Wednesday, May 29, 2013

Keystone's Midday Market Action 5/29/13

The SPX loses the 1653 support out of the gate so the test of 1649 support came quickly, then that failed. The dollar/yen just dropped under 101 so the stronger yen creates lower equities. TRIN is collapsing, surprisingly, to 0.45, which is typically uber bullish. This low TRIN number matches the action during the April and February market sell offs. Within one to two days later the TRIN spiked to 3 or higher and signaled a market bottom so hold on to your hats for the remainder of the week, it may be a bumpy and intense ride.

The 8 MA fell under the 34 MA signaling bearish markets for the hours ahead. VIX is 15.55 near the highs of the day. The elevated volatility will create wilder price moves up and down. Copper and oil are weak not indicating a robust economy. The IMF and OECD downgraded Europe's prospects moving forward. China is lowering expectations. Gold and silver are higher. UTIL is printing 482.40 less than two points from the UTIL 480.67 that will create a whoosh lower. The algo's should kick in with sell programs at UTIL 480-481 so the bulls are starting to lose their grip. The bears are pushing hard today. If UTIL 481 fails, the push lower will become much easier with the broad indexes moving far lower. SPX support below is 1639.28 (20-day MA), 1636 (last week's low 1635.53) and 1634. The 20-day MA is finally receiving the respect it deserves so the action in this 1639-1640 area is important. The LOD thus far is 1640.05 bouncing from the 20-day MA on the first attempt.

Note Added 11:43 AM:  The UTIL firm bull-bear line in the sand (identified by Keybot) is 480.64. Price is now 480.65. This test is huge for markets. Bulls have to bounce UTIL immediately or they will lose control of the markets. If this level fails, the day will likely become very ugly. Bounce or die.

Note Added 11:47 AM:  Bounce. UTIL 481.10. Bulls pull a handkerchief from a pants pocket to dab the beads of sweat on the forehead. A low was printed at 480.23 for UTIL so failure occurred but resulted in an immediate bounce. Watch for further tests of this critical level today. Dollar/yen 100.94.

Note Added 1:46 PM:  Dollar/yen 101.07 up from the sub 101 numbers so the weaker yen moves equities higher in these central banker-controlled markets. The SPX recovers and is now testing the all-important 1649-1650 resistance again. VIX is 14.84 dropping from the 15+ numbers so this allows equities to receive buoyancy.  TRIN remains uber low in the bull camp for today at 0.50 also helping the broad indexes recover. UTIL is higher, up to 485.61, well off the lows and away from the 480.64 market failure level. The bears need to keep the SPX under the 1649-1650 support. Also, copper, commodities and volatility remain in the bear camp. The bulls stopped the downward slide with the defense of UTIL 480.64 and now will try to move the SPX above 1649-1650 and also try to bring copper, commodities or volatility back into their camp. The 8 MA remains under the 34 MA on the 30-minute chart signaling bearishness ahead, however, the bulls are curling the 8 MA back to the upside. Bears need to keep the SPX under 1646 to keep the 8 MA moving lower. Traders interpret Rosengren's (Fed) comments as QE-friendly helping the afternoon market recovery.

Note Added 1:58 PM:  SPX 1652.62. So after all of today's excitement thus far, the fight through the 1649-1653 area, described before the opening bell, resumes. The recovery move can be considered a back kiss of the 1649-1653 failure this morning so price should bounce or die from this 1653 level. Bulls win above 1653, bears win below 1653.

Note Added 3:32 PM:  Dollar/yen 101.18. TRIN 0.49. VIX 14.70. UTIL 486.11. SPX stumbles through 1649-1653.

Note Added 3:56 PM:  Dollar/yen 101.21. TRIN 0.49. VIX 14.86. UTIL 485.01. SPX 1649.01 at the bottom of the 1649-1653 range in place for 2 1/2 hours. Slight weakness occurs in the SPX and UTIL into the close as the volatility moves higher.

