Wednesday, June 19, 2013

Keystone's Midday Market Action 6/19/13; FOMC Rate Decision, Forecasts and Chairman Bernanke Press Conference

Mortgage Applications are down this morning with the refi's flat. The trend remains lower and the Housing Starts were not impressive yesterday continuing to question the housing recovery. FDX beat on EPS this morning but top line was light like most other companies these days. Shipping is a key bellwether and FDX lowered guidance while saying 3,600 employees are 'leaving voluntarily'. That is a lot of folks, perhaps they were made to walk the plank to help them arrive at the appropriate decision.

Same-o metrics are in place today as recent days. Watch UTIL 488.48 and GTX 4764. UTIL is dropping as trading begins now at 488.92 so today's theatrics begin.  GTX jumps to 4797. Dollar/yen 95.05. TRIN spikes above one helping bears but is drifting back down towards the neutral one, now at 1.15. Yesterday the TRIN closed near the uber low 0.50 so a TRIN above one is needed to relieve the bullish euphoria. Markets may maintain a flat posture today until the Fed this afternoon. Strike up the calliope and begin the parade. The circus main event is 2 PM EST with the Fed statement and Forecasts and then Chairman Bernanke's Press, or rather Desk, Conference begins at 2:30 PM. Markets will pivot on the news and Q&A today. Bernanke purchased fuzzy slippers from WMT last evening since he plans on quietly side-stepping each question to maintain the status quo.

Note Added 9:43 AM:  UTIL bounces off the 488 handle on the first try, now she falls again, 488.87 ...... Bears got nothing unless they push UTIL under 488.48. VIX is above 17.


Note Added 10:07 AM:  UTIL drops under 488.48 for a couple minutes but bounces so the bulls are in control at UTIL 489.21. The short minute charts favor the bounce but the 30-minute and one and 2-hour charts appear to be hinting at some further weakness in UTIL moving forward. GTX 4804. Dollar/yen 95.03. Euro 1.3390. SPX 1649.45. HOD 1652.23 holding under the 62% Fib highlighted on the daily chart at 1652-1654 this morning, so far.

Note Added 11:42 AM:  UTIL keeps teasing 488.48 but remains on the bull side today now at 489.55. Dollar/yen at 95.04. So use these two as the pivots today. Bulls need UTIL to stay above 488.48 and dollar/yen above 95. Bears need UTIL under 448.48 and dollar/yen under 95. For now, markets float sideways. VIX and SPX are both down today so one of them is wrong. TRIN 1.03, neutral. Markets sliding sideways ahead of the Fed. Time for a slice of apple pie.

Note Added 1:44 PM:  Sideways action continues. Yields creep up with 10-year at 2.21%. Dollar/yen 95.17. Euro 1.3410 over 1.34 so the corresponding dollar is weaker which corresponds to traders expecting the Fed to pump the easy money talk. UTIL jumps higher the last 45 minutes now at 490.60 well above 488.48. Since UTIL is moving higher, traders must be expecting the 10-year yield to drop. Utilities will be sold off if yields are on the rise. GTX 4810. Big VIX collapse today from over 17 to under 16 now at 15.87. VIX will continue to create market negativity above 13.75 but the intraday move lower today provides bull fuel. VIX 20-day MA is 15.89 exactly where price is now testing. TRIN 1.03 remaining neutral refusing to favor a side today. The Fed Forecasts and Statement hit in a few minutes and then the Press Conference begins at 2:30 PM. Markets should become volatile. Gather inside the Big Top one and all, the grand main event is about to begin, take your seats.

Note Added 1:59 PM:  UTIL 491.14 the high for the day. SPX 1651. Dollar/yen 95.25.

Note Added 2:02 PM:  The Fed says no change to the purchase program. Markets flat so far. Dollar jumps higher. Gold down. Euro down to 1.3373 as dollar jumps.  Dollar/yen higher 95.66. 10-year yield now hits 2.24%. UTIL jumpy now slipping. Markets need to digest the confusion.

