Wednesday, June 5, 2013

Keystone's Midday Market Action 6/5/13; Beige Book

Utilities collapse at the open. UTIL 477.91 fails with UTIL now printing 476.70.  This is the trap-door so it will be interesting to see if the broad indexes take a whoosh lower over the next half hour. The SPX drops to test the key 1626-1627 support. The SPX falls under the 200 EMA on the 60-minute chart at 1630.58 signaling bearish markets for the hours ahead, however, the failure is tentative so far. Dollar/yen 99.57. VIX 16.67.  TRIN 0.82 trying to help the bulls recover. UTIL 480.83 and 477.91 dictate market direction today.

Note Added 9:49 AM:  UTIL just back kissed 477.91 and moves lower again. Fasten seat belts and helmets tightly.

Note Added 10:03 AM:  Markets moderate after the economic data. Dollar/yen 99.43. SPX continues to fight at the 1626-1627 support.  UTIL jumps back above 477.91 now printing 478.76 so this closes the trap door, for now.  UTIL remaining below 480.83 will maintain market weakness moving forward and prevents Keybot from going long. UTIL 477.91 is the key number today. Here she comes lower again......

Note Added 10:14 AM:  The hinge on the trap door is oiled and begins to open again with UTIL at 477.22.....

Note Added 10:18 AM:  Trap door opening a bit further. SPX 1622 should lead to 1618. UTIL 476.50. SPX drops to a LOD at 1620.81, so far.

Note Added 10:24 AM:  Dollar/yen 99.38. UTIL creeping back up now at 477.29.  SPX 1622.08. TRIN 1.07. Keystone took profits on the SPXU trade exiting the position, will look to reenter.

Note Added 10:33 AM:  Dollar/yen 99.38. UTIL 477.62. SPX 1623.22.  Keystone is back in SPXU opening a new long position (which is short the S&P). Also bot DNDN, a dangerous and speculative biotech stock, opening a new long position.

Note Added 10:47 AM:  Dollar/yen 99.51. VIX 17. UTIL 477.22. TRIN 1.11. The 10-year yield is 2.10%; note how yields move down with equities contrary to the great bond unwind a week ago that showed yields moving higher with equities lower. Lower yields and lower equities is disinflationary and deflationary type behavior. The UTIL 477.91 trap door must be rusty but she should give way.

Note Added 11:04 AM:  SPX now testing 1618 support, whoa, 1617. This area is strong support with 1614 next.  UTIL closed the trap door with UTIL now at 478.40 but the markets remain weak. Dollar/yen now 99.16 dragging equities lower. Keystone took profits on the SPXU using it as a day trade, flipped into SPXL to play the countertrend.

Note Added 11:10 AM:  SPX is at 1616. If UTIL stays above the 477.91, now at 478.67, this will prevent the markets from dropping to 1614 and 1600. If UTIL 477.91 fails again, then 1600 is likely on the way.

Note Added 11:29 AM:  UTIL fails 477.91 so the trap door for the broad indexes opens again.  Keystone needs his heart pills. SPX 1617.  WLT is feeling some love.

Note Added 11:37 AM:  UTIL 476.30. SPX 1616.71. Keystone took profits on SSG exiting the trade which is short semi's, will look to reenter. Also bot KOL opening a new long position (reference this morning's KOL chart).

Note Added 12:01 PM: SPX LOD is 1613.99 (smack-dab on the important 1614 support). Time to bounce or die. The UTIL 477.91 trap door remains open and has created -16 spu's so far today. Even the TRIN is in the bear camp today at 1.29.

Note Added 12:08 PM:  Dollar/yen 99.12. If dollar/yen loses 99 then SPX sub 1600 is a given. For now, dollar/yen is holding this 99.12-ish area. UTIL 476.34. VIX 17.29. TRIN 1.60.  SPX 1612.95. LOD is 1612.75. This is all air between 1600 and 1614. Markets may hang around 1614 S/R until the Beige Book at 2 PM, now less than two hours away.

Note Added 12:56 PM:  Dollar/yen loses 99. SPX 1609 handle. UTIL 476.51. VIX 17.71 now up +9% today. TRIN 1.82.

Note Added 1:06 PM:  Dollar/yen back above 99 to 99.10 so the SPX recovers to 1612.

