Thursday, January 31, 2013

Keystone's SPX Monthly Chart 12 MA Cross Indicator

Today is EOM so the monthly charts receive a new data point. One of Keystone's cyclical signals from the Cyclical Signal page on this site is the SPX monthly chart with 12-month MA cross which tells you if the markets are in a cyclical bull or cyclical bear market. The chart is also called the 'Decider'. Currently, the Decider says continued cyclical bull market. Back in March 2003, the bombs started dropping to begin the Iraq War. Back then Keystone jumped in with both hands, when you see the bombs dropping and everyone is worried sick, buy.  Price crossed down thru the 12 MA in November-December 2007 signaling major trouble ahead. The markets never bottomed until over one-year later when Chairman Bernanke had to step in to save the markets with QE1, the beginning of the money pumping that artificially props up markets and prevents price discovery.

So the cyclical bulls were running into 2010 when another roll over occurs, the Fed saves it with QE2.  In 2011, that roll over was stopped with Operation Twist and the ECB's LTRO 1 and 2 that kicked off coordinated global intervention. Then last May 2012, the SPX dropped under the 12 again to signal a cyclical bear but the bulls reversed that immediately when Draghi pledged support for the euro providing the OMT program, and Bernanke chiming in with QE3 Infinity.  Then the last foray to the wild side, when price fell thru the 12 MA only for Bernanke to pump some more as traders sniffed out QE4 Infinity and Beyond which was announced in early December 2012. What a sordid tale it is.

The red rising wedge is a wicked pattern, the corrections out of a rising wedge can be dramatic. Rising wedges are bearish patterns that resolve to the downside. January is a big up month with price tagging the upper rail of the wedge. The red lines show firm negative divergence in place wanting to see a spankdown perhaps forcing the failure out of the rising wedge.   The RSI, MACD line and money flow are sneaking out a hair of momo (short green lines) so the bulls may try to bring the SPX back up into the apex of the wedge after a selloff. The RSI has not moved into overbot territory so that would be one thing for the bulls to try and push for to extend the upside.  From peak to peak, 2007 to now, note that the RSI is far below those levels. Negative divergence cannot exist until price makes a higher high but price is almost at the same levels as 2007 and the RSI show how there is far less strength in the move higher this time as compared to 2006-2007.

Projection is for price to move lower and fall out of the rising wedge in Q1 and drop significantly lower. If the money pumping can extend the party a bit longer, a move to the 2007 highs may be attempted but the overall move is already very long in the tooth. Price is now at the point where a failure out of the rising wedge would be expected. 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.

CRB Rind Index Weekly Chart

The Raw Industrials Index, also known as the Rind Index is a less-followed, but very important index.  The Rind is a key barometer of global economic health and also of oil prices moving forward. The Rind Index will typically lead the CRB Commodities Index by about 10 weeks. The index is important because it is hard to manipulate, many of the items making up the index are every day manufacturing needs. The make-up of the Raw Industrials Index includes hides, tallow, cocoa, copper scrap, lead scrap, steel scrap, zinc, tin, burlap, cotton, print cloth, wool tops, rosin and rubber.  In other words, key raw materials that are very telling for overall global economic health. If these products are in great use the economy is moving along with high fives all around.  If these products decrease in use and there is less need for raw components, then obviously factories are slowing down and demand for products is low, a negative and bearish market and economic signal.

Keystone adds the Rind Index to the Other Market Signals page on this site. A weekly chart is useful with a 13-week MA cross as a signal line. The chart shows a market buy signal on 1/9/12 then a sell signal on 3/26/12, then a buy signal on 8/6/12 (as the Draghi OMT and Bernanke QE3 Infinity money printing pumps markets), then a sell signal on 10/15/12 and then the current buy signal on 11/26/12 that remains in place. Thus, the Rind told you at Thanksgiving that the bulls would be rockin' into the new year. The chart is a few days behind so the price line likely has a hook to the downside to reflect the last day or two. Since the current signal is bullish the wine is flowing like water for the long traders, however, note the sideways blue channel in play.  Even though the Rind is moving higher to lead the market bulls, the Rind is below the 2012 numbers. Contrast this with the SPX well above 2012 highs. If the economy was very strong to reflect such a robust stock market one would expect the Rind to be much higher.

Thus, watch for the sell signal ahead (price moving under the 13 MA) and if the top rail resistance of the blue channel holds, or not. 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 Midday Market Action 1/31/12; EOM

The 8 MA stabbed down thru the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours an days ahead.  UTIL remains elevated well above 467.24 and the VIX is flat well under 16, however, so the bulls are not worried. With the drop thru SPX 1500 an acceleration lower to 1495-1496 would be expected, however, the dip buyers are tripping over each other to buy and support the market. The TRIN is 1.23 favoring continued selling today. AAPL is flat at 455. Tech is not leading the broad markets lower today so that helps the bulls. The euro remains elevated at 1.3581 which keeps equities elevated.  WTIC oil dropped today, now at 97.23.  The SPX and oil move in lock-step so lower oil is lower equities or higher oil is higher equities. The 10-year is 1.99% so equity bears are in biz if the yield marches lower, equity bulls are happy if yields rise. Check that, the 10-year yield is down one more tick to 1.98%.

Note Added 1/31/13 at 12:13 PM:  Markets meandering sideways. TRIN is 1.22 so this will keep the bears in biz all day long, 1.22 or higher. Keystone bot NEM opening a new long trade. The positive divergence is attractive although price may leak to 42.20, if so, that would serve as an add level. The 42.9 was a gap fill.

Note Added 1/31/13 at 2:38 PM:  The bulls are curling the 8 MA on the 30-minute chart upwards and aiming to spoil the bears day.  The utilities remain elevated, ditto copper although JJC is down today, and the VIX is flat at 14.25.  The bears do not have any oomph to the downside. The bulls are nibbling as the SPX drops under 1500 but they are not self-assured either. TRIN is 1.05 almost directly on the 1.00 neutral line so it does not even want to pick a side today. Markets stumble sideways. Traders are contemplating positions ahead of the Monthly Jobs Report less than 18 hours away.

Note Added 1/31/13 at 3:52 PM: UTIL at 474. VIX 14.35.  Keystone bot more NEM.

Note Added 1/31/13 at 4:16 PM:  Markets skid out sideways waiting for the Jobs Report. The January Barometer is correct two-thirds of the time and it says as January goes so goes the year. January was a blow-out month for bulls. The bears are content this evening since they pushed the 8 MA under the 34 MA on the 30-minute chart to signal bearish markets for the hours and days ahead. UTIL closed at 474 which helps the bulls. Ditto JJC. The VIX did not move higher today to help the bears but it did not move lower either.  TRIN is 1.10. Markets are frozen like a deer in the headlights but should break hard, one way or the other, on the Jobs Report. Consumer Sentiment and ISM Mfg Index are going to cause additional intensity at 10 AM EST tomorrow. Sure is a lot of folks, in fact everybody and his brother, and his dog also, that figure the market pullback will be shallow.

SPX 30-Minute Chart 8 and 34 MA Cross H&S Patterns

Lo and behold. The 8 MA finally stabs down thru the 34 MA signaling bearish markets for the hours and days ahead. The day is young and the bulls are strong so watch to see if it holds, or not. The SPX punched below 1500 which should lead to a drop to 1495-1496 but the bears could not hold the prints under 1500, and once the Chicago PMI was better than expected, the markets ran higher. The bulls could have stopped the 8/34 cross with a gap up at the open, but that did not happen, but the bulls created a major thrust after the open, but it petered out for now as well.

