Thursday, June 20, 2013

Keystone's Midday Market Action 6/20/13

Equities are slapped around for another day.  The Dow is down in excess of -200 points. Shipping bellwether FDX is beaten almost -5% today. UTIL is 471.92 well under 481.10 paving the way lower. Commodities are collapsing on the weak China news overnight. GTX fails 4764 adding bear fuel to markets. VIX is over 19. XLF is 19.32 three pennies away from the bull-bear line in the sand at 19.29. Watch this closely. If XLF fails 19.29, the broad indexes will collapse another leg lower with the SPX likely heading towards 1593. RTH 51.50 is another bull-bear line in the sand that requires watching. RTH is printing 51.61The SPX lost the 50-day MA at 1618.54.  The LOD is 1601.01 so price did not lose the pyschological 1600, yet. Remeber, 1597-1600 is very strong and key support. Price will likely test this zone and bounce, or die.

Keystone took profits on the MYL short trade exiting the position, will look to reenter. Also took profits on SSG exiting this long position, will look to reenter. Also took profits, which is actually a dead-flat trade, on the SRS long trade exiting the position. This exit is fortunate to free up the dead capital. Housing is hit on the higher yields. Also bot DNDN opening a new long position as it tries to hold its 20-day MA. Also bot SLV opening a new long position that is long silver. Also bot GDXJ, the junior gold miners, opening a new long position. Also bot DRYS, a shipper, opening a new long position.

Note Added 11:09 AM:  XLF 19.29, bounce or die. This XLF 19.28-19.29 will tell a lot about broad index direction forward. Financials now hanging on by one single thread.

Note Added 11:18 AM: XLF 19.28 hanging on by a fingernail. Keystone bot more DNDN adding to this long position opened today.

Note Added 12:08 PM:  XLF is up to 19.36 eight pennies above the critical 19.28 level so the market bulls are fighting back. XLF LOD is 19.26 so the bears are pushing but could not get the job done, yet. SPX is now at 1606.23 with a LOD at 1599.45 cracking the 1600 but only for one minute of time. Note that last week's low is 1608.27. The failure below the previous week's low is always a negative signal so watch to see if the bulls can regain the 1608.27, or not. SPX S/R is 1623, 1620, 1618.63 (50-day MA), 1618, 1617, 1614, 1611, 1609, 1608.27 (last seek's low), 1607, 1600, 1599, 1598, 1597, 1593, 1589, 1586, 1583.07 (20-week MA), 1583, 1579, 1577.07 (100-day MA) and 1576.

Note Added 12:35 PM:  SPX 1606.50 under last week's low with 1607 R creating a ceiling. UTIL 472.88. VIX 18.14 with a one-point drop over the last hour helping bulls. XLF 19.40. RTH 51.64. TRIN 0.61. Markets stumbling sideways. Financials, XLF, are the key metric now.

Note Added 1:04 PM:  TRIN sneaks higher to 0.74 and VIX recovers higher over the last one-half hour to 18.67 so the SPX leaks lower. Perhaps the markets want to explore the 1597-1600 bounce or die zone and battle it out with either the bears exiting lower leading markets south, or, the bulls exiting higher leading markets north. XLF is 19.35 but starting to leak lower again. The bulls were breathing a little easier when the XLF bounced off the 19.28 line in the sand one and one-half hour ago but now they are using the asthma inhalers again to prevent hyperventilation.

Note Added 1:37 PM:  XLF bounces again, however, the retail sector is falling out of bed now with RTH at 51.47, use the 51.47 as the line in the sand, like the XLF 19.28 number. If RTH loses another tick, to 51.46 and lower, that will push equities south for the next leg lower. TRIN keeps floating higher now at 0.87 which helps send equities lower. Ditto VIX now over 19 again.  RTH 51.47 and XLF 19.28 tell you everything you need to know. SPX sits at 1600.