Note Added 2:08 PM:  Markets are selling off, but orderly. TRIN 1.25. UTIL is at 488.31 losing the 488.48, however, Chairman Bernanke is waxing the new money bazooka in the back room that he plans on displaying shortly. Markets should trade wildly up and down for the next hour.

Note Added 2:14 PM:  UTIL recovers above 488.48. TRIN down to 1.00 neutral. Markets recover. This erratic behavior should continue. 10-year yield is 2.26% so it punched through the 2.23% recent high. Watch this closely into the close. VIX drops to 15.55 under its 20-day MA. Dollar/yen to 96.06, a one point move today which is huge for a currency, so the weaker yen helps equities recover. Euro 1.3351 well off its 1.34+ highs today dropping as the dollar rises.

Note Added 2:23 PM:  10-year is 2.28% so utilities drop. UTIL falls under 488.48. Usually, use about 7 to 10 minutes when prices are testing support and resistance to see if they really want to stay at the new level. Minutes ago, UTIL failed but recovered in six minutes. UTIL failed again at 2:18 PM. Looks like she is lost now which should create market negativity. UTIL now under 487 and dropping.

Note Added 2:31 PM:  The 'Desk' Conference begins. SPX 1647. Dow 15274. UTIL 486.82. TRIN 1.03. VIX 15.83. Compare these numbers after the Chairman finishes Q&A.

Note Added 2:53 PM:  SPX drifting lower to 1642.59. The 20-day MA is 1638.72. Price may want to take a look at this support. UTIL 484.21. Watch UTIL 481.15 since this level will open a trap-door in the equities markets. Keystone takes a couple of heart pills as the tension mounts and rolls the defibrillator closer to the computer.

Note Added 3:19 PM:  The markets continue to drop as the Chairman speaks. The stage manager is frantically making hand signals to end the performance but the band plays on. The manager grabs the hook. If Bernanke talks for another ten minutes the SPX will be down another ten points. UTIL is 482.86 well under 488.48 creating market negativity but remaining above the trap-door market trigger at 481.15.

Note Added 3:26 PM:  Euro 1.3279 now under 1.33 after being above 1.34. These currency moves are big. Dollar/yen 96.70. The 10-year yield is 2.32% with a 2.33% high, the highest yield since March 2012, fifteen months ago.

Note Added 3:28 PM:  The Press Conference ends. Fortunately the Chairman was able to walk off the stage and did not get carried off in a stretcher. SPX 1641 so it lost six. Dow 15215 so it lost 60. UTIL 483.97 dropped due to higher yields. TRIN 1.26, bearish. VIX 15.95 up a touch so slightly more bearish than when the talk began.

Note Added 3:42 PM:  UTIL just lost 482, this is getting serious. Place seats in upright position and install helmets. UTIL 481.15 is the number.  UTIL 482.07 ... 481.97 ... 481.93 ... hang on, bulls better pull up on the stick fast or they are going to hit.... 481.85 .....

Note Added 3:46 PM:  Trap-door. UTIL 481.10 is the number. UTIL printing 481.08 now, failure.... 480.99 ... 480.73. Hang on, the markets may collapse into the close, the trap-door just opened.

41 comments:

  1. the expected sideways movement into the 2:30 main act is underway. The first move when the lights go on is often the wrong direction... note that the FDX results are in fact -from a real economic perspective- much more important than the FED-SHOW. But since FDX doesn't deal crack cocaine, aka prints money, the addicts don't care... When I was a child I recalled markets actually moved on real economic news and objective interpretations of earnings from key economic indicator companies like FDX, IBM, etc. But those days are long gone...