The blue lines show the head and shoulders pattern off the top. The red rising wedge and negative divergence is creating the spank down.  The H&S with head at 1509 and neck at 1504.5 targets 1500 which is being tested right now. The 1500 is an important psychological level and also key from today's standpoint as described in this morning's wake-up notes.  The pink H&S uses 1500 as the neck line so it would target 1490-1491 should the 1500 fail.  If the SPX bounces, it may come up to place a better right shoulder for the pink H&S. Note how price uses the 34 MA as support so that failure is significant.

The MACD line is pointing firmly south so lower lows should occur for the next couple candles or so; that would take the markets into lunch time. If the bears can keep the 8 under the 34 the markets will continue to leak lower. 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 1/31/13

Dow Chemical misses bottom line EPS citing slowness in China and is down 3.5% pre-market. Chemicals and plastics are the building blocks of a global recovery. UPS misses on earnings citing a continued malaise in the shipping industry. UPS is in the top tier of bellwether companies and its results should discourage bullishness. Keystone's UPS 20 and 50-Week MA Cross Indicator continues to signal a cyclical bear market ahead by this tool but the other cyclical indicators remain bull-friendly. POT disappointed as well. Copper weakened on the news. POT may create a negative vibe with commodities.  UTIL 467.26 remains an important bull-bear line but at 473 the bulls are not concerned.  VIX 16 is another the bull-bear line in the sand, now at 14.32 so the bulls are happy (remember, volatility moves inverse to the broad markets). If the VIX moves above 16 the market selling will continue but, if the VIX stays under 16, the bears have no oomph and any pull  back in the indexes should be shallow. Dollar/yen tops 91 today not seen since summer of 2010; Japan is making good on their promise to weaken the yen (weaker yen means higher dollar/yen).

Watch the 8 and 34 MA cross on the SPX 30-minute chart to see if the 8 stabs down thru the 34, or not. If so, the bears receive a large feather for their hats and may gain downside momo.  For the SPX starting at 1502, the bulls need to touch 1510 which will accelerate the upside and begin the trek to the 1520's.  The bears need to push under 1500, only two points lower to accelerate the downside which will test the strong 1495-1496 support in quick order. A move thru 1501-1509 is sideways action today. Today is the EOM so the monthly charts receive new data points. Keybot the Quant was long for the entire month of January and remains long.  Keystone's shorter term trades, all bearish positions, have been beaten on the market run-up lately, but the negative divergence set-ups and overbot conditions in the charts provide reason to let them run. UTIL 467.26 and VIX 16 are key. If the bulls stay above 467.26 and below 16, respectively, the bulls have no worries. Farm Prices hit at 3 PM EST so that data will affect commodities.

Wednesday, January 30, 2013

FB Facebook Daily Chart Overbot Rising Wedge Negative Divergence Inverted H&S Patterns Sideways Channel

We saw the red rising wedge, overbot conditions and negative divergence a few days back projecting a slap down, which occurred.  Type 'FB' into the search box to reference the previous FB chart for further study.  Price returned for a higher high which is interesting since the universal negative divergence red lines would predict that price would not have to come back up.  The blue neon blue lines show a new rising wedge and negative divergence creating the spank down over the last few days. Earnings hit in one-half hour.  The chart says down but as always with earnings, anything is game.

Note that over the last few days price is no where near the prior low but the indicators are starting to print matching lows (short red lines). This behavior acts as a weight on price and will try to pull price lower.  The sideways black channel may be a path forward, thru 27-32 for a while. The pink inverted H&S pattern played out when price reached the 29-31 area. The blue inverted H&S, much larger, with head at 17.5 and neck line at 33 would target 48.5 returning FB to its initial offering area.  Projection is for FB to churn sideways for the forseeable future perhaps thru the 27-32 channel. 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 1/30/13 at 4:09 PM:  Bottom line EPS beats by two pennies, 17 cents versus 15 cents, and top line, with better revenue than expected, 1.59 billion versus 1.53 billion, good numbers. The knee-jerk reaction is down over 10%.  FB is 28.77 down two bucks. It will need a while to settle out. Zuck pulled it out but the trader's are not impressed.  Mobile users overtaking desktop users. Perhaps the idea is that the money is made with the larger screens and more ad offerings. With the shift to mobile occurring, and that ad strategy probably unable to generate the same revenue, traders may be getting nervous for future numbers.  The growth rates are slowing slightly as well. FB is coming back now at 30.32.

Note Added 1/31/13 at 9:00 AM:  FB receives three downgrades this morning from Wall Street firms.

Keystone's Midday Market Action 1/30/13; FOMC Decision

Copper catapults higher. Utilities pausing. Oil flat now perhaps turning negative.  The SPX is leaking lower today and succeeding in pulling down the 8 MA on the 30-minute chart so far. The TRIN started out at 0.8 showing another bull day ahead but then ran up to 1.00, now at 1.01 so consider this a minor victory for bears even though 1.00 only signals a neutral vibe in the markets not favoring bulls or bears. The VIX was over 14 now trying to move back above again. The euro is 1.3569 above the 200-week MA at 1.3528, equity bullish. The 10-year yield is on a wild ride, in only a few hours time from 2.03% down to 1.97% back up to 2.03% all over the place. The GDP is -0.1% surprising even the most negative prognostications.  The bulls keep ignoring bad news but the bag of bad news rocks is now growing increasingly heavy.  The SPX tried to punch up thru 1509 to accelerate the upside, HOD at 1510, but failed so far. The LOD is 1503 far away from the 1498 the bears need. Markets are likely holding steady moving sideways until the FOMC announcement at 2:15 PM which will create a market pivot point either up big, or down big.

Note Added 1/30/13 at 1:56 PM:  The Fed decision is near. SPX 1507.  Dow 13947. RUT 902.35. JJC 47.31 (Copper 3.749 at the top rail of the triangle shown on this morning's chart). WTIC oil 97.66 at the top rail of the triangle shown on this morning's chart. UTIL 473.51. TRIN flat neutral at 0.99. VIX 13.91. 10-year Treasury yield 2.03%.  The euro remains elevated at 1.3569. Gold is up one percent today to 1678.

Note Added 1/30/13 at 3:00 PM:  Pig in a poke. The news was the same old Fed talk. SPX 1505. Dow 13933. RUT 898.77 (slipping sub 900). JJC 47.29. Copper 3.748. WTIC oil 97.95. UTIL 473.38. TRIN 0.96. VIX 13.87. 10-Year Treasury yield is 2.01%. The euro is 1.3565. Gold 1674. No great shakes after the much-awaited announcement.  The 8 MA is curling over to the downside, barely, on the SPX 30-minute chart and nearing the 34 MA. The SPX needs to stay under 1506 and head lower to keep pulling the 8 MA down. Bears got nothing unless they move the 8 MA under the 34 MA on the 30-minute. The circus will next focus on FB earnings after the bell.

Note Added 1/30/13 at 3:25 PM:  The 8 MA is dropping as the SPX price drops to 1501 so the 8 and 34 MA cross may occur before the close today.  Well bears, do you have what it takes? TRIN 1.01. VIX 14.00.

