Thursday, June 27, 2013

Keystone's Morning Wake-Up and Midday Market Action 6/27/13

The markets stage a strong come back off the low at SPX 1560 on Monday.  It is a shame that free markets are faux markets since the central banker trifecta saved the day once again enabling the three-day, now perhaps four-day, rally. China stepped in to help their seizing banks on Tuesday morning (after their close on Tuesday) thus taking the Lehman-style event scenario temporarily off the table. This goosed equity markets into yesterday when ECB's Draghi waved the banner of easy money firing off his money bazooka with happy QE talk. Then, to complete the central banker trifecta, the Q1 GDP came in at a paltry 1.8%, sick weak growth, which means the Fed will continue printing easy money and the Fed talk this week is all pro QE. The market junkie receives more crack cocaine so equities move higher. The central bankers are the markets. The Fed talk continues today and tomorrow so the markets will be reacting to all snippets, dovish or hawkish.

Moving to the technicals, watch the Nasdaq and RUT since they underperformed the broad market yesterday. Yesterday's volume was the lightest over the last week. The importance of the 200 EMA on the SPX 60-minute chart at 1619.65 cannot be understated. The bears rule the markets with the SPX under the 200 EMA. The rally this week will roll over to the downside as long as the SPX stays under 1619. If the SPX takes out the 1619.65 to the upside, the story changes and the bulls will likely move up to test the 1636 R and perhaps 1649-1650 R. Thus, the decision around the 200 EMA, at 1618-1620, if price can make it upwards for the test, is a bounce or die juncture, likely resulting in from 20 to 40 SPX handles of oomph in the same direction that price commits. Watch the 8 and 34 MA cross on the SPX 30-minute chart now with the 8 above the 34 signaling bullish markets for the hours ahead. The 30-minute and 60-minute charts' turn signals are in disagreement and whichever side they jointly move to will dictate market direction.

The drama continues with UTIL 480.81, XLF 19.20 and RTH 51.48. All three are in the bull camp creating the up move in equities. If the bullish prices increase, then the broad indexes will continue higher. If any of the three lose the levels shown, the markets will weaken and begin drifting lower again. Keybot the Quant is long but if two of the three parameters turn bearish and the SPX drops under 1592, the algo will likely whipsaw back to the short side today. For the SPX today starting at 1603, and not yet able to test the 1609 R yesterday, the bulls need to touch 1607 and 1609 will give way with price moving towards 1614 R. The bears need to push under the 1592-1593 support level today and a downward market acceleration will occur. A move through 1593-1606 is sideways action but the S&P futures are now running higher at +11 so it looks like the test of 1614 R may come quickly today. And this action may set up the big test of the 200 EMA described above where a showdown of bulls and bears will occur.

Note Added 9:36 AM:  The bulls jump higher at the open with the SPX HOD at 1613.78 hitting its head on the 1614 resistance. Treat the 1614 R as the first ceiling, then 1618 R, but considering the importance of the 200 EMA on the 60-minute at 1619.60, the 1618-1620 zone is a resistance gauntlet, where good thing happen to bulls above, and good things for bears if price stays below.  XLF, RTH and UTIL are all running higher reinforcing the bull case. TRIN is 1.01 refusing to commit to a side today. Keystone took profits on the long SPXL trade exiting the position.

Note Added 9:41 AM:  SPX takes out 1614 R so this sets the stage for the battle at 1618-1620, a cage match, where two sides enter, but only one will exit from this critical S/R level. Fed's Dudley is on tap, wiping jelly stains from his neck tie as he prepares to make a statement. Markets await all QE snippets since the Fed's dovishness or hawkishness dictates market direction. TRIN 1.00 dead neutral.

Note Added 10:05 AM:  Fed's Dudley parrots the other Fed heads this week promising QE as far as the eye can see, but it now sounds like more of the same-o, same-o. The SPX drops a couple handles to back kiss the 1614 support. XLF, UTIL and RTH remains bull friendly. TRIN 1.29 favoring bears today. The mixed signals continue.

Note Added 10:35 AM:  Here it is for all the marbles. 200 EMA is 1619.62. SPX is 1619.29. HOD 1619.64. The battle is on. Bounce or die.

