Thursday, June 13, 2013

Keystone's Midday Market Action 6/13/13

It is hard to keep up with the market theatrics. Traders are staggering around with eyes half open from watching the Asian markets overnight. The dollar/yen drops through 95, even dropping under 94 briefly, which created a large -6.4% sell off in the Tokyo Nikkei index. The broader Topix lost -4.8%.  Asia in general was sold off. The Shanghai index coughs up -2.8%. The dollar/yen chart posted this morning shows the recovery occurring before the U.S. open that sends the S&P futures and SPX higher to begin the day. The dollar/yen is now printing 94.17 threatening the 94 level once again; a loss of 94 and the broad indexes will turn negative. Markets are moving flat trying to make sense of the overnight developments. Abenomics is in the emergency room right now receiving treatment. The central bankers have created confusion among asset relationships. Price discovery is lost.  No one truly knows what any asset class is actually worth due to all the money printing and market intervention.

Retail Sales were better than expected. Markets typically do not bottom on Wednesday's and large down days mid-week typically lead to lower lows on Thursday which has occurred this morning. The recent market selling hints that the smart long traders this year, holding bags of money, are taking their chips off the table and leaving for the summer. Any fund that is up over 10% this year with not even half of the year complete would be foolish to not take the money and run avoiding these current market machinations. If this 'get outta Dodge' behavior permeates the markets, a steady downward bias may develop for equities. The recent higher volatility creates a trader's heaven. The wider point swings allow for more day trading and a more active trading environment overall; far better than the low volatility market action through May. The higher volatility creates the larger and larger intraday and day-to-day point swings. Just wait until the VIX starts printing above 20; that is when the real fun begins. Key economic bellwether DD lowered guidance this morning. Chemicals, plastics, paints and resins are the building blocks of all recoveries.

Utilities are puking right now with UTIL at 476.40, firmly below the bull-bear lines at 480.94 and 481.39, keeping the bears in charge despite the buoyancy in the broad indexes. The 8 MA is under the 34 MA on the SPX 30-minute chart and the SPX is under the 60-minute chart both signaling bearish markets for the hours ahead so watch these metrics closely. Pay attention to the semiconductors moving forward. Keystone has been trading in and out of SSG, the inverse 2X ETF that shorts the semi's, but it is a thinly-traded vehicle. SOX 455.50 is a key bull-bear line in the sand as identified by Keybot the Quant, Keystone's trading algorithm, and the broad indexes will sell off strongly if SOX loses 455.50 (now at 461.45 printing a LOD at 456.50 today only one point from creating market mayhem). VIX drops today to 17.66 which creates the slight lift in equities but the overall bearish volatility trend continues. TRIN is 1.01 dead neutral refusing to pick a side today. Thus, watch the TRIN closely since a move under one will give the bulls the all-clear for today while a move above one will give the nod to the bears and another leg down in equities will begin. Watch the SPX 50-day MA at 1611.81.  Price failed at the opening bell but recovered. This dance is likely not over and the 50-day MA is a key market indicator for the path forward. Bulls win above 1612. Bears win under 1612. The 10-year yield is 2.19% off the 2.24% high yesterday.

Note Added 11:53 AM:  Today's action is uneventful so far. Trader's are too sleepy from watching Japan and Asia all night long. TRIN is 1.04 continuing to refuse to pick a side today. Dollar/yen is 94.33 moving up off the lows near 94 so the SPX moves higher a few handles. SPX is at 1618.44, with a HOD at 1619.59. The bulls win the initial fight for the 50-day MA at 1611.96 with a bounce after the opening bell. Bulls want the TRIN under one and the dollar/yen to continue higher to 94.40, 94.50 and higher. Bears want the TRIN above one and the dollar/yen to move lower to 94.20, 94.10 and lose the 94 level which will send the equity markets into a tail spin. Until a side is selected, the markets will meander sideways. Keystone took profits on the overnight SPXL trade exiting the position.

Note Added 1:20 PM:  Banzai!! The dollar/yen runs higher from the 94.33 in the last update to 94.83 so the broad indexes run higher printing near the highs of the day. The BOJ cranks up the printing presses bashing the yen, creating the higher dollar/yen, and higher equities. The Fed also chimes in with a strong POMO pump today. TRIN is 1.03 continuing to sit on the fence today and not provide its upside approval. VIX leaks lower all day long now at 16.95 dropping under 17 providing bull fuel today. UTIL moves above both 480.94 and 481.39 which provides bull fuel and places Keybot the Quant in position to whipsaw long, however, Keybot likely wants to see SPX 1638 today to commit to the long side again. Watch UTIL 481.39; now printing 481.59.

