Thursday, June 6, 2013

Keystone's Midday Market Action 6/6/13

Copper fell through the bull-bear line in the sand at 41.40 like a hot knife through butter helping the bears. The utilities remain front and center with UTIL 477.91 and 480.83 continuing to dictate broad market direction.  UTIL popped above 477.91 at the opening bell and is now printing 479.18. Thus, the bulls receive upside market oomph since utes are above 477.91, but, the bears keep pressure on the markets since the utes remain under 480.83.  Keybot the Quant remains bearish and will likely remain on the short side all day as long if the SPX stays under 1629.

The BOE and ECB rate decisions were yawners. The euro is 1.3190 moving higher. Europe needs a lower euro to bolster their exports and manufacturing sectors and did not receive any help from Draghi today. The dollar/yen is 98.45 now firmly under 99. This should place a lid on any market upside today.  Same with the Jobless Claims. Fed's Plosser, a hawk, is on tap to speak at noon. He will likely make the case for tapering QE so this may create a slight pall on markets. Perhaps markets will then develop a recovery move in the afternoon after Plosser's comments are digested. Traders will think about market positioning this afternoon in front of the all-important Monthly Jobs Report in the morning. The new moon is on Saturday so markets tend to be bearish moving through the new moon. The SPX is under the 200 EMA at 1629.00 on the 30-minute chart signalling bearish markets for the hours and days ahead so pay attention to this forecasting tool. Ditto with the 8 MA under the 34 MA  on the SPX 30-minute chart now signalling bearish markets for the hours ahead. Watch for a potential positive 8/34 MA cross moving forward. The SPX closed under 1620 so the 80/20 rule opens the door to a print in the 1580's.  Strong support exists at 1593, 1589, 1586, 1583, 1579 and 1576. Therefore, a potential downside target is 1576-1583, where a more substantive market bottom may occur, after a dead-cat recovery bounce plays out. If UTIL 477.91 gives way again, the 1576-1583 target may occur a lot quicker.

The SPX drops down to test the 50-day MA at 1605.12 and bounced. Another test may be on tap today. The 50-day is a logical place for a dead-cat bounce and the NYMO chart provided this morning verifies this area as having potential for a market bounce. The BPSPX triggers a market sell signal as highlighted in this morning's chart. The TRIN is 1.09 today, slightly bearish.  As mentioned yesterday, the 1.80 TRIN was not a panic number considering the strong market sell off. A TRIN of 2, 3, or higher would have signaled that fear and panic was rampant but instead, it was an orderly selling day.  The CPC put/call ratio backs this notion since the CPC is at 1.18 not even over the 1.20 fear and panic line. Considering the strong sell off, the CPC would have been expected to show panic by spiking to 1.3 or more signaling a more firm bottom is in place for markets. Instead, the TRIN and CPC say that traders are not particularly worried about the sell off as yet. This hints that further selling is probably on tap for markets, until the fear and panic develops with the CPC spiking above 1.20 to print a firm market bottom. Keystone bot OSUR, a speculative biotech play, opening a new long position.

Note Added 11:46 AM:  Dollar/yen 98.43.  Euro 1.3196 approaching 1.32. JJC 41.04.  UTIL  479.74 between the two critical levels for UTIL, 477.91 and 480.83. TRIN 1.03, a hair bearish despite positive markets. SPX 1612.64 moving higher to test 1614 R.

Note Added 12:01 PM:  The SPX came up to test the 1614 resistance and the robots sold off with price now down to 1607 in a heartbeat setting up another test of the 50-day MA at 1605.03. UTIL remains above 477.91 so the markets have limited downside. A break of UTIL 477.91 today and the SPX will be in the 1590's testing key support at 1597 then 1593. Dollar/yen now loses 98 to 97.71. The euro is 1.3244 exploding above 1.32. Europe can kiss any job growth good-bye.  The higher euro drives the dollar lower which in turn is helping to create the weakness in the dollar/yen. Since the dollar/yen is affected more by the dollar component today the overall affects the dollar/yen has on equities is somewhat muted. VIX at 18.

Note Added 12:09 PM:  SPX 1604.77. This is the test of the 50-day MA so the SPX will bounce, or die. UTIL is dropping like stone but still above 477.91. TRIN 1.43 and VIX 18.08 encouraging bears today. Perhaps some good ole fashioned fear and panic will surface today?

Note Added 12:12 PM:  Whoopsies daisies. UTIL 477.87. We are at a key point right now. Bounce or die. If UTIL stays under 477.91, SPX sub 1600 will occur quickly. Keystone added more SPXL which is playing the countertrend to the upside. The SPX hourly and minute charts are showing positive divergence which would be agreeable to a market bounce, however, UTIL is heading lower.