Note Added 12:58 PM:  Die, at least so far. The 50-day MA is 1620.47. The 20-day MA is 1620.10 just now starting to stab down through the 50 which is a bearish market signal. The 200 EMA on the 60-minute is 1619.48. So this confluence at 1619-1621 is far more important than even this morning's hype provided. Three major moving averages are being tested simultaneously. The first try by the bulls this morning was rejected. The SPX hour charts may want to take one more run up to test the critical 1619-1621 resistance today. The 8 MA remains above the 34 MA on the 30-minute chart signaling bullishness ahead, however, the 8 MA is 1616.05, so if price moves under 1616 and lower, this will curl the 8 MA to the downside. Current print is 1616.32. HOD is 1620.07. TRIN 1.09 favoring bears but only by a smidge. Watch for more drama at 1619-1621 where the fate of markets over the short term is being decided. Whichever side that price closes on today, above or below the 1619-1621 gauntlet, will likely point the SPX in a 20 or 30-handle move in that direction. Bears want to hold 1619 and lower. Bulls need 1621 and higher. XLF, UTIL and RTH continue to remain bullish favoring the bull rally move higher. The tension mounts.

Note Added 1:54 PM:  Stauts quo. SPX stretches its legs to 1618 continuing to tease the 1619-1621 resistance gauntlet. TRIN is 1.20 so the bears are holding their own today despite the financials, retail and ute sectors pushing higher to help the bulls. Gold is at 1203, about to break the psychological 1200 level, not seen since summer of 2010, three years ago.  Both gold and silver ran out of gas today. GLD collapses to 116.63. Keystone bot GLD opening a new long position. The GLD minute, hourly, daily and weekly charts are favorable with positive divergence so this beaten down ETF should at least receive a dead-cat bounce moving forward. Also bot more MUX adding to this small cap speculative miner long position.

Note Added 2:15 PM:  SPX receives another spank down from the 1618-1621 resistance gauntlet now moving sideways at 1614.  Gold and silver receiving lots of negative attention again today. Gold loses the 1200 level. Keystone bot more SLV adding to this ongoing long position.

Note Added 2:26 PM:  SPX 1614 is strong support after it gave way to the upside as resistance this morning so price is moving between the 1614 S and the 1618-1621 resistance gauntlet. The TRIN and VIX creep slightly upwards over the last one-half hour which causes the drop in the SPX from 1618 to 1614. The drama continues.

Note Added 3:40 PM:  UTIL is 482.42 drifting towards the 480.82 danger level. SPX is 1614.49 sitting on 1614 support.

Note Added 4:06 PM: Today is a draw. SPX is 1613.20 losing the 1614 support, which now flips back to resistance again. The three moving averages hold the fort for the bears; the 20-day MA at 1620.00, the 50-day MA at 1620.42 and the 200 EMA on the 60-minute at 1619.37. The 20 MA stabs down through the 50 MA which is a bearish market signal moving forward. The 8 MA remains above the 34 MA on the 30-minute chart signaling bullish markets for the hours ahead. The SPX 2-hour chart is rolling over but the MACD line hints that price may want to attack the 1618-1620 (1618 is strong resistance along with the three moving averages listed) resistance gauntlet again tomorrow. So the market story for the next 20 or 30 SPX handles will be told tomorrow depending on whether the SPX closes under 1618 or over 1620. If UTIL loses 480.82 tomorrow, the broad indexes will be selling off and heading lower but if UTIL stays above 480.82 that will give the market bulls the nod and a chance to take out the 1620. Remember, the SPX began June at 1631. The SPX is up for 7 months in a row. The bulls only need 18 points and they can print another positive month. If not, the bears will finally log the first negative month in the last eight. Tomorrow is EOM, EOQ2 and EOH1.

32 comments:

  1. I just love this rally as I'm full long. After all this good data the market proves that it doesn't needs QE anymore. fed can fully eliminate it.
    Who needs QE when US will have it's next year GDP at more than 5% ?
    :)

    V.

    ReplyDelete
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    1. Watch the 200 EMA on the 60-minute now at 1619.62 since that will verify the bull case, or, crush it. It may be a very eventful day ahead. The hour and minute charts are moving towards or at overbot conditions with negative divergence in place or continuing to form. The hourly charts may want a few more candlesticks before neg. div. is properly in place so this does hint that there should be at least enough oomph to continue higher into lunch time or early afternoon and test this critical 1619-1620 and, either bounce, or die. This is a critical day and S/R level.

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    2. Thank you KS, all I'm hoping is that the market won't crumble after the european close.

      V.

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    3. V, here's the test right now at 1619.62, bounce or die time.

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    4. Thank you KS. Thanks a lot.

      V.

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    5. It's enough, I'm out of longs as I can count 5 waves from 1560 lows.
      Will reload at lower levels (1580-1590), after a corrective wave that might start now/tomorrow.
      Thank you KS.

