Tuesday, June 25, 2013

Keystone's Midday Market Action 6/25/13; Consumer Confidence

The bulls need the SPX to jump above 1588 and touch the 1589 handle to unleash the upside and price is there to start the day. The strength of any recovery bounce will depend on SOX 457.00, RTH 51.48 and XLF 19.25. SOX jumps above 457 providing bull fuel for the broad indexes today. RTH and XLF continue to enjoy the bear camp, for now, so the market upside may be limited. If either RTH or XLF joins the bull side, then the SPX takes another leg higher.

The economic data this morning places markets in a good mood. The S&P futures did slip a couple points as the data hit hinting that some traders thought the good data reinforces Chairman Bernanke's bullishness and thus reinforce the idea of tapering QE, but then just before the open the futures shot several handles higher. Markets may idle in front of the Richmond Fed Mfg data, New Home Sales and Consumer Confidence at 10 AM that will create a market pivot. The Con Con number was blow-out last month at 76.2, the highest number since early 2008, so use the 76.2 as a metric when the number hits. The 2-Year Note Auction is 1 PM and important in respect to the 2-10 spread since this will impact the banking sector moving forward. The 100-day MA is 1579.34. The 20-week MA is 1585.85.  The 10-year yield is 2.54%. The SPX was rejected at 1588-1589 on the first try, here she comes again. What say you bulls, do you have the juice to touch 1589 and set loose the upside?

Note Added 9:48 AM: Another spank down from 1588-1589 with the SPX now fighting the 20-week MA at 1585.78. Traders want to see Con Con. Markets may move a couple minutes ahead of 10 AM since privileged folks likely receive information ahead of time. SOX 458.48.  RTH 51.15. XLF 19.02. VIX 18.82, under 19, but continuing to cause bearishness as long as it stays above 14.20. TRIN is 0.72 verifying the market bullishness so far today. Watch SOX and RTH when the Con Con hits.

Note Added 10:36 AM:  Con Con prints another blow-out number not seen since January 2008 over five years ago. Markets did not pivot on the news choosing more of a sideways indecision path for today. SOX fell into the bear camp again but now is back above the 457.20 bull-bear line in the sand (use this number instead of 457.00). So there may be lots of drama around SOX 457.20 today. Watch RTH 51.48, now at 51.07, since bulls next need higher retail to move markets higher. XLF is under 19 and will need to move to 19.25 to supply bull fuel. TRIN is at an uber low of 0.55 which will greatly help the bulls today. The beat goes on.

Note Added 12:49 PM:  The 8 MA moves above the 34 MA on the 30-minute chart at 11 AM signaling bullish markets for the hours ahead. SOX 459.81. XLF 19.10 (watch XLF 19.20 as the bull-bear line in the sand). RTH 51.27. VIX drifts lower intraday and TRIN stays low at 0.59 helping create the market lift. The SPX has made five attempts at breaking up through today's 1588-1589 resistance, and did touch the 1589 handle, but continues to struggle to punch up through to light the acceleration path higher. If financials jump a few more pennies, with XLF moving above 19.20, that will provide the bull fuel needed. If XLF stays under 19.20, the bulls may have a tough time moving higher. Keystone took profits on DNDN exiting the trade. Will look to reenter. DNDN remains an attractive long moving forward. Also bot MUX, a speculative mining play, opening a new long position. Also added to the ongoing SLV long position.

Note Added 1:12 PM:  Keep the SPX 1630.74 in mind the next three days since this was the starting number for June. Key SPX resistance above is 1589, 1593, 1597-1600, 1609, 1614, 1618, 1623, 1626-1627, 1636 and 1649-1650. The SPX keeps playing at the 20-week MA at 1585.81 with price now at 1586.50. The 1589 R has held as a ceiling so far today. Whoopsies. Look at SOX drifting lower.. 459.30 .... 459.00 ...458.67... 458.40.

Note Added 2:58 PM: SOX recovers back to the highs today now near 461 helping the market bulls but XLF is at 19.10 remaining under 19.20 in the bear camp. Ditto UTIL at 475 that was sneaking upwards today. Without help from XLF or RTH the bulls cannot receive additional oomph, but the 8 MA above the 34 MA on the 30-minute, and low 0.62 TRIN keeps markets elevated. The SPX keeps punching at 1589 and boom, it made it up through at 2:34 PM, but slipped on a banana peel and immediately traced lower within 5 minutes.  Price needs to hold the higher levels for 7 to 10 minutes to lock them in. If SPX takes out 1589 R, then the strong 1593 R is next.

