Friday, June 21, 2013

Keystone's Morning Wake-Up 6/21/13

Happy first day of summer and summer solstice. S&P futures were up over +10 but now leak back to +4. OpEx Quad Witching is today. Volume should be robust at the open and the close. Watch to see if the open is sold off since elevated prints will occur at the open. The full moon is Saturday to Sunday and stocks tend to be bullish through the full moon so a low today may provide a long opportunity into Monday. The major Bradley turn is tomorrow and it has not disappointed since the window has created the big drop in stocks this week. Likewise, Keystone's Eclipse indicator targets 6/10/13 give or take a couple weeks or so as a potential market top and that may have come to be as well. The markets are fickle so you can only take the action hour to hour and see how the drama unfolds.

Quarter and one-half year end (EOQ2 and EOH1) window dressing should appear for the remaining days of June perhaps helping create some market buoyancy. Traders will be squaring positions for these important schedule dates. The week after OpEx in June is typically negative but the negativity appears this week and is likely more due to the calendar in June where June starts later than normal. Of interest is to what extent traders will take their long chips off the table and go home. The volume is strong as stocks are thrown overboard the last two days. Many of these traders are likely taking the summer off and booking the big long-side gains on the year. This may create a lack of buyers during the summer time.

The weakness in utilities is a very bearish indication for stocks moving forward. Watch the UTIL 50-week MA at 481-ish. Equities will remain in deep trouble as long as UTIL remains under 481. For today, watch RTH 51.46 (causing bearishness now), XLF 19.27 (causing bearishness now) and SOX 456.10 (causing bullishness now). Any change to these three parameters will move the broad indexes in that same direction. Keybot the Quant is back to the short side. For the SPX today starting at 1588, the bears need to push under 1584 and that will accelerate another leg lower where the SPX will likely make a bee-line for the strong and important 1576 support. Bulls will try to stop the bleeding by sending RTH and XLF above the levels listed. Watch the SPX 20-week MA at 1582.17 as support.

The CPC put/call chart last evening shows a print at 1.39 so nibbling on longs from the long shopping list can begin, however, the market selling likely has a need to continue over the next one to three weeks to place a proper market bottom. NYMO is at -79, a low number indicating that a market bottom is at hand or near. The NYMO can definitely drop lower but again, some nibbling on longs that you have done the homework on may be prudent. Watch the SPX:VIX ratio since a drop under 68 and all bets are off since the markets will be headed to the low 1500's and panic and fear will definitely return to the markets. Earnings season is coming so pay attention to any pre-announcements and of course, companies must deliver the goods. If earnings are weak, this verifies the global slowdown, and flies in the face of the Fed that thinks the economy is improving. Lots of drama is in store over the next couple months. In a nutshell for today, watch RTH 51.46, XLF 19.27, SOX 456.10, UTIL 481 and SPX 1584 to determine market direction.

Note Added 9:31 AM:  SPX moves higher to test the strong 1593 S/R and punches up through. RTH 51.55. XLF 19.24. UTIL 469. SOX 464. Wow, uber bullish TRIN at rarely seen numbers, plummeting to 0.12 now at 0.30. Wild action these days.

Note Added 9:35 AM: SPX up to test the 1597-1600 resistance zone. RTH is allowing the market buoyancy to occur while the XLF is placing a lid on the market move higher today, so far. TRIN 0.67. ORCL is down -9%.

Note Added 11:15 AM: RTH is 51.24 slipping on a banana peel so the markets stumble lower. SPX LOD 1585.45 so pay attention to this number and of course today's lower number of interest 1584 since the SPX will likely collapse to 1576 if 1584 fails. If RTH stays under 51.46 and the XLF under 19.27, the bulls got nothing.