      V.

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    6. KS, I owe you! :)
      Selling those longs at the peak was the best idea! Thank you for your support!

      V.

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  2. KS, Any thoughts on the 6/22 Bradley turn? Was thinking it would be a downturn but nothing but up so far.

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    1. It's still up in the air since there was a 3 or 4 day down move into the turn date, now a 3 day up move, both would be perceived to have equal worth since the turn date only targets a window of +/- a few days, so the trend should show itself over the next couple days, either more up towards the old highs, or down from here then taking out the lows from 3 days ago at 1560. This test right now at 1619-1620 is very important and likely points the direction.

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    2. marlowe,

      from an astrological point of view, Mercury since 20 June is in retrograde planetary motion.

      what does mean that ?
      until 5-8 July the market's move will be the opposite to the previous move.
      after 8 July the market's move will one more time have the direction valid from 22 May to 20 June.

      V.

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    3. Marlowe, that means that market until 5-8 July might try to be bullish, jumpy and so on... but after a trip to 1610-1650 (in that area) a sudden flash to 1470-1510 will come out of air ... and it will be the true wave 'C' of int.4 :)
      now we are in a weird wave 'B' of int 4 ..enjoy the bullishness while it is ... ;)...

      the end of int 4 will be registered in the 10-25 August period.

      V.

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  3. Thanks for the replies. Good point on the preturn. Looks like breaking Spx 1635 or 1590 will define the turn.

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  4. KS, can you please help us?

    A friend of mine called me and told me that : (his words) :" check oex ratio, the smart money are short today, close your longs"

    What is oex indicator?

    Thank you,

    V.

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    1. $OEX is simply the S&P 100, so the larger stocks in the S&P but since he says OEX ratio he is probably talking about the OEX put/call ratio, so it is along the lines of $CPC or $CPCE only it may focus more on volume moves in addition to puts and calls. CPC dropped down to 0.85 yesterday, a big drop nearing the 0.7's and lower that verifies complacency. So the panic from the other day was forgotten very quickly. So perhaps he sees excessive call buying overall but the smart money is not biting and is skeptical.

      The result of it all is easier to gauge by simply watching where the SPX closes today, above or below this important 1619-1621 confluence of three major moving averages. Bulls win at 1621+, bears win at 1619-.

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    2. thank you KS.
      i feel ashamed for not knowing such a simple thing (oex = S&P 100)...I'm used with S&P 500...

      V.

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  5. price touched 50d SMA today and was rejected. not surprisingly..., but i think it will pass sooner than later. i think the market bottomed in intermediate wave iv at 1560 and is now in the midst of a (minor) wave 1 of intermediate v up from that low. 2 reasons: 5 waves up already..., and KB flipped long; it often does that at the starts of a wave 1... yes KS knows a thing or two guys!!!

    This wave 1 up will likely want to target last thursday's gap down at ~1628 before turning back down for a minor wave 2, which ideally retraces 61.8% of wave 1, which is right at ~1586 (gap fill from yesterday's gap up...) Then minor 3 of intermediate V, followed by a 4 and 5th wave. Likely target: 1720s +/- 10. This will also fullfill the 1687 top, which suggests a trade to 1720s... let's see how this road map plays out!

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    1. This 1619-1621 is the confluence of the 20-day MA, 50-day MA and 200 EMA on the 60-minute chart, so it is for all the marbles, bounce or die, one side will end up happy the other side will be crying.

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    2. Arnie,

      If you're right, I'll give you (via FedEx) a pack of 12 beers box or a fine wine bottle (your choice) ...

      This upside doesn't get above 1638 (38.2 % retracement fibo) or even 1623 (fibo retracement 50%).
      You'll see....
      on Caldaro's site I just love to see that all folks got so bullish in an orderly fashion ( :D ) and don't even think one single second that int.4 might still be here .... :) and now they are playing long-sided a "B" wave :) ... (me too, on the long side, but at least I know that this 'bullish' wave is a dirty prankster).

      When (and if) we'll get above 1654 that would be the supreme confirmation that int.4 has ended.

      V.

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    3. what do u have against caldaro? Are you not in agreement with his count?

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    4. With Caldaro? Don't have any problem. I have a problem with the human mass phenomenons.
      The reality now it's that it's indetermined if int 4 ended and int 5 started. It might be a bounce in int.4, it might be int 5/minor 1. The chances are 50-50%, objectively speaking. One area and one level are to be watched: 1619-1623 area (20,50,200DMA, fibo retracements and the former support channel of Nov.12 up-impulse) and after that 1654 (the assumed peak of wave"B" in int.4). If those 2 are surpassed than it is a confirmed up int.5.