Note Added 1:51 PM: XLF is 19.36 above the 19.28 danger line. RTH is 51.54 above the 51.47 danger line. SPX 1602.84. The bulls are holding the line at 1600 with financials and retail remaining buoyant. Keystone bot SPXL, the dangerous and speculative leveraged long ETF for the S&P, opening a new long position, viewing it as a quickie long countertrend play. SPXL will obviously be a bad entry if either XLF or RTH fails in the minutes ahead as described.

Note Added 2:04 PM:  XLF 19.36.  RTH 51.53. The drama continues. The bulls are stopping the slide, for now. SPX 1603. Economics professor Jeremy Siegel repeats his 17,000 Dow call for this year, within six months time. The Dow is now 14.8K. With the stock market off the highs, from the top at SPX 1687, both Jeremy Siegel and hedge fund manager David Tepper may have unwittingly called the top, not by their choice, but rather conversely, by their uber bullishness, in May. Both are extremely bullish and stocks have sold off ever since their prognostications one month ago; perhaps the market top will be known as the Siegel Summit and/or the Tepper Top.

Note Added 2:12 PM:  RTH 51.47, just touched 51.46, at the bull-bear inflection point, this is very important for the remainder of the day. RTH is losing it, now 51.42. SPX now down through 1598. Hang on tight.

Note Added 2:18 PM:  RTH recovers above 51.47, now back below 51.47, lots of drama. RTH 51.47 will tell you the market story into the closing bell. XLF 19.33.

Note Added 2:22 PM:  RTH collapses to 51.31.  SPX collapses to 1595 likely to test 1593. XLF 19.28. Bulls are losing complete control of the markets. Bears need to push and it will be carnage into the close. Note the big change in TRIN now firmly bearish today at 1.24.

Note Added 2:33 PM:  Dow down nearly -300. SPX now testing the strong 1593 support. RTH 51.27. XLF 19.25. The bears are not playing around today; they mean business. SPX 1589 S is next if 1593 fails.

Note Added 2:43 PM:  VIX 19.70 at the highs starting to tease the 20 handle. RTH 51.34.  XLF 19.27 only one tick on the bear side. SPX LOD 1592.75 so the 1593 support is holding, for now. XLF 19.28 will determine if markets bounce, or not.

Note Added 2:59 PM:  There's 1589 S.  If this fails, 1586 is next and price likely wants to look at its 20-week MA at 1582.19.  Traders are likely locking in the year's profits; only a fool would give up such a run higher. May as well take the summer off and spend it at the beach. With RTH under 51.47 and XLF under 19.28, the markets are toast. The clock just fell off the wall at the Eccles Building. Gold down 95 bucks to 1279.

Note Added 3:50 PM: SPX in the 1580's.

Note Added 7:06 PM: SPX falls 41 points, -2.5%. Dow down 354 points, -2.3%. Nasdaq is down 79 points, -2.3%.  RUT drops 26 points, -2.6%. VIX is 20.49 spiking over 21 today. The 10-year yield is 2.42%. CPC put/call is 1.39.  There is finally some fear and panic in the air. This is a good time to at least nibble on long positions. 

35 comments:

  1. Am I seeing a .67 trin today? In my past experience such low readings on down days have not been kind to the bulls subsequently, but I have no scientific data on this.

    But anyone's thoughts on a low trin today?

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    1. Anon, you must be sleeping like Rip van Winkle. Why do you think Keystone comments on the TRIN daily? Type TRIN in the search box to the right to bring up areas for further study. In a nutshell, TRIN 1.00 is dead neutral. A TRIN under one is bull-friendly, under 0.7 uber bullish which usually leads to a snap back the other way the next day or two. Conversely, a TRIN above one is bearish and above 2 or 3 or higher is uber bearish and it typically leads to a snap back where the markets will recover a day or two later. TRIN is 0.61 which is uber bullish and odd considering the large down day. This TRIN favors the bulls and hints that markets should recover today.