Note Added 1:52 PM:  UTIL is flirting around 481.39, on the undersideso the drama continues. Dollar/yen 94.71. VIX 17.12. TRIN 1.06; neutral but leaning bearish. Keystone bot FRO, a very dangerous and speculative shipping play, opening a new long position. FRO is showing attractive positive divergence but it may need additional time to base.

Note Added 2:06 PM:  UTIL is now back above 481.39 at 481.47. Dollar/yen is at 94.92 providing the further goose higher for equities. SPX is now testing the strong 1626-1627 resistance. Bounce or die. The 200 EMA on the 60-minute chart is 1629 so if the bulls regain this level the entire complexion of the markets will change in favor of the bulls (reference this morning's chart).

Note Added 3:06 PM:  Dollar/yen is over 95 to 95.06. Say no more. The weak yen continues to drive equities higher today with new highs printing. The SPX moves up through the strong 1626-1627 resistance, and then through the 200 EMA at 1629.01 signaling bullish markets for the hours ahead. The 8 MA just crossed up through the 34 MA on the 30-minute chart signaling bullish markets ahead. Market bears must reverse the positivity in this final hour or the bulls will likely run with the ball for a few days. UTIL is 482.40 on the bull side. VIX is under 17. TRIN remains neutral today at 1.02. The higher dollar/yen today and higher utilities creates the bull recovery rally.

Note Added 3:18 PM:  SPX 1634 is the next strong resistance. Dollar/yen 95.07 so equities stay elevated through the close if dollar/yen stays above 95. UTIL is 482.39 exactly one point above danger.


  1. Wait, where is the destruction!! Where did everyone go on the fake move up and then the collapse??? No one can admit they were wrong??? Where is the red screen and the further moves down...40 comments yesterday and not one today??? LOL

    1. Anon, remember now, you highlight all the extra folks commenting on the down days, however, you show up as well, at the same time, commenting about them commenting.

    2. Hold your breath Anon, this move up doesn't have an impulsive structure.
      1626 or 1632 might be the up-limits and at least one test in the 1595-1605 is due today or tomorrow!

      Don't rush being so bullish yet cause we're not yet out of the woods ....
      today is a high POMO day ?
      ok, see maybe you won't be disappointed until the end of the day ... might be the message of the FED to the market not to associate big POMO days with market up, thus creating some "a la dog's Pavlov" bias ... big pomo = market up / small/no pomo - market down.
      Don't jump to conclusions, a test at 1590's-1600's is due today or tomorrow.


    3. The 20-day SMA is curling over and turning down. That's hardly bullish for the days ahead.

      Any pops are likely to be short-lived. It's the summer of 2007 all over again. I'd love to see some violent swings both ways.

      The blog host keeps a clean house. Wipe your feet before you come in. Tracking mud in from outside is bad manners.


  2. KS, you see, after you took profit on SPXL, spx goes higher, may be if you hold it longer, market will meander sideways :) lol

    1. Yep, that is funny, it always does seem that way. UTIL is up to 482 providing strength for the bulls today.

  3. Actually anon I went long yesterday and explained my reasoning why, and am delighted with green board. I made $ on the swings up and down this week. I expect the gap around 1640 to get filled at a minimum, will assess things if SPX blows past 1645. A classic short-covering rally may be on tap. Resistance expected at 1626. $UTIL staged a classic reversal day, cleared 481 and I doubt it looks back now that it double-bottomed. The bullish wedge KS pointed out this a.m. is in play.
    We also have to aware of the money flow from the periphery to the core. Hot money is exiting emerging markets, where to move it next? The core looks safer than the periphery.... this could be one driver of an SPX move to 1720.

    1. Yep, UTIL now at 482 so it is helping the bulls today, so far. Dollar/yen up to 94.83 from near 94 even provides the bull fuel as well. UTIL 481.39 is perhaps the key number to watch this afternoon.

  4. much unexpected up day today, but POMO is $34B today..., shouldn't go much above 1640 or the bears can forget about more downside. I know I've been calling mid 1500s all the time, but at the end the market decides, I am just trying to extrapolate...

