in the utilities sector last week, the huge move down in UTIL over the last month is very ominous for the intermediate term market picture but to start the week, UTIL should be able to stay above 464 helping the bulls.  Tech remains elevated and has allowed the market rally to continue along each day so semiconductors remain in the bull camp.  The NYA Index remains above 8000. The SPX 30-minute chart shows the 8 MA crossing above the 34 MA on Friday, more bullish news.

The vapor for volume clearly says the market rally is in question.  Lower volumes are expected in the summer. After Labor Day, the volume will pick back up so mid-September will help identify how the low volume has, and will, impact markets moving forward. VIX has a 15 handle showing continued market complacency thru this 13-16 range. Markets have rallied with the goal of arriving at the finish line this Friday when Chairman Bernanke provides the market answer, and then Draghi on Saturday. Since this is Monday and the news is only four days away, one would think the markets may prefer to move sideways from here. A bias to the downside may form early week into mid-week since the markets may have rallied as far as they are willing to ahead of the Fed. On Thurday and Friday, the pre-holiday market buoyancy is anticipated, and also, markets tend to be buoyant in front of a full moon, which is Friday evening, so late week markets may prefer an upward move into the big news.

For the SPX today, bulls need 1413.50 to launch the upside, bears need 1398 to accelerate the downside, 1399-1412 is sideways action.  Watch the 30-minute chart as described this morning. JJC 43.61, UTIL 464, SOX 389 and NYA 7808 will dictate market direction. All four are bullish which will allow markets to continue along sideways to sideways up.  If one of the four fail, markets will be selling off. If two of the four fail, the markets will be tumbling lower, the SPX headed for the low 1390's, and Keybot the Quant will likely flip to the short sideIf the four parameters remain bullish, however, the bulls have not a care in the world, they will be sitting back enjoying the ride into the Bernanke speech. Markets may start the week slow but upon release of the ConCon number at 10 AM tomorrow, the action will ramp up into the Bernanke and Draghi circus.

SPX 30-Minute Chart 8 MA and 34 MA Cross Fibonacci Retracements Key Support and Resistance

The market bulls wrestled back control of the markets since the 8 MA crossed above the 34 MA on the 30-minute chart on Friday at 1:30 PM. The fix was in at that point and the bulls ruled into the close and moving forward. The move reverses the bearish cross that occurred mid-week last week. Keep using the cross as the market directional indicator for the hours and days ahead. For now, the bulls are driving the bus again. The red lines from a week ago show how the negative divergence marked the top and created the spank down from the 1427-ish intraday high print. The green lines show the positive divergence, along with the oversold conditions and green falling wedge that created the launch move on Friday. Note that the RSI and MACD line, however, want to see a retest of the 1398-1399 price area.

The action on Friday shows price inching higher into the close with negative divergence on the RSI and MACD histogram, also the stochastics which are overbot, while the MACD line and ROC want to see a retest of the Friday high.  This morning's futures are setting up this outcome.  When a 1413-1416 print occurs, the negative divergence should be across all indicators so that would lead to downward action again moving forward. The action for the last five hours of trading Friday hints that price will stutter step thru 1409-1416 to start the day today and then likely resolve to the downside.

The Fibonacci retracements are shown for the move from the 1427 top down to the 1398 bottom.  If you think Fib's are folly, the chart shows you how price respected the 38% Fib retracement, using it as support, for hours, and, the spike high intraday tagged the 50% Fib before retreating, obviously the Fib's are to be respected. Price is moving thru the 38%-50% retracement range, 1409-1413. If price jumps up over 1413, keep an eye on the 62% Fib retracement at 1416-ish. Perhaps the buoyant futures will pop price to the 62% Fib at the opening bell.

Key support and resistance levels are shown by the black lines; 1422, 1419, 1413, 1406, 1403 and 1499. Any moves thru these levels are significant. For Monday's trade, the bulls need to push thru 1413.50 and hold it for about ten minutes, and an upside acceleration will occur easily testing 1416 and perhaps moving on to the critical 1419 level.  The bears need to see 1398 to regain mojo. A move thru 1399-1412 is sideways action today. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Sunday, August 26, 2012

NYSI NYSE Summation Index Daily Chart Rising Wedge Overbot Negative Divergence

The NYSI is a useful tool in helping identify market tops and bottoms.  In August-September 2011, the falling wedge, ovesold conditions and positive divergence created the bounce for the NYSI but the markets did not follow along higher until October. The 13 MA crossed above the 89 MA to verify the stock market rally.  In February this year, the NYSI topped out and received a spank down form the rising wedge, overbot conditions and negative divergence, however, the stock market kept moving higher. The 13 crossed down thru the 89 in early April to identify the market top.