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  2. V or KS, LOD reached 1599, is this a good time to scale in longs? Your comments is appreciated.

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  3. I'm sure KS won't allow himself to give you a clear advise. He also has a disclaimer on that.

    My opinion is that you should hold your horses ...stay calm.
    If 1597-1600 is lost you could see 1574-1576 in less that 3 -5 minutes and 1554-1560 in maximum 15 minutes.
    Don't play with your money.
    Do you want to get long on a wave 2 or on a wave b of down Minor C? Are you mad?

    respect the trend and think at longs when this Minor C will give signs of exhaustion.
    According to price-time ratios Minor C will end at 1520-1560 until 28 June 2014.

    I would take some time to allow the 2nd up wave / the b wave to get us to 1620-1630 and at that point I would (re)load shorts.
    But not loading longs.... on a C wave? Oh my God! The C wave has much more bearish power than the A wave! If you're caught you'll cry rivers of tears! Stay nimble and respect the trend!

    When it's long it's long, when it's short, it's short...

    V.

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  4. V, so glad you're always around, thank you, great advice!

    I was just a bit worried after reading KS's note that market should recover today with low TRIN. I didn't want to miss the bull ride since I lost a lot of money on the bear ride. Hoping to trim my big loss getting on a bull recovery ride.

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    1. yes, now it should have been a bounce...but who buys here? I don't see nobody ....a weak bounced started , but died soon.

      there's a gap left at 1626-1628 - that should be the peak of a potential bounce from here, if a bounce appears (I doubt).

      but ,again, if 1597 is lost there is the danger of a cascade move due to longs stop-loss orders..getting long here? no way!
      the risk-reward ratio is bad!
      you risk a downside of 60-80 points versus a reward of 25-28 points - not a good trade.

      V.

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    2. V, thanks for following up. I was on a 6hour plane ride watching tv and panicking that the S&P was getting smacked while not having access to this blog or my trading platform. Th Theres that nasty emotion again. Now that ive landed, im hoping we at least retrace to 1614 and ideally to 1628. Im thinking I should start purchasing shorts at the 1614 level and have a stop at 1598. Obviously I have a lot to learn about trading and your help and obviously Keystones and others have and will continue to be invaluable. Thank you.

      BK

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    3. Hi BK,

      We all learn together.
      Yo, take a look at that :
      http://stocktwits.com/message/14205467

      there's a gap to be filled at 1626-1628.
      could be useful.
      if it's filled today that's it.
      but if more downside today occurs advancing in the oversold conditions and tomorrow is OPEX an up move pretty powerful might even exceed 1626-1628.

      Anyway it's not ok what I'm doing. I'm exposing my opinions as trading advices. If I'm wrong others get f***ed on real money. And I'm not accountable.
      Maybe it would be a better idea to refrain from trading advices.

      But I have some good news for you as from your long position: there's one interpretation (i don't subscribe to it) that considers that we've got 5 waves down from peak of B (1654) and that was 'C' and int 4 it's over.
      But I don't believe it - I didn't saw any violent capitulation selling of longs yet.
      Nor an impulsive down move.
      Or even an ending diagonale.

      V.

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    4. V, I should hope we all understand that nothing written in this blog should be thought of as a rule. We are all adults and trade for ourselves. I appreciate your insight and understand as we all should that our decisions and the results of them are on completely on us. Thank you as usual.

      That said if you theoretically held a significant long position currently, what approach would you take and would it change if we dropped below the critical 1598 support?

      BK

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    5. V, you are a smart guy, it is okay to give trading advices here, you are not hold you for any responsibility because we (who ask you) are the one to make final decision whether we win or lose.
      Anyway, I also want to ask you about SOX, do you think the semi's will further drop before 6/28?
      I am in semi's bear, it's up today but did not reach the price I bought back then, should I take a stop loss today or wait 'til next week?
      Thanks!

