Tuesday, May 14, 2013

Keystone's Midday Market Action 5/14/13

A 'Tepper Rally' occurs today with the SPX moving up through the 1636 resistance and into the 1640's. The SPX prints a new intraday all-time high at 1647.71 and as shown on the 30-minute chart likely wants to explore this high again today. The 8 MA remains above the 34 MA signaling bullish markets ahead. The dollar/yen is at 102 again. The euro/dollar and dollar basket are flat so the weaker yen helps provide equity lift. The 10-year Treasury yield is 1.92% remaining tame and not running higher with equities.  Copper is takin' the pipe today but equities remain unaffected by weaker commodities. Good news is good news and bad news is good news (since more QE will occur).

Of great interest is volatility jumping higher today; the VIX currently printing 13.11 with a HOD at 13.21.  The VIX 50-day MA is 13.38. The bull-bear line in the sand to watch for the VIX is 13.20 (down from the 13.25 mentioned this morning). So, with both the VIX and SPX up, one of them is wrong. TRIN is 0.74 so say no more, the bulls have the day in hand and the long streak of consecutive days of very low TRIN numbers continues. The bulls are running and continuing the streak of up Tuesday's. SPX support below is 1646, 1645.50, 1642, 1640, 1639, 1634-1636, 1626, 1618, 1614 and 1597-1598. Here's the new all-time high print again, now at 1648.63.

Note Added 1:45 PM:  TRIN 0.69 with LOD at 0.59. VIX drops from the 13.11 back under 13, now at 12.79. The 10-year yield moves up to 1.96%. The dollar/yen is printing new highs now well above 102 at 102.38.  The weaker yen, higher yields, lower volatility and lower TRIN all reinforce the Tepper Rally today. The SPX prints another new all-time high at 1649.71 at 12:20 PM. Today is a demoralizing rally for the shorts. Keystone's call has been wrong on a stronger pull back in equities over the last three months, so far.  The individual peaks and sell offs have been easy enough to call with the negative divergence but the markets are not permitted to fully correct with all the central banker easing in place. Keybot the Quant remains long. Today's momo may lead to a couple-three days more of sideways buoyancy.  The RSI on the daily chart is overbot now so the next two days will show if the RSI has further oomph, or not, and if the much-needed Godot market correction, finally appears. VIX 13.20 is key.

Note Added 2:11 PM:  TRIN 0.70. VIX 12.86. The 10-year yield is 1.95%. The dollar/yen is 102.20 (slight leak lower). Note that the parameters are relatively the same except for the dollar/yen with the slight leak lower. The SPX slips a couple handles. It is easy to see the direct market correlation with the BOJ easing. Dollar/yen (weaker yen) up = equities up and dollar/yen (stronger yen) down = equities down. Traders continue to run into XLI and XLB dubbing industrials and matedrials as the next sectors to pump higher. Tech is moving only in line with the market today. AAPL falls about seven bucks over the last one-half hour.

Note Added 2:27 PM:  The market oddness continues. AAPL is now down to 442 dropping from 452, ten bucks, in 45 minutes time, -2.2%. TRIN 0.72. Dollar/yen 102.24. VIX 12.86. SPX 1647. Crude oil is down towards 94 but markets do not care about weaker commodities.

Note Added 2:51 PM:  The dollar is near 83.6 hinting at a breakout higher with the two-leg bull pattern. Type 'USD' into the search box to bring up the 5/10/13 chart that shows this pattern for the dollar which would target 86. This would slap commodities silly. Lots of twists and turns occurring in the ongoing market drama. TRIN is 0.69 so say no more, bulls are fine. VIX stuck at 12.84. 10-year is 1.95%. Dollar/yen 102.20. SPX 1646. Markets slide sideways.

Note Added 3:55 PM:  More melt-up.  SPX new all-time high 1651.10. The 10-year yield is now running higher at 1.97%. Dollar/yen 102.25.  TRIN uber low 0.64. VIX 12.77. Volume is below average as usual for an up day.


  1. Hey Arnie, now that weve broken through 1640, do you have a revised view on the beginning of the 4 or do you just think were in the + or - 10 range for the 1640 target?

    Thanks, BK

  2. arnie, are you scaling in more sds today?

    1. Sorry for late reply: I am traveling currently. By breaking above 1635 the SPX now targets 1675 +\- 10. Imho. I will add SDS there. I am net short at about 1625 now. Adding shorts at 1675 will bring it to ~1650. I then expect a 5% correction to ~1600 before the next leg up to mid 1700s. Note that I am 75% of my account long now, slowly selling my long positions into market strength.

  3. I would scale in here with some shorts considering what goes up must come down. It looks as though here that from the charts, maybe the market goes down. Then again, the divergence may make it go up. The FC indicator is showing an interval change of 1/2. That's the flip coin indicator.

  4. I'm curious about the european GDP figures ... might surprise some bulls :)!


  5. The Aussie dollar dived to test an up-trend-line that goes back to 2011. Back-tested the 1.00 break. Interesting.

  6. Hey traders (so, not investors, traders!),

    I've got one theory: some financially powerful folks in the market are trying (succesfully!) to create behavioral patters.

    I'm sure you have observed today the 13th (!) happy bullish Tuesday ! Rationally considering that you cannot get a consistent conclusion between a certain day of the week and a market sentiment inclination I'm just saying to watch put for those fully bullish Tuesdays... one day we will experience a "Ruby Tuesday" not so bullish!
    Consider yourself informed, not averted :)!