Note Added 12:25 PM: Dollar/yen 96.62. Holy smokes. Now 96.29. There may be an event occurring.  SPX now has a 1602 handle. UTIL 477.38.  Buckle up this may go down hard. Crash helmets required immediately.

Note Added 12:27 PM:  SPX loses 1600. Hang on. The 10-year yield is dropping like a stone to 2.02% (Treasury prices up, yields down). The 50-day MA's fail on both the SPX and Dow. Keystone's SPX:VIX ratio indicator is at 87; the 68 level triggers a crash signal.

Note Added 12:33 PM:  TRIN at 1.55 so no big panic; orderly selling continues. SPX 1600.24. UTIL 476.52 so the trap door for markets is open (under 477.91). Keystone needs some heart pills.

Note Added 1:11 PM:  Dollar/yen recovers back above 97 to 97.22 so the broad indexes recover. UTIL leaps higher now at 479.13 closing the 477.91 trap door. SPX is back above the 50-day MA at 1605.02. Nothing to see here folks, move along, move along. Markets resume a sideways path. SPX LOD is 1598.23 so pay attention to this number moving forward.

Note Added 1:16 PM:  Use the UTIL 477.91 and 480.83 to steer the market ship today. UTIL is now up to 480.01. Above 480.83 and the broad indexes are in recovery rally mode. Between 477.91 and 480.83 markets meander sideways. Under 477.91 and the SPX will drop for tests of 1597 and 1593.

Note Added 1:44 PM:  UTIL 478.90 so markets meander sideways. The SPX plays to and fro across the 50-day MA at 1605.04. Keystone took profits on JO exiting this long coffee trade and will look to reenter. Coffee should develop into the fave commodity for markets moving forward for the weeks and months ahead and is likely very near a strong move higher.

Note Added 1:50 PM:  Big spike in UTIL now at 481.44 overtaking 480.83 so the bulls are in  market recovery mode. Watch to see if UTIL 480.83 holds, if so, markets will move higher into the close. SPX resistance above is 1614 R. HOD is 1614.64 so watch this number closely the rest of the day. Bears need to push UTIL back under 480.83.

Note Added 2:47 PM:  UTIL 481.34 so the bulls push the broad indexes higher. SPX now testing 1614 resistance, bounce or die.

Note Added 3:21 PM:  UTIL 481.33 so bulls are happy. SPX continues the fight at 1614 S/R.  Bounce or die. Traders must place their bets for tomorrow morning; either long, short, or exit trades and sit in cash until after the Jobs Report.

Note Added 3:52 PM:  Bounce. SPX moves above 1614 targeting 1618 R which gave way to a move to near 1620. Markets are very erratic and unstable ahead of the Jobs Report tomorrow. Anything can happen in currencies tonight. UTIL is 482.29 so the bulls are set up to run higher tomorrow, if, they receive an acceptable Jobs Report. Keybot the Quant is also in position to go long so the stage is set for drama. Lots can happen in the next few hours.  The higher volatility continues to create larger and larger intraday point swings. Volume is below average today at a run rate of only about 70% of a day's average volume so this does not create confidence in the late day pop. Keystone took profits on SPXL exiting this long trade. Also bot JO, the long coffee trade, opening up a new long position. Also bot more DNDN and WLT adding to these ongoing long trades in biotech and coal, respectively.

36 comments:

  1. as i mentioned before; wouldn't be surprised for a quick stab below the 50d sma -and here we even have below 1600- to trigger a boat load of sell orders, and then to quickly reverse... max pain for bears and bulls!?

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    1. can you tell us please exactly where is 50d sma ?
      does it have a relation with the gap at 1597 ?

      V.

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    2. 1605.04. fyi: i went long at SPX 1604; (SSO $76.75); expecting a ~20-30 point bounce before SPX will head south again to mid 1500s, where I will unload my SDSs, which I bought at ~1640s; aiming for a ~100 points gain. Of course I'll unload my SSOs in the bounce. NOT TRADING ADVICE.

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    3. For 50-day moving average, 50-day MA, or 50d sma (simple moving average), simply bring up the $SPX chart on stockcharts.com and plug in 50 for the MA's. The 50d sma is 1605.00 right now.

