Friday, June 14, 2013

Keystone's Morning Wake-Up 6/14/13; Consumer Sentiment

The bulls came to play yesterday and reversed all the pre-market negativity from Japan and Asia. The dollar/yen moved from 94-ish to up over 95 during the day which means weaker yen and higher equities which occurred. Watch dollar/yen 95 as a pivot since above the equity bulls win and below the equity bears win. Markets simply do the bidding of the central bankers. The big late day push yesterday was due to the WSJ article that said the Fed will keep the spigot on and any tightening moves are far in the future. The article is written by Jon Hilsenrath, who the majority of traders believe to be a mouthpiece for the Fed, so anytime Hilsenrath releases an article in the afternoon, the SPX will gain from 10 to 20 handles. Just think of the folks that know the article is coming and position themselves long ahead of the release booking easy gains. Volume was below average for the big market run up maintaining the trend of low volume up days and volume on down days outpacing up volume days.

Keystone's trading algo, Keybot the Quant, should flip to the long side at the opening bell today with any buoyancy in the SPX triggering the move. UTIL moved above both the 480.94 and 481.39 levels supplying bull fuel yesterday. Today creates new drama since the levels of interest for next week with utes is UTIL 480.94 and 488.48. UTIL begins today at 485 so the 481.39 remains very important but after lunch time the 488.48 will gain importance and at the closing bell today, UTIL must be above 488.48, otherwise, next week will set up for the market bears. Thus, use UTIL 488.48 at 4 PM EST today as a key gauge for next week. Commodities are important today and the bulls need to push GTX above 4759 (now at 4738) to receive further upside fuel.


Markets continue to sort out asset relationships. One day stocks go up with yields up, the next day they move opposite. The 10-year yield is at 2.12% this morning well off the highs a couple days ago (reference the $TNX daily chart posted a day or two ago that forecasted the spank down). The 2.05% level is support so yield may want to move down for a test. The dollar has dropped in recent days with the euro rising and yen strengthening but commodities remain weak. The euro is 1.3316 remaining above 1.33 ever since Draghi's inaction last week.  Asset relationships will continue to sort out in the days ahead; stocks, commodities, bonds, yen, euro and dollar. Perhaps the asset relationships will develop consistency after the FOMC announcements and press conference next Wednesday, 6/19/13.


The 8 MA is above the 34 MA signaling bullish markets for the hours ahead. The SPX is above the 200 EMA on the 60-minute chart at 1629.06 signaling bullish markets for the hours and days ahead. The bears are having a tough time keeping the SPX under the 200 EMA, a critical bull-bear line in the sand. Bears got nothing until they can move the SPX back under 1629. For the SPX starting at 1636, the bulls need only three points, to move up through 1639 and this will light the way towards the strong 1649-1650 resistance. The bears need to retrace yesterday's up move to regain their mojo, a formidable task, but yesterday the bulls retraced the prior day's bear move, so not at all impossible, especially in these increasingly volatile and erratic markets. SPX S/R is 1649-1650, 1643, 1634, 1629, 1626-1627 and 1623. The bulls successfully defended the 50-day MA at 1612.21 yesterday so price is now moving up for a potential test of the 20-day MA at 1643.34.


Producer Price Index (PPI) hits at 8:30 AM. Industrial Production 9:15 AM. Consumer Sentiment is released at 9:55 AM and should cause a market pivot. On the esoteric side, Keystone's Eclipse Indicator identifies the remainder of June as having potential for a large market sell off. A major Bradley turn occurs Saturday 6/22/13, so a window opens from today through the month-end at 6/28/13 for a major market trend change to occur. Thus, the last couple weeks of June should be entertaining. In a nutshell, for today, watch SPX 1639, which would lead to a test of the 20-day MA at 1643, also, UTIL 480.94, 481.39 and 488.48, and GTX 4759. The BOJ controls the markets so if the dollar/yen moves higher to 95.10, 95.20, 95.30 and higher, stocks will rally. If the dollar/yen moves lower under 95.00 to 94.90, 94.80, and lower, stocks will sell off. Good luck to all the golfers at the U.S. Open.