In early June, the falling wedge, oversold conditions and positive divergence bounced the NYSI higher which nailed the market bottom dead-on. The 13 moved above the 89 MA in early July to confirm the stock market rally and verify that the bulls rule the roost. Over the last cople days, the NYSI placed a higher high as compared to the July high, creating a rising wedge. The RSI and stochastics are overbot but most importantly, the negative divergence is strong indicating that the NYSI needs a spank down and that has just started. Look for the 13 MA and 89 MA cross in the days ahead which would confirm market bearishness moving forward.  The first step in making the 13 MA move lower is for price to stab down thru the 13 MA; this occurred albeit by two points (NYSI is 622 and the 13 MA is 624). Projection is for the NYSI to continue lower with the 13 crossing down thru the 89 MA in the month or two ahead. Weakness in NYSI corresponds to weakness in the broad indexes. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Key Events and Market Movers for Trading the Week of 8/27/12

Keystone presents the following underlying market currents, sometimes subtle, sometimes turbulent, that move global markets in real time.  The key dates and times below typically correspond to market pivot points.

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week: The key economic data this week includes Consumer Confidence, GDP, Beige Book and Consumer Sentiment. Trading will kick into high gear this week after the ConCon hits on Tuesday at 10 AM. Chairman Bernanke is the major focus for Friday from Jackson Hole.  Traders continue to wait for Spain to request a formal bailout which should manifest as equity market friendly. The problem is that saving Spain will result in depleting the rescue funds available to handle the Euro debt crisis and there would be no further money available should contagion strike with other nations especially Italy. Germany is more ECB-friendly these days further buoying equity markets. Germany would be able to support Europe moving forward if the euro was weaker. Continue watching the 10-year yields for Spain and Italy, the 7% and 6% levels, respectively. Watch the 2-10 Spanish yield spread, Draghi’s fave, which he wants to see steeper which aids the banks; a flattening 2-10 spells more trouble for Europe.  Bank runs and European riot worries remain a concern although Europe has been calm lately awaiting the stimulus announcements, or perhaps non-announcements, from Bernanke and Draghi.  The European vacation season is winding down so the market action will heat up. U.S. trading volume will increase after Labor Day.  Draghi talks from Jackson Hole on Saturday, 9/1/12 (perhaps the date is ominous containing ‘911’). The ECB rate decision and press conference is 9/6/12. The European news flow directly dictates global market direction especially Spain bailout news. The Fed drama will take center stage with Chairman Bernanke’s speech from Jackson Hole on Friday, 8/31/12 and then the FOMC meeting, rate decision and press conference on 9/12/12. Congress is on recess (vacation) which is bullish for markets but back in session 9/10/12 which is bearish for markets.  Watch for further China easing measures such as lowering triple R’s which will bounce equity markets although China appears to be focused on local stimulus programs instead of triple R or interest rate cuts. Earnings season is wrapping up; TIF is a notable release to begin the week.  The trend with earnings were matches or beats on the bottom line but the top line revenue numbers are weak showing that the overall economy remains sick underneath the surface. Companies do not need to hire workers if sales are decreasing. At the same time, firing more workers will boost the bottom line EPS numbers, a worrisome trend forward. Remember, volatility, the VIX, typically bottoms in August and now sits at 5-year lows. On the esoteric side, a Bradley turn date occurred on Saturday, 8/25/12 so a window is open for a market trend change from 8/20 thru this Friday, 8/31. A full moon occurs on Friday evening and markets are typically buoyant in front of the full moon.  Markets are closed in Observance of the Labor Day holiday on 9/3/12 so markets are typically buoyant the two days in front of a three-day holiday weekend.
·         Monday, 8/27/12: Dallas Fed Mfg Survey 10:30 AM. Fed’s Pianalto speaks 12:15 PM. Fed’s Evans speaks 6:15 PM.  Republican Convention begins but perhaps delayed a day due to Hurricane Isaac. Bradley turn date occurred on 8/25/12 so a market trend change is expected between 8/20 and 8/31. Earnings: TIF.
·         Tuesday, 8/28/12: S&P Case-Shiller Home Price Index 9 AM.  Richmond fed Mfg Index and Consumer Confidence 10 AM-watch for a market pivot point. 2-Year Note Auction 1 PM. Earnings: SAFM.
·         Wednesday, 8/29/12: Mortgage Purchase Applications 7 AM. Corporate Profits and GDP 8:30 AM. Pending Home Sales 10 AM.  Oil Inventories 10:30 AM.  5-Year Note Auction 1 PM. Beige Book 2 PM-watch for a market pivot point. Earnings: FLOW, HNZ, P, ZLC.
·         Thursday, 8/30/12: Jobless Claims and Personal Income and Outlays 8:30 AM. Retail Chain Store Sales.  Natty Inventories 10:30 AM. Kansas City Mfg Index 11 AM.  7-Year Note Auction 1 PM. Fed Balance Sheet and Money Supply 4:30 PM. Markets are typically buoyant the two days in front of a three-day holiday weekend. Earnings: CIEN, SPLK, ZUMZ.
·         Friday, 8/31//12: Chicago PMI 9:45 AM.  Consumer Sentiment 9:55 AM.  Factory Orders 10 AM-watch for a market pivot point at 10 AM. Farm Prices 3 PM. Jackson Hole Fed drama begins-listen for news from Chairman Bernanke hinting at QE3, or not. (3-day weekend ahead-U.S. markets are closed until Tuesday-traders will not be able to trade the complete Jackson Hole news until Tuesday) EOM-monthly charts receive a new print. Full moon.  Markets are typically buoyant in front of the full moon.
·         Saturday, 9/1/12: Draghi speaks from Jackson Hole-listen for any quantitative easing talk and if he backs up his “whatever it takes” rhetoric ahead of the ECB meeting on Thursday morning. (NOTE ADDED 8/28/12: Draghi cancels his trip to Jackson Hole due to too heavy of a work load.)