Note Added 1:18 PM:  Utes are goosed to help the markets recover. UTIL at 477.06, now 477.16. SPX now back at the 1614 S/R. The SPX under 1630 and UTIL under 477.91 are very strong negative factors for markets moving forward and prohibit any substantive recovery.

Note Added 1:28 PM:  Dollar/yen up to 99.33 so the SPX recovers to 1616. UTIL 477.22 teasing higher but remaining under the critical 477.91.

Note Added 2:08 PM:  Dollar/yen 99.23.  Beige Book not much of an event with the broad indexes idling sideways.  UTIL is fighting along the 477.91; the winner will dictate market direction. This is an inflection point with UTIL 477.91 and SPX 1614 S/R. Which way will they pivot?

Note Added 2:26 PM:  The pivot is down; UTIL 477.32 and SPX 1611. Large sell offs on Wednesday's usually lead to lower lows on Thursday. This did not work last week but did work the week before. Interestingly, the last three Wednesday's are all strong selling days. Whoopsies. Markets just slipped on a banana peel. UTIL down to 476.85 and SPX to 1609.

Note Added 2:32 PM:  UTIL 476.13; the trap door is officially open again. SPX 1607 printing new lows likely on its way to 1600. TRIN remains bearish at 1.88. Dow is under 15K down over -215 points. Keystone's SPX:VIX Ratio Indicator is at 90 now finally arriving near the 68 neighborhood again. The SPX:VIX will come into play now that volatility is jumping; a drop under 68 indicates a major market technical failure but it will probably be a few days before it becomes pertinent.  The SPX 50-day MA is 1604.20 and serves as a bounce or die point. Support below at 1604, 1600, 1597 and 1593.

Note Added 3:37 PM:  UTIL 478.28 so the theatrics continue and the gallows operator has to raise the trap door again and wait for 477.91. The SPX is sticky at 1614 S/R. The LOD at 1607 remains three points from the 50-day MA at 1604 so a proper test of this important moving average did not occur and remains on the table.

Note Added 4:05 PM: UTIL finishes under 477.91 leaving the trap door open. UTIL loses both 480.83 and 477.91, a significant negative market development. The UTIL 477.91 drama continues tomorrow.

29 comments:

  1. wow, you certainly called it with the UTIL trapdoor, KS, you da man! Now that the lower bollinger's been touched and NYMO is hitting a pretty good low, there's a potential setup for a bounce. That said, the MACD suggests a downtrend is in place. Bulls are pushing the UTIL trapdoor, trying to close it, tough going, but they got it to 478....

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  2. Yep Charles, UTIL 477.91 tells the story. SPX may bounce from this 1616-1618 level, if not, 1614, then 1600. If UTIL fails at 477.91 again today it is likely down for the count so the trap door will probably guarantee 1600 in short order. UTIL now printing 478.33..... 42 cents away from creating market mayhem....... the bulls are trying to hold the line .....

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  3. KS, lows usually not made on a Wednesday. Right?

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    1. Yep Weaver but it did not work last week. The Thursday did not provide a lower print. But the week before the large Wednesday drop did create a lower low on Thursday. It always worked well in the past at about 80% or more success, until the central bankers got involved like a bull in a china shop, moving around in markets now and distorting all kinds of relationships as well as price discovery. But the expectation wold be lower prices on Thursday if this weak action continues today.

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  4. KS, Beige Book may turn market to north? What's your assumption?

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    1. It may be a non-event. UTIL 477.91 is more important. The SPX 1600-1614 is no man's land so price will likely want to migrate to either +1614 or -1600 after the Beige Book is released but it may be a leisurely move rather than sharp.

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  5. Round numbers galore that act as psychological lines in the sand: DJIA 15,000, NAZ 3400, SPX 1600. If only we knew what the NY Fed and GS trading desks were doing....

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    1. We are doing fine, thank you.
      Currently, buying quality stuff here at GS in low volumes.

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    2. forget my answer!
      Keep selling, the June Swoon is here!
      http://www.cnbc.com/id/100791707

      Each part of the market should do it's job! When a market ramp will come out of the blue, guess who will sell to you? Keep selling, be fearful !
      We will help you!

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  6. Thanks for the grins, it's always good to keep a healthy sense of humor. And frankly, a huge ramp in the next few days/two weeks wouldn't surprise me at all. 1700 SPX beckons.... That would be a great shorting opportunity.