    1. Well at least you fess up to being wrong...thats a good trait, most sore losers here run away

  5. I have been here when market is down. I just find it amazing that many of you disappear when your bear calls and TA are completely wrong. KS said beware of any "good news" as that would be a head fake and market would head lower. Keybot still short?? I was the first to post today because you all were hiding under your rocks, you could not bare to show your downside, crash, short BS. Its just hysterical that you are all gone when the market rises, and then come out to defend against me. A whipsaw? Still have downside potential KS? Please lol.

    1. maybe this thing (more comments versus less comments) it's a sign of the strong fracture between the reality of stocks and the real economical and social reality.

      people react when they see an approach more accurate to REAL reality, not the HFT's reality and the POMO free money reality.

      ever thought of that ?
      it's just social psychology, not bears and bulls. it's psychology.

      There's a big and rising gap between the main street and the wall street realities. And that some day will crack..


    2. Why so much hate? You seem like an intense kind of person. Why don't you help us out here? Add meaningful information, advice, interpretation, or just inspired speculation - that's fun. Its sort of stupid to merely make infrequent attendance musings.

  6. one more proof that market is heavily manipulated ...

    10 minutes before the closing bell and this appears as breaking news on marketwatch ... this kind of things makes me sick .... :(


    Fed to say taper not sign of rate hike: Hilsenrath


    Fed to stress taper not end of QE: Hilsenrath


    1. I am with you V. The Fed $$ Policy is just so heart-breaking for a lot of bears like myself. I guess I have to think about going long tomorrow:(

    2. it's not about bulls and bears, it's about market as a social game that lost it's main component : freedom.
      and this is a very big problem.


  7. KS - when does Keybot flips to long?

  8. I think at 180 points you can safely say flip long, but watch for profit taking as that's what people do when they make money..;)

  9. sold my long SPXL at SPX 1638. There will be other opportunities long and short tomorrow. SPX might fill the gap at 1640 at the open or it may backtest support. meanwhile JO and WLT may have finally bottomed... I caught the knife too early on both.

  10. The Bull so strong and stand out, it can just turn everything around in one day! WoW!

  11. @ Anon Bulls, you guys are so full of S! Where were you yesterday pumping when the markets were going down? I asked where the dip buyers where, hoping one of you bulls would at least show up and do some pumping, giving yourselves some credibility . But no, you trolls are such bad traders, probably hiding in your closets quaking with fear. LOL.
    By the looks of it, I and few others here profited nicely, while you were hiding in your closets.

  12. KS,

    Do you have any comments with respect to the SPX/VIX ratio?

    On a weekly chart, it appears to be rolling over, while the SPX has not yet succumbed. Perhaps this could be a leading indicator to a drop in the SPX.


  13. V, KS, or Arnie,
    Do you think there's still more downside to spx?
    After Fed announced right b4 market close today that taper not sign of rate hike, stay committed to low rates, and not an end to QE. Fed tries to calm market rate fears, this seems to change our prediction for spx to correct to 1580s.
    FOMC on 6/18 and 6/19 may bring spx up to 1720s.
    How's your wave count?
    Are we still in int. 4?
    Should we start considering going long?
    Thank you.

    1. the week before the OPEX usually is weirder that other weeks and add this thing to the possibility that we are in int.4 or in wave 4 of int.3 (still).

      it's an undetermined territory between 1643-1646 and 1595-1598.
      don't be too surprised if tomorrow at the end of the day it will be down.
      I've said it previously: if it's going simply down, it's simple. If it's going up one more time (like it did on Thursday) it will be more complicated to interpret, not imposible, only more complicated.

      I've also said that there is a risk to go to the upside with a target of 1665-1670 (if it's a terminal phase of B of int 4 - followed by a C down to make it's target) or to go to new highs soon (1690-1720) if it started wave 5 of int.3 (and if what we have seen was simply a wave 4 of int.2 from nov'12). It's also worth to mention that the cash market (not futures) respected the november uptrend channel (yesterday at 1606-1607).

      On Friday follow if 1640-1645 is strongly broken to the upside and after that study the market's behaviour in the 1660-1670 area (to determine if there's the peak of B of int 4 OR if there's a stronger wave III of 5 of int.3 to take us to new highs in the week prior to FED's meeting and OPEX on Friday).
      On Thursday it might hypothetically have been wave I of wave 5 of int 3 and it finished overbought on 60 min and lower timeframes.
      That requires a sideways / or a lower potential wave II of 5 of int 3 on Friday, prior to US cash market or during the US mk open hours.
      If short, use this correction to lower the level of/eliminate the shorts on break-even or profit if you can.
      If long behave in a nimble way and keep a hawk-eye on the mentioned level 1660's-1670's to determine if that's a B peak of int 4 or if that's a wave III of 5 of int.3.