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·         Monday, 9/3/12: U.S. Markets are Closed in Observance of Labor Day. Eurozone Finance Ministers.
·         Tuesday, 9/4/12: U.S. Markets Reopen for Trading. ISM Mfg Index 10 AM-watch for a market pivot point.
·         Thursday, 9/6/12: ECB Rate Decision and Press Conference—Draghi drama. 
·         Friday, 9/7/12: Monthly Jobs Report 8:30 AM.
·         Early September: Troika Report (this is needed for leaders to make a decision with Greece).
·         Tuesday, 9/11/12: Anniversary of U.S. Terrorism Attacks. Banking Union Proposals. 
·         Wednesday, 9/12/12: German vote on the ESM (European Safety Mechanism). FOMC Rate Decision and Press Conference—Bernanke drama. AAPL releases new iPad5.
·         Sunday, 9/30//12: Bradley turn date-a potential market trend change may occur 9/24 thru 10/5.
·         Thursday, 10/18/12: ECB Summit-Merkel may avoid a decision on Greece until now. Will Greece exit the euro?

Saturday, August 25, 2012

SPX Support, Resistance (S/R) and Moving Average Price Levels for Trading the Week of 8/27/12

Last Tuesday, 8/21/12, is one of the most important trading days of the year thus far.  The SPX spiked upwards to take out the prior closing and intraday highs for 2012 at 1419 and 1422, respectively, but fell back under to close the day below.  Tuesday was an outside reversal day with a higher high than Monday, then lower low than Monday, and also a lower close than Monday's close. This type of behavior hints at a trend change for markets, and sure enough, the SPX dropped from a 1427 high this week to a 1398 low, 29-points, a 2% drop, in about 18 trading hours.

The 1427 resistance level takes on strong significance moving forward, especially 1426.60-ish. Interestingly, the April closing high remains in place and although the SPX has spiked up thru 1419.04 intraday but price remains unable to close above. A closing print any day forward over 1419.04 is very telling, very bullish and likely indicates a move to test 1427 again and perhaps the 1440's. Market bears must prevent 1419 with all their might.

The 1413, 1406 and 1403 resistance and support levels carry clout. Weigh their importance heavier than other levels. For the SPX for Monday, starting at 1411, the bulls only need two points higher, to print 1413.50, and hold it a few minutes, and an upside acceleration will occur to test the critical 1419 level. The bears must push the SPX under 1398 which will accelerate a downside move to 1391 in quick order. Failure of 1391 signals major market trouble and turmoil and far stronger selling ahead. A move thru 1399-1412 is sideways action to begin the new week of trading.

The SPX is respecting the 20-day MA at 1400.38 as support and the 10-day MA at 1410.52 as resistance (the Friday close is a hair above at 1411), so watch these two moving averages closely during Monday's trade. Any continued move above the 10-day is bull-friendly, any move below the 20-day is bear-friendy, between is neutral with the bull-bear tug-o-war raging on into the Bernanke and Draghi Jackson Hole circus beginning this coming Friday, 8/31/12.

·        1445 (1/4/08 Gap Fill 1444.01-1447.16)
·        1440 (5/19/08 Intraday HOD for 2008: 1440.24)
·        1427 (5/19/08 Closing High for 2008: 1426.63) (8/21/12 Intraday HOD for 2012: 1426.68)
·        1424
·        1422
·        1419 (4/2/12 Closing High for 2012: 1419.04)
·        1417
·        1415 (5/1/12 Top 1415.32)
·        1413.46 Friday HOD
·        1413
·        1411.13 Friday Close – Monday Starts Here
·        1410.52 (10-day MA)
·        1410
·        1406 (5/29/08 HOD)
·        1403
·        1400.38 (20-day MA)
·        1399
·        1398.04 Friday LOD
·        1394
·        1391
·        1390.80 (200 EMA on 60-Minute Chart)
·        1389
·        1385
·        1378
·        1377
·        1375
·        1371(5/2/11 Intraday HOD for 2011: 1370.58)
·        1370.34 (50-day MA)
·        1370
·        1369
·        1366
·        1364 (4/29/11 Closing High for 2011: 1363.61)
·        1363
·        1362.28 (150-Day MA; the Slope is a Keystone Cyclical Signal)
·        1362
·        1360.88 (20-week MA)
·        1359.96 (100-day MA)
·        1358
·        1357
·        1355