Note Added 4:03 PM:  SPX closes on the underside of the 1649-1653 S/R gauntlet at 1648.36. Aunt Abigal and Uncle Frank remain worried about their investments. Frank pumped air into the front tire of the 1993 Cavalier and they drove back to the financial manager's office.  The lights remain off and no one answers the phone. They took their entire life savings and placed it into dividend utility stocks three weeks ago like all the pundits and analysts told them to do on television.  But buying UTIL at 538 results in a print today at 485, a drop of -10%, the level that is called a correction. All of a sudden the 4% divvy yield does not appear attractive since it will take 2 1/2 years to simply recover the loss in price over the last three weeks. Now they are confused as to what to do. Abigal and Frank decide to drive back home, hoping the Cavalier does not break down on the parkway, and eat a dinner of franks and beans.

29 comments:

  1. Wedge forming on the daily SPX--lower highs, higher lows, pinching into a triangle that will break big up or down soon. Maybe KS's eclipse window will open wide and the market will fall out and go splat.

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    1. That is interesting Charles, note that the bottom higher lows are created by the support from the 20-day MA, now at 1639.38. So if the 1639 fails, that will immediately lead to last weeks lows and the 1634 support, that failure would send price to the 1620's.

      Wow, the UTIL line in the sand is 480.64 and price is 480.65, this is epic.

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  2. tomorrow's gdp and employment data will mark a turn.
    an U turn after visiting 1590-1620's area - and thus completing the 4th down wave of 5th of 3rd, next being the final part of big 3rd wave - 5th of 5th (until mid June, including the topping pattern).

    V.

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  3. V, what do you see the 5th of 5th wave tells us? Thx!

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  4. 5th of 5th (of 3rd) may very well have failed if it breaks below 1636...

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    1. Arnie, believe me, Caldaro is dead wrong!
      we now are in 'c' wave of 4th of 5th of the 3rd.
      after entering the 1590-1620 area, we will shoot a 5 waves up impulse up to 1700-1710-1720.

      There's no 5th of 5th of 3rd now! This 5th of 5th of 3rd will start in the second part of this Friday or next Monday! It is also linked the momentum to the end-of-month moment.

      The market has to close the monthly spx 500 below the upper BB (aprox. 1622- 1625) or else it will technically signal a thing not too great for bulls(the need of reaching after that the middle-lower BB on monthly charts).

      You'll see , Arnie!
      Or .... You'll see that I'm wrong :D!

      V.

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  5. from 1590...1620 up to 1700-1720 (maximum).

    currently we are in the 'c' wave of a-b-c of 4th wave of big 3rd.
    the 3rd of 3rd peaked at 1687, last week.
    now we are in the 'c' wave of 4th of 3rd and it might end in the 1590-1620 area. It can't go lower than 1590 cause it will get through the lower support line created since the apparition of up-movement from Nov'12.
    after that final 5th of 3rd up to 1700-1720 (a simple 5 up waves).

    and that was the big 3rd that started in november 2012! :)

    V.

    p.s. All I have written here might be wrong if we already are in the 5th of the 5th of the 3rd (as some of ellioticians believe - i.e. Tony Caldaro).
    But I don't think we started yet the 5th of the 5th of the 3rd.... I might be wrong, or not :D ....

    watch tomorrow US gdp and employment data - if there are way too good that might call some more down movement due to elimination of QE necesity... so data too good might induce the inverse effect in the markets ... watch carefully what you're doing tomorrow!

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    1. V,

      You are SOooo confusing!!!

      You might be right, or you might be wrong!!

      Very dubious - all this 5th and abc crap!

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    2. http://jimrogers-investments.blogspot.ro/2013/05/i-do-not-really-want-to-own-equities.html

      read this anon!
      this is more clear than me!

      V.

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  6. Oooops!
    They did it again! :)
    BREAKING
    marketwatch.com
    Moody's cuts Alcoa's rating to "junk grade" of Ba1

    V.

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    1. That is interesting V. AA is a very attractive set up chart-wise. The weekly is building a long base. If the markets experience a sell off it is one of the few stocks that may be a good store of value moving forward longer term. The composite materials have been eating aluminum's lunch and the main killer is the glut of aluminum in China, and now that growth is slowing, that glut becomes larger. The floor at 8 should hold but due to bad news it may be tested again. Possible entry at 7.7-8.2 which would fulfill the 80/20 rule that says the 12 failure should lead to 8. If it falls through 7.7 then the story may be bleak ahead for double A but for now, it appears attractive, lots of sideways, perhaps not gaining a lot but having exposure to limited downside.