Note Added 12:08 PM:  The SOX drops to test the lower boundary at 456.35 (use this as the bull-bear line in the sand rather than the 456.10 mentioned above) and bounces so that shows that the bears do not have further downside juice. But RTH and XLF remain bearish so the bulls do not have any juice either, hence, sideways markets ahead until one of these three parameters make a decision. SPX LOD 1577.70 near the strong 1576 support and bouncing exactly off the 100-day MA at 1577.64. SPX is dancing with the 20-week MA at 1581.93 which is an important signal for the path ahead as well. SPX S/R is 1607, 1600, 1599, 1598, 1597, 1593, 1589, 1586, 1583, 1581.93 (20-week), 1579, 1577.64 (100-day), and the strong floor at 1576The action will ramp up in the last hour of trading today.

Note Added 1:13 PM:  SPX is up to the 1593 S/R again. Note the RTH rising now at 51.46 on the dot. This rise creates the upward lift in equities. If RTH moves above 51.46, bull fuel is provided and the SPX will move to the 1597-1600 resistance zone again. If RTH 51.46-51.47 holds as a resistance level and price drifts lower again, so will equities. The broad indexes may want to float along sideways with an upward bias until 3 PM and then the dice will be rolled for the final hour of trading.

Note Added 1:28 PM:  Whoopsies. RTH down to 51.42 so equities drift lower again. The retail sector is the most influential force on market direction right now.

Note Added 3:19 PM:  RTH sneaks above 51.47 so the SPX floats higher towards the 1597-1600 resistance zone. RTH now printing dead-on the bull-bear line at 51.46 - 51.48. Whichever way retail goes, so goes the markets. SPX sitting above the 1593 support. VIX drops from 19.30 to 18.30 over the last hour providing the bull oomph this afternoon. TRIN 0.82.

Note Added 3:31 PM: RTH 51.54 firmly in the bull camp. SPX up to 1598. XLF 19.22.  Bulls would need XLF 19.27 and higher to send the SPX above 1600 into the weekend.

Note Added 3:51 PM:  RTH 51.39. XLF 19.14. SOX 460.95. SPX at 1593 S/R.

Note Added 4:00 PM: Markets stumble sideways since retail and financials stay in the bear camp and semi's stay in the bull camp. One of these three will flinch and send the broad markets that way. This drama will continue Monday morning. The bounce today is off the 100-day MA at 1577.75 so this number carries clout moving forward. SPX parks itself at the strong 1593 S/R.  Will be interesting to see if a China 'banking crisis' occurs over the weekend, or not.

25 comments:

  1. Hi KS, technically of course you are a better chart reader than me, you mentioned that SOX may go 450 or lower yesterday.
    For today and forward, do you see SOX will roll over say may be around 400-ish?
    Thanks!

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  2. pay close attention to the market action... the lack of a corrective bounce to 1610-1620 after apparently 5 waves down were registered yesterday hints to a possible end of int 4 today or on Monday/Tuesday.
    it's just a possibility, DON'T GO LONG until confirmed by price action.

    I'm still following the action.
    next pivot (last?) : 1574/1576.

    as time there were already 4 weeks of correction. the average correction time for a int.wave it's 4-6 weeks. lack of corrective bounce makes me careful shorting here.

    V.

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    1. now that is funny :)
      did I pin-pointed to the minute (June 21, 2013 at 12:40 PM ) the end of int.4 ? :D?
      lol ..just kidding.
      still watching market action.

      confirmed int.4 ended above 1626-1630 in an impulsive way.
      if rise it's blocked at 1610-1620 on Monday/Tuesday, the rise might be a 'b' of a 'C'.
      If it gets to 1626-1630-1632, int.4 it's ended.

      V.

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    2. V, HOD=1599.19, 11 points up this morning, do you consider this a corrective bounce or we have to wait for end-of-day to see?
      So we are still riding int.4 of C-wave?
      I am just really underwater for being a bear since January, I am hoping for a 10% correction and I will give up the rest of the losses.
      Thanks!

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    3. I can't really say now anything.
      I need to see the action of today and Monday (before big US data of next Tuesday) to get an idea.

      But if int.4 started at 1674 (after int 3 was truncated) and if A=C the minimum of today satisfied the minimum requirements for int.4.

      I can't say more right now , there is a bounce there but I need time to see it's nature. That's why I've said I need to study the action of today and Monday and it's behaviour in the 1610-1620 area , below and/or beyond.

