Monday, May 27, 2013

Keystone's Holiday Weekend Reconnaissance 5/27/13

Happy Memorial Day everyone. Hopefully, everyone is enjoying a day of relaxation and remembrance. Thank you to all service members (and their families) that gave their lives as well as the Vets that served, and serve, in our military.  China's Xi and Li are more open to slower growth to help reduce pollution and improve the environment. Crude oil is weaker on that news. The Nikkei and broader Topix both drop -3.2% this morning on a stronger yen. The dollar/yen dropped under 101 which also directly sent S&P futures from flat to negative four in a heartbeat. The Fed and BOJ are the markets. Dollar/yen down = equities down and dollar/yen up = equities up.

The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets ahead but, as highlighted previously, the 8 is poised to perform a bullish cross tomorrow morning unless the bears come to play.  The SPX begins at 1650 and the bulls only need to see a smidge of green in the futures before the opening bell and that will light the way higher and confirm a market bounce on tap. The bears need to push under 1637 after the bell to accelerate the downside. A move thorough 1638-1650 is sideways action for Tuesday. VIX 13.13 and JJC 41.73 are key levels affecting market direction negatively right now. If the markets bounce, the bulls need to regain either or both of these levels to prove they have upside juice. If markets bounce but the VIX stays above 13.13 and JJC stays under 41.77, the bulls got nothing and markets will reverse back to the downside. SPX S/R is 1687 (all-time high 1687.18), 1669 (all-time closing high 1669.16), 1666, 1649-1650, 1634, 1626-1627, 1618, 1614 and 1597-1598. May started at 1597.57. The 20-day MA is 1633.71, 200 EMA on the 60-minute is 1622.42 and 50-day MA is 1592.17. All three levels are key.

The CPC and NYMO are at levels where recent market bottoms have occurred, however, the low volume on Friday, and lower volatility, allow for a higher CPC and lower NYMO. The next few days may be epic for markets. Independent on how the markets open tomorrow, Consumer Confidence, one of the key monthly indicators, is released at 10 AM EST and will cause a market pivot, thus, allow the first half hour of trading to play out before a path is set for the day ahead. This initial trading time will also provide insight into the 8/34 MA cross as discussed above. Pay attention to the dollar/yen and the JGB yields. For now, it is time to enjoy more holiday flag-waving, barbecue hot dogs, and of course apple pie.

Note Added 5/28/13 at 5:00 AM:  The dollar/yen jumps above 102 to 102.20 one full point above the 101.20 and tease of 101 last evening. BOJ's Kuroda says 'trust me' which is a signal for a weaker yen so the S&P futures jump to +12 and Dow +103. Dollar/yen higher = yen weaker = equities higher. The BOJ and Fed are the markets. Copper and oil are higher while gold and silver are lower.

Note Added 5/28/13 at 8:02 AM:  TIF beat on earnings maintaining the bullish vibe for today. Dollar/yen remains above 102 so futures remain elevated. S&P's +12.  Dow +104. The 10-year yield is 2.04%.

Note Added 5/28/13 at 9:15 AM:  Dollar/yen 102.10. S&P's +15. Dow +124.  Nasdaq +31. All at the overnight highs. The 10-year yield is 2.05%.


  1. Hey KS,

    At that apple pie if you add a little touch of cinnamon it might just get better... like adding a little bit of melissa M. to yahoo :))))))))))))))) might just make it better. only might :D!



    p.s. Oh, KS! Quick! The insecticide! 2 spamming bugs appeared again! :)

  2. Hey KS, would Keybot require both VIX 13.13 and JJC 41.73 to flip? Also so that we refer to him or her correctly, what gender is Keybot? Im thinking female since women generally tell me they're more rational and less volatile than men.

    Thanks, BK

    1. That is funny BK. Keybot is a robot so no gender. The algo likely only needs one of these parameters to turn bullish to flip to the long side. VIX bull-bear level remains 13.13 but the JJC drops to 41.60 providing the bulls an easier level to achieve. For now, both remain bearish. The SPX HOD is important as well at 1674.21 thus far today so that would need to be exceeded after one of the two parameters above are met. There are other things that need to occur but this provides the general gist of what is going on with Keybot.


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