Wednesday, June 12, 2013

Keystone's Morning Wake-Up and Midday Market Action 6/12/13; 10-Year Note Auction

Mortgage Applications bounce +5% reversing the 4-week downtrend but this is likely the last of the refi's, and buyers on the fence jumping in, as the mortgage rates rise. The recent rise in rates places a damper on home builders and the real estate sector in general. Rates should retreat lower again but perhaps some short-term damage has occurred to the housing sector. The markets bears came to play yesterday with the broad indexes all dropping about one percent with tech and small caps leading lower which is a bearish indication. But, what a difference a day makes, since the S&P 500 is set to bounce back this morning. The 8 MA is below the 34 MA on the 30-minute chart and the SPX is below the 200 EMA on the 60-minute chart at 1630.10 signaling bearish markets ahead, however, the bulls may try to reverse these signals this morning. The SPX under the 200 EMA signals bad things for markets ahead. The SPX sits exactly at the strong 1626-1627 support between the 20-day MA at 1646.36 serving as a resistance ceiling, and the 50-day MA at 1609.71 serving as a support floor. Thus, use these two key moving averages as a bracket; the bulls win and move higher above 1646 while the bears win and move lower under 1610.

The drama around utilities will continue today with UTIL 481.39 and 481.00 two key bull-bear lines in the sand. If UTIL stays above 481.39, the bulls are whistling Dixie and have no fears or worries. If UTIL falls under 481.39, the markets are in trouble. If UTIL 481.00 fails, the markets should drop like a stone. UTIL begins at 482.15. Thus, independent of how the broad indexes are moving, pay attention to UTIL 481.39 since it will likely provide the market answer today.  Bulls need commodities to move higher to receive additional upside fuel so watch the bull-bear line at GTX 4755. GTX is at 4691. If UTIL drops under 481.39 and the SPX drops under 1623, Keybot will likely flip to the short side. If the SPX stays above 1623 today, Keybot will likely remain long.  


For the SPX today, starting at 1626, the bulls need to touch the 1640 handle, 14 points higher, to unleash the upside and signal the all-clear for further upside. The bears need to push under 1623 to accelerate the downside to 1618 and 1614 in short order. A move through 1624-1639 is sideways action. The S&P futures are +9 about one-hour ahead of the opening bell. Oil Inventories are at 10:30 AM and the 10-Year Note Auction is 1 PM. Treasury Budget is 2 PM. PVH earnings provide a gauge on the retail sector. Watch UTIL 481.39 and 481.00, GTX 4755 and SPX 1623 and 1640.

Note Added 9:42 AM:  SPX jumps higher but not yet at the 1640 level. UTIL 485.12. Say no more. TRIN 0.64.  Say no more. Bulls can keep the broad indexes elevated. GTX 4713.  Dollar/yen drifting a touch lower to 96.33 so the SPX drifts a touch lower. SPX resistance is the strong 1634 level, 1636, 1640, 1643 and the 20-day MA at 1645.55. Support is at 1631, 1629, 1626-1627, 1623, 1618, 1614 and the 50-day MA at 1610.96. UTIL continues to show a descending triangle pattern on the 15-minute chart, as long as the 485-ish holds as a ceiling. The base line of the triangle is 482.50-ish which would represent a failure and a downside target of 477.

Note Added 10:00 AM:  UTIL 484.75. TRIN 0.66. SPX 1633.10. Keystone took profits on the DNDN trade overnight and will look to reenter. DNDN remains attractive moving forward. Also took profits, which only amount to a dinner out on the town, on SLV exiting this long trade. Will look to reenter.

Note Added 10:31 AM:  SPX 200 EMA on the 60-minute is 1630.14 and price is in a fight at this level now printing 1631.17.  The 200 EMA is an important level for the market path forward. UTIL 482.61. TRIN 0.65.

Note Added 11:31 AM:  UTIL fails both levels; 481.39 and 481.00. It is surprising to see the broad indexes not selling off more. UTIL is printing a back kiss at 481.00 now so it is bounce or die time. Markets are at an inflection and appear to want to make a decision today one way or the other. UTIL 480.34. TRIN 0.69. Keybot the Quant is now in position to flip to the short side but the algo likely wants to see the SPX print under 1623. SPX sits at the 1626-1627 support/resistance where it started today. Dollar/yen 95.81 under the 96 level creating weakness in equities (stronger yen). Keystone bot SSG and SPXU opening new long positions which are short semi's and short the S&P, respectively.

Note Added 12:36 PM:  Keybot the Quant flipped short at SPX 1622. UTIL 481.00 and 481.39 hold the key. Stay alert for a potential whipsaw with Keybot today or tomorrow. Dollar/yen down to 95.45 is helping create market weakness.