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    1. That, my friend, is another story... you won't see today 1700+
      in 2 weeks maybe if you're not naughty!
      I don't know why you retailers keep thinking at shorting, when a swoon period should be an opportunity to buy low.
      But...usually the retailers don't do that.
      Keep on selling, every part of the market should do it's job!

      Be afraid, oh! ....be afraid!*
      --
      *maybe I should have been an actor, not a trader. :)

      ok, my pause has gone, my cigarette was smoked, my Ipad message will be sent ! Back to work!
      Keep selling, be afraiddddddddd !

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    2. oh, one more thing to add, my friend: who thinks that FED will taper after latest economic data and with the pro-deflationary environment...well,... it's a complete moron.
      It's all smoke that gets in your eyes ...

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  7. As I mentioned y'day ~1615 should be next level of support. +/- 5. If this doesn't hold, next stop is 1600 and then 1575ish... Bulls have to bring their A-game now. Regardless, the current low print of 1610 has put any hopes for a massive rally for now of the table, the only thing left is a bounce (B wave), which I expect to go to 1665s, then a C wave down to ~1540s, assuming C=1.618X A, and assuming C bottomed at 1610 today:

    1665 - 1.618x (1687-1610) = 1665 - 1.618x 77 = 1540.

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    1. '' the only thing left is a bounce (B wave), which I expect to go to 1665s''

      Hi Arnie!
      in what way might be affected the B target (1665's) if the A wave doesn't stop at 1607, but goes further to 1600 or 1575?
      Be stays at 1665's or might register lower levels ?

      Thank you,
      V.

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    2. 1645ish. Seeing this go to 1600 before any meaning full bounce may occur. 50d SMA is at 1604 and may provide support - with the usual quick intra-day stab below to kick in many sell-orders... max pain...

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    3. Thank you Arnie.
      V.

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    4. V., aren't you glad you stopped out yesterday? are you long or short now?

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    5. I'm in cash waiting for the end of wave A where that may be ... 1606 , 1595 or 1580's.
      there I'll get long again for the B wave and then short for C.

      V.

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    6. How do you make your determination on where A has ended?

      BK

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  8. UTIL 477.91 and SPX 1614 S/R is where prices sit now, they will pivot one way or the other since they are sitting on their inflection points.

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  9. arnie, are u still short?

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    1. yup! :-) not getting any buy signals for going long either. will have to take this day by day. IMHO we're now in 5 of C down, but 5 can extend, and given that we're now in a confirmed down trend, counter trading is only for the fast and the furious. I am expecting this correction to go down to 1540s and will sell my shorts there. I may long the bounce, and add shorts at the top.

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  10. Think of where that NYMO might be tonight.... minus 84 starting the day. Lowest since November. If we get a flush below the 50MA or even below 1600 before closing today, it might be okay to dip a toe in the pool again?

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    Replies
    1. Yep, it will be interesting. BPSPX probably issues a sell signal this evening. Still on the table is the May 2012 or August 2011 waterfall crash scenarios on the table, the rest of the week is important. SPX needs to look at the 50-day MA since it was so close. TRIN 1.82 reflecting strong selling but the selling is very orderly and calm, no panic to it at all, so it may continue for a while. A panic will wash things out, so CPC and CPCE will be interesting to see if they agree with an orderly selling day. If so, CPC should stay under 1.20. Hints of panic beginning will be shown above 1.20. VIX is up so CPC should be up it is a matter of how much.

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  11. gold was weird almost as if it was being held down. The miners put in no fight and finished flat. Any thoughts?

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    1. Gold moving into a sideways triangle over last 3 or 4 days just like the dollar is moving, both are at the decision point. ECB decision will send dollar in opposite direction in the morning and gold moves counter to the dollar, the same way as the euro so the ECB decision may be important for gold.

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  12. Hi KS,
    Thank you for your notes on 80 20 rule last week. I dont know how you catch up w so many questions from readers. I do appreciate this. very successful. So now SPX closed under 1620 we can expect 1580.

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    Replies
    1. Good catch Serenay, in the excitement that slipped Keystone's mind. Strong support is at 1593, then 1589, 1586, 1583, 1579 and 1576. The 1593 and 1576 are the stronger levels. So, mixing it together with the 80/20 rule that targets 1580's, a downside target at 1576-1583 would be in place after a dead-cat bounce occurs for markets.

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