      For those new to trading, the 20-day MA and 50-day MA and 200-day MA are three key levels that tell you how bullish or bearish any stock is. Simply watch to see where price is at in relation to these MA's. Price moving down thru the 20-day MA is bearish. The 20 moving down thru the 50 is bearish. The 50 down thru the 200 is the bearish death cross. Price moving up thru the 20 is bullish. The 20 moving up thru the 50 is bullish for that stock or index and the 50 up thru the 200 is the bullish golden cross. So technicians pay a lot of attention to these moving averages (MA's) and today the 50-day MA for the $SPX and Dow ($INDU) are the flavor of the day.

      It's a fight. Price is now fighting for its life at 1604.82 seventeen pennies under the 50-day MA at 1604.99 making market bears smile. Price is now 1605.54 so the bulls smile.

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    4. Thank you KS.
      That guy, GS guy, ... GS stands for what?

      V.

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    5. Arnie, how high will this bounce go?

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    6. Thank you Arnie!
      only 20-30 points up??? you've said 1645' s or 16645's !
      V.

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    7. GS is Goldman Sachs, boy!

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    8. @ Arnie:
      typo, sorry: you've said 1645's or 1665's !

      V.

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    9. V, please continue to provide your wave count, it helps us as a guidance. Thank you.

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    10. V., are u long?

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    11. If spx break 1613R, do you guys think this bounce may be for the job report tomorrow, then head south again on Monday? Thanks!

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    12. V. i know that my earlier predictions were higher, but I have to adjust according to the price action and this retrace is already 15-20 points deeper than I'd expected; hence I need to shave off 15-20 points of my price-prediction as well... Originally I thought 1625ish would hold, then 1615ish, now we're down to 1600s... this market is in a hurry and is scaring a lot of bulls out of there longs; trust me I am sure many have sell-orders at 1600 and 1597...

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    13. ps: also note that I am a conservative trader (if you've traded long enough you've been slapped around hard enough to become conservative real quick; I am sure KS can agree); and I rather take 50-70% of each move with a very high degree of certainty, then trying to catch 80-90% of a move with much less... it's all about risk/reward and probabilities. in addition; counter trading can be costly, so one has to be extra careful, and extra conservative IMHO.

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    14. @ Anon:
      tomorrow report will be bad (and thus good for a big market up move)
      why? simple!
      remember the ISM number on US services ? it was slightly better than expected.
      BUT: when I've studied it better - the employment aspect draged in the ISM total number - I've discovered that although the expected employment in services subcomponent was expected at 51.4 it was ... 50.1.

      This number is an indicator of the employment figure tomorrow guys!
      Cause in US 70% of jobs are in services, US only now wants to develop more jobs in manufactury area.
      So: that's why the are BIG chances that tomorrow's employement number will be a lousy one (thus QE expectances rise=good for market).

      V.

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  2. I know he's a great guy.
    ok, basta! like the italians say .... no more comments - oh, maybe just in the essential points ;) ... tops and bottoms areas.
    expect a bounce in this area and 50% retracement of the whole downside.
    so ... see you at mid-1600 or higher - with a new comment.
    I CAN'T contribute on a daily basis here, I don't have time for that and I'm not sure it's legal considering my job (trader).
    But at turning points I'll appear here. Hope nobody will get pissed off.
    Watch the area 1590-1600 for building a base for a bigger bounce. Next stops: 1630-1633 / 1642-1648 / 1650-1674. If one of those areas proves as being R - next stop is in the mid to low 1500's.

    GS guy

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    1. I'll take FULL OF SHIT for $500, Alex. Thank you.

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  3. KS-
    Why coffee, its been in the garbage so long now---why do you finally see it making a strong up move ?

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    1. We have been watching JO for hte last few weeks. The weekly and daily charts are washed out and it should be at a base right now. There can be fits and starts this is why Keystone has been moving in and out right now. For JO, price may come down to 26.60 again but anywhere in here is likely a good base moving forward. Perhaps coffee is only one news report away from a news story that says the weather or politics will hurt the coffee crop, or a bean virus hits. But the charts say that coffee has paid its dues and it should be sideways to sideways up for weeks, months perhaps a couple years ahead, just like when we watched natty gas in early 2012 and called the bottom in April-May 2012 due to the positive divergence. Time will tell. Keystone is drinking more coffee and passing out cans of Folgers and Maxwell House to help the trade out.

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    2. Key, I like the way you express coffee! :) lol

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  4. Arnie, your summary of trading is one if the best I've ever read anywhere--if every new trader followed your wisdom, they'd be ahead of the game.
    Max pain trade--2 possibilities:
    1. SPX opens up 20, causing shorts to cover and bulls to chase the runup
    2. A pop to 1635 then a sharp decline head-fake that causes bears to go short and bulls to exit, followed by a quick 30 point rise that leaves both bulls and bears in the dust.