Note Added 2:16 PM:  UTIL was indecisive but has now broken down to the 477 handle that the descending triangle on the 15-minute chart targeted. VIX is over 18. SPX is 1615 just printing a new LOD at 1614.46. The 50-day MA is 1610.60.  TRIN 0.87. Keystone took profits on SSG and SPXU exiting both positions using them as day trades today.

Note Added 2:23 PM:  The SPX 5, 10 and 15-minute charts show positive divergence as the low just printed so a bounce of a few handles of upside may be on tap for the next one-half hour to 45 minutes. UTIL is 477.87 and market bears are in full control with UTIL sub 481.00.  TRIN 0.87. The 10-year yield is 2.21%.

Note Added 2:57 PM:  UTIL 478.75. TRIN 0.90 drifting ever higher all afternoon moving towards the neutral one and bear territory above 1.00. Keystone bot SLV opening a new long position that is long silver. Also bot SPXL, the triple X long S&P, as a hedge against the short side since Keybot went short today. The minute charts hint at a move up in the 5, 10 and 15-minute charts.

Note Added 3:06 PM:  SPX is printing the lows now with LOD at 1612.42. Minute charts hint at a small recovery move of a few handles. Price is in the 50-day MA at 1610.58 neighborhood so it really should tap on the door to say hello. If not today, then maybe tomorrow.

Note Added 3:20 PM:  There is no bounce. SPX keeps printing new lows headed for a test of the 50-day MA at 1610.53. LOD 1610.92.

Note Added 3:49 PM:  There's the little bounce in the SPX. UTIL 478.99. TRIN 0.82 but was just in the 0.9's, bullish all day remaining under 1.00, one reason that the bears could not gain traction lower. Dollar/yen is 95.92 so the stronger yen, as this currency pair drops through 96, helps the equity bears today. The dollar/yen is in a dangerous area with a 95 handle since much lower and it will break down and no one knows the ramifications from all these central banker actions. The 10-year yield is 2.24% continuing to threaten an upside breakout but hesitant.

Note Added 6:23 AM on 6/13/13: The dollar/yen collapses through 95 overnight down to 94.28 now trying to recover at 94.40 (stronger yen). The Nikkei is crushed -6.4% to 12.4K. The broader Topix falls -4.8%. Abenomics may be a failure. The central bankers have made a mess of world markets. S&P futures are -6 about three hours ahead of the U.S. open.

49 comments:

  1. How long do the Utes have to stay below 481 to lock in?

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  2. woah, UTES hit 480, is the elevator down button about to be pushed for SPX?

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  3. Bulls defending 1624 with all their might...

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  4. UTIL break down should lead to market weakness, so far, they are not. UTIL has to stay under 481. If the SPX drops under 1623 that would kick the downside in gear today. LOD 1623.32 so far.

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  5. KS, per your 80/20 rule, hopefully we will see util 478 soon.

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  6. One thing I've noticed is that almost every trade is now a day-trade. Volatility rules. I see the potential for either V's inverse H&S pattern here and Arnie's 1550 target.
    Depending on how you draw it, the wedge in SPX I mentioned appears to have broken decisively to the downside. Bulls defending 1619....

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    1. IHS is not applicable anymore.

      1523 ... 1560 is the area where this down wave will finish.
      it's int. 4 confirmed.
      conservative target: 1560-1575
      normal target: 1536-1543
      wild target: 1523 or lower.
      time : downtrend possible until 23-30 June 2013 (or sooner) / price prevails to time.
      V.

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    2. One more thing Charles:
      this down wave will not be linear.

      wave minor A was down to 1598.23
      according to my opinion.
      we are now in minor B wave (still!)
      wave 'a' of B was 1598.23 - 1648.69
      wave 'b' of B just ended = 1648.69 - 1615
      next : wave 'c' of B MIGHT(!) , remember : MIGHT occur 1615 - 1668/1675

      going long here is a high speculative trade but might work (consider that the risks are big)

      from 1668/1675 wave minor C should develop down to:
      conservative target: 1560-1575
      normal target: 1536-1543
      wild target: 1523 or lower.
      time : downtrend possible until 23-30 June 2013 (or sooner) / price prevails to time.

      the alternative to this vision is that wave minor B ended at 1648.69 and we are already in wave minor C. In this case no up wave to 1668/1675 will occur. That's why I've said that getting long here is pretty dangerous and is applicable only with very short stops.

      Cheers,
      V.

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    3. also consider that potential long (wave 'c' of B to 1668/1675) might truncate and never get there.

      so if you don't like high speed adrenaline trading, don't get long on that potential bounce.

      V.

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    4. V. nice projections and counts! i am favoring that the B-wave is already in at 1649. A was 89 points (1687-1598), which is a fib nbr btw..., and assuming A=C, measured from B then C targets 1649-89=1560. But, C can be any fib-extension of A (1.0, 1.238, 1.382, 1.5, 1.618, etc) so we have to monitor along the way using TI, EWT, keybot etc.