      But, by comments, Tony induces the idea that int.4 really ended and a lot of people are putting money to work and might get burned. Oh well, I don't have to stress myself for them. :).
      The only objective part is in his SPX 500 chart where the "int.iv" sign is marked as "assumed, but not confirmed" with green.

      I don't have a problem with Tony Caldaro, I like him, he is an experienced TA technician and a wise guy. I have a problem with: a) the assumption of possibilities as certainties and b)with human mass phenomenons.

      Too much certainty in an uncertain trading world (another problem :D).

      V.

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  6. I'VE TOLD YOU THAT THE MACHINES WILL BE TURNED ON.
    http://evilspeculator.com/wp-content/uploads/2013/06/2013-06-27_UVOL.png

    credits go to 'evilspeculator' for this pic.

    the put/call 'perfect' curves show NO MAJORITY HUMAN PRESENCE, BUT MOSTLY MACHINES ACTION.
    THE BIG PLAYERS USE MACHINES TO TAKE YOUR MONEY. GET YOUR MONEY OUT OF THE STOCKS NOW!
    THIS IS A RIGGED GAME IT'S NOT YOUR GRANDFATHER'S MARKET AND ALL BIG INSTITUTIONS (INCLUDING FED) KNOW THAT BIG BANKS MACHINES MAKE THE MARKET AND AGREE WITH THAT TO PREVENT 'PROBLEMS' IN THE MARKETS LIKE IN 2007-2009(in fact natural adjustments).

    THEY HAVE FREE MONEY, THEY HAVE POWERFUL TECHNOLOGY, THEY ARE SUSTAINED BY THE FED AND OTHER US INSTITUTIONS (SEC included) THAT AGREE WITH THOSE FACTS.
    TAKE OUT YOUR MONEY NOW!

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    1. 'Anonymous' might be the solution to this?
      What could do a virus if inserted in those big banks trading computers ???

      Frank

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  7. Tomorrow window dressing follow by 3 days in front of major holiday, so bull stays happy until then. Mercury retrograde ends around 7/20, waiting for 7/8, let's roll it to 1550s again in front of our new moon! LOL!

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    1. Anon, do you know what means "holiday reversal" in the present context?
      that should mean that until Friday/Monday the market rises and after Monday until Thurday it gets lower?

      KS, what's your opinion on window dressing and holiday reversal?
      Might Anon be right and bulls might rule until 4 July?

      Thank you,

      V.

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    2. Okay V, Holiday Reversal means when the market have been up up up, then it suddenly reverse its trend right in front of the holiday.
      I think tomorrow it will melt up to close the gap in 1625-1630 zone, then holiday reversal jumps in on Monday to haunt the bulls. GL!

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    3. Anon, you're referring to minor 2 of int. V. I will look to reload longs on that holiday reversal. Good fortune.

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    4. Thank you Anon, I appreciate it.

      V.

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    5. V, you are welcome.
      I am not sure if the melt up to 1625-ish is Friday 6/28 or 7/1 where we have upcoming pmi's and ism. If it's not in line or bad, then investors will be happy because they can expect more QE just like how they ignore gdp 1.8% yesterday and rally.

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  8. Have not heard from the GS guy lately...

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    1. I'm keeping it low-profile so KS won't get mad ...
      I'm speachless...
      Amazed how fast can people forget that they are near a top and they still buy stocks like there's no tomorrow...

      Fear and greed are just the same .... and retailers always mixed those things up ... not seeing the forest because of the trees .

      GS guy

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  9. The window dressing helped the market bounce in the front half of the week. There is a Russell rebalancing that may cause some erratic action today. Volume should be light which will also create intraday volatility. The Consumer Sentiment will create a market pivot at 10 AM so let the first half hour play out before the day starts to settle in. The key is the 20 and 50-day MA's at 1620, which is a huge win for bulls and will send markets higher, give the important 1626-1627 resistance level respect as a last ditch effort for bears to hold back the upside. If price is rejected at this 1619-1620, the SPX may be under 1600 in a flash. Fed heads are out in force today but their schtick every hour telling traders that QE is here forever is getting old this week, it is hard to imagine they can provide any new news in respect to QE. China saving their markets from a Lehman-type event this week was the main cause for the markets to bounce. Markets have to make a big decision today or early next week. Flip a coin. Watch 1619-1620.

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