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  2. from an EW perspective, what I see developing is most likely and Ending Diagonal, which always resolves lower. But the market is a mess currently, and may as well be that we have a big ABC correction, where A=B=C, and B goes back to mid 1680s, and then C down to 1600s again. Or this whole correction ended at 1598 and bigger 5 to mid 1700s has already started... time will tell.

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    1. :)
      2 daysof upside, no matter to what level and them more downside.

      then in july... happy, happy, joy,joy! until around the mid of month... after 15-23 July ..less "happy, happy, joy, joy" ... moreover a real correction until sept-oct 2013, not 5% , more-like 15-20%... not "5% = childs-play"....

      V.

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  3. UTIL 488.48 and dollar/yen 95.00 are two important pivots today, both are above so the bulls are not worried, yet.

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    1. with or wothout FED's authority in market, in China something strong is coilling... and China is not under FED's authority ...lol :)

      so, the uber-hero on the Barron's, might face destiny soon , with or without QE.

      cause is China goes down hard, I'm not seeing US market ok... US and China are commercially very linked. Not even QE's mother will save the situation.

      V.

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  4. live from 14.30 EST, Bennie, the nimble pumper :)

    http://www.ustream.tv/federalreserve

    V.

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    1. I like the backgroud music previous to the conference :)

      V.

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    2. 'background' ....typo, ...lots of typo today :)
      V.

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  5. Chairman Bernanke wipes the gravy stains from his necktie and prepares to speak in one-half hour. SPX 1650.21. UTIL 490.93. With utilities moving higher, that is telling you traders do not expect yields to climb. The 10-year is buoyant at 2.21% but if utes are not selling off than the expectation is for the 10-year yield to drop. Higher yields will send UTIL quickly and strongly lower.

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  6. Ben Bernanke has risen from the wait staff at South of the Border in Backwater, SC to ruler of the world!!!

    LOL.

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  7. The FED statement starts to have some hawkish inflections - today George and Bullard opposed by vote.
    "downside risks diminished since August", "labor market shows 'further improvement'"
    FOMC: projects unemployment rate at 6.5%-6.8% at the end of 2014

    V.

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  8. Markets are selling off on the initial news minutes ago. Chairman Bernanke is frantically calling the journalists and instructing them on the proper questions to ask in the upcoming Q&A.

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    1. markets are bipolar now... spx surged to previous levels but us 10y bonds kept higher % ....not good at all.
      let's see what Bennie has to say....

      V.

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  9. 10-year yield 2.285%. UTIL under 487. This erratic stuff should continue a while.

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  10. Love my daily read of KSP!

    My Anon-o-bot did not flip last night. This low volume is keeping her steady. It is challenging to design a trading system using old data even using Monte Carlo sim. given the drunken Fed.

    Besides, position sizing is more important than the model.

    I designed the model to keep whipsaws at a min which it has done. It will align with Keybot over the long term but I am hopeful to avoid SOME of the whips.

    To answer an earlier question, I dont have a website. Nor do I aspire to create one.

    I an Engineer who has been trading the markets for 30 years as a hobby.

    I would appreciate if Charles or some else could help me with the fret buzz on my Casino. Had to to a Luthier and he made it worse. :-)










    Dont believe in Divergence
    Dont believe in Elliot
    Dont believe in Fibonacci
    Just believe in Me*

    *John Lennon take of (c) 1969

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  11. Watch UTIL 481.15, now at 483.42. The 481.15 would open a trap-door to Hades for equities. Bulls have to hold the line or they will lose market control.

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  12. well, my Ending Diagonal worked out perfectly. I think we'll see 1598 again before we'll see 1700... just my 2 cents.

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    1. and below 1598 or just 1598?

      V.

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    2. The 1597-1600 is the strong support so that would be the Bounce or Die scenario at that level. Failure would be down to 1593 then lower. Bounce would take price back up to the 50-day MA, but, the SPX would have to get down to the 1597-1600 first.

      Delete
    3. yes, of course 1597-1600 is a bounce or die level... but: what is your intuition KS after watching Ben?
      rechecking 1597-1600 or up?