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    1. Charles, are you still into gold miners? What is your take?

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    2. Charles, thank you for the compliment; that means a lot to me! Trust me; I've learned a lot from KS, noting where here enters and exits etc. I've also learned from others here, incl. you. And I continue to learn

      What I (prefer to) see now is that this rally of the 1598 low was a sucker c-wave rally. First blow some longs by dropping below 50d sma, then squeeze the shorts by closing green. Today's gains of ~25 points are right around my target of 20-30; so I will exit my SSO tomorrow morning. By now, I think we'll have one more lower low to come; possibly same level.

      my SSO trade today was mainly to hedge my SDS, which worked out great.

      I agree with your possibilities. Either way, both sides will be screwed as usual, 'cause that's how the market roles...

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    3. I want to thank KS for hosting a forum that is actually civil with a minimum of trolls and trash talk.
      Anon, yes, I am playing the miners via NUGT, GDX and GDXJ. I exited NUGT a couple days ago at $12.23 for a nice gain, it dipped for a few days and then came back up to that level today. Truth be told I have traded both sides of the miners over the past month. My sense is the sector has bottomed but may noodle around for a couple of months or even take another hit to retest lows, so I'm playing small and short-term. That goes for all my trades at this point....

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  5. ps: not expecting the SPX to drop to mid-1500s tomorrow or day after that. It kinda reversed IMHO in no mans land (no real S/R levels); and I think it would want to test the 1578 +/- 5 area (maybe tomorrow/monday). That be massive support area from a pivot and EWT perspective... It would also rime with KS' 80/20 rule. Since it traded and closed below 1620, it will want to see 1580s...

    From that ~1578 level we should see a decent bounce to ~1640 again, IMHO, before the next decline to mid 1500s. That be a nice ABC and setting up nicely for the next run to 1700+

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    1. Arnie, thank you for sharing your wave counts, you are just so precise and to the point.

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    2. @ Arnie:
      spx closed at 1622.56 Arnie.

      V.

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  6. KS,

    What level of the $VIX would Keybot like to see for the bullish side?

    TW

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    1. UTIL 480.83 and 477.91 and JJC 41.38 are more important. Volatility may stay elevated for a while and stay in the bear camp.

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  7. Arnie, V, Charles, and of course Keystone, thank you for all the posts. This information is fantastic, and I look forward every morning and throughout the day to continuing to learn from all your knowledge. Arnie, thanks for all the insight into your counts.

    Concerning projections, the 200-day EMA on the 30 minute chart had been listed as a key S/R over the last couple of days. KS, are you expecting us to touch this soon - potential a touch, followed by the drop Arnie mentioned? Is Keybot simply looking for a move above this number to flip long? Also, how long does one wait before assuming we've offically cleared a S/R (if we move above it by a point or two, how long does it have to stay there to legitimize the break of the S/R). Finally, where does one find the 30-minute chart - is the 200 day EMA still 1628.

    Thanks again, BK

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    1. 60-minute with 200 EMA was updated today (Friday), Keybot's site is updated as well. Usually breaks of support and resistance allow 7 to 10 minutes, if it holds then price is set to move in that direction to the new support or resistance level. You should be able to bring up the minute and hourly charts from your trading platform. Stockcharts.com provides all the charts in the shorter time frames but this is with a subscription.

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  8. KS,

    What do you think of FIO and ARUN as potential knife-catches, for someone willing to assume the risk?

    TW

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    1. ARUN looks too psycho, FIO appears interesting.

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  9. @ all:
    one more information to consider:
    on the daily chart there were 11 bearish days ... the period for a confirmed bearish pattern until exhaustion is 8-12 days. More than 12 days means medium to long term trend reversal.
    Yesterday was the 11th day and the market action was telling.
    Further upside after the employment reports and bears will have a true problem with some short-closing waves.

    V.

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    1. V, what are u trying to say?
      what do you mean by long term trend reversal? I am not following..please explain. Thanks!

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    2. @ Anon:
      without that strong up move from yesterday - that would have been the eleventh down days (with a break of strong support area) - and that could have met some follow-through down on Friday (thus the 12th day).
      That would have sealed a strong break of the support channel of the up trend from Nov'12 (thus a trend changer) . Do you understand?

      But NO! Yesterday was a strong up day and that should rise some question marks around the heads of bears! Because data is sent to special guys 24 hours prior to rest of the market!

      The action during the second half of yesterday should rise BIG question marks in the heads of those who are short!
      Also, today is EOW - end of week.

      V.

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