Chairman Bernanke is conducting his desk conference. He is being grilled with Q&A, but not so much a grilling, more of a softball toss. The Fed stays the course as anticipated. The SPX jumped to 1557 at the opening bell today, and sat there all day until the announcement. Usually on Fed day this behavior occurs, either gap up or gap down then sideways until the announcement. After the announcement the SPX printed a HOD at 1561.27 and is now leaking lower printing a 1558 handle again. Keybot the Quant, Keystone's trading algorithm, flipped long at SPX 1557 losing one percent on the one-day bronco ride. The whipsaw was anticipated with the drop in volatility yesterday afternoon. The market bears need to see VIX 14.95 or they got nothing. If VIX 14.95 occurs, Keybot will likely flip short again. VIX is now printing 12.40. The 10-year yield is 1.94%, above the 1.90% mentioned last evening, so that was another hint of a bullish day today.
The SPX all-time closing high at 1565.15 is now on the table again. TRIN is 0.80 so the bulls can keep the broad indexes elevated into the closing bell. Watch the HOD at 1561.27. As the Chairman speaks, traders probably think to themselves, 'Cyprus schmipress, we got the Fed and their money bazooka, that is all we need'. Cyprus banks are now closed until Tuesday. This was anticipated since Monday is an actual holiday so why not declare a bank holiday for the other days and allow the leaders breathing space to find a resolution, now through Monday. The ECB continues to fly in cash on airplanes to stock the Cyprus ATM's but the machines empty as fast as they are filled. Cyprus businesses are having trouble making change. Imagine if your bank was closed since Friday and what will be a total of ten days by the time it is over, if there is resolution in the end. Things can get ugly at any time and bank runs may be a given come Tuesday. The Cyprus finance minister will probably stay in Moscow through the weekend. Lots of rumors are in the market concerning Cyprus and markets are reacting to the tape bombs as they hit, be them fact or fiction. For now, the wine is flowing like water. Traders that shorted ahead of the Fed likely covered quickly supplying the bullish pop from 1557 to 1561 after the FOMC announcement. Do not forget the China PMI tonight about 9:45 PM EST. Copper and commodities will react, also the Aussie and Canadian commodity currencies.
Keystone took profits on MCP exiting the long trade for a one-day trade, then reentered MCP reopening a new long position. Also added more shorts to the LL short trade. LL should print an M top and with the negative divergence in place, experience a spank down at any time forward. Also added more JO to this ongoing long trade that is long coffee. The coffee appears very fresh with an anticipated strong bounce coming due to the positive divergence in place.
Note Added 3/20/13 at 3:41 PM: VIX 12.43. TRIN 0.77 showing bulls in control today. SPX at 1560.18, see if it takes out the HOD at 1561.27, or not. Interesting to see bellwethers like FDX, CAT and DE, all sick, but the Fed pumping continues to stuff the turkey. CTAS is weak again. If the manufacturing and other companies do not need uniforms, obviously the economy is not in good shape. Copper starting to leak lower. The LEN earnings are a bullish bright spot but the home builders are very expensive now. SRS is very attractive. The ABDE earnings last evening another bright spot.
Note Added 3/20/13 at 3:48 PM: SPX prints a new HOD at 1561.56. The TRIN at 0.76 provides the fuel.
Note Added 3/20/13 at 4:05 PM: The Dow Industrials print a new all-time high today at 14546.82 but the all-time closing high remains 14539.14 on 3/14/13. The SPX closes at 1558.71, HOD 1561.56, which is not a new closing high nor did a new intraday high occur today. The SPX closing high for 2013 is 1563.23 (3/14/13) and intraday high for 2013 is 1563.62 (3/15/13). It is remarkable that the SPX is up over 9% this year. The 10-year yield is 1.95%. ORCL earnings are a big miss, the top line revenue is sick. Oracle is slammed 6% in AH trading, the opposite of last evening's ADBE joy.
Note Added 3/20/13 at 4:22 PM: ORCL down 7%. Quick, call the Oracle of Omaha, maybe he can help a fellow oracle. The ECB is threatening to cut off liquidity to Cyprus if a resolution cannot be provided in quick order. Flying all that money into Cyprus is like throwing money out the window as you drive down the street. All the options for Cyprus are terrible, they must choose the least dirtiest shirt in the hamper. Just like in the States, the regular Cyprus folks will be stuck with paying for the sins of others. There is still a lot of trading remaining this week and a lot of crazy stuff to happen. Keystone must have a slice of pie to keep up his strength.
