Equities jump higher after the opening bell. The utilities, UTIL, leap higher looking for 470, then committed hari-kari, UTIL now falling under 466. Thus, the market bears crack a smile since UTIL under 466.79 will create market negativity. Note the collapse in copper today. JJC dropped under 46 now trying to hug that support. With utes in trouble today, and copper leaking, Keybot the Quant is close to flipping to the short side. JJC 45.80 is critical. If JJC loses another twenty cents today, the broad indexes will be selling off in force.
The SPX ran to 1502 but could not hold the level. The HOD is 1502.26 interestingly one penny shy of yesterday's, and the 2013 intraday high, at 1502.27. The 8 MA remains above the 34 MA on the 30-minute chart. The bulls curled the 8 back upwards at the bell as explained in this mornings chart. The high at 1502, matching yesterday's high, came with negative divergence as explained this morning and that created the spank down to 1496 support. Price is now bouncing along sideways. Bears got nothing unless the 8 MA stabs down thru the 34 MA. The 10-year yield jumped to 1.93% now back to 1.91%. Higher yields encourage the equity bulls. WTIC oil retreated from way above 96 this morning to go negative, in concert with copper weakness, oil now at 95.80.
CAT and JOY are weak, two proxies for China. Note the roll over with FXI and the jump in FXP. Something is going on in China and only the insiders know about it so far. Commodities pulling back, machinery, perhaps someone is looking at China data that tells a different story than all the recent bullish hype? UTIL is now tumbling to 465.45. JJC now under 46 to 45.96. All Hades will break loose if copper loses more ground and JJC drops under 45.80. Today's trading session may become dramatic. This morning's money pump is having trouble boosting markets with the SPX stumbling sideways since the open. The New Home Sales were weak with better revisions created a sharp downward pivot at 10 AM kicking in the negative divergence on the minute charts. Volume remains lackluster.
Note Added 1/25/13 at 12:42 PM: UTIL moves above 466.79 so the bulls play on, refusing to give any ground. JJC is 46.04 twenty-four cents above danger. The bulls want to try and hold on into the weekend, perhaps a close above SPX 1500 will occur making the newspaper headline writers' job easy. The 10-year yield is 1.93% helping equity bulls. The euro is 1.3458 helping the bull case. UTIL 466.79 and JJC 45.80 dictate broad market direction today. Both are bullish now creating market bullishness.
Note Added 1/25/13 at 2:00 PM: UTIL remains above 466.79. JJC is 46.10. The 10-year yield is 1.94%, another tick higher. The euro is 1.3462. VIX is 12.82. TRIN is 0.65, uber bullish, and will deliver the markets in the bulls hands all day long. Bears do not have a chance unless they send the TRIN back towards 1.00. The SPX is testing 1502 again which would accelerate a move to the strong 1505 resistance. A new HOD occurs for 2013 at 1502.55 and price is coming back up now.
Note Added 1/25/13 at 2:12 PM: SPX punches thru 1502, and there is 1503. The SPX continues higher from the 11 AM pump today. UTIL hits 469. The 200-day MA for UTIL is 468.85 so utilities would signal that they want to go higher if this support level holds. The SPX 15-minute, 30-minute, 1-hour and 2-hour are setting up with negative divergence again, this is wash and rinse, over and over, ditto the UTIL charts, which say that prices should roll over, if not into the close today, than Monday. WTIC oil moves to and fro across 96 today in concert with the broad indexes moving up and down. Bears need to send oil lower, bulls want to see oil float higher.
For the AAPL followers: what I think has happened technically in the chart is the logical break down below a descending triangle which has formed since mid-Nov last year.
ReplyDeleteThe horizontal lower line is at ~$505 (maybe $500), and starts when AAPL hit $505 mid-Nov. That horizontal line can be drawn all the way from that point through yesterday. The descending upper line of the triangle connects the late november high of $590-$595 and runs down along the Jan 2nd high of $550 and Wednesday's (1/23) high of ~$515. The height of the descending triangle thus measures ~85-$100. The price target area of the move out of the descending triangle is then: $505-$85 (or $100) = $420 to $400. This area, especially the $420 level is MASSIVE support area. Also note that a move down to these levels will fill the late Jan. '12 gap that formed on AAPL's then stellar Q1 reporting. AAPL needed to jump over the $420 area to start it's insane bull run to $700. Hence, this area will provide interesting battle grounds for sure.