Note Added 1/30/13 at 4:05 PM:  The bears fell a hair short of pushing the 8 under the 34 MA but it should occur at the opening bell tomorrow. The only thing that can save the bulls is a gap up move in the morning. Thus, listen for any bullish news overnight that would hint at another stick save coming. Barring that, the 8 should cross down thru the 34 MA tomorrow forecasting bearish markets ahead and additional selling on tap. January typically finishes with a couple down days. Copper is strong and utilities remain buoyant so at this juncture, the market move lower would be projected to be shallow. If oil, copper and commodities are hit, perhaps on China slowdown news, this would create bear fuel. The bulls are not sweating yet. The SPX closes at 1502 remaining above the psychological 1500. TRIN 1.03.  VIX closes at the high at 14.26, big up in volatility today showing that the bears are coming out of hibernation. A move above 16 for VIX will create strong market selling. Perhaps tomorrow will bring a delayed reaction to the negative GDP with market selling.

Note Added 1/30/13 at 4:15 PM:  FB earnings beat on top and bottom line but the stock is moving lower. QCOM hits it out of the park jumping six pecent AH's. 10-year yield is under 2% at 1.99%.

SPX 30-Minute Chart 8 MA and 34 MA Cross Overbot Rising Wedges Negative Divergence

We have been watching these continual overbot-rising wedge-negative divergence set-ups smack price lower but the bulls keep coming into markets buying with both hands. The 8 is above the 34 MA signaling bullish times ahead, however, the chart is set up with negative divergence once again. The bulls appear possessed not willing to give up any ground and only interested in a solid up market. The bears got nothing unless they can move the 8 MA lower to stab down thru the 34 MA. That would begin if price can move under the 8 MA at 1507.40 to cause it to curl over to the downside. Price is now printing over 1509; the bears needed to eat more Wheaties this morning.  The Fed is on tap this afternoon so markets may meander sideways until the announcement.  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 1/30/13 at 4:01 PM:  The bears pushed all day long but fell a hair short of pushing the 8 MA under the 34 MA. The 8 and 34 MA cross is immensely important when the opening bell rings tomorrow. The SPX finished today with a 1501 handle dropping six points.

WTIC Light Crude Oil Weekly Chart Sideways Symmetrical Triangle

Oil is set up similarly to the long-term copper chart, as would be expected since the commodities tend to move in sync. The up move is strong, like ths strong moves in late 2011 with Operation Twist and anticipation of the ECB's LTRO's, also the move last summer when Draghi proclaimed support for the euro and pumped the markets with the OMT Bond-Buying program announcement. Chiarman Bernanke chimed in with QE Infinity as well. Since we are talking QE, the current rally is due to QE4 Infinity and Beyond announced at the end of last year. And do not forget QE2 in 2010, the strongest rally that free money can buy.  Does anyone not understand that the markets are purely a function of quantitative easing and money pumping, fundamentals be d*mned? The chart clearly shows the oil asset bubbles created by Bernanke and the Fed, and now thru coordination with the ECB.

The red vertical side of the triangle is 40 handles. A move out the top side from 98 and higher targets 138, likely in concert with escalating Middle East turmoil. A move out the bottom from 87 targets 47 which would be a deflationary funk that would leave most citizens of planet Earth shell-shocked. The near-term momo is up. Stochastics are overbot. Projection is for a reversal in oil to begin with price moving lower for an extended period forward with the top occurring at either 98 (now) or 102 anytime from today thru the next month. 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.

COPPER Weekly Chart Sideways Symmetrical Triangle

It seems like copper, oil and commodities are heading higher day after day recently as the Fed creates new asset bubbles due to money printing, however, note that despite all the upside euphoria, copper has not yet broken out above the top rail of the sideways triangle. The thin purple line shows that price broke out of the alternate triangle pattern, but returned back inside during the November bottom. The blue sideways triangle now takes precedence. Equity bulls must see copper move higher from here and the wine will flow like water for long traders. Equity bears need to see copper weakness appear now and the top rail of the triangle holds as resistance, and price returns lower into the apex of the triangle. The moving averages and indicators verify the overall sideways nature of price over the last year or more.

The stakes are enormous. The thick blue line shows a one dollar move is coming. Thus, a breakout to the upside here targets 4.6-4.7 and would be in concert with far higher equity markets and yields moving higher and a move towards inflation ending the last few years of disinflationary funk. If price moves lower and returns to the inside of the triangle favoring bears and collapses out the bottom at 3.5, 2.5 would be targeted which is the disinflation and deflationary outcome that Keystone continues to forecast. This move represents a stagnant global economic environment and a final flush lower to cure the over-leveraged economy that ran rampant from the 1990's thru 2007. Lower copper would be in concert with a few years forward of flat euro and dollar currency moves and flat Treasury yields. Watch copper like a hawk. Q1 2013 is shaping up to be a historic turning point in world economics and trading. 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.

USO Oil and SPX Moving in Lock-Step

The oil, copper and commodities push higher over the last couple weeks, as the central banker pumping creates new asset bubbles, is providing rocket fuel for markets. Over the last month, oil (the USO is an ETF proxy for oil), the blue line, and the SPX, green line, are moving in lock-step higher. Higher oil = higher equities. 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.

XEU Euro Long-Term Multi-Year Chart Descending Triangle Head and Shoulders (H&S)

Technical analysis is all about time frames from a few minutes, to hours, days, weeks, months, years and decades. The euro action is framed nicely within a longer term context. Note the descending triangle in play. If the 120-125 level fails, that path to 80-95 is on tap. Remember, we are talking multi-year moves. Should the descending triangle play out it may take five to eight years.  A head and shoulders is also in play with neck at 120 and head at 160 targets 80 should the 120 fail.

First thing is first, however, and the euro is rockin' higher without a care as Europe sinks deeper into recession and depression with growth dropping. The euro must be weakened to spur growth in Europe or the entire continent may explode into chaos considering the escalation in social unrest. The 200-week MA at 1.3528 was pierced this morning to the upside. In 2003, the Iraq War Rally, the euro remained above the 200 for about seven years. In recent years the euro has danced to and fro across the 200. Purely from a reversion to mean standpoint, a more extended stay under the 200 would be favored rather than a move above, but, alas, today the euro moves above.

The indicators favor sideways movement overall and the recent action has set up negative divergence and overbot conditions although the RSI and MACD lines maintains a long and strong profile wanting to see another higher high after a pull back occurs. The downward-sloping upper rail of the descending triangle slices down thru this current 135-138 zone which sets up an ideal place for the euro to top out. Projection is for the descending triangle pattern to continue to play out with the euro topping in this 1.35-1.38 zone over the next month or so. Draghi should weaken the euro at some point.  The ECB meeting announcements are the first Thursday of each month so pay attention to those dates moving forward since Draghi would hint at or announce a rate cut at these meeting. 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.

XEU Euro Weekly Chart Rising Wedge Overbot Two-Leg Bull Flag Gaps

The major central bankers are printing money like there is no tomorrow as the race to debase continues. The euro is left at the altar, however, as the euro pairs are march higher and the euro gains.  This action is fascinating with the back drop of the Greece and Spain depressions and ongoing European recession. European auto sales are dropping as shown by recent data. Draghi will need to cut rates to weaken the euro to promote growth, however, the opposite is happening. Europe is standing pat so the euro is launching higher with this morning's print now punching up thru the important 200-week MA resistance at 1.3528. The euro has near term momo as shown by the indicators (green lines) and the RSI and MACD line are long and strong wanting to see a higher high after a pull back occurs.