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    2. @ KS:

      KS, what other stocks might be directly connected with AA (aluminium producer) ?
      Boeing? or Caterpillar?
      Could we consider as being possible a shock wave from AA to other directly connected stocks during Thursday?

      Thank you.
      V.

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    3. Nope, the AA news will likely have no affect at all. The downgrades typically come late and many times occur after a washing out of the stock has already occurred, which may be the case with AA now.

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  7. KS, that last post of your was H I L A R I O U S! I am still crying tears of laughter!!! omg that was so funny!!!

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    1. Aunt Abby and Uncle Frank made it home but the front tire on the Cavalier lost air again. They will keep trying to get in touch with their financial manager today to find out what to do with the 'safe' utility play. LOL

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  8. KS, Hi !
    I recall your 80s lead to 20s rule, S&P 500 touched 1680 s and came down to these levels. How do rule apply upwards like if exceeds 80 s that leads next 20s (like 1720s) up and if fails next 20s (1620s) down?

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    1. It is a simplistic rule but it is always amazing how it often works out. You really want to see a close above the 8 level so when the SPX went into the 1680's it never closed up there. But a close above 1680 does hint that 1720's would be on tap. But it is only applicable both ways for the tight 80 to 20 move. For example, the close above 1480 led to the 1520's. So eventually, when markets retrace downwards and would drop through 1520 that would lead to the 1480's. The rule does not apply to anything from the 1580 level to the 1520 level. So for right now, watch the 1680's to see if the hint occurs to run to the 1720's, otherwise, wait for the drop through 1620 that would hint that the SPX will venture to the 1580's. The rule works for any dollar or cent increments like 8 would lead to 12, 23.80 would lead to 24.20 and so forth, or a drop through 22 would lead to 18 or a drop through 44.20 would lead to 43.80.

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  9. Dont worry KS, when Abi and Frank get back home the nitrates from the hot dogs and the stress of driving the broken Cavalier will cause Fran to have a heart attack. Abi who already is suffering from several disabilities, will have to sell the car and the hot dog maker to pay for health costs and Franks medical bills. By the time they realize that their UTIl investment is down, they will be buying gold coins on TV with the pennies in the cupboard, and thinking about selling organs like they do in china. All's good. That is unless, the IRS audits them for not wishing things were different. There is always tomorrow's powerball (60 percent goes back to gov from winning amount.

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    1. Yep, that is funny, sadly, the joke in Pennsylvania is that everyone's retirement plan is the Pennsylvania lottery. Contribute a few dollars each week and hope for the best. LOL

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  10. KS, any thoughts on the uber low TRIN all day despite the drop in the markets?

    Thanks, BK

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    1. Yep, BK, you must be telepathic, the TRIN v. SPX comparison is posted this morning (Thursday).

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  11. Hey, what do you think of this...
    http://blogs.marketwatch.com/thetell/2013/05/29/expect-another-pop-before-a-drop-in-stocks-sps-stovall/

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    1. Sam is well-respected and his ideas are always worth considering. So much about trading is time frames that is why you cannot say go long or go short without identifying a time frame. In the near term, the coming days or week or two, markets appear poised for a sell off. This will likely lead to a recovery bounce, perhaps to above 1700, perhaps not. The recovery bounce may only come up to 1650-1680 before the more substantial roll over occurs. So the general idea may be a drop in the SPX down to 1580-1630 over the coming days or week or two, then back up to 1650-1740, then roll over for a long term trend lower for the broad indexes.

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    2. Also do not rule out that the top is in and the indexes simply trend lower from here forward. There are no gaps above that need filled for the SPX, INDU or RUT, so there is no need for price to move higher, although the Nasdaq, COMPQ, did leave a gap above that may need filled.

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  15. ''Within one to two days later the TRIN spiked to 3 or higher and signaled a market bottom so hold on to your hats for the remainder of the week, it may be a bumpy and intense ride.''

    very true KS, very true.
    the period between Thursday and first half of Friday will catch that TRIN at 2 or 3 (bottom marking level).
    I'm ready to rumbleeee :))

    V.
    p.s. Hey, pssst! KS, insecticide needed again KS against bug-spammers! :) Some persons really don't understand some things!!! :)

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    1. KS = kill spammers? :)) LOL!

      V.

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