  7. KS or V,
    Do you think the Tepper talks really keep investors pumping into stocks? Tepper must know the bull can keep going, he said that "Investors should not be concerned about the Federal Reserve winding down its bond-buying program too soon and the one who bet against stocks better have a shovel to get themselves out of the grave"...and the economy is doing OK...blah blah blah..

    1. Anon,
      this Tempper guy is weird to me, to be so bullish NOW after 4 years of stocks rise!
      God d*mn it, I should have my IQ below 90 points to believe him! In 2009, yes !, at that moment the stocks were cheap (and maybe not even than, considering the moving averages on decades, considering the P/E ratio and others) , now they are expensive like hell!
      If some 'wise' guy appears at TV and tells me what should I do with my money - that means that this is what should I do with them? Since when the average people 'tycooned' themselves by watching TV and investing in stocks???? I remeber that WEEKS before the 2009 crash everybody at TV was shouting how great the future is and how wise is to buy stocks NOW!
      This doesn't mean shorting the stocks (until a downtrend appears) - that would be even more stupid!
      But this so called 'bull-market' is counterfeit!
      I'm not a socialist, but the sign of the "better times" should be when the life standard rises for the average little man, when salary rises, when there are jobs and the unemployment gets below 5% (!) - those are good times.
      Not now with a counterfeit bull market fed by the FED ... I thought that those FED are some wise guys...they are not! My cat is even wisen that those! (I have a cat :D).
      If your monetary transmission mechanism is broke, and you, being FED, pump money into the system but those money don't get to SME's (small and medium enterprises) and to the little guy by lending , but those funds get to the casino-stocks markets why continue like that?????
      Look, I have a piece of advice for Bennie the Pumper, advice that was inspired by my cat ... if my cat gets too fat, it won't catch mice, or flies or stuff like that :) ... if the top 10 banks get too fat, they won't be interested in lending the real economy - they will get their dosh from the FED, play it in the stocks and derivatives and nothing will change!
      The FED should cut the first 10 banks in US in 10 parts each bank in order to rise the level of competitiveness between them by doing basic business (lending and deposits). You recall the Glass-Steagal Act, don't you?

      Cut the fat cats in 10 pieces each and send them to catch mice! :)
      Will the FED do that?
      Why ?
      Because the top 5-10 banks in US ESTABLISHED FED!!! Will the child cut his parents in pieces?
      The FED will not cut the top 10 banks but will continue to pamper them in a way or another way.
      And the circus will continue.
      I'm not an american, but do you know how I see USA from here, from eastern Europe?
      Like a person that had a lifestyle so lavish that got sick of diabetes.
      Resolve your economic "pancreas problems", ask FED to cut those top banks in smaller pieces in order to oblige them to do basic business-lending!
      Your economy is too big and it's affecting the whole world - you're the gorilla in the room, so to speak.
      Resolve your problems! Your problems are our problems in this global economy!

  8. It's really very simple. We're in a bull market. And whenever there's a bull market, lots of people try to find reasons why a precipice is around the corner. But, it usually goes on, rewarding people who buy dips, until it starts to hurt. Then, it's time to reevaluate.

    Personally, I don't worry about why we're in a bull market, I just look at the daily closes. Lucky for a lot of people, Keybot has been doing something very similar.

    1. Yes, you're right, I just tried a more fundamental view on the situation.


    2. Yup, this is a 3rd of a 3rd wave! Straight up pretty much for 6 months now! Perma bears short this all the way to the top, "cause it has to go down...", then throw in the towel close to the top and pooooffff.

      People shoukd just let their emotions and conviction go, look at the charts objectively, see that it's up, up, up and trade accordingly. Nothing else matters.


  9. This board has gone insane. All the regulars including KS are probably down big time or losing their shirts. The TA and charting on this site spells diaster if you followed it since November last year. KS, what happened to Cyrus and the fiscal cliff? Admit it, you have all been wrong wrong wrong and dangerously wrong.

  10. There are a lot of anonymous posters here, but, in response to the last anonymous above, if you look at KS's short term trades, you'll see that they're up 23.6% ytd. And I don't know what Keybot has done as of today, but it's certainly up a few percentage points. If such performance qualifies as losing one's shirt, I can't wait to misplace mine.

  11. Lots of spirited comments which is excellent. Yep, Keystone has been looking for a top Feb-present. The peaks are easy enough to call, and were all identified but instead of the markets correcting, the dip-buyers are enthusiastic and taking the central banker money to pump things higher. These are not regular markets. As mentioned a few times, the Fed and BOJ is like having a third man on the field. So, simply roll with the flow. Keystone is down on his index shorts. Emotions always run high, on both sides, as markets peak. The mini-thrusts that occur continue to add near-term oomph. Patience is probably the word of the day, if short. The rolling tops typically take 2 or 3 months, this market keeps running higher since February. The broad indexes behave more like commodities each day since the central banker money creates this environment. Will be interesting to see if the weak copper and commodities every have an effect on the broad indexes which it should.

    The markets continue to be remindful of October 2007. The feeling that markets would go up each day non-stop, and they did, like now, and bulls pounding the desk that it will only rocket higher from here. It may, however, the short pain is probably worth enduring a bit more to see how it plays out. Copper and commodities all point to a slower global economic environment, Asia continues to trail off. European GDP's are low, the recession and depressions continue across the pond. Germany even disappoints and they are expected to lead Europe. European attitudes are very gloomy as well. But any negativity has no affect on markets, yet. One outcome would be a quick and sudden move that surprises all. Bulls are very comfortable now and it is doubtful that anyone is thinking about paring back positions.

    1. @ KS:
      ''One outcome would be a quick and sudden move that surprises all."

      maybe such a move appears in Minutes.


Note: Only a member of this blog may post a comment.