Price now filled the gap at 1.35.  The blue and brown resistance lines gave way. Price is now entering the 1.350-1.367 zone corresponding to the brown and red S/R lines. A large gap exists above 1.367 where price would target a fill, or an island reversal may occur where price moves up to 1.365 and then immediately catapults to 1.380 in a heartbeat. The inverted H&S is plain to see and all the rage on the Forex desks. The blue line at 1.345 is the neck line, and, with the 1.21 head, the target is 1.48. It is very likely far too premature to consider this outcome. With price now thru the important neckline a back kiss to 1.345 would be in order.

The red rising wedge is bearish for price moving forward, ditto the histogram, stochastics and ROC. The neon blue two-leg bull flag is playing out right now. Leg one is 1.21 to 1.31, ten handles, then sideways consolidation with a lower bias, then leg two begins at 1.27, thus, 1.37 would finish the bull flag pattern. It is going the euro bulls way and as the euro goes, so goes the equity markets. Up euro = up markets. Watch the interplay of price across the S/R lines. Projection is a pull back but there is momo to the price move now so the euro should either move to, or come back up to, the 1.36+ test (red line). Watch the action around the 200-week MA at 1.3528. The stronger euro will crush Europe but Draghi does not appear worried. 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, January 29, 2013

BPSPX Bullish Percent Index Daily Chart

Wonders never cease. Lo and behold. The BPSPX finally placed a peak at 82. It looked like it would never end.  For the BPSPX chart, the six percentage point reversal is a sell or buy signal, and the move across 70% and 30% is important. Obviously, 70% is applicable over the last few months and the lower side of the chart is not in play.  Recapping the action since the September 2012 top, price printed 80, thus, 80-6 = 74, so if price hits 74, which it did, a sell signal is triggered for the broad indexes.  Then as the BPSPX fell and dropped thru the 70% level this provides additional downside oomph and intensifies the sell signal. This action verified the October-November selloff.

Then when the BPSPX bottomed in November at 58, the 64 is key (58+6), and that gave way as the December winds arrived to announce the market buy signal. Then, once price punched up thru the 70% level, the sky was the limit. From 82, the 76 level is key. The bears need to see 76 to receive a market sell signal that will point to lower markets moving forward. The 70% will come into play again as well. The question is how the BPSPX comes off the top. The red lines show firm negative divergence so the indicators are happy with price dropping in earnest from here.  The RSI, however, may want to bring price back up for another high at 82 or so before rolling over. The indicators are into the ceiling for the stochastics and RSI unable to move any higher. The uber bullish euphoria is truly remarkable. At least the markets now show they may be mortal after all.  Watch the 76 level. If the BPSPX moves higher tomorrow, say, to 83, then you will watch the 77 level for the broad market sell signal. BPSPX is a lagging verification-style signal so the broad markets would sell off for a couple or few days before the six percentage-point reversal typically occurs. 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 Midday Market Action 1/29/13

Copper was up strongly about four hours ago but turned negative a short time ago and drifts lower. JJC 45.80 remains key. JJC is creating bullishness now but see if it drops under 45.80 after the opening bell.  Utilities remain key as well. Watch UTIL 467.18. Bulls will move markets higher if UTIL remains above, but bears will increase market selling if UTIL loses 467.18.  If JJC loses 45.80 and UTIL loses 467.18, Keybot the Quant will likely flip short.  The 8 MA and 34 MA cross on the SPX 30-minute remains bullish. Bears need the 8 to stab down thru the 34, otherwise, they got nothing.

The VIX moved above 13. Market selling will become strong and steady if the VIX moves above 16. Overall, the bulls are not worried with VIX under 16. The CPC moved higher yesterday, now at 0.97. Along with the VIX, obviously some nervousness is developing as the SPX plays around with 1500. The best time to bring on longs is when the CPC spikes above 1.20 so watch this closely in the coming days if markets start to accelerate lower. The BPSPX keeps moving higher now at 82.20. A top should occur now where the six percentage point reversal signal can be monitored moving forward.  The SPXA150R is 85.80 moving thru the 85-90 zone for a few days. A bearish market signal would occur favoring bears with the SPXA150R dropping under 85. Bulls need to keep it above 85. The NYSI chart was highlighted this morning and it is consistent with where significant broad market tops occur. WTIC oil is 96.55 continuing to stumble sideways as the Egypt unrest deepens and starts to tumble out of control. Markets remain buoyant with buoyant oil. The 10-year yield is 1.96% off the 2% intraday pop yesterday. The TNX chart last evening points towards a pull back in yield which would correspond to weakness in equities.

Spain retail sales were weak and conditions appear to be deteriorating due to austerity measures. Spain will miss their budget deficit targets. With the ongoing European recession and the Spain and Greece depressions, one wonders why everyone is so giddy and happy at Davos waving the all-clear banner?  Obviously they are trying to instill confidence hoping traders buy into the vibe. So far they have. The bond bubble charts are interesting from yesterday (scroll backwards thru the pages or type the tickers into the search box above; LQD, JNK, HYG, MUB). Everyone understands that bond prices are elevated into bubble territory but the difference is that many expect a strong move lower in prices (huge up in yields) to occur while others, such as Keystone, expect a more gradual move, when the time comes. Keystone continues to entertain the disinflationary and deflationary outcome for the U.S. over the coming year or three, thus, yields may move sideways the whole time.  Unlike commodity or other asset bubbles, which collapse in dramatic fashion, when the bond bubble burst, it will be much less dramatic, more like a slow leak, similar to a limp, deflating air mattress.

For the SPX today starting at 1500, the bulls need three points, to punch up thru 1503 and an upside acceleration will occur, straight thru the strong 1505 resistance and onward to target 1511. The bears need to push under the 1496 level to ignite a downside acceleration. The 1495-1496 level is strong support which would immediately lead to a test at 1489 support. A move thru 1497-1502 is sideways today.  The S&P futures are down a few at this writing which hints at some weakness to begin the day for the SPX. Case-Shiller is on deck at 9 AM. This housing information will further impact the housing sector stocks highlighted yesterday such as WY, USG and SHW (type these into the search box to study the charts). DHI earnings beat which starts the sector off on a positive note today.

Do not forget to reference the Key Events missive posted on the weekend for each days itinerary   A market pivot point will occur at 10 AM with Consumer Confidence. F earnings look good but it is sold off pre-market. PFE beat and it is up. IP profit is down and it drops pre-market. Watch these key economic indicator type stocks such as paper, rubber, packaging, cardboard, shipping, etc...  Weakness in the paper markets (businesses have less of a need for paper) tell you that the underlying economy is not in that good of shape.  In a nutshell, JJC 45.80, UTIL 467.18 and SPX 1503 and 1496 dictate market direction today. Watch the 8 and 34 MA cross on the 30-minute since that immediately changes the game should the bears decide to flex their muscles.

Note Added 1/29/13 at 9:48 AM:  Flat markets. Copper recovered, JJC is up twelve cents to 46.25 well above the 45.80 danger level. Ditto UTIL at 469.38 well above 467.18.  Bears got nothing as the session begins. WTIC oil shoots up thru 97; buoyant oil means buoyant equities. The 8 MA on the 30-minute is 1500.94 and slightly curling over to the downside. The SPX is at 1500.12.  As long as the SPX remains under 1500.94 it will cause the 8 MA to move lower. If the SPX moves above 1500.94, the bulls will be driving markets higher again. Consumer Confidence should create a sharp pivot point for the broad indexes in ten minutes.

