Tuesday, May 28, 2013

Keystone's Midday Market Action 5/28/13

The broad indexes reopen after the holiday weekend and explode higher on the weaker yen. Today would be the 20th consecutive up Tuesday. The dollar/yen is up near 102.50 bouncing from 101.00 last evening, hence, up markets. Consumer Confidence prints a 76 handle not seen since early 2008 adding further upside fuel. Interestingly, the copper and volatility moves are muted. Watch VIX 13.13 and JJC 41.60 today. Both remain in the bear camp despite the big rally on tap. The Dow Industrials are up over 200 points above 15.5K.

Watch to see if the SPX can print a new closing high above 1669.18 today, or not. The 8 MA is above the 34 MA again signaling bullish markets for the hours ahead.  Keybot the Quant remains short, for now, and is looking for the bulls to regain VIX 13.13 or JJC 41.60 before flipping back to the long side. The 10-year yield jumps to 2.10%, the highest levels in one yearfilling the gap from April 2012. The Japan 10-year JGB is up in the 0.90's now moving towards 1.00%. The low TRIN at 0.76 provides the nod to the bulls today. Despite the strong open, the markets remain mixed and erratic.

Note Added 11:03 AM:  Wild action today. The 10-year is now 2.13%. SPX drops under the all-time closing high at 1669.18. VIX 13.77.  JJC 41.15. TRIN 0.75. The RUT prints over 1K again. The utilities sector, UTIL, is weak and the daily chart is continuing with the bear flag pattern discussed a week or two ago. EXC utility is beaten down -7% today. Higher yields hurt utes.  Dollar/yen 102.16 dropping from the 102.50-ish a short while ago, hence, equities leak lower. The direct relationship of the BOJ to equities is obvious. The BOJ and Fed are the markets. Up dollar/yen = weaker yen = higher equities and down dollar/yen = stronger yen = lower equities. Very simply, these are central banker-controlled markets.

Note Added 11:46 AM:  SPX now testing 1666 support. Dollar/yen leaking lower, now at 102.06, so markets leak a bit lower. VIX 13.86 at today's HOD. For such a strong up day, the VIX should have collapsed under 13, instead, it moves higher as the day moves along now flat on the day overall. JJC printing the LOD at 41.07 so volatility and copper are not yet jumping on the bull bus. TRIN 0.71. European markets finished higher. The CPC at 1.26 and NYMO at -40, highlighted on the weekend, appear to have created the near-term bottom, however, a couple days need to play out to sort out the mixed market signals.

Note Added 12:07 PM:  SPX loses 1666 support so bears will try to hold this level as resistance moving forward.

Note Added 2:02 PM:  JJC drops under 41 becoming more bearish moving away from the 41.60 bull-bear line in the sand. Ditto volatility with the VIX now above 14 moving higher to 14.38. Copper and volatility were a tell on today's action as described this morning. TRIN 0.82 remaining bull favorable but up off the lows. Dollar/yen is flat across the 102.20-ish level.  SPX is 1657 moving between the key S/R range at 1649-1650 on the underside and 1666 on the top side. The 8 MA has turned sharply downwards on the 30-minute chart setting up a potential move back to a bearish 8/34 MA cross either at the close today or tomorrow. For now, however, the 8 MA is above the 34 MA continuing to signal bullishness for the hours ahead. Volume is below average today, as usual for an up day, running at about 70% of a day's average expected volume. Some traders must have had one too many beverages on the weekend.

Note Added 5/29/13 at 4:35 AM: Dollar/yen drops under 102 to 101.65 so the U.S. futures are lower with the S&P's -6. The central bankers are the markets. Copper and oil weaker. Gold and silver higher. The 10-year yield is 2.19%; this will require further study this morning.

27 comments:

  1. Oh dear lord where have all the children gone? Keybot remains short? Apple pie must have been laced with acid. I really hope their is no one leaning out a open window right now.

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  2. I agree. Strong open? 200 points is more than that. Come on can one of you confess how wrong you have been?

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  3. Keybot rode the upside rally from mid-April. Keystone's negative call on markets continues to be wrong for this year. The bounce today is interesting since it seems like it would be a no-brainer for Keybot to flip long today, and it still may, but it likely needs to see VIX 13.13 or JJC 41.60 so those are a couple things to watch today that would confirm the upside move. Watch dollar/yen now at 102.34 since the weaker yen is the market driver. Bears want lower dollar/yen, bulls want higher dollar/yen.