      V.

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  3. Well, the whole idea of the site is for you to develop into the chart reader. Sounds like you have to prepare better for each of your trades, scaling-in rather than jumping in with one chunk, and having an exit plan. Some traders use a percent like 2 or 3 % loss as the limit when they will exit the trade. Some will use a total amount like $100, or $200 or $1K, whatever your risk tolerance is, as the limit where they will toss in the towel. Always use these mental types of stops and then follow through with executing them since placing actual stops may simply give the market makers something to gun for. So, as the semi's went higher against you, you could have made another 2 or 3 adds to the position, or exited much lower with a minor loss if it hit one of your limits you set for yourself. All that said, the SOX charts were highlighted about a week ago when Keystone started playing around with SSG inverse ETF. Type 'SOX' in the search box for further study on semi's.

    The weekly SOX chart appear to be rolling over and indicates lower lows for price for the weeks and months to come. The RSI did not quite reach overbot but the indicators in general have rolled over with negative divergence. It does not mean they cannot come up for one more look but the chart looks good for more continued down. Keybot is tracking SOX 456.35 so you may want to follow that number since that will indicate there are lower lows coming for SOX ahead, or not. The 410 is support from Aug-Sept 2012 and spring 2013, then the upward sloping 200-day MA at 385 is a target and the 375 support as well. All of those appear doable over time in the weeks and months ahead. As a rule if you think you will own something for many weeks or months, do not play the 2x and 3x ETF's, play the single ETF's instead. So, everything depends on your risk tolerance, need for capital, time frames, and many other factors but semi's like the markets in general are anticipated to make further lows ahead.

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    1. Above 2 paragraphs are for SOX (semiconductors).

      Delete
  4. 20 week SMA is at 1581.... important support area (I always give that +/- 5)

    Daily SSTOs, getting close to OS; no sign of any reversal though.
    Weekly SSTOs also firmly down on all three SSTOs, none getting close to OS and no sign of any reversal...

    Positive divergence on the hourly RSI (5) though with the new low... bounce time!?

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  5. Yep, the 100-day (1577) and 20-week (1582) are providing levels for price to play off of, and the 1576 is a sturdy floor. If 1576 fails, that would change the game.

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    1. i'd like to see 1576 fail to give a serious bull scare. feels like it's kinda needed if the market wants to best it's 1687 high. just two down days, with one big, just doesn't do that imho

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    2. Arnie, if you do some counting and calculation and consider that int.3 ended at 1674 after wave 5 of int.3 was truncated (after the 1687 peak) and check Minor A (1674-1598) versus minimum of today (considering we are now in Minor C) and apply A=C ratio , what do you get?
      Check the minimum of today! ;)

      V.

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    3. The 1576 should give way, if not now or Monday, then perhaps the first few days of July or in July. If it does the technical damage created may be to a degree that a strong recovery move is no longer on the table (back to new highs). Right now, markets could recover back to the highs. Chairman Bernanke did not pull back on QE because he thinks the economy is getting better, that is a smoke screen, he knows it is not. Bernanke simply saw the euphoric up move in equities and had to stop it. It is obvious that the programs are harming the markets and economy more than helping. On top of that, the social unrest around the world, now Brazil, a result of the central bankers helping the wealthy at the expense of regular folks, has to be creating concern. This social unrest is likely coming to a theatre near you soon.

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    4. V. yes, that could have been a truncated 5th, but Pretzel really argued that he wouldn't consider it as such for many technical and EWT reasons. And I respect his judgement very much. Also note that the market always keeps all it's options open at all times, and whatever way you (can) count makes sense...

      Note that IMHO the market has only a bunch of 4th and 5th waves left, if it doesn't decide 1687 was it...., at several higher degrees. So the market moving forward will become more and more choppy, harder to trade. None EWers will call this a topping process. At the degree we're talking (crash to follow) that makes sense.

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  6. KS, I agree. We are closer to a top than a bottom (bigger picture scale so to say; not some intra day blips or weekly bottoms), but on multi-year scales... The CBers screwed this one up big time, and as usual the regular joe pays for it and they walk away with it...