KS - looks like you were right about FB. Dropped below 26 today while the rest of tech land was moving higher. Profit taking into the end of the day combined with the bull surge during the fed-speak today, makes me sense that we have more supply than demand at current levels in the SPY. I also think that the commodities carry trade has been carried too far and too long by fed intevention, and we are seeing less reaction in commodities and precious metals whenever Bernake speaks. Oil barely budged higher after the speech. Because of that I'm short HAL and BHP
ReplyDeleteThe ag commodities are of interest since they have gotten beaten up, like DBA is set up with positive divergence now, and my coffee long, JO. FB will probably develop the C&H, there is a gap at 24.80 that may serve as an attractive area for the bottom of the handle. FB will likely have a nice summer but spring may be a little rocky. HAL daily chart looks like it wants more down, it has a funky H&S, it is also on an island that serves as the neckline at 39.4 where it is at. It may pull an island reversal and drop like a stone to 37.8 tomorrow. Or it may simply fill the gap. If this 39.4 fails, then, say head at 44, target would be the support at 35.5 or the juicy gap at 35. BHP may need a little more time to set up it is so close to the 200-day MA at 69.32 it will likely want to touch and perhaps overshoot to the downside. A big gap is at 68, it may want to follow the 80/20 rule to go from 72 to 68. Weekly chart wants lower lows but then it may move sideways into summer. 67-68 may be a good target. Good luck.
ReplyDeleteKS, re: FB. I think the $24.80 gap fill is what it's aiming for as well. I know many have stoplosses for their longs at $25... that be just enough to blow all the bulls out of the water, suck in all the bears and reverse. I will add add that level IF it get's there, and I think it will.
DeleteMean time; S is finally breaking out above $6, (check out that massive C&H pattern of the past 2 yrs...) DECK trading above $50. BBRY up and if it can clear $16 it be on it's way to new highs.
HPQ put in a intra day reversal and bearish engulfing candle. May have put in a intermediate term top IMHO. Looking for $20 area to re-enter for a long to ~$27.50
Arnie, S is funny, that is a huge soup bowl, LOL, only a cup, no handle. S does not look good universal negative divergence on weekly and daily charts over the last six months. S may be topping right now and roll over so stay alert on that one. DECK has had a run, daily wants a spank down but weekly is long and strong wanting one more high, so that should have a pull back right now but then come up for another high.
ReplyDeleteThat BBRY is interesting, it received good news today from an analyst that said their estimates are probably easy to beat moving forward. The 18 would likely create negative divergence on the daily over the last two months. BBRY is not attractive from the chart perspective, probably lots of sideways moving forward. HPQ was the other one we were watching, it has momo, but it will go up just because it is going up, charts are setting up negatively, it has a bit more juice but seems like other plays would be better to pursue. That 24 S/R may be hard to pound thru. HPQ may see 24 even 26 on the momo, but then roll over. HPQ may be making its highs for the year, to pick a wide range, the high may be from 23-28 in the coming weeks and that may be it for the long term. Daily chart wants to see a spank down right now today may have started it by the looks of it.
thanks KS, I am staying nibble as always and protecting profits. I don't see much else for now worth bottom scalping, everything I track is at 52-w highs, etc... no real idea to chase that...
Deletein follow up to my first comment about how Oil is reacting less and less to Bernanke's speeches, I did a little historical comparison to how USO has reacted.
ReplyDeleteSee this chart:
http://eatlovetrade.blogspot.com/2013/03/the-tired-bull-short-commodities-on-qe.html
Interesting but the run from the July bottom and higher is more due to Draghi pledging support for the euro and the Fed's QE3 Infinity announcement, so oil ran from 29 to 36. Then QE4 Infinity and Beyond, that replaced Opeation Twist with outright purchases was the December meeting but traders knew that was coming so that is the rally from 31 to 36. So it may be due to Fed pumps. Nice chart and QE is likely losing an effect.
DeleteTotally agree. Causation for the moves in oil can't be fully attributed to fed intervention - i did my best in a few minutes to try and recall what was going on at those moments in time. Working against oil recently has been a higher us dollar too.
DeleteKS, love your website, you've attracted many knowledge traders. Thanks to everyone willing to share their wisdom and thoughts about today's market. It is very difficult to trade with Fed's hand on market. I am still learning and waiting for SOX to roll over. Dunno how high can it climb..
ReplyDeleteYep, SOX jumped today recovering from the three-day slide. Its filling a gap at 432-434.
DeleteVery important to see FEDEX and CAT lowering forecasts, lower revs etc. Those are the true indicators of our economy. Meanwhile the FED's smoke and mirrors -aka money printing- continues, while business are not running as they should. this will end bad...
ReplyDeleteArnie, are you adding shorts again at today's levels?
ReplyDelete