Friday, January 4, 2013

Keystone's Midday Market Action 1/4/13

The Friday session is off and stumbling. VIX remains in the cellar now down to 14.08. Bulls are pushing on UTIL, now at 463, only three points from 466 which would create a new leg higher for the broad indexes.  GTX is dropping lower.  JJC is flatish at 46.45 well above the 45.40 bull-bear danger line. Thus, status quo, keep an eye on the utilities. The 10 AM data created a downward pivot. Markets are traveling sideways thru the 1457-1466 range as mentioned this morning, and will continue to do so unless one of the above four parameters flinch. The euro is 1.3040. The 10-year yield is 1.94%.  The EGLE long trade is feeling some love up 40% today but who knows what is going on there, likely a large short squeeze.

Note Added 1/3/13 at 2:11 PM:  UTIL is only a point away from 466 but it remains bearish.  VIX is under 14 providing the afternoon bull fuel. JJC remains elevated in the bull  camp. GTX is bearish.  Thus, status quo, markets move sideways with an upward bias due to the utilities marching higher with UTIL moving towards the bull-bear line at 466. Bears do not have any juice today. SPX remains inside todays sideways range. The euro receives lift to 1.3075 moving up as equities move up. Keystone added more to the ongoing FAZ long trade. The minute and hour charts hint that this price level may serve as a low as positive divergence is in place.

Note Added 1/3/13 at 2:36 PM: The very short term SPX topping behavior over the last day or so, with the minute charts and hourly charts placing highs, with the indicators in negative divergence, continues along. Price is resilient preferring to move sideways rather than roll over. The negative divergence should begin knocking down the SPX anytime now thru the close or first thing Monday morning. UTIL losing a bit of gas, now at 464, two away from 466.

Note Added 1/3/13 at 2:47 PM:  Watch the SPX 30-minute chart with 8 and 34 MA cross. The 8 MA remains above the 34 MA which signals bullish markets ahead but the moving averages are converging. The close today may prove quite interesting.

Note Added 1/3/13 at 3:12 PM:  The SPX tags the closing high from 2012 at 1465.77. Broad indexes are printing highs of the day as the Friday buoyancy appears but VST charts show negative divergence. The 1468 is very strong resistance and the next test if price remains above 1465.77. Perhaps some drama into the close, 45 minutes is a lot of time remaining.

Note Added 1/3/13 at 3:28 PM:  The SPX tests 1468 resistance. The next R is 1472. Above that the next resistance is the intraday high for 2012 at 1474.51. This is an interesting close, the negative divergence says that price needs to move down, but the bulls keep pushing higher. UTIL is at 464.50.

Note Added 1/3/13 at 4:02 PM:  The SPX finishes at 1466.47 above the 1465.77 which is a five-year closing high. Not intraday high, but closing high. That will keep bulls happy all weekend long since the headline was just written. The negative divergence on the VST charts should push the broad indexes lower on Monday unless some type of good political news or other such positivity occurs on the weekend such as China positive news. The bulls ran higher to begin the year. Seasonality-wise, the first day is up, the first week is up, thus, January would be expected to be up and 2013 up. Euro is 1.3080. The four parameters, UTIL, GTX, VIX and JJC did not change their stripes today. The 10-year yield is 1.91% off the high yields earlier today, sitting exactly at the important 1.91%-ish S/R level described in this morning's TNX chart. LIkewise, JJC, copper, sits at its top trend line described in this morning's JJC chart.  Decisions will need to be made next week.

33 comments:

  1. KS, I feel like I'm standing on a wharf watching friends going 'round in a pleasure boat. Waterskiing. Whooping it up. Having a grand time. Once in awhile the boat swings a little closer to me, but stays out of reach. Will this market slip at all? Is Apple's two-percent decline today not even relevant anymore? I'd like to buy a few more longs but am going grey(er) with the wait.

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  2. Well, you are growing grey in style. If looking for an ideal entry for longs, patience would be required to perhaps wait until fear and panic shows up at CPC 1.2+, until then, markets are prone to topping. In the Pennsylvania hills today, the wind chill is likely near zero so sun screen is not required in these parts today.

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  3. slow grind higher; not much action. AAPL either putting in a nice ABC decline for a wave 2 down, with 3 up to follow. or it wants to go below 500s. I've moved my interest towards FB, it's doing great!

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    1. FB daily, hourly and minute charts may be peaking with negative divergence right now, so it may begin rolling over. AAPL is moving sideways thru 500-550 for the last month.

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  4. AAPL has become a very crowded trade, an unpredictable one at that. It used to be low-hanging fruit,but now it's all over the place and rather something of a gamble. I dislike gambling, because I usually lose when I play that game.

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  5. Agreed with aapl, shane. What gives with it tanking and RUT and TNA up, along with other chip makers...so weird...like clock work..CRUS is a joker as well

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  6. Ford has gone parabolic... not easy work for the faint of heart... Anyone going to start dollar cost averaging in the VIX down here perhaps covered calls on UVXY what's your thoughts all? When Gold Futures gets to 1626 I'm going into to NUGT (covered calls) - otherwise trading rock solid companies and momo whores when share price is below the 9EMA on the daily chart and bounces off the 120SMA (daily chart)... targeting the return to the 3EMA (little slices) so long as the KS algo is long I'll trade equity on individual basis when it dips.