      Always prudent to be vigilant and not think our model ('cause all this is a model) is right. Models are per definition always wrong. some are useful... Only the market is right.

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    5. Yes Arnie, until yesterday I had my doubts that int 4 is in the house!
      Now I'm sure it started.
      Yesterday the bulls had their chance and waste it at 1648-1649. With that IHS they wasted their second chance. A third chance might not appear. Anyway on daily SPX chart it's clearly rolling down, not looking bullish in my opinion.

      V.

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  7. KS - When does keybot flips to short? Thx.

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    1. V.,

      You should not expect KS to hold your hand every day!
      Take responsibility for your own trades!

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    2. :)))))))))))))))))))))))))))))))))))

      wasn't me :))))))))))))))))))))
      I sign in my posts.

      V.

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  8. Yep, Keybot flipped short at SPX 1622. UTIL 481.00 and 481.39 are key, as long as utes stay under here, bears are fine, but if utes recover so will markets.

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    1. So is this a good time to scale in some shorts?

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    2. @ Anon:
      no. wait at least a bounce to 1625-1628 (minimum expected bounce level).
      Or do how you're feel it ...

      V.

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  9. FWIW I took profits on SDS. Mr. Market is resisting the downdraft and we may get a whipsaw back up. In treacherous volatility, cash is your friend... VIX getting pretty stretched here as well.

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  10. Oil has been in the green all day. As long as that persists, expect market to rally by end of day.

    Sean

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    1. Sean, do you know why oil in green since EIA reported increase in supply. Shouldn't it go the other direction?

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    2. Don't have a clue.

      Sean

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    3. Think Turkey and Middle East

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    4. Thought they only affect brent oil?

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  11. there's some potential for some flashy-crashy action is price continues to stay here ....

    if not the previous week , at least this week we will get some raging action ....

    come to papa ! 1500's is soo sweet :) !

    V.

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    1. V. have you given up your inverse head and shoulders pattern here? Did that fail at SPX 1626? Just curious. My sense (not TA, just gut feeling) is that SPX should be tanking here a lot harder, given VIX and UTIL. That makes me suspect there's a reversal lurking nearby....

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    2. A reversal might appear but will be just another opportunity to go short cheaper.
      IHS has failed , the ideal (or should I say maximum downside point?) point for right shoulder should have been 1615-1617. Now it's lower than that.

      If (only IF) a ramp up appears and breaks (today or tomorrow) 1649 and 1653 after that, IHS might still be applicable.

      But keep a close eye on 1665-1676 area!!! Keep a real hawkish eye on that area cause it's the reversal area if we just experienced wave 'b' of B.
      So is a bullish development appears: if it's a potential bulish wave 5 (not part of int 4) might reach 1698-1720.
      If it's wave 'c' of B it will not go farther than 1665-1676 area and a very strong bearish reversal (minor wave C) will appear with the same already noted targets.
      If we just go down it's easy.
      If we will experience a rise today or tomorrow , technically it will be more complicated to follow. Not imposible, only more complicated.

      V.

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  12. if you don't like shorting, don't get long until RSI on weekly SPX gets to 40-45 at least
    it's an useful clue ;)

    cheers,

    V.

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  13. nice to see KB short too; another piece of the (never ending) puzzle that for now suggest much more downside. Note that it won't be straight down of course. There will be bumps in the road, but KB should smooth those out and help us remain on the right side of the trade as much as possible!!

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  14. one more thing , regarding the time factor: watch for end of wave int 4 the period: 21 - 28 June 2013 (or sooner, in relation with price targets).

    Note that on a post-it and stick it on your monitor :) lol!

    V.

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  15. Interesting day today. It does seem like the market is reluctant to drop but that may simply be a one or two day snag. UTIL is 478 so that is all systems go for bears. The SPX is at 1612 but the very short minute charts 5 and 10 minutes hint at a few handle recovery in the minutes ahead. But, maybe the weakness that should be in the markets will flush the indexes into the close. Tricky trading day today, markets definitely feel like they are at an inflection. The 50-day MA is key at 1610-1611, perhaps the action this afternoon is considering this to be the test, and if she heads down for a touch of 1610 it may simply collapse straight down thru 1600 to 1593 in a heartbeat.

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  16. Also if a ramp up starts tomorrow watch on a 5h chart spx a bearish gartley (bearish butterfly pattern) with it's 5th point in the mentioned area: 1665-1676 and it's first point at 1687 (top in may).

    V.

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    1. That's interesting, the Gartley stuff. Have not used that. It uses the Fibonacci retracements and in essence it is similar to using a rising wedge where price will collapse out the bottom, or a falling wedge where price jumps out the top. That is what is interesting about trading, you learn something every day.