      If it's a B it will stuck in the 1660-1668 area and will make on the 5 and 15 min charts topping sturctures.

      If it's a wave III of 5 of int 3. it will not give a damn of this area (for potential B peak of int 4) and it will go to 1675-1680 without an eye-blink.

      anyway, as a good advice :
      - keep some shorts if you go long. "Some" doesn't mean 40-50% of total, "some" means an assuring quantity that if it's losing value (due to strong up trend) it will not hurt you much. Something like an assurance. Let's say 15-20%. Also keep cash 35-40-45%. Might help in a great way if something bad happens. Get long on the market with maximum 30-35% of portfolio and ONLY if the market is strongly breaking 1642-1643 (there is a resistence of this down channel - breaking this resistence might be an argument for bulls).

      - If short try to lower that level if we get a retracement today. And try to get some longs to add equilibrium to portfolio.

      You have to understand that I can't be more precise than I am because the market stand here in this no-man's-land (1598/1600's - 1644/1646). STRONGLY breaking one way or the other MIGHT tell the direction.

      I played this f***-up market being 50-50% longs and shorts and selling them with profit piece by piece as the market moved up and down.

      Now I only have an insignificant 7% of shorts (taken at 1642) and the rest is cash.

      I have to ask the other Anons here something: do me a favour and shut the f*-up with your negative comments or I'll take a plane to US, come there and kick you in the head until you won't know what's your name anymore !

      Either you add value by your comments, or you stick your mouths in the special place not seen by the sun, ok?

      Thinking is a superior activity to trolling. So, if you express yourself, do it in an intelligent way!


    2. Well said V. Ur an All-Star on this board along with Arnie. Of course, KS is the Superstar for his world class market knowledge and for attracting all this talent. We can definitely ignore the solo anon troll and make some coin based the great content and comments on this blog.

    3. thank you , but I'm not an all-star :)
      I'm just a piece of dirt compared to KS or Caldaro or others that have tons of experience.
      And yesterday even Caldaro was caught - he said that there was a strong downtrend developing and ...ka-boom! ...the market went up! And there are so many people that follow him blindly not even realizing the danger of concentration only on one side of the boat - and that side being freely presented on the internet (so with full access to it!)! You can realize what are the dangers, don't you?
      It takes only 1 or 2 medium to strong fund-managers to follow one "so-called" start-like TA analist (that has many followers) and after that to determine the concentration of puts/calls in the market (according to the TA start :D) and then to induce the opposite move to tahe the "star's followers" money's so easy and no one seems to understand that danger!!!!! And the retailers get f*ed on big amounts of money and they didn't realize what even hit them! That's why everyone should do his homework!
      KS or Caldaro or others are diamonds when it comes to learn the TA tools ! But following blindly, without understanding why (like I saw a few on Caldaro's site) is a huge huge danger!
      So if even the more experienced are caught wrong-footed you can easily understand that I can be wrong and being proud and complacent and full of self-sufficiency does not help me at all.
      but thank you.


    4. also:
      continue to watch a forming bearish gartley !
      target for final point 5 before a potential break-down of the pattern: 1658.40 - 1668.21 (depending on where is point 1 of the formation : at 1687 or 1674).



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  15. if after the bullish engulfing painted yesterday when I leaned long on S&P 500 the market reverses today I don't know what I'm going to do ... I'll just take my money and never trade again!
    this market is weird!
    up today , down tomorrow, up the day after tomorrow, down after that ....

  16. Keep watching dollar/yen now at 95.00-ish, so higher means higher stocks, and lower means lower stocks. Also watch UTIL 481.39 for Friday, if utes stay above the bulls are fine today, however, 488.48 is key at the closing bell, so bulls must steadily pump utilities higher all day long on Friday, that will tell you that the bulls have legs, but, if the utes are weak on Friday, and UTIL does not close above 488.48, this will set the market bears up for next week.

    The WSJ Hilsenrath article pumped the markets Thursday afternoon.

    Keybot should flip long at the open today (Friday), as long as the SPX is moving higher.


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