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    6. If I've had a long from 1628 I would close it (break-even or on profit).
      If market would go against me (lower than 1597-1598) cascading I would hedge with shorts (minimum the equal value deposited in longs) if i've had more cash but I would not sell the longs with a loss (anyway after 1520-1560 as target for int 4, there's still int 5 up to come - target 1712-1780).
      If all my money would be in longs taken at 1628 I would sell only on break-even or with profit preffering the cost of time (waiting) and the cost of opportunity (potential earnings lost) than the cost of money through a loss. I don't like losses. I'm allergic at losses. I know that this thing is not the sign of a experienced trader, but it is what it is. :)

      Regarding the cost of time, anyway , I don't see this down wave extending way beyond 28 June 2013 (maximum until 4 July'13).

      The technical indicators are pretty oversold and more than a 200 DMA (in the worst nightmare for a long holder) and 200 dma would be in 2 weeks at 1505-1520.
      Already the "bear juices" are pretty old , there has been a 50 points fall in 2 days, a bounce is required tomorrow or next week - from 1598-1600 even a dead cat bounce up to 1620-1628 might save you.
      have some patience it will be ok.

      V.

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    7. @ Anon:
      sorry, I don't follow SOX.

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    8. typo:
      ''The technical indicators are pretty oversold and more than a 200 DMA (in the worst nightmare for a long holder) and 200 dma would be in 2 weeks at 1505-1520. ''

      the technical indicators are pretty oversold and more than a 200 DMA touch we won't see.

      V.

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    9. BK,

      if wave 1 finished today 50% retracement for w2 might be 1624 (+/- 2 points).

      V.

      p.s. anyway today the middle BB on weekly charts was touched so a bounce to (minimum) MA 10 on weekly charts (1624) is required.

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  5. TRIN is only of use for day trading or trading across a couple day or so period. The low TRIN is helping the bulls to create some buoyancy today with the SPX off the 1599 low up to 1606 now. Everything is about time frames. For the days or week or two forward, use the UTIL 481.10, GTX 4764, XLF 19.28 and RTH 51.50 as a guide. UTIL and GTX should keep a bearish cloud over markets. XLF is at the inflection so pay closest attention to that. If XLF stays above 19.28, the bulls will keep pushing for a recovery rally, so then watch UTIL and GTX to see if bulls can gain juice. But if XLF loses 19.28, that says the extended downside is here and markets will take another leg lower and then if RTH fails the SPX will be far lower heading towards 1550-1580.

    Also, the CPC, CPCE, NYMO, all those charts will be useful to see if panic and fear arrived today, or not. It has the feel that no one is worried that much so a brief market bounce may occur then another whoosh lower since no one is panicked and fearful as yet, but, the put/calls will provide insight this evening.

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  6. KS, THANK YOU.

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  7. SOX charts appear to be rolling over so semiconductors should continue to weaken moving forward. SOX weekly chart should close the 450 gap and move lower as the days and weeks move forward.

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    1. Super KS! Thank you for your prompt response. I was just about to take a big loss before the closing bell.
      I am holding your hand...thank you again.

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  8. RTH loses 51.47, see if it holds 7 to 10 minutes, if so, the markets will take the next leg lower.

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    1. Back above RTH 51.47 after a few minutes.

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  9. High drama, as KS says, bounce or die SPX 1598. Interestingly, options volume in SPY strike $161 tells a story: the number of calls traded is 72K, puts 146K. Open interest is 42 long (calls), 92 short (puts) for expiration tomorrow. That suggests the max pain trade is above 161 so all those puts expire worthless.

    Have to be careful not to read too much into this kind of options analysis but the crowded trade usually gets hammered. Max pain might be a low that blows out stops to the downside and then a huge reversal that blows out shorts and put buyers.

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    1. ''Have to be careful not to read too much into this kind of options analysis but the crowded trade usually gets hammered. Max pain might be a low that blows out stops to the downside and then a huge reversal that blows out shorts and put buyers.''

      Very true Charles.

      V.