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  4. if 1676.5 ( 76.8% fibo retracement) that's 1673.5 on ES is not strongly and confidently braked to the upside and held after that => 1624...1590 is next today and during asian/european session after US session today.

    the stake here is this one:
    a. if 1676.5 broke strongly to the upside => wave 4 of 5 of 3rd is ended and now we live the final part of 5th of 5th of 3rd (target 1690-1730 - if it trunctes/extendes).
    OR:
    b. if 1676.5 is not broke and falls -> that would be the C wave of 4th of 5th of 3rd and has a target between 1624...1590.

    So, what should it be?
    Oh Great Masters of HFT, decide today! Lol! :D - p.s. almost 70% of the volumes of the daily market is executed by HFT's , not humans, so... figure that out!


    Cheers,
    V.

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    1. So, the gREAT mASTERS of HFT's have decided :) lol ...

      it's b. option => look for 1624....1590 during first 2-3 hours of US trading during today's session.

      :)

      V.

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  5. The obvious simple minded excuse here is to say "look for a sell off" Well that is obvious. It is obvious even more now that the market may go lower. It's a sell off of unreal highs not anything to do wit any TRIN or VIX. cognitive dissonance is messing with you dear KS.

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    1. @ Anon:
      ''It's a sell off of unreal highs ''

      Can't wait to see what you'll say when the market will get to 1850-2100 in december'13- march'14 ...
      ''cognitive dissonance is messing with you dear KS. ''

      learn to behave, Anon, learn to behave! KS has taught us a lot of things... so be kind and take a silent walk from here :) ...

      V.

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  6. I agree that it's interesting that the majority of comments come out when the markets are moving down, but long uptrend moves with low volatility are extremely profitable and boring to talk about at the same time. Comments are posted when traders see opportunity. In an uptrend, other than "buy the dip" and buy buy buy, what else is there to say?
    I would like to thank KS for keeping this blog so interesting. And kudos to KS for acknowledging being wrong (for the time being) for leaning short. It's not about being wrong or right, it's how one executes their trades in spite of their bias that will make or break them as a trader.
    My trading questions for the day are:... :)
    DID the traders buy the dip? IF they didn't, then we'll get to ride some nice short covering action.
    If the traders bought the dip, then expect some selling around resistance areas.
    cheers, over and out.

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  7. @ trader69:
    ''it's interesting that the majority of comments come out when the markets are moving down''

    And that along with volumes in market. :)
    Up-trend = low volume / down trend = high volume = and that means distribution, not accumulation.

    Simply market psychology ...reflected in volumes, in comments, and so on...

    V.

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  8. KS, first of all: thanks for all the charts, TA etc over the weekend! Impressive pieces of work. IMHO this is either a simple bounce (B-wave) or a 5th of a 5th that may very well NOT make new highs, and hence I am not surprised to see KB on the short side. This is, IMHO, NOT the level to go long... that was mid-April, end-Febr or Jan 2nd.

    I bought more SDS today; closed my TSLA (105) and AMD (4.10) longs, and also bougt more FB (24). I already exited NFLX, DAL, F, MWW, SBUX, S, and others in the weeks prior. I am still long AAPL, DECK, HPQ, MCP, PGH. But as one can notice; I am unwinding many long positions because I don't expect this party to last much longer. Now is NOT the time to become greedy, but smart instead, and cash in those hard earned profits.

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  9. I have to agree you can't have Keybot go short and the market rise 200 points. Sorry something wrong with your artificial intelligence.

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    1. if the bulls don't turn this around real quick then it was simply an OS bounce aka pop-n-drop. KB doesn't react/trade -as far as I understand- to bumps in the road.

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    2. Keybot does what it does all it sees is 1's and 0's. The algo is not designed to catch exact tops and bottoms. Keybot has held position, either long or short, when the SPX has moved as much as 30 handles against its position for the latest trade. Just sit back and enjoy the ride. Keybot may flip long, then again, perhaps the markets will oblige. Note how copper is weaker than this morning and volatility is higher; that is why Keybot did not bite on the long side, at least not yet.

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  10. KS, can't understand why Crude Oil move higher today when we are over supply in the States, it just don't make sense to me. Do you think the Fed mess around with Crude/Brent like they do on the market? Weaker Crude tells us that the economy is not in good shape... please comment. Thanks!