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  7. I'm seeing a potential inverse head and shoulders in the SPX. If price hangs around 1585 that could become the right shoulder. The market may need some sort of catalyst to bounce higher today, like a leak from the WSJ i.e. the usual....

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  8. RTH 51.47-51.48 us a firm rudder for the stock market ship today. It is now oscillating above and below, current print RTH 51.51 so the bulls are making a push. Whichever way RTH goes, so goes the markets.

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  9. Final act opening with drama: can SPX punch through resistance at 1597-1600 or will it fall on its sword? Something for everyone today--those holding puts had a great chance to exit with fat profits, now maybe call holders get a chance to unload *if* SPX clears 1600 with momo. If RTH is key then we may get liftoff.

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  10. whole move from 1584 to close looks corrective; didn't see the breath needed to call it "bottom is in". simply put:

    5 waves down to 1584, then 3 up to 1599 (wave a), 3 down to 1577 (wave b), 5 up to 1598 (wave c); it's called an expanded flat correction. Thus lower prices are likely on tap next week. I expect that (mid 1500s!?) to be the end of this down move. Market has to go below 1460 before I call the entire uptrend over.... so lot's of room to go.

    also note that QE3, 4 etc are still in full force. Bernanke only said they'll tapper later this year (maybe...) and end them all together 2014 (maybe) so liquidity is STILL being injected into the market every day... hence NOTHING has changed yet...

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  11. Anyway to post a chart?

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  12. Arnie,
    look what I've found:
    "The topping process is over for the countertrend rally that started in the first quarter of 2009. The next leg lower that commenced in April should now deliver a decline that will ultimately be bigger than the 2007-2009 sell-off. ... Gold poked to a new high, but in doing so, likely completed a pattern in mid-May that will lead to a multi-month selloff. ... The U.S. dollar index DXY +0.82% is fulfilling EWFF's forecast for a strong advance."
    It's from June 2013 Prechter newsletter.
    :)
    Pretzel is a top-tier EW-er. How come after this Prechter newsletter was released, Pretzel turned back to a multi-year chart that treats the trend 2009-present as corrective, not impulsive?

    Until 1-2 days ago Pretzel thought 1525-1535 as his 3'rd target and the end-point of int.4.
    Yesterday, suddendly, the 3'rd target become "the 3'rd wave" (from a 5 wave down formation). How come? :)?

    Reviewing the EW basic rules, I observed that usually when we deal with a complex corrective formation (actual int.4) the last wave (C) never ever has 5 waves, but only 3 waves or alternate structures - i.e. double zig-zags or other stuff-! But NEVER 5 clear down impulsive waves!

    Pretzel is one of my respected masters (as he was right much more times than he was wrong)- along with KS, Caldaro and others! But I never ever follow dogmatically one or another TA analyst (not even KS)!

    It's not good for my wallet's health! :).

    Every TA analyst is a human , not a machine! Can make errors, is opened to emotional bias, his rational capacities (focus, attention, analitical and synthetical abilities and so on) can meet fluctuations. That's why following dogmatically one analyst or another is not ok!

    I suspect that Pretzel was contaminated for the moment with Daneric-Prechter perma-bear virus. He may be right with his target (1525-1535 or even lower as he stated) BUT: the Friday market action (as waves) allow (ALLOW, NOT DETERMINE, OK?) the end on int.4 and people have to know that and not fall in love with any (perma)bull/bear bias but keeping their eyes open!

    If in doubt or if not fully understanding what is happening, I'm not in :).

    How come lately all the doomers revived at tv, on the internet ...and so on? :)?
    Don't you observe that when $cpce or $cpc reach certain (high) levels all the doomers come out in light yelling and growling?