$500 has now become solid resistance, and a move up from the $400-$420 area may be expected; and often happens. Re-test. We'll have to re-assess by then if that level is too much for AAPL or not....
That is excellent dead-on technical analysis, better than Keystone can do. Interestingly, sometimes there is a fine line between a descending triangle and a falling wedge, the first bearish and the second bullish so it makes a big difference as to which one presents itself. Likewise, conversely, an ascending triangle (which is bullish) and rising wedge (which is bearish) may be tricky to distinguish as they form. The trick is identifying the flat base line which would tell you that it is a triangle pattern in play rather than a wedge.
DeleteThanks KS, a compliment like that from you means a whole lot since I HIGHLY respect your tech analyses, as it's so often dead on! I think the falling wedge was in play until yesterday. You also eluded in your recent updates of the weekly charts to the fact that if price would drop outside the falling wedge it would invalidate that set up.
DeleteOn another blog I posted on Jan 5th: "IF AAPL closes (not trade intra-day, but closes) below the recent low of $506, then I'd be looking for $475ish for a quick bounce play and eventually further downside to $425ish, for gap fill. That should be a GREAT longer term entry point for a solid multiples of 10s of $$$s of gains IMHO." I guess I wasn't that far off back then...
I gambled on this one, since if earnings would have been stellar, AAPL would be at $560 now instead... That obviously didn't happen...
Note NFLX... up another $20 today; NUTS.
I also wanted to bring BBBY to your attention. It has a great set up IMHO, with nice positive divergence in the MACD, FSTO, RSI, on the daily, and price over the past week is now "responding" to that IMHO. It used to be called "blood bath and beyond" and like HPQ and AMD -which KS has alerted to us waaay back- BBBY is setting up similarly IMHO.
ReplyDeleteOne can nicely draw a falling wedge in BBBY's chart, with the lower line from the mid-July 2012 lows, then touching the Nov. and Dec. 2012 lows; and the upper wedge line connecting the mid-Sept 2012 high with the late-Dec 2012 high. Price has now clearly "launched" out of that (bullish) falling wedge. The width of the wedge between the July low and Sept high is about $12. From current levels that would project a price of ~$70-$72. This target would then be enough to fill the mid-Sept. 2012 gap of $68->$64.
Yep on BBBY, that has been on the watch list but it took that big pop already and left a large gap behind. Maybe at 52.0-55.5 is a better entry, it may never come down, so be it, but in a large market sell off there will be lots of stocks dropping so like others, this can be on a long shopping list to review if the broad indexes finally cooperate and pull back. And if the CPC put/call shoots above 1.20 signaling a time to go long with strong confidence.
ReplyDeleteI hear ya! I bought at $58, when it "launched" off the upper wedge line. You are truly a rock-bottom scraper! Me like!!! This is a 3-4 months hold for me, as I think it will eventually fill that $68 gap. I did only buy half a position for starters, so can always average down -if need be- when it drops.
DeleteAnd it's impossible to trade all tickers, just too many to keep track off, some you just have to let pass. Plenty more to come.
Looks like Tuesday or Wednesday we'll see if they turn this market barge around or continue onward to 1525 or 1565. Divergences, as Keystone would say, are large.
ReplyDeleteYes the gap is where eventually AAPL will go, and in a down market (if there ever is such a thing :D) the overshoot could be to 380. At some point the value funds will step in.
RAX is the only equity I hold at the moment and it's getting a bit rarified. Maybe one more push up to 86ish.
Yep, weekly and daily charts are universally negatively diverged for RAX.
DeleteI like your take on AAPL, Arnie. I saw the earnings of AAPL is too much of a gamble for my liking. Glad I didn't pick any up. I see more downside for them, maybe $400.
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KS, would you classify TZA or FAZ in descending triangles given their big drop? I know you are holding both short ETFs. Thanks for your wonderful blog.
ReplyDeleteCommented on in subsequent message.
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