Tuesday, June 4, 2013

Keystone's Morning Wake-Up and Midday Market Action 6/4/13

The door was open for the market bears yesterday and they started to walk through, only to have the door close on their toes. The breakdown in UTIL 480.80, then with 477.91, set up a strong market flush lower but the bulls immediately recovered pushing utilities higher, as the Treasury yields fell, and the markets were saved from imminent failure. Copper and utilities are key again today. The bears need UTIL to drop under 480.80 and then 477.91 while the bulls need to push JJC above 41.38. Copper is higher this morning and since JJC is only pennies away from 41.38, it looks like the bulls will push to regain control of the markets today. The new money coming in for the beginning of the month helps buoy markets. The last 20 Tuesday's are all up so today will either continue the streak to 21, or not.

For the SPX starting at 1640-1641 closing at the highs, the bulls only need to touch the 1641 handle and the upside will accelerate with a test of 1649-1650 likely in quick order. If the JJC moves above 41.38, and the SPX moves above 1641, with utilities remaining elevated, it is likely that Keybot the Quant, Keystone's trading algo, will flip to the long side. The bears must push the SPX under 1623 to regain their mojo. A move through 1624-1640 is sideways action today. DG earnings are important since they reflect the middle to lower income spending. Motor Vehicle sales data is on tap today. International Trade hits at 8:30 AM. Fed's Williams said yesterday the Fed is committed to stimulus which helps create the market happiness for bulls. Three Fed heads are talking today; Raskin at 12:30 PM, George at 1:30 PM and Fisher at 8 PM. Watch the 8/34 MA cross on the SPX 30-minute chart, now signaling bearish markets for the hours ahead but the bulls have curled the 8 MA higher for a possible positive 8/34 cross this morning.  In a nutshell, UTIL 480.80 and 477.91, JJC 41.38, and SPX 1641 will dictate market direction and tell the story today.

Note Added 8:02 AM:  DG earnings match EPS estimates and are in-line with top line revenue but guidance is lowered moving forward. The stock is hit -6% pre-market. Obviously, the regular and lower income folks in America do not have money to spend. 25 million remain either unemployed or underemployed as a result of the ongoing financial disaster. Young folks are deep in debt with little job prospects. On the other side, the Fed pumps the markets higher each day to reward the wealthy and they continue to spend money like it is water, drinking champagne each day as they look down on the masses, watching the classes separate further with the middle class disappearing.

Note Added 10:41 AM:  JJC is above 41.38. UTIL remains above 480.80. Keybot the Quant wants to go long but is held back until SPX 1647+ can print and hold. Lots of drama right now. Watch the HOD at 1646.53.

Note Added 11:09 AM:  The SPX stumbles lower. One day is more odd than the next. It looked like a slam dunk for Keybot to flip long, it still may today, but for now, all bets are off. The SPX needs to move above the HOD at 1646.53 and hold it a few minutes for Keybot to move to the long side. JJC is 41.60, bullish, well above the 41.40 bull-bear line. UTIL is 481.30, bullish, but teasing around the 480.80 bull-bear line in the sand so watch that closely. Markets will become decidedly negative if UTIL 480.80 fails. For now, markets meander sideways. Time for a slice of apple pie.

Note Added 3:31 PM:  JJC remains bullish. The utilities keep threatening to break down, which creates broad market weakness, but UTIL keeps recovering as well. Watch UTIL 480.85. UTIL is 481.77 taking a spike higher over the last few minutes so that helps the broad indexes recover. The 8 MA remains under the 34 MA on the SPX 30-minute chart keeping the bears in control, for now. Keystone took profits on the SPXU trade exiting the position.

Note Added 3:34 PM:  SPX now testing the strong S/R at 1634. JJC 41.71.  UTIL 482.41.  TRIN 1.08. Keystone reentered the SPXU trade opening a new position.

Note Added 3:46 PM:  Utes recovered shooting higher from UTIL 480.70 to 482.85 in twenty minutes time sending equity markets higher. UTIL 480.85 and 477.91 remain key for the rest of the week so this drama will continue tomorrow. UTIL is printing 482.16. TRIN 1.05. SPX keeps testing 1634 support, see if it holds, or not. Note how the intraday and day to day price swings are becoming larger and more dramatic due to higher volatility. Just wait until VIX moves above 20; that will make these wild swings look like child's play.

Note Added 3:54 PM:  Whoopsies daisies. SPX lost 1634 support.

Note Added 3:56 PM:  SPX comes up for the back kiss of 1634, bounce or collapse, and......