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  7. just as an fyi I have seen the chatter on semiconducters here in forum... ONNN is one of my fav's in that category.


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  8. Lots of charts have the same look showing the gap up on Wednesday. But many of them on the daily charts are overbot with negative divergence. The weekly charts are more of a mixed bag and some agreeable to higher highs after a pull back. But, perhaps a pull back in general will occur here in general for the markets, into middle next week then back up again.

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    1. yup, that would be a normal set up (this week was wave 1 of 3 of 3, then early next week, wave 2 of 3 of 3, and then 3 of 3 of 3, where it will just be up, up, up. We may then get to 1520-1550 in ~2 months and then what...???

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  9. Still not convinced about highs above SPX 1480, and perhaps the highs have already occurred. But, if 1480 is taken out, then the 15 handle is definitely on the table. The close today will be interesting, SPX should roll over due to the negative divergence on the minute and hour charts, but, sometimes divergences are divergences until they aren't. It's been a heck of a topping formation for one day and one-half, waiting for Godot, but it seems like if you simply breathed on the SPX it should venture lower.

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    1. I do disagree since negative divergence during a bull run is rather normal. Also, during the whole fiscal cliff shenanigans many primary dealers were keeping their freshly printed $$$s handed out by Uncle Benny on the side line. Now they've started to flood the markets (i've been told from reliable sources).

      daily SPX' MACD crossed signal line from below and above 0-line: bullish
      daily SPX candle sticks walking upper BB: bullish
      weekly SPX candle stick is huge: bullish key reversal
      weekly SPX' MACD about to cross signal line from below and above 0-line: bullish
      weekly SPX BB are now expanding, and with this candlestick that's: bullish
      weekly SPX full STO: popped up from about to cross at 60ish level: bullish (see similar pattern early 2012, late 2011, summer 2010, etc

      Oh, we'll see some minor pullbacks but those are IMHO BTDFD opportunities... And all that negative divergence on the weekly MACD is NOT necessarily bearish right now; it's healthy sign of a bull run. Remember, upside momentum is stronger than downside momentum as long as the MACD is positive. The momentum is becoming less and less positive (strong) as the advance extended, but it is still largely positive. Thus for now the trend is up.

      ps: of course this will eventually resolve to the down side, but that's months ahead IMHO

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  10. I think they're gunning for a close over 1465.77 so that all the experts and CNBC talking heads, etc. can tell Ma and Pa, "we've already beaten 2012's highest close so you got to buy now" (and take all these shares off our hands before third-quarter earnings).

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  11. the 2min NYSE tick can't get under -250 keeps bouncing off my slightly upward sloping trendline. We are pretty much between 0 and 500 all steady as she rips a stick at a time higher... I missed buying the 1459.00 at the time you posted and then saw a buyer of 4200+ contract purchase soon there after that. That sidelined my VIX trades because that kind of purchaser isn't ussually wrong.

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  12. Plus CNBC isn't ever right that's all I hear in the back ground from every guest bear, bear, bear... Here's a negative -127 tick lets see if she bounces off that now to determine if status quo holds. Any sell off in my opinion will be a futures event in Globex to preclude the populus which will likely be a quicky one evening next week. Bingo there is the tick over 400 again algo robots are buying slow and selling .25 and .50 ticks all day long. Should get choppy soon boom +586 tick... Wow almost a buy program 990 tick

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  13. This has gotten silly the ES MAR 13 Futures contract is parabolic through the bollinger band on a 5MIN with algo's fliping 1000 lot contracts for half(c's). Just got an alert on Zillow lets see what's that all about.

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  14. KS, bulls taking this up above september high because they can with this vacuum between cliff and earnings. it's a perfect world now. you know what that means!

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  15. spxs is outside the bollinger band on the daily not a bad flyer

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  16. hey MCAP, your posts are just a big waste of time!

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  17. KS, next Saturday is new moon!

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  18. I get paid to waste time thank you for sharing.
    11:23:45 Stock PSX BOT 10000 52.41 NYSE false 1.00
    11:50:41 Stock PSX SLD 10000 52.90 NYSE false 1.00

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  19. Interesting stuff MCAP, the PSX boucned off the positive divergence this morning on the minute charts. That was a good one.

    Anon, yep new moon Friday into Saturday so perhaps some market negativity next Thursday and Friday.

    Weaver, you called it with the newspaper headline on the SPX this afternoon, 1465.77 taken out, five-year highs.

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  20. KS, I just saw the charts for $BPSPX and $BPNYA...both are very strong, signalling higher mkts. but it looks like it could be setting up for a higher price and STOC MACD divergence when it does...