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  10. Super KS! Thank you for your prompt response. I was just about to take a big loss before the closing bell.
    I am holding your hand...thank you again.

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  11. RTH failed 51.47 so the markets are dropping; if XLF loses 19.28 it will be carnage. A snap-back can occur, the last one and one-half hour should be entertaining.

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  12. KS, how 'bout that NYAD of -2800? Lowest it's been since August 2011. We need a bounce here at some point.

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  13. Still an hour left, there may be a chance that spx will get to 1583.07 (KS's 20-wk MA) before closing. This is more excited than watching an action movie.

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  14. Yep, this is a key watershed day for markets. NYAD does hint at a snap back. Also full moon on weekend, and window dressing for end of quarter. Looks like the 20 of 22 post-OpEx weeks for June did hit early due to the calendar starting late this year for June as discussed on the weekend. So perhaps the close today or during tomorrow morning or lunch a bottom will lead to a recovery. Watch that RTH 51.47 and XLF 19.28, if these stay below, there is nothing but carnage ahead.

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  15. wake me up when we get to mid-1500s, i never gave up on that projection made almost a month ago. none of the TAs I use ever gave a real buy signal suggestion 1700+ first. All of the TAs and EW instead strongly suggested much lower first.

    Namely: as I suggested y’day evening the 50d SMA didn’t hold and neither did 1598. There are waaay to many stocks at waaay to over-priced levels IMHO. We need a good bull scare before the uptrend can resume and a dip to 1598 again won’t do that IMHO. Because when everybody is long, the market can’t advance anymore and when everybody is short the market can’t decline anymore. Always has been and always will be like that.

    Price is now at the lower BB on the daily -showing weakness- and the BB’s are expanding;
    My 3-SSTOs indicator flipped to a sell signal on the daily today and negated a slight buy-signal on the weekly.
    The 8d SMA remained under the 34d sma ever since the 1598 low, and both have now turned down.
    The MACD on the daily has now turned down and never gave a buy signal since the 1598 low either…

    All suggested the "SUCKA" b-wave we just experienced to 1654... Now ALL systems are on "GO" for the sell/short side. We’ll get the usual OS bounces etc, but am looking for mid-1500s at least.

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    1. Interesting Arnie. What will also be of interest is if traders do cash in and leave for the summer. With the light volume in recent weeks, if the long winners take their chips home for a couple months or so, there will not be many folks remaining to buy the markets.

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    2. ''We’ll get the usual OS bounces etc, but am looking for mid-1500s at least.''

      first oversold from what point to what point, Arnie?

      V.

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    3. KS, absolutely. Mid-1500s is what I THINK should be a bottom area. But, that's just me. The market may very well decide that 1687 was really it and bear-times are here. We can never know.

      V. I'd expect a bounce from around today's levels to ~1620 +/- 5ish... But, that's just my expectation. I will NOT long that, 'cause a bounce is just what it is a bounce... can be either more or less...

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    4. Thanks Arnie.

      V.

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  16. When I look at VIX today at 18-ish, I was thinking it would be nice to see it 21+ again, and now it's getting close to 21...what a day!

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  17. Thanks, Arnie for the analysis--1550 aligns with V's target. I am kinda feeling there are two basic ways for this decline to play out:
    1. A 20+% waterfall in July, more or less fulfilling the Hindenburg Omen for a crash of some sort. Rallies will last for hours in this 1998-like scenario.
    2. A decline that lasts for months marked by sharp short-covering rallies that fade to new lows.
    Very S-T things feel pretty washed out and just for grins I nibbled on some SPXL at EOD in the event my max-pain trade scenario plays out tomorrow. A ton of stops got blown out today, and a rally to fill the gap on SPY would spread the discomfort and loss around.
    On the other hand, tomorrow could see a waterfall down to 1550, rewarding put holders.

    I'd like to see a buy-the-dip rally here as that would set up another nice shorting opportunity--but I may not get it.

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