    Arnie:
    -there has been a 6.3% correction and a 4 week correction until now (price/time)- this qualifies for int.4
    - as structure of waves : we had a Minor A, a Minor B and now a Minor C that might or might not ended the downside (Monday/Tuesday action will be telling). Anyway, keep a close eye on that double ZZ.
    It's a wave 4 and wave 4 can fool everybody.
    That's why in one of my previous messages I've said :DON'T GO LONG NOW! Because we need confirmation (clear 5 waves up to more than 1620-1628, with good fibo internal relations)! Than , when a lower high is put in place (wave 2 of potential int. 5) that's when we go long, when we have confirmation!

    People have to be aware that right now the chances of int.4 to be ended are 50-50%. Monday and Tuesday action will bring clarity!

    V.

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  13. V., Caldaro thinks the correction could have ended today with A=C. Are you in agreement with him? Do you expect a bounce to 1610-1620? 1616 is 50% Fibo. Are you scaling in longs? CN, had an interesting post in Caldaro's blog. As long as 1576 (2007 all-time high), then market is likely to make new highs. Otherwise, 1687 is the long-term top and it's time to go short when a lower high is attained. What do you think? Feel free to chime in Arnie and KS (even though EW is not his main tool). I have to say that Pretzel is scary good with his market predictions but according to Caldaro, there are three more uptrends to come: Int. V, Major 5, and Primary V (which should all end around Spring 2014). $BKX had a double bottom today and touched Pretzel's GTFO level but held (so far).

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    1. I'd start my reply by saying that what I wanted to say, I've said already. I have te soo the type of action on Monday and Tuesday.
      Everything I might say now more than already said might be wrong assuming one thing or another previous to real market action starting on Monday.

      Lomg term view (quarters, years) I consider that we might see The Top at 1850-2100 as previously noted here by me in other comments.

      Yes there might be some weakness through-out the summer 2013, but 1000 % The Top (the big one) is not in. When int 4 will be confirmed as ended and int 5 will start (with one more new all time high, if not truncated) you will see all those dangerous bears starting to dissipate.

      Yes after int 5 there will be a Major 4 (down) probabbly down in the 1400's (in August, September or October 2013)... one more chance that all mighty bears to growl one more time.

      But after that there is also a Major 5 up!

      Do you think China might be a problem with some liquidity issues, some credit-crunch? They are sitting on a mountain of money, if the problems really get serious they won't allow their economy to crumble having all those money! Think the situation, don't transform the reality adapting it according to a bull/bear bias like some guy are doing on the internet!
      yes, the stocks will get down and the stocks will get up... but targets as "400" on DOW like Prechter preached are real dumb! He doesn't really understands what "DOW at 400 points" might mean to US economy , USD value, and so on... who really sane on Earth will think that FED and US Government will allow a disease like that to happen???!?!?!?! It would destroy the US position in the world!

      Never believe the "perma" guys! (bulls or bears)

      They transform reality according to their illusions!
      Keep the things simple and have a rational approach to reality!

      V.

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    2. ok guys, I won't be here until Monday, I'll take a trip to the mountains this week-end :)
      see you later,

      V.

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  14. "... Will be interesting to see if a China 'banking crisis' occurs over the weekend, or not. ..."

    An interesting writeup ...

    http://wallstreetexaminer.com/2013/06/20/blame-china-heres-why/

    ... and a PBOC reversal over the weekend could ... well, you can fill in the blanks.

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  15. Yep, China is front and center again. The futures were up Friday morning when China intervened, but apparently they are trying to tamp down the shadow lending. As they say in Brooklyn, 'good luck wit dat'. The bubbles take years to form so there is likely serious damage to occur ahead. Even if the PBOC can manage things to some extent, the cat is out of the bag that China's growth will be far lower leading to a weaker global economy. Europe is China's number one customer so the China weakness is in part due to the ongoing recessions and depressions in Europe. If China, Europe and U.S are a three-legged stool, two legs are cracked and about to fail with the U.S. third leg creaking as well. The 100-day MA at 1577 was the key bounce points so that is important. Trannies were bludgeoned, not a great indicator forward for the global economy. The SPX weekly chart says lower numbers ahead but markets may recover next week to 1600-1630 before the next leg down. Watch to see if semiconductors weaken, if so, we will be headed to the mid 1550's for SPX.

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