Note Added 3:06 PM:  Financials are trying to run higher; XLF is 19.13.  SPX is at 1588. The financials would provide the bull juice to test 1593 R and then perhaps 1597-1600 R if XLF can gain another 7 cents. If the bears can move SOX back under 457.20, markets will sell off again.

Note Added 3:11 PM:  XLF 19.14. SPX 1589.24. With three day settlements before the EOM and EOQ, today would make sense to be a bullish day.

Note Added 3:12 PM:  XLF 19.15 ......

Note Added 3:34 PM:  XLF 19.19 moving higher so SPX runs up to the highs of the day towards 1593 R. Bulls need one more penny for XLF. There it is XLF 19.20; bulls need to hold it 7 to 10 minutes and that would indicate further upside with SPX probably targeting 1597-1600.

Note Added 3:43 PM:  SOX running higher like a banshee now at 463.47 well above the 457.20 danger line indicating that the bulls are developing upside strength. Whoopsies. XLF drops to 19.16 so SPX hits its head on 1593 and staggers lower to 1591.

Note Added 4:01 PM:  XLF stumbled into the close performing a face plant at 19.11 so the SPX ran out of gas and dropped back down through the 1589 S/R. Even though bulls ran out of gas into the bell, they pulled the SOX back into their camp today and also the 8 MA moves up through the 34 MA on the 30-minute chart, so they place two feathers in their caps. Place XLF 19.20 on the top of your watch list when the bell rings tomorrow to determine broad market direction. The 10-year yield is 2.60%.


  1. KS, or anyone:

    Could you help me figure something out that is probably ridiculously simple? I use Interactive Bokers and I cannot figure out what the costs (i.e., interest rates charged) are.

    I would like to short leveraged etfs to take advantage of their inherent decay, but I'm not sure if the costs will minimize or eradicate this advantage.

    For example, if I think that the market is going down, I would like to short TQQQ rather than buy SQQQ, but I don't know if the shorting fees/interest rates make this a bad idea.

    Your assistance is appreciated.


    1. The dividend is a consideration when shorting since you will be on the hook for that but the ETF's likely offer no dividend. It seems like simply buying the inverse ETF and paying the commissions to enter, if scaling in at a few levels, then commission to exit, is the easy path forward. Not sure if what you mention offers any advantage.

  2. KS,

    What would Keybot be looking at to catch a potential move up to 1640?


    1. SOX moves above 457.20 so we will call this SPX 1590. XLF 19.20 may take it to 1600 or more, RTH 51.48 then would take it to maybe 1620's, then at anytime watch the UTIL 481 since it is sneaking higher today now at 477 only four points away, that would be another bullish bump, so perhaps all four parameters above and that may place SPX in the 1620-1650 area.

  3. Remember June's beginning number was 1630.74 so bulls may plan on making a run to tease this number and try to turn the month positive, they have 3 1/2 days to do it.

    1. interesting thought! i just don't think they'll have the oomf. today is not the kinda "all systems green day" one would like to see to kick off a new rally...

      i sold my sso's from yday for ~$2 gain (73->75) and am now fully in SDS again. I think we'll see mid 1500s (1550-1530) before we'll see 1640 again.

    2. tomorrow US GDP , Arnie :)and the consuption data... very meaningful data that can turn a corrective trend into a impulsive trend.

      remember that int.4 might have had finished at 1560.

  4. Couldn't one just chalk all this up to 130 point dow yesterday and 100 points up today, we are running basically in neutral. Do not not need Elliot Waves and TA to know this. 8's lead to 2's and 2's to eights. This is so easy to figure.

    1. ARE YOU SILLY? Anyway, very unprofessional comment you have above! Ahhh...! may be you dont have the knowledge...:)

  5. KS, what is your opinion going into nat-gas, coal and steel after this market correction?
    PBR and Peabody look very attractive.
    Thank you.

    1. Commodities, metals and such are all getting hammered. They have fell a long way but falling knives can keep falling. The charts are all agreeable to basing and recovering in general so Wednesday morning may provide a capitulation type move for these sectors. Study the GLD charts this morning. Coals are hit since President Obama slams coal all the time and did again yesterday. This hurts the folks in West Virginia, Pennsylvania and other coal States. BTU recovered well off the low yesterday. The action the last day or two hurt coal and will cause it to need extra time to base. PBR is like all other commodities, another story that should base, 12.8-13.2 may be a good place to start a long. In general all the commodities look good, gold, coal, silver, miners, but they are getting further pounded on negative news. It may require a little patience over the next month but they should all recover, so scale-ins on the long side may be a good idea moving forward.


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