Note Added 10:36 AM:  Dollar/yen up to 99.22 helping create market buoyancy. UTIL leaps to a HOD at 488.22, now at 487.16, only pennies from the important 488.48 explained above. GTX jumps above 4759 which should create bullishness. TRIN is 1.00 neutral not wanting to pick a side again today although the whole first hour was sub one favoring bulls. Keybot the Quant did not yet flip long; perhaps a move back above 1638 will kick things in gear for the bulls and trigger the algo to move to the long side.  The SPX popped on Consumer Sentiment at 9:55 AM but then at 10 AM a downward pivot occurs and the broad indexes drift lower ever since. The beat goes on. Markets meander sideways for now. Time will tell to see how the day proceeds. Keystone took profits on FRO and SLV exiting both trades. Both remain attractive as long trades moving forward and will look to reenter.  Also bot SPXL opening a new long position that is long the S&P.

Note Added 12:07 PM:  Dollar/yen 94.17. Say no more. As highlighted above, the lower dollar/yen results in weaker equities. The central bankers control the markets.  Euro 1.3325. UTIL 486.65. GTX 4770. VIX 16.82. TRIN 1.36. SPX 1630.97. The 20-day MA is 1642.37 and the HOD is 1640.80 so only about one-point away from a touch before receiving the 10 AM spank down. The 10-year yield is 2.11%. Utilities and commodities say the broad indexes should move higher while volatility and TRIN want to see lower numbers for the SPX. The 200 EMA on the 60-minute is 1629.21 and is a major bull-bear line in the sand. Price is 1629.57 so the bulls are winning by a hair. Above or below 1629.21 will tell you a lot about the preferred direction of equities today and moving forward. The SPX is respecting the 1629 support with price moving through a sideways tight 3-point range at 1629-1632 for the last one and one-half hour.

14 comments:

  1. watch out people!
    traingle developping in usd/jpy...first break might be a fake, the second might be tre true one ... so: the market might go one direction until the european market close, and after that go to the opposite direction! (it's just an intuition, I've seen that previously!)

    http://stocktwits.com/message/14100641

    V.

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    1. sorry for the typos :) ...being in a hurry :D
      ''triangle developing .... the second might be the true one"
      :)
      V.

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    2. Consumer Sentiment is 9:55 AM so there should be a pivot around 10 AM.

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    3. yes, more events here
      http://www.fxstreet.com/fundamental/economic-calendar/

      V.

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  2. so funny :)))
    after U Michigan consumer sentiment below expectations SPX wants to rally :))))))))))))))))

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  3. Keybot flip? Thanks.

    BK

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  4. Nope, Keybot did not flip long yet. It should above SPX 1638. UTIL and GTX are strong which will help the bulls but the broad indexes are responding in a lackluster fashion, so far. The UTIL 488.48 will be key at 4 PM EST today.

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  5. Wedge forming on the SPX, which way will it break? KS, what triggered your move into SPXL? My thinking is of the 1626-8 support holds, and VIX sags a bit, that sets up a move higher next week in OEX week, i.e. the wedge breaks to the upside. Plus, traders may bid the market up in anticipation of Bernanke dumping more hootch in the punchbowl on the 19th.
    The 20-day MA has curled over, suggesting the trend is no longer up-up-up, but sentiment and MACD etc. suggest another push higher is likely. A move back to 1680 would blow out the hobby bears and maybe push sentiment back to bullish extremes.
    The higher volatility and big swings of the past two weeks are a trader's dream...

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    1. Do not read much into the SPXL Charles, it is more of a long hedge than anything since the overall portfolio remains heavily short. This is an interesting day, the utes (UTIL) and commodities (GTX) say the markets should be stronger, but they do not appear to have a lot of gas. Markets may want to try and chart a sideways path for a couple days until the Fed next week. Use the 200 EMA on the 60-minute as a key gauge, now at 1629.20 which represents a major bull-bear line in the sand. Price is now 1629.97 so bulls are favored by a sliver. It is also all about the yen. The strengthening of the yen this morning with dollar/yen collapsing lower sends equities lower and will send Nikkei lower. The treacherous market action continues.

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  6. WLT is going down 10% a day. Does KeyBot have a stop to this position? WLT will get to $1 in a few weeks.

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  7. Yep, WLT dumping -12%, now -15%, that knife was not yet finished. Capitulatory selling volume over three times an average day right now. Anyone holding it gave up today. Coal hit across the board again with all of them down ACI, ANR, BTU, etc... CLF (iron ore) down. X, NUE, RS (steels) all lower which hurts met coal. Probably as a result of global slowdown so all these are getting hit further. UNG is down -2% which will also hurt coal. Higher natty gas price will help the coals base and begin the recovery higher.

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  8. I would guess WLT becomes an attractive acquisition at these levels. Interestingly, the options board on WLT is messed up--bid has disappeared on some options.

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  9. WLT trading halted pending news. The market didn't like their cancelling a $1.55 B refinancing loan.

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