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    1. Oil and copper are higher with gold and silver lower. That is traders that believe in the recovery and the need for oil and copper to fuel all the great economic times they see ahead. As the day moves along the wind is coming out of the sails. WTIC crude has moved flat across the 86-98 range, a 12-point spread, since before Christmas. Watch for the break above the 20-day at 94.89, or below the 50-day MA at 93.58 to see which side receives the nod. Oil is at 95 testing the 20-day MA resistance now.

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    2. @ Anon:
      this Friday OPEC has a meeting and all WTI crude oil traders hope like hell that the arabs will decide the lowering of their oil output in order to sustain the price "attacked" by the US energy boom.

      but... on Friday they will discover that their hopes were all in vain :) ...but shhhh! don't tell anyone! :D!

      V.

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    3. V, you are very funny:)
      You know your posting here is read by millions.
      I'm just thinking if Crude continue to fall, this will weaken market along with VIX above 14 and weak Cu+, then we can get a nice correction to at least
      SPX 1590 area.

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  11. Haha. You Anonymi are hilarious. I challenge any one of you brilliant marketeers to short Keybot since it is programmed so poorly. Or just go bull and go home. Obviously both strategies would not have been nearly as successful as Keybot has been since inception but obviously you all know better.

    BK

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    1. I went against Keybots short move, how could you not? If you walk outside after several days of sun, and say I am going to bet it rains now, and it doesn't, you cannot say 'well IT will" just wait for the precipitation and conditions IT will. And when it begins to get cloudy and drizzle as it did today after 200 points, see, see it started to RAIN. See Keybot said it would. You TA guys are delusional. OF course the market is going to sell off EVENTUALLY. And the 100 point shaving was normal not anything based on TA or TRIN or this or that. LOL.

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    2. It's rather pointless to keep complaining about what nonsense TA is when you haven't contributed any insights yourself. You keep coming back. What does that say about you?

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  12. KS, if you have a chance, could you please give us your insights into day's huge jump in treasury yields (10-year at 2.135 last I looked). There is chatter elsewhere today that it's nothing to do with an improving economy nor with a rotation into stocks. Rather it reflects how unstable things are getting with Japanese bonds and stocks.

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  13. I would like to jump to grumpy Anonymous's defense. His point is quite clear: TA is worthless. But, I don't agree with the claim that he just complains without adding something valuable. It may have passed unnoticed, but grumpy Anonymous has developed a fabulously robust market timing system based on the weather. I don't mean to be presumptuous, grumpy Anonymous, but I feel that your system should be called Meteo Market Meter. Basically, the complexity of its algorithms reduces to the following, blindingly clear strategy: go long after three sunny days. Simple, elegant, and robust. What more could one want from a system. And, since I live in Austin where it never rains, I'm already thinking about which beachfront property on St. Barts I will choose.

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  14. anybody who doesn't use one or a combination of the following: TA, patterns, cyclicals, trendlines, S/R levels, indicators, elliot wave etc is like a blind man stumbling through a nude beach filled with naked hot blonds... missing all the real action.... and doomed to walk into the sea and drown. GL to those who fly blind; the market will have your account for breakfast, lunch and dinner.

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    1. lol.... 200% true, Arnie.

      V.

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  15. Interesting and funny comments by all. Separate the TA from Keybot. Keybot is an algo so it is a mathematical model. Keystone's TA work is highlighted here daily and yes, the Godot top from February through now remains on a milk carton (missing in action), but the coming days and weeks should prove interesting. Typically about 2 or 3 months are taken for a roll over in the markets but this one is at about four months and counting. TA is vitally important. The odd thing with markets now is that the third man is on the field affecting play, the central banker, and mainly the BOJ over the last three months that created the new all-time high in the SPX on the weaker yen. So these money pumps can nullify the projected TA but the charts will adjust and set up again. In years past you simply do not have this type of intervention. The charts will win out, they always do. The pump can only last so long as human psychology kicks in. Watch the dollar/yen, up means up markets, down means down markets.

    Technicals and fundamentals are both important, you cannot trade short term without using technicals and conversely, for investors and long term players that do not want to deal with all the daily drama, they are well served by fundamentals.

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  16. The rupee was at 60.64/67 in early trades as against Thursday’s close Of 60.43/44. Agri Tips

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