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    2. Thank you KS.
      I learn day and night so to speak :D! (now here in Romania it's 10.35 p.m....I watched the situation developing since 7.30 a.m. local time :)....)
      After more than 10 months 12-16 hours/day I started to recognize in seconds pattern on charts :)! I like that :).
      High speed fast-forward!
      And God is my witness that from your site and from you I've learned more than half of what I know ...Thank you!

      V.

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    3. V, your wave counts are so interesting and impressive, did you learn all this on your own or you took a TA class? Could you advice me where to begin learning EW? Thank you.

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    4. I've learned on my own.
      I wouldn't start with EW the learning.
      First I would start with learning of classic technical patterns (hammer, head and shoulders, shooting star, stuff like that...) , than I would lear about fibonacci levels, support/resistance levels, boillinger bands, technical indicators (RSI, MACD, slow/fast stochastics, ...), than I would continue learning with more advanced learning structures (EW, Gann price-time ratio, others)
      EW is an advanced interpretation theory and not used properly can easily mock you and your money.

      I don't consider myself as being at advanced level I'm still learning day by day. A man when considers he knows everything he's already dead. :)
      I'm not doing this for money, I simply like numbers, I like this stuff :D!

      V.

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    5. Thank you V. Appreciated:)

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  17. What happened to all the dip buyers? Bulls? anyone?....LOL
    Anyhoo...getting real close to a good low risk dip buy soon.
    Please don't give me EW counts as rebuttals. LOL
    No such thing as a sure thing. Good trading all.

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    1. I feel in the air the smell of a very bearish 2014 :) !
      Again I have that flashy-crashy feeling lol :) ....

      V.

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  18. As a general rule, buying dips gets tricky with VIX above the 200-day MA. With VIX under the 200-day MA and some relative calm, the markets trend higher so dip-buying is in vogue. Not so much right now with elevated vol. But this is only one tool. The other key is if the SPX bounces off the 50-day MA, or not.

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  19. Funny everyone comes out when the market sells off and disaster is looming, market goes back up 400 points and the you'll hear the tumblweeds

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  20. It's funny:) on a day like this, gold did not receive any attention...

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  21. I nibbled long here as the sentiment is getting ugly, put/call ratio and NYMO are back up at levels where reversals take place and all sorts of extremes are being hit: the euro, for example.

    here's the interesting question--does the market bounce here at the 50-day, or does it recover to at least the 20-day? I am guessing the bull market still has some momo, short of some externality event that kicks away the 2X4s.

    On the other hand, MACD is still in a free-fall and there are plenty of other signs of weakness. It's been an interesting month....

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    1. it's confirmed down trend Charles!
      don't touch longs until 1540-1560, maybe 1523.
      there's possible a bounce from 1593-1598 up to 1610-1623, but 1540-1560 is the target.

      1523 or 1540-1560 it's the place to get long !

      V.

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    2. Charles,

      if on break-even or with a little profit get out of those longs please at 1613-1623!
      this is not the place to stay long.
      it's a confirmed downtrend!
      I've told you getting long here it's a high speculative trade.
      1523-1540-1560 it's the place to get long.

      the market's path might be:

      down to 1593-1598
      up to 1613-1623
      down to 1540-1560 (maybe lower levels touched: 1523-1536).

      take care,
      V.

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    3. V, tonight globally tumble! everywhere...good job V!

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    4. also, watch out cause the banksters usually put in the low (or one low) the prior Thursday or prior Friday to the OPEX week.

      so don't get trumped by good data today.
      watch 1593-1598 and next pivot 1570-1576 for a low point.

      so today or tomorrow will be a good point for a bounce until next monday/tuesday.
      watch 21-28 June for the lowest point to be reached = a very good longs entry !

      V.

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  22. Thank you KS,V n Arnie for all your efforts everyday.Its very rare to find guys like you helpung others withOut any obligations.You guys have been really great and I thank you all personally for all your postings and alerts...

    Cheers!BS

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    1. :) it's my pleasure :)
      anyway never take what is written here by me , Arnie or other persons as truth.
      do your own homework, ok?
      it's better that way.

      V.

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  23. got more goodies for you people :D!

    watch today / tomorrow the following supports on usd/jpy:
    93.678
    93.521
    and at lower levels (maybe next week):
    92.70
    91.00

    might be strong support levels from where an up bounce on usd/jpy might occur (usd/jpy is directly correlated with SPX 500, so up usd/jpy = up stocks / down usd/jpy=down stocks)

    anyway, the first 2 levels on usd/jpy are only for fast and furious high adrenaline trading for today (maybe tomorrow).
    previous targets remain the same : 1540-1560 to be reached until 21-28 June 2013.

    V.

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