Note Added 1/29/13 at 2:12 PM:  The 10 AM number created a downward pivot for all of four minutes, which then marked the low of the day at 10:05 AM.  Consumer Confidence is the lowest since November 2011, over one year ago. Last month the number surprised to the low side and ditto this month, however, all bad news is ignored. The morning Fed pump sends the SPX thru the 1503, then the strong 1505 resistance gave way so the path to strong 1511 resistance is open. The SPX is now printing near the HOD at 1508.05. UTIL and JJC are running to the upside taking the broad indexes higher. The bulls will try to push UTIL above 483 this week to guarantee SPX 1520's. Financials are up today yet tech is down. Yesterday tech was up with financials down. These two should be in sync to the upside for a strong rally so consider it another head-scratcher in this cross-current market environment.  Tech and small caps are lagging today. Advancers and decliners are flatish and unimpressive by the bulls, much greater strength would be expected.  NYSE volume is below average at a run rate of only about 75% of a days average expected volume. TRIN has moved down from 0.92 at 1 PM to 0.79 now which provides bullish oomph. The 8 remains above the 34 MA on the SPX 30-minute chart which keeps the bulls in the drivers seat. Bears got nothing and the bulls are not taking any prisoners. The SPX 2-hour and 1-hour charts are set up with negative divergence once again. The 30-minute chart can live with sideways action. The 15-minute and 10-minute are negatively diverged. Thus, the VST charts say down but the bulls keep sweeping in and buying even the most subtle dip.

Note Added 1/29/13 at 2:41 PM:  WTIC oil is 97.46. If you recall the oil chart on the weekend with the sideways triangle, the chart obviously broke out to the upside which sent it towards 98. The Egypt, Syria, Iran, take your pick, and others, turmoil provides a bullish lift to oil and the equity markets want to move with oil. Brent oil is over 114. The dollar is lower testing 79.5 support from two weeks ago. Thus, the euro is higher, now approaching 1.35. The euro 200-week MA is 1.3528 which is strong resistance and may serve as the top. The euro daily and weekly charts are overbot and set up or in the process of setting up with negative divergence. For now, dollar down = euro up = equities up. The 8 MA on the 30-minute is 1506.18, thus, the bears do not have a chance unless they push the SPX under 1506.18 and lower so the 8 MA can curl down and move lower. VIX remains above 13 today. TRIN is 0.80. Bears got nothing unless the can move the TRIN back up to 1.00 and higher into the closing bell.

Note Added 1/29/13 at 7:41 PM:  Another upside orgy today. The jump in both the JJC and UTIL this morning was key, then when the SPX headed higher curling the 8 MA up on the 30-minute chart, the bears had to assume the position. Volume was below average today but came on stronger in the final hour posting a healthy volume number comparable to two other up days this month. Usually when a month is all up like this month, the month will finish in the opposite direction and there are only two days remaining. In addition, seasonality-wise, the last couple days of January are typically bearish. So the lonely and saddened bears can grasp two feathers moving into the end of the month, looking for a minimum of a couple days of selling ahead. The 10-year yield closed at 2%. BPSPX finally placed a top, so that is worth watching for the days ahead. The TRIN has printed several days with numbers below 1.00 on the bullish side, today at 0.77 is uber bullish, and needs to see a market pull back to burn off some of this over-the-top bullish euphoria.  Markets are prime for a sharp pull back like the mid-December selloff into the end of the year where the SPX dropped 50 handles in seven days. The bulls have been buying every tiny little pull back so the downside will be interesting once it begins. With the floating higher nature of markets lately, there is air underneath now, it is a matter of how much. Fifty handles would target the 1460-1461 support level as a potential bounce point. The CPC 1.2+ will come in handy as the markets sell off. Considering this non-stop bullish euphoric action, the best way to hurt the maximum amount of traders would be for an overnight event to occur, that way, markets would open far lower, perhaps LLD (lock limit down) in the case of something drastic, which would trap all the bulls that entered on the euphoric thrust and at the same time hurt the bears that will miss the shorting opportunity due to sitting on the sidelines, the shorting opportunity that they have been waiting for. The probability of an overnight event may be low but if a gremlin appears, right now would be the ideal time. Europe, and the Middle East will likely become more important in the the coming days. The thrust in oil is helping buoy the broad indexes as well. The euro is near 1.35.  GDP is in the morning. The FOMC decision is in the afternoon.

NYSI NYSE Summation Index Weekly Chart Signals Market Top Chart Shows the Positive Effects of Quantitative Easing Money Pumps

Once the NYSI begins printing candlesticks at or above +800, the broad indexes top and roll over within a couple months time. These elevated NYSI levels identified the April 2010 top, the November 2010 top (very short-lived pull-back), the Febrary 2011 top that led to the August 2011 waterfall crash, the late October 2011 top, the March 2012 top, the September 2012 top, and, ...... now?

Conversely, market bottoms are identified when the NYSI slips under -100. The NYSI identified key bottoms such as the summer 2010 bottom when Chairman Bernanke announced QE2 money printing, the summer 2011 bottom when Bernanke saved the markets with Operation Twist, the December 2011 bottom when the ECB started printing and pumping free money with the LTRO's, the summer 2012 bottom when Draghi proclaimed support for the euro and then followed up with the OMT Bond-Buying program, and the Fed jumped in with QE3 Infinity as well, and the November 2012 bottom as traders sniffed out the Fed's QE4 Infinity and Beyond announcement in December. Do youi think the markets are purely a function of money pumping (quantitative easing)? Please Lord help us when price discovery occurs at some point in the future.

The NYSI has punched above +800 once again, for two or three weeks now, so a significant market top is being placed and should roll over at anytime over the next month.   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, January 28, 2013

TNX 10-Year Treasury Note Yield Daily Chart Hits 2% Intraday Negative Divergence Upward-Sloping Channel Cup and Handle Potential Island Reversal

The 10-year yield hits 2% intraday not seen since April 2012, nine months ago. A C&H pattern is in play with base of cup at 1.4% and top of cup and handle at 1.9% which yields a target of 2.4%, key resistance above. Considering the gap above at 2.1%, the 2.00-2.05% level could very well serve as the base line for the C&H as well, which would target 2.6% and higher.  The green lines also show where an island reversal would occur. The drop under 2.05% ten months ago created an island below.  Thus, if the yield comes up to this 2.00-2.05% area and gaps up to 2.2% and higher, green line to green line, an island reversal would play out.  The yield could simply choose to meander higher and fill the gap at 2.1%.

Before stoking the higher yield talk too much, the lower yield side must be presented since that direction is more likely moving ahead. The red upward-sloping channel is of course bullish but yield is at the top rail right now susceptible to a spank down. The length of the channel is met with negative divergence across its bullish yield run. For January, yield has now created a new high, but all the indicators are negatively diverged (red lines) so a spank down in yield would be expected. Projection in the near term, days ahead, is a pull back from this 2% level, a move down to 1.9% perhaps 1.8%, to test these support levels.  It does not appear time for the C&H pattern to break out to the upside. Interestingly, a move down in yields would correspond to a move lower in equities. The current print on the yield is 1.965%. 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 Midday Market Acton 1/28/13

CAT earnings were in line after the China shenanigans were backed out. The guidance was lower, however, as well as extremely broad, so broad where it is of no use.  CAT promises for a better second half of Q3 and that is good enough for long traders; the Koolaid tastes great with CAT up over 2%.  Copper is flat on the day so perhaps the commodities traders are not convinced of the happy talk. JJC is 46.17. The bull-bear line is 45.80 so copper continues to add bullish strength to markets.  Of great interest is the big drop in CAT's back logs which are not a healthy sign. In a true recovery you want to see folks beating down the doors demanding equipment, instead the back log of work is shrinking year on year.  The 10-year Treasury yield hit 2% today, so dough is moving from bonds to stocks and the tentative move to embrace riskier assets continues. The Durable Goods were better than expected which encourages bulls but the Pending Home Sales were much weaker than expected encouraging bears. The markets are continuing to prefer the good news and ignore the bad news. Lo and behold, the VIX is over 13.