      Ben sounded somewhat hawkish: tapering started in the second half of 2013 and ended (!) in 2014 - he said that! also, added that plans might change according to incoming employment data and inflation.

      What's your intuition KS?

      V.

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    4. ...guess 'C' started...
      take a look on charts ...

      V.

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    5. V, if C wave started, that means we're not going to reach 1600s? C is an up wave, right or I am confused?

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    6. minor A = 1687 - 1598
      minor B = 1598 - 1654 (yesterday)
      minor C = 1654 - (estimated) 1523-1560.

      Bennie said the magic words: tapering in the second half of 2013 and QE ended in the first half of 2014.

      anyway, tomorrow is a big chunck of QE, let's see how the market behaves.
      and Friday is OPEX.

      KS, in this context what impact might OPEX have and also, what impact might end of June (end of quarter, mid-year) might have - I'm referring at the so-called 'window-dressing'?
      Up or down markets?

      V.

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    7. I think KS mentioned market normally buoyant in front of window dressing, not sure this time..

      Delete
  13. Hey KS. What is Keybot thinking currently? Is she looking to flip?

    Thanks, BK

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  14. Hi Anon, I am no expert on fret buzz, but I would start by raising the bridge a bit--easy to do on an electric guitar.

    Just as a wild guess, it wouldn't surprise me to see SPX dip to 1598 level by Friday, and then bounce next week as managers hurry to save the quarter.

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  15. Charles, do you mean start scaling in longs?

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  16. More like watch and wait. If SPX hits the 1598 area mentioned by V. Arnie and KS by Friday, then I'll be watching to see if that level holds or caves in. I am also waiting for some extreme readings in indicators such as VIX, CPC and NYMO that KS often mentions.

    A bottom on Friday is one possibility, but not guaranteed. If 1598 gives way, then V's target of 1550 becomes the next line in the sand. It's usually unwise to short the end of the quarter, as fund managers are frantic to boost the market to make their numbers look good. But things are deteriorating rapidly in the global economy so counting on another bullish leg is also iffy. We'll just have to wait for EOD Friday and see how things look.

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  17. Charles, thanks for explaining.

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  18. yes, Charles is right.
    we get lower levels if 1598 gives way.
    from financial astrological point of view, keep an eye on 23 or 28 June 2013. Those might be turning points to this downside. It's not a serious trading tool for me but it's worth keeping an eye on that.

    Use lower levels (1523-1560) to scale gradually in longs. After int 4 is ended , there's int 5 (up wave) with a target of 1712-1780 to be reached until end of July.

    V.

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    1. V, I would like to point out that 6/23 is a Sunday, also Fullmoon and 6/28 is Friday, EOM window dressing.
      You're right, probably very bullish!

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    2. A,

      Bradley turns and fullmoon stuff and all this intuitional stuff create the background bias.

      Please follow also the targets posted at my Arnie's reply.

      V.

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  19. sorry for late reply guys, had my orders (shorts) in place, and left for the day to enjoy some wind and waves at the coast; had enough of the FED-SHOW... Had enough of this QE driven POS... Anyway, 1598 will IMHO NOT hold. Assuming A was down to 1598 (89 points) and assuming C=A, then we can count from the 1654 a potential low of 1565. But, C can 1.238, 1.382, 1.618x A as well. And even 0.618. But I don't expect the latter. We'll have to monitor divergence, waves, TA along the way -as usual- to see where things may end.

    Given that price has already bounced off the 50d SMA twice, it's logical to assume that buyers at that level have been rather already exhausted. Note that the NYSE already went right through it today like it didn't even existed... so expect the SPX and INDU to do the same.

    The MACD on the daily never gave a buy signal, which indicates the B-wave "sucka rally" off te 1598 low (just look at the clear 3-waves up, with c of B being the typical ending diagonal. Classic, textbook!