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  21. I know how KS loves divergence and it works there is always a new lower low often at times from a bottom. I like trading divergent sets ups when the stocks are down all the way down and there is no shortage of opportunities in the market for that. I have had a lot of trades like PSX - I like to buy companies REAL companies that are down when the broad market momentum is up. I buy stocks at or below their 9EMA on the daily charts when the 3 & 9EMA’s are positively crossed (I also refer to the weekly and monthly charts to look at established support and resistance zones so as I don’t back up the truck up on something too early). I love buying the throw back my trading algos are programed to trade moving averages with ATR calculations. KS refers to the 8/34 SMA on the SPX 30minute chart all the time. I know institutions with algos that trade that chart all the time using futures. That 8/34 setup can get you in front of some really big moves early if you have the conviction to trade them. Remember the RIMM trade last year KS that was awesome “scale up in the zone” that stock took a _hit! and it _hit hard! The day of the earnings you got it - I waited to get it after the next morning. There are some setups like RIMM that when you have seen it so many times work and have worked it – it’s like free money go size on the dip and sell the rip if your early exponentially double the size of you initial trade and you’ll be above water as soon it rears its head. Look at Smith and Wesson recently that’s a classic example of a company that you need not concern yourself with so when it gets whacked under the daily Bollinger Bands you back the truck up hard and buy blocks scaling up the zone. It’s easy distribution when she returns back inside the Bollinger Band set your algo on sell and random size out the inventory with quarter rips. The company can’t make enough guns to keep up with the sales that’s a no brainer not a pharmaceutical house of cards that’s going to get halfed on a headline. Watch the whale’s trade price points all day on stocks as they gravitate to previous fractals high, low, open and close prices and then suddenly reverse course it’s not a mystery. You can trade with little draw down when you trade the moving averages around those zones. I constantly refer to your work for broad market momentum why because the truth fits - like I have been saying it’s only a penny movement at times that will set off a wind storm and when your calculating all the math of inter-market relationships I understand the logic and I know that’s what the HFT robots are doing and prices move off those zones often at times to the penny accurate. Bottom line when I’m buying in the direction of the broad market momentum equity that has thrown back below its 9EMA I’m buying at a discount. Buy real companies with good fundamentals technically. Buy sectors on with good fundamental micro/macro economics technically. Don’t fade the KS algo it’s bank for 10 handles on the ES all the time when it flips.

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  22. I was just thinking about the ES MAR 13 trades at the time you (KS) posted today at 2:54PM. I made reference to a trader that sucked up 4200 contracts which I tried to piggy back his or hers draw down unsuccessfully I missed it by a quarter but that's not the point. Why 4200 contract right then why were there dozens of 1000 lot purchase momements before and after that. Do the math on that traders trade that's $210,000 a point and that trader was 4 handles in the money within 15 minutes. Studying people who make nearly a million dollars in less time than it took me to even write the darn reference is no waste of time. I think we all contribute a lot to this forum and it's a real pleasure to have this be in existence and readily available as we all have differing approaches it's a learning experience. Last year we learned NYSE TICK from your bloging and how to use it and when and it's something that is alway up on the screen when we are on the platform we use it all time. As we all learn something all the time from all those that contribuite e.g., Arnie and Weaver and even from those that don't.

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  23. CES starts next Tuesday, $SOX may punch thru 400 next week. Watch out!

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  24. KS, what's your take on the TZA chart? Is it weak and bleak or has positive divergence kicked in? Thanks for your informative blog.

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    1. KS's 80/20 rule, TZA is now $12 and eventually become $8, do not short!

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  25. Any thoughts on AMZN.I see negative divergence playingnout everwhere on AMZn.Plus the low volume is creating a very dangerous setup on the short side.Maybe I am wrong but hopefully you guys can share your views...

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  26. In studying the SPX daily chart the last six months, it seems that it takes anywhere from 3-7 trading sessions to retrace back to the middle of the bollinger bands. KS, is that the usual time frame for retracement or is it something different from your experience? Also, under what conditions will Keybot flip short? Feel free to chime in on this question as well Arnie or MCAP. Thanks guys.

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    1. Its McAP generally speaking your analysis is correct however as afutures trader for 20 years I have seen the SP just climb up the upper band and destroy your account. I have seen it recently just stop and roll sideways continually for a protracted period of time and then suddenly fail. We are nearing highs and I trade price more so then anything else so 1475 1500 area everything else is technically over bought and fundamentally its going to earnings season February could be nasty. Now trading is how you trade it really this top in my opinion could over shoot so no matter how much I like the setup I scale up zone. I will be buying UVXY next week and SPXS so in order to scale up a zone we start with nothing really 100 shares and sell a call against it that gives us room when it goes against us we double it and sell another call as the time window is counting down your following everything something happens overnight maybe, we get a headline and your scale starts to tip your trade begins to go in the money we double up and re-double up we want as much size then as we can as the momentum is building to the downside and if doesn't wash out at fixed price when its obvious your wrong. Options can provide you with a little cushion when your trying to top tick the market trading small keeps you alive and when it breaks free you size up in the money. I have watched to many times TZA just go into the basement and not buy it because everything sounded to good on the news days latter its not buy a zone sell a zone the algo will flip when it does increase your position its a tool to use.

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    2. Its MCAP if youlike the bands this is what we use to scale zones when NYMO is outside the bands fade away... http://scharts.co/ZBsKSh

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  27. KS, both VIX and S&P up. You know what that means.

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