Note Added 3:59 PM:  ......collapse. SPX ends with a 1631 handle. Dollar/yen is sitting exactly on 100.   UTIL 481.31. Fed's Fisher is on tap at 8 PM EST. He is a hawk like Esther George who created market drama this afternoon with her speech that supports tapering QE moving forward.

42 comments:

  1. Well put keystone, besides your TA insights your political insights are right on. Our markets are just a big mind game for us all, obsession with numbers and divergence and angles and future predictions and the euphoria of winning and losing, but we are all fortunate to have something it seems if we are on this site and board. The minimum wage is still $7.50 30 years ago when I was a teenager it was the same. And you always got $10 an hour and felt like you could save a savings. Unreal.

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  2. and the rocket flyed away :) ... told you!
    don't believe the teddy bears when a TA guy tells you that we've bottomed!
    ;)
    V.

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    1. oopsie daisy! :D!
      in order to reach 1675-1687 we have to get over 1647-1652.
      Considering the technical pattern from 1687 until now that should not be a problem.
      Probably until Thursday we will reach 1675-1687.

      V.

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    2. one more thing to add: on CNBC I've seen today Mr. Faber, the ultra-doomer.
      He speaks on TV during the terminal phases of declining trends, as I have observed...
      He's so talented in stirring bear-inclinations in retailers :) ... mostly at the end of declining patterns LOL! :)

      V.

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  3. Has Keybot flipped long?

    Thanks, BK

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  4. Keybot the Quant did not flip long yet. Watch the HOD at 1646.53, bulls need to hold this and higher a few minutes and that should create the move to the bull side.

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  5. Hmmmm.... Scratches head. I' neither a bull nor a bear at this point and I think that's a lot of people. I don't have massive confidence in meaningful upside, yet there's a still enough juice to keep the skies from falling.
    My scratch and sniff test says the jobs report should be strong.

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  6. SPX had a near-death experience when $UTIL dipped below KS's 480.80 line, now on life support as the utes noodle around 481.
    Shane, what do you think will happen if the jobs number is good? It could boost the SPX or trigger as a decline as traders would fear the Fed might taper the quantity of hooch its dumping in the punchbowl.

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  7. That'a good point Charles. Even a fair jobs report has been a bully orgy until now, but the game has changed. A better jobs report means less "need" for QE, therefore "tapering". You know really this QE is like a dealer giving crack to addict and then saying "Don't worry. When you're ready to quit, we can get you off of it no ill effect." You'll just snort a half line a day, then a quarter line, and so on until it's all gone."

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  8. Goldman-Sachs tells FT tapering expected by December. Perhaps in September, if data warrant. That news came out at the same time as the big drop to 1530 this afternoon. The Fed's George too ill to speak. They were going to release her speech anyway at the same time. Either event might have contributed?

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  9. this drop pretty much seals the deal for the bears in their favor IMHO. I am now looking for much lower prices in the near future. I did go long at the open today; only to be stopped out 1.5hrs later... no need to over think this.

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  10. bear trap. 1670 by friday. Stay long. V., are u still long? What's your latest wave count?

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    1. still long.
      stop loss = 1623
      in a wave 2.
      if 1623 is taken my count is not valid.
      cooper green/usd/jpy green...
      it would be a surprise to close flat until the end of the day.
      so many are shorting right now...

      V.

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    2. i've closed position :(
      V.

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    3. are u going long at 1614?

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    4. v., why did u close yourr position? 1623 is holding just fine? Got a new wave count? I'm still long.

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    5. no, i'm in cash.
      I have to rethink the situation after closing like an idiot on the lows today.

      I need a break... :(
      V.

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    6. Sure 1623 will be today's low? Wait till the realization as we approach closing that we're going to break the streak of green Tuesdays.

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    7. V, dont feel bad, we all have our ups and downs, I'm still deep underwater on semi's bear.
      Look, even the market is in red, SOX just keep going up up up, it never stop and I am still waiting for Godot. However, I've learn my lesson.

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    8. I think this puppy wants to go down to 1540s +/- 10. That's what I am aiming for. Sure seems like a long shot, but this market has gone too far too fast and needs a serious reset and shake out a lot of longs IF it wants to continue go higher longer term. Expecting this target in ~2-3 weeks.

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  11. I suspect this is a bear trap and utes and SPX recover. Maybe I've been burned too many times...but SPX MACD is positively diverging on the s-t charts. OTOH hand, the "Tuesdays are always up" run of 20 straight weeks is due for a breather.