    A typical 38.3% retrace for a wave 4 at this degree has the SPX target 1555, which fits rather well with the 1565 C=A target.

    GL!!!

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    1. Thank you Arnie.
      Arnie's targets, calculated for your use are:
      C=0.618*A = from 1654 to 1599
      C=A = from 1654 to 1565
      C=1.238*A = from 1654 to 1544
      C=1.382*A = from 1654 to 1531
      C=1.618*A = from 1654 to 1510

      good luck!

      V.

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  20. tonight HSBC China Manufacturing PMI for June :
    previous:49.2
    estim.:49.4
    actual: 48.3 (contraction on-going, lowest levels in 9 months).

    V.

    p.s. I like this blog, it has posters world-wide ... for exemple Arnie just posted in US (where now it's mid-night) whilst I , in eastern Europe, I post in the morning (7.40 a.m.) drinking my coffee... KS, you have a world-wide blog :)

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  21. V, you forgot about all the international spammers. Although we could probably do without them. By the way, do you expect any bounce from the close or mostly straight down to at least 1598? If you were short from 1628 for instance, would you wait for a bounce or just close the position and cut your losses? Thanks.

    BK

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    1. Sorry I meant long from 1628. Its late here in the US. I also wonder if Keybot is waiting until 1598 to flip.

      BK

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    2. BK,

      If long from 1628,
      I might try to wait for a bounce.
      This C wave registered a first down wave (wave 1) from 1654 to 1614/1618 until now (those are futures real-time targets, as valid now - look at the hour of posting this message).

      wave 1 might go down maximum to 1610-1614.
      After that a bounce (wave 2 up) to minimum 1636-1638 (back kiss 20 MA) to 1640-1646 might be expected.
      after that there will be a fierce wave 3 down that might cut right through 1598 without looking back.

      But it's also possible to gap down and go lower during US cash session on Thursday. Although , with a biggie QE chunck on Thursday I doubt that. A wave 2 up to 1636-1338 to 1640-1646 might be expected (during european sessionand US session)
      V.

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  22. KS, today util closed @ 479.38

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  23. I appreciate it V. Your insight has been a tremendous help since you became a major poster on this blog.

    BK

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    1. I'm just doing my best, not such a big deal.
      try to exit break-even or with profit from those longs taken @ 1628 and only when the up-wave (wave 2 in potential C) will give signs of reversing.

      A very perverse scenario comes to my mind :
      if during european session the S&P 500 futures don't go down below 1618-1620 (that's the trend line verified at 1598-1600 2 times previously)there still might be valid the scenario where inside Minor "B" wave C=1.618*wave A (that would be 1689 in S&P500 cash) ...but this is a very psycho scenario, totally schizophrenic and bipolar ... just like Wall Street somewhat :D ... anyway, consider that on Thursday we have a big QE chunck and on Friday it's OPEX). This is a very, very low chances scenario (below 5-10%).

      That's why I'm saying: don't go emotional and sell your longs with a loss. A minimum bounce to 1636-1638-1640 is expected. But the freak low chances scenario must be held in the background of the mind. That's why I've said to you: CONTROL YOUR EMOTIONS, and follow to see where this up-wave gives signs of turning down, of reversing, ok?

      In case of bipolar schizophenic scenario , after 1689, a C wave to 1598-1618 would be guaranteed. A sign that this weird scenario might be real is if Thursday bounce exceeds potential peak of "B" Minor wave (1654). That's the sign.

      Keep your emotions in control, you have to know that you are the master of this game, nobody takes your money without you accepting selling with a loss, ok? It's all psychology, not rocket-science!

      remember those numbers: "bounce to 1636-1640 (maybe even 1646)" and "1654 exceeded".
      If Thursday's up-wave shows weakness and reversal signs at 1636-1646 exit longs.

      V.
      p.s. thank you for you kind words.

      Delete

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