Utilities are important again this week. The 50-week MA at 467.18 remains a critical bull-bear line that will directly influence broad market direction.  UTIL is 469.33 now so this causes market bullishness. UTIL came down to test 467 after the open and the bulls bounced it higher. Watch the 8 and 34 MA cross on the 30-minute chart now showing the 8 above the 34 MA signaling bullish markets for the hours and days ahead.  The 8 MA is inching lower but the mid-morning pump is underway so the bulls may once again spoil any bear hope. The SPX LOD is 1496.33 so price held the support at 1495-1496. The euro remains above 1.34. Bears need UTIL under 467.18, JJC under 45.80 and/or the 8 MA under the 34 MA on the 30-minute chart, otherwise, they got nothing. TRIN is flat at 1.00 showing neither a preference for bulls nor bears today.

Note Added 1/28/13 at 4:24 PM:  Markets end the day flat.  UTIL remains above 467.18. JJC remains above 45.80. The 8 MA remains above the 34 MA on the SPX 30-minute chart. Three feathers remain in the bull's cap.  The Dow Industrials and SPX, the broader market, are down today while tech and small caps are up. That is a feather in the bull's cap. The SPX is rolling across a top here in the minute and hourly time frame  and would be expected to leak lower tomorrow.  YHOO's earnings are better than expected and it jumps 5% AH's, now settling at 3% up.  Thus, the two key releases today, CAT and YHOO, go the bull's way. Two more feathers. The bulls are running out of space to place all these feathers in their cap, every day is sunshine and every evening is happiness. The TRIN was flat today across 1.00 giving the bears a hair of an advantage at 1.16. The BPSPX, CPC, NYMO and other charts will be of interest once they provide the closing numbers over the next hour or two. CAT was up 2% but note the pull back in SCCO (copper), down 5%, JJC was up only eight pennies and FCX was down a percent.  Thus, CAT supplied the booze for the party today but they were the only one drinking; copper is flat to weak. Banks were weak today.

SPX 30-Minute Chart 8 and 34 MA Cross Overbot Rising Wedge Negative Divergence

The action picks up where Friday left off. Remember the hourly and minute charts setting up with negative divergence, a rising wedge and overbot stochastics? Today price receives the spanking. The 8 MA is above the 34 MA signaling bullish markets for the hours and days ahead, however, note how the 8 MA is curled to the downside and converging on the 34 MA.  As long as price stays under the 8 MA at 1501 right now, that will pull the 8 MA lower, by definition. Thus, bears can maintain a tentative smile if the SPX stays under 1501 and keeps moving lower.  Note the prior teases, however, other moves lower only to see quick reversals as the Fed pumps money into the system each weekday morning at this time.

The money flow is printing a matching low as compared to late last week so this type of behavior acts as a weight on price and wants to pull price lower. Watch to see if the RSI, stochastics, and/or money flow fall thru their 50% levels which would signal continued bearishness.  The market bears need to see the 8 under the 34 MA, otherwise, they got nothing. 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 1/28/13 at 4:45 PM:  The bulls spoiled the bears day once again keeping the 8 above the 34 and maintaining control. Tomorrow is another day. The bears plan to eat more Wheaties and give it a go again in the morning.

SHW Sherwin Williams Weekly Chart Overbot Rising Wedge Negative Divergence

Here is another darling of the housing recovery that has ran its course and is topping for a roll over. Do you sense a theme this morning?  (Overbot conditions, rising wedges and negative divergence). On the paint side of the recovery, SHW has had a phenomenal run from 70 to 165, 140%. The party is over, however, and all that remains is empty paint cans and brushes that no one bothered to clean. The negative divergence will spank her down.  Projection is sideways to sideways lower moving forward.  The pink bars show a potential H&S formation, that will need a right shoulder in the springtime; head at 165, neck line at 140, target is 115. All these housing momo plays, gysum, USG, lumber, WY and LL, flooring, MHK, and paint, SHW, may need some sideways action to burn the euphoric bullish energy off, but the best days are behind them all. USG is the most bearish right now, then WY and LL, then SHW, then MHK. The flooring side with MHK, is holding up the best and can squeeze out a bit more on the upside. When MHK rolls over in the days and weeks ahead that will firmly signal a roll over in the housing sector. 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 1/28/13 at 10:02 AM:  The above chart is posted as Pending Home Sales report a surprising 4.3% drop when a 1% rise was expected. The broad markets weaken.

WY Weyerhaeuser Weekly Chart Overbot Rising Wedge Negative Divergence

Many of the housing sector stocks have enjoyed obscene runs higher over the last year on the talk of the ongoing housing recovery.  The gypsum, lumber, flooring, paint and other stocks all show the same characteristics on weekly and daily charts; rising wedge, overbot conditions and negative divergence which says a spank down is needed. The gains in these stocks have already been achieved for the most part. Prices should move sideways to sideways lower moving forward. LL exhibits the same characteristics.  $LUMBER peaked in December and has trended down ever since. 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 1/28/13 at 10:02 AM:  The above chart is posted as Pending Home Sales report a surprising 4.3% drop when a 1% rise was expected. The broad markets weaken.

USG Gypsum Weekly Chart Overbot Rising Wedge Negative Divergence

The housing recovery has catapulted key components to breath-taking heights. Gypsum is key since it goes into the manufacture of drywall. In one-year's time USG has catapulted from 6 to over 30, 400%, a phenomenal move. The volume continues to trail off. There are less and less traders chasing it higher, but they are chasing it higher. Weekly and daily charts are prime for a spank down. The stochastics above are pegged at 100% and cannot move any higher. USG is a very attractive short moving forward, especially with scaling in over the coming days or weeks. Keystone caught the pull back in the short side in the Fall. Price appears to be producing a significant top right now. The pull back should create a negative vibe in the housing sector. 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 1/28/13 at 10:02 AM:  The above chart is posted as Pending Home Sales report a surprising 4.3% drop when a 1% rise was expected. The broad markets weaken.

MUB Municipal Muni Bonds Weekly and Daily Charts Sideways Channel H&S Muni Bond Bubble Rolling Over

The muni bonds topped out in the Fall where the rising wedge, overbot conditions and negative divergence created the smack down. The low in December helps establish a lower boundary for a sideways channel at 109.5. There has been much talk about muni's over the last couple years, the rally beginning 2011 is very impressive.  However, the party appears to have ended and it is time for the hangover to begin.

California law suits may create headaches in the bond world and highlight that muni's are not as safe an investment as expected. Muni's are a credit risk due to falling tax receipts and interest rate risk where yields are up and bond prices fall.  Warren Buffett, the large reinsurer, is no longer writing credit default swaps for the mini's which hints that the jig is up.  Buffett does not want to be on the line as the defaults increase. Municipalities may also want to perform 'strategic defaults' which will add a new negative twist to the game.