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  12. KS, spx suddenly went from 1634 to 1628, that's quite a drop, I notice copper still up, is util below 480.80 at this moment? thanks!

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    Replies
    1. You can watch utes on www.stockcharts.com with $UTIL or on Yahoo Finance with ^DJU.

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  13. arnie, are you still 1/3 long? Shouldn't this be another green tuesday?

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    1. I bought SSO and GOOG and PGH today, also more FB. But, got stopped out of SSO and GOOG pretty much right away. I am now 1/3 long (FB, PGH), 1/3 short (SDS) and 1/3 cash in total.

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    2. sorry that should read 1/6 long, 1/3 short and 1/2 cash.

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  14. Calling the Plunge Protection Team: hi guys, this is Ben, buy 100K ES Mini contracts pronto, we're about to lose this puppy....

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  15. I believe we will get down to 1590 by the end of week, dont forget New Moon is around the corner if you believe in it.

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  16. Wild day, note how UTIL recovered back above 480.85 (use this number now) and that led the way higher over the last half hour. UTIL 480.85 and 477.91 will remain key moving forward.

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  17. Hey KS, what made Keybot require 1646 (today) rather than 1641 (yesterday) to go long? Does it need the S&P to go above the previous high for the day once the other parameter (UTIL) satisfies its requirement? If so, why?

    Thanks, BK

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    1. That is an excellent question, it shows that you are thinking. Yep, the prior days highs and lows are uber important and must be programmed into any algo. Without divulging too much about the algo, the prior days high and the HOD that day must be exceeded when the algo number exceeds the signal line to want the algo to flip long. What happened was that the threshold for the SPX was lower to start the day but when the algo wanted to go long, the SPX had already pulled back from the high so this prevented the trigger. Then the SPX came back up to print another new HOD so it was all systems go but there is a two-minute timer that kicks in and requires price to move higher after the new HOD prints, but price immediately collapsed and then never visited the highs again. Keybot was within a minute or two, even seconds of flipping long, but it was held back, for now. Another day of drama is ahead. If UTIL drops under 480.83, all bets are off, Keybot will likely remain short moving forward.

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  18. KS, have we got our six-point reversal on the $BPSPX? (I'm not sure what the high was.)

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    1. It is on the Other Market Signal page. 90.20 was the top on 5/22/13 so minus 6 is 84.20. Yesterday's print is 84.80 so not quite yet but only a sliver away.

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  19. Nikkei down 3.8% this evening, it was above 14000, now it's only around 13000...shedding 1000 points!

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    1. Yep, now down -18.5% from the top almost in a -20% bear market in only ten days time. Central bankers have destroyed the markets and ruined all price discovery.

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  20. I don't know what to say ... .
    http://www.marketwatch.com/story/credit-suisse-lifts-2013-sp-500-target-to-1730-2013-06-05?link=MW_home_latest_news

    After closing long position exactly on the lows yesterday, I need now, after reading this, to place a sign on the wall and write near : "head-banging spot" and action on it ...
    And on Thursday spx 500 it's gonna rise isn't it? Oh God! ...
    I just hate myself! I'll take a break of a few days!
    Never listen to me again, I'm a complete moron! To take such a long position with such a large stop and to mark the stop exactly on the lows!
    I have so much more to learn!

    V.

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    1. ''And on Thursday spx 500 it's gonna rise isn't it? Oh God! ...''
      I'm so mad on me that I thought that Thursday is today ... probably today it will spike up to make me totally miserable.
      I'll take a break guys, listen to KS, he is the uber-master, he knows this stuff...

      V.

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    2. Why so hard on yourself? Find your zen, do not get too excited about the good trades, nor disappointed in the bad trades, maintain an even emotionless keel. Keystone has plenty of bone-headed calls this year on the market in general and especially financials. It all goes with the territory, its all part of the fun.

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  21. V., your wave counts provide good guidance too. Perhaps it was wise to close your position since Caldaro believes that Int. IV is underway targeting the 1540s. Just think of all the profits you've made with your wave counts. Lastly, you are a key contributor on this blog now posting more often than even the venerable Arnie.

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  22. V, don't leave us for too long. As an avid follower of this blog, my two cents is that your insight and informative posts will be sorely missed during your leave of absence. I'm pretty sure you're not the first person to make a mistake predicting the market. KS gives us the illusion that this stuff is easy, not because it is, but because he's the Lebron of TA. I wish meteorologists were this upset when they screwed up the weather. I hate carrying umbrellas.

    BK

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