Keystone has been calling for this muni top and highlighting the action over the last year. Projection is for sideways to sideways lower prices moving forward as the air deflates out of the muni bubble. 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.

LQD Investment-Grade Corporate Bonds Weekly and Daily Charts Downward-Sloping Channel

LQD is the leader for the roll over as compared to HYG and JNK. A triple top was placed in October-December. Money was moving around late last year with the worry over taxes and other investing matters leading to choppy sideways action. Price is now testing the bottom rail of the downward-sloping channel at 120.  The move off the top occurred due to the negative divergence smack down (red lines). Price is at matching lows compared to mid-December and note the upward-sloping indicators (thin green lines). This encourages a bounce, however, the RSI is weak and bleak (short red line) and prices typically will test lower in this situation. Therefore, once price trails a bit lower watch to see if the positive divergence remains in place, or not. If the RSI drops below the December low, price will venture lower over time as well.

The weekly chart shows the red rising wedge, overbot conditions and negative divergence that created the Fall spank down. Price is stumbling sideways. The blue rectangles show distribution taking place with large selling volume occurring the week after an upward move occurs. This is Joe Sixpack running into LQD, and corporate's in general, since most everyone on television tells him so, and the institutions and large funds are all too happy to provide the shares to the bag holder. The weekly chart is weak and bleak across all indicators. There is no hint of positive divergence whatsoever indicating a continued path lower for LQD moving forward. LQD rolled over first. HYG should roll over next then followed by JNK after that. The air is coming out of the Corporate Bond Bubble. LQD is moving very orderly to the downside so far. 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.

JNK High-Yield Junk Bonds Overbot Rising Wedge Negative Divergence Junk Bubble Grows Larger

The JNK charts mimic the HYG charts posted a short time ago so the same analysis applies. Overbot conditions, a rising wedge and negative divergence all add up to a smack down coming. Add the Junk Bubble to the High-Yield Corporate Bubble and the Dividend Stock Bubble. The March-April 2012 top is highlighted in yellow as it was when it occurred. There is a hair of momo as shown by the short green lines but price should top here and roll over receiving a smack down moving forward.  The daily chart exhibits the same characteristics as HYG so watch for a potential island reversal, a gap fill, and/or an H&S 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.

HYG High-Yield Corporate Bonds Weekly and Daily Charts Overbot Rising Wedge Negative Divergence High-Yield Bubble Grows Larger

HYG was last highlighted about a year ago as the chart formed the blue rising wedge and negative divergence which created the spank down in April 2012. Note the doji candlestick that marked the top. After that pull back, the spigots were opened to save the day with all the phoney baloney central banker money. In a coordinated move, Draghi pledged support for the euro in late July 2012, following that up with the OMT Bond-Buying plan. Chairman Bernanke chimed in with QE3 Infinity, and then QE4 Infinity and Beyond in December 2012. The easy money is fueling the current dividend and high-yield bubbles.

The weekly and daily charts are set up with overbot conditions, rising wedges, and negative divergence across all indicators. Time for a spank down. The money flow on the daily chart shows a hair more momo but overall, lower prices are expected moving forward, perhaps for the considerable future. The drops out of the rising wedges can be quite dramatic.  The daily chart shows the gap up to begin the year, folks wasted no time in chasing yield wherever they can find it. This thirst for yields is creating the divvy and high-yield bubbles that are now topping and ready to pop. The gap up creates an island where price remains so a potential island reversal is in play where price would drop to 94, then collapse thru the gap in a heartbeat to print 93.4 and lower. The alternate is for price to simply drop to fill the gap. A potential H&S pattern may form as price rolls over from the top. Projection is for a peak in prices right now, the high-yield and dividend stock bubbles are topping and popping. Q1 will be very exciting and the current price levels may not be revisited for months or years once the roll over occurs. 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.

DVY Dividend ETF Weekly and Daily Charts Overbot Rising Wedge Negative Divergence Dividend Stock Bubble Grows Larger

The dividend stock bubble continues to pump higher. DVY and SDP are charts to monitor as time moves along as well as any blue chip that offers a large divvy.  An upward-sloping channel is clearly in place for the daily chart. The daily chart is set up with overbot conditions and negative divergence across all indicators. The MACD line has a hair more momo so a stutter step can occur for day or three before price rolls over. Friday's candle is a hanging man that signals a trend change but follow-thru would be needed today to verify the candlestick prognostication. Money is running strongly into dividend stocks as seen by the vertical move in price for January.

The weekly chart shows a rising wedge (bearish) where price is reaching the upper limits. Again, universal negative divergence across all indicators.  The volume is unimpressive as well. The sucka's that are running into the dividend stocks no doubt are greeted by the institutions all too happy to provide shares to Joe Bagholder. The strong move higher this month to start the year results in some momo (green lines) in the weekly time frame. Thus, the daily chart wants a spank down now, the weekly chart is agreeable to a move back up after the spank down occurs, then the weekly chart should be positioned for a more substantive roll over moving forward. The drops out of rising wedges can be quite dramatic sometimes.  Projection is for the dividend stock bubble to pop over the coming days and weeks and lower numbers for the weeks and months ahead. As time moves along, watch to see if the current price action eventually forms a head for an H&S. Q1 is setting up to be a historic time for trading and economics. 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, January 27, 2013

Keystone's Key Events and Market Movers for Trading the Week of 1/28/13

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week: A large economic data dump is on tap this week as well as a continuation of earnings season. Consumer Confidence on Tuesday, the FOMC decision Wednesday afternoon, the Monthly Jobs Report Friday morning, and then Consumer Sentiment are the four key releases. The next political deadline is the Sequestration on 3/1/13, only 32 days away, followed by the Continuing Resolution on 3/27/13, then the Debt Ceiling limit comes into play again mid-May. Traders are no longer concerned of any market downside occurring due to these political deadlines. The politicians solved the Fiscal Cliff and the Debt Ceiling deadlines with can-kicking and this will simply continue on indefinitely, so there is no reason to price in any market downside.  Of course, if a stumble occurs, it would impact markets more greatly due to this complacency. The European debt crisis news directly dictates global market direction and all is quiet across the pond for the last couple months encouraging market bulls.  As the euro goes, so goes the equity markets. Spain is delaying their bailout request so the ECB’s OMT bond-buying program cannot be unleashed in full force, although simply having the OMT in place has greatly calmed Europe.  Spain is reluctant to give up sovereignty and accept conditionality.  Italy wants Spain to request a bailout since the ECB bond-buying will immediately improve Italy’s debt situation. Look for a strong market bounce and rally if Spain requests a bailout. A flight of deposits out of Greece, Spain and Italy is ongoing which may lead to bank runs. European riots and violence continue with shooting now occurring in Greece. The slow-motion development of a European banking union continues.  Merkel wants Greece to stay in the euro until her election in September then will not care afterwards. The next ECB Rate Decision and Press Conference is 2/7/13.  A cut is expected in early 2013, however, Draghi gave the impression a rate cut is nowhere near so perhaps summer time may be the target. In addition, Draghi is now talking up the euro saying it had a rebirth in 2012. Euro is above 1.34, up euro means up markets. If the European economy continues to falter, however, and the automobile sales are dropping significantly, Draghi will change his tune quickly.  Europe must cut rates to weaken the euro and help the Eurozone grow out of the debt mess but so far this concept is on a milk carton. The China hard versus soft landing saga continues. Watch for further China easing measures such as lowering rates or triple R’s, which will bounce copper, commodities and equity markets. As copper and commodities go, so goes the markets.  China appears hesitant to act further (they have been pumping their markets for the last few years) since they correctly worry about the commodities inflation and asset bubbles that will be created (Chairman Bernanke incorrectly defends QE saying it does not create asset bubbles). China continues to provide lip service about easing measures and the markets bite each time raising copper, commodities, and equities, all on promises. New leaders President Xi Jinping and Premier Li Keqiang will supply economic targets in March. China professes a 7.8% growth rate but no one asks how this is possible when their number one customer, Europe, is in recession and depression, the U.S. is flat, and uninhabited cities litter the China countryside, waiting for the urban shift to a domestic-led economy. China demographics are a mess due to the multi-decade one-child policy now causing a lack of workers to fuel economic health. With all their reported high growth, and considering it is winter time, why is their diesel imports dropping? No wonder that many question the validity of the China data. CAT earnings, the number one key proxy for China, hit on Monday morning and this can very well be the most important event of the entire week. Copper and commodities will immediately react and send equities in the same direction. The equity markets continue to ignore the geopolitical landscape. Egypt is erupting in chaos again with over thirty deaths this weekend.  Use Brent oil as a proxy for the Middle East turmoil. If Brent is above 110, now at 112-113, tensions are rising. Calm is returning under 110.  A weak global economy is a force to drive oil price lower but Middle East turmoil wants to take oil prices higher. Syria remains a mess with tens of thousands of people dead. The Northern Africa to Middle East area is a powder keg. WTIC oil remains on the verge of breaking out to the upside at 96-ish. As oil goes, so goes the markets. The earnings season continues. Companies are meeting lowered estimates although the percentage beats are on the low side. Top line revenues continue to be challenged. AAPL choked last week but the markets made new highs. As AAPL goes, so goes Nasdq but not necessarily the SPX.  A few more weeks will be required before writing off Apple’s impact. The money running from AAPL went into high short interest stocks that launched dramatic short squeezes that actually bounced the broader markets higher. The expectation is that Apple weakness would be in concert with a weaker economy but for now, the wine is flowing like water in the markets. Tech (COMPQ) lagged the broad markets last due to AAPL and small caps (RUT) did not show the strong leadership from the week before. The small caps are enjoying a nice run which is also expected seasonality-wise. CAT earnings are key as mentioned above. Also of interest are YHOO, LLY, F, PFE, BA, FB, MO, MA, UPS, MRK and XOM.  Tech, pharma, shipping, auto’s and oil will provide a cross section of the economy, CAT and UPS are the two most important. Volatility is now at a six-year low but the VIX shows signs of recovery.  The CPC put/call remains low verifying the market complacency.  Traders never doubted the positive outcome for the fiscal cliff, and now the debt ceiling limit, and are without fear or worry.  A Bradley turn last weekend resulted in a melt-up move.  The market bears are absent this year thus far. The markets were buoyant late last week into the full moon. January typically finishes with weakness the last couple days.  January ends on Thursday, EOM.  The ole Wall Street adage says as the first day in January goes the first week goes, as the first week went so goes the month, and as January goes so goes the year. Something else for the bulls to raise their glasses to and keep the party going. There is upside momo in the markets with the orgy move to start the year. Market topping action and roll over is anticipated as the days and weeks play out.
·         Monday, 1/28/12: Durable Goods Orders 8:30 AM. Dallas Fed Mfg Survey and Pending Home Sales 10 AM.  Earnings: BIIB, CAT-China proxy, CE, CR, FBP, HAYN, IRF, MCHP, OLN, PCL, SANM, STX, STLD, UNB, YHOO.
·         Tuesday, 1/29/13: FOMC Meeting begins. Consumer Confidence 10 AM—market pivot point.  5-Year Note Auction 5 PM. Earnings: AKS-steel, BXP, BSX, BRCM-tech, DHI-housing, DHR, LLY, EMC, F, FSL, HOG-discretionary spending, HRS, HW, IDXX, IP-paper, JBLU, LXK, EDU, NUE-steel, BTU-coal, PNR, PFE, RHI, RYL, TYC, X-steel, VLO, VRTX, VRTS, WBSN.
·         Wednesday, 1/30/13: Mortgage Applications 7 AM.  GDP 8:30 AM. Oil Inventories 10:30 AM.  7-Year Note Auction 1 PM. FOMC Rate Decision 2:15 PM—market pivot point. The last two days of January tend to be bearish. Earnings: ALGN, AMP, BA, CBT, ELY, CTXS, CVLT, COP, CLB, EA, FB, FIO, HES, JDSU, LLL, MAN, MUR, NOC, NXPI-tech, OI, PSX, QTM, ROK, SWKS, SO, TSCO.
·         Thursday, 1/31/13:  EOM. Challenger Job Report 7:30 AM. Employment Cost Index, Jobless Claims and Personal Income and Outlays 8:30 AM.  Chicago PMI 9:45 AM. Natty Gas Inventories 10:30 AM. Farm Prices 3 PM-watch commodities. Earnings: AN, APU, BEBE, BERY, BX, CRR, D-utes, DOW-chemicals, DNKN, EMN-chemicals, EPD, HP, FLWS, KEM, MO, MTW, MA, MCK, OXY, PCAR, RGLD, TLAB, UA, UPS-shipping, VIAB, WHR, XEL, ZMH.
·         Friday, 2/1/13: Monthly Jobs Report 8:30 AM. PMI Index 8:58 AM. Consumer Sentiment 9:55 AM—market pivot point.  Construction Spending and ISM Mfg Index 10 AM. Earnings: AON, CVX, XOM, IR, LVS, LYB-chemicals, MAT, MRK-pharma, MOD, NOV, TDW, TSN.


·         Monday, 2/4/13: Factory Orders 10 AM.
·         Tuesday, 2/5/13: ISM Non-Mfg Index 10 AM.
·         Thursday, 2/7/13: Jobless Claims and Productivity and Costs 8:30 AM.
·         Friday, 2/8/13: International Trade 8:30 AM. Wholesale Trade 10 AM.


·         Tuesday, 2/12/13: President Obama’s State of the Union address. Markets are usually buoyant the following day.
·         Wednesday, 2/13/13: Retail Sales 8:30 AM.
·         Friday, 2/15/13: Consumer Sentiment 9:55 AM.
·         In February: Italy elections.
·         In February or March:  New China President Xi Jinping and Premier Li Keqiang take over complete control and the ten-year transition of power is finished. China now sets inflation and budget targets moving forward.
·         Friday, 3/1/13: Sequestration hits with one trillion in automatic spending cuts for government.
·         Wednesday, 3/27/13: Continuing Resolution (CR) is required to fund the government.
·         In March and April:  The BOJ head’s will be replaced and strong QE will likely occur. Perhaps a low in the Nikkei in January or February may provide a point of entry ahead of the money-pumping?
·         Sunday, 5/19/13:  16.4 trillion Debt Ceiling limit is hit.
·         In September:  Merkel (Germany) seeks re-election and will not want Greece to exit the euro before the election, but will not care afterwards.  Perhaps Greece and Germany will both exit the euro in the future.

----------------------------  2014  ----------------------------------

·         In March 2014: ESM is officially ‘fully operational’. The banking union schedule has been delayed from January 2013 to January 2014 and now to March 2014.