Wednesday, July 31, 2013

Keystone's Morning Wake-Up and Midday Market Action 7/31/13; EOM; GDP; FOMC Announcement

ADP Jobs Report is 200K so this will cause the Friday Monthly Jobs Report estimates to bump up with traders looking for 200K or more. FB hits its 38 IPO price jumping 46% in four days from 26 to 38. FB and AAPL pumped the Nasdaq higher yesterday. Dollar/yen dropped to 97.69 a short time ago but is very jumpy now leaping back above 98. The 10-year yield just popped. The recent range held the 2.63%-2.64% as the resistance ceiling and yield was teasing this level all morning long, now popping above on the jobs number. Yield should now move to 2.72% resistance perhaps higher. Futures are flat ahead of the GDP number minutes away. Today is the EOM and the bulls will log an up month for July. The monthly charts will receive a new print today at 4 PM. 

Watch the usual suspects of the last few days; SOX 471.20, VIX 14.26 and GTX 4785.  All three are causing market bullishness and keeping the indexes elevated. Bears need at least one to move to the bear camp to begin market selling. For the SPX today starting at 1686, the bulls need to push above 1693 and it is all blue skies to 1700. The bears need to push under 1682.50 to accelerate the downside. A move through 1683-1692 is sideways action today. The GDP and the FOMC Announcement at 2 PM this afternoon are the two main events.

Note Added 8:31 AM:  GDP is 1.7% at the upper part of the consensus range of 0.7%-2.0% better than expected. The 10-year yield is now 2.69%. Futures are flat and non-reactive. The Fed changed the way the GDP is calculated revising all the data so it is all simply a pile of mashed potato's now.

Note Added 8:33 AM:  S&P's drop 3 handles on news that the first quarter revision is 1.1% down large from the 1.8% original number. This would have been expected to be higher with the new way of calculating data. It is all a mess. So first quarter is 1.1% and second quarter is 1.7%, a sick 1.5% economy. After all the QE and money-printing, this is shameful.

Note Added 8:41 AM:  Dollar/yen now up to 98.40; this should help maintain equity buoyancy. Futures remain flat. Dollar is higher dampening gold and silver. Copper is strong all morning long. China says it wants to maintain the 7%+ growth rate so that is probably providing the copper lift. Markets remain frozen like deer in the headlights. The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets ahead, however, SOX, VIX and GTX, as described above, remain bullish. Hence, a standoff. Looks like the deer will leap in one direction or the other either this afternoon or tomorrow morning. IBM down -1% pre-market. MA earnings beat and jumps over +3% pre-market. Markets are typically bullish from the last day of the month through the fourth day of the new month, thus, if markets do sell off today or tomorrow, that may set up an opportunity for a scalp long that can be exited next Tuesday.

Note Added 9:33 AM:  SOX explodes higher towards 478 well above 471.20 danger level. VIX up a tiny hair to 13.48 the day starting out like yesterday. Look at that, GTX exactly at the 4785 danger line, so it looks like commodities want to dance today. TRIN 0.86, bullish, helping maintain market buoyancy. SPX moving up to attack the 1692-1693 resistance for today as bulls try to create a positive 8/34 cross on the 30-minute chart. Bulls are off to a strong start sans GTX, and volatility is a touch positive.

Note Added 10:11 AM:  GTX recovers back above 4785 returning to the bull camp. Markets will float higher if GTX stays above 4785 but a lid on the upside will occur if GTX fails and stays under 4785. SOX 477. VIX 13.59 moving up today with up SPX so one of them is wrong. TRIN 0.76 strongly bullish for markets today. Thus, bulls are favored. Markets will likely stagger along until the FOMC Announcement at 2 PM.

Note Added 10:16 AM:  Big up in GTX now 4798.

Note Added 10:51 AM:  GTX comes down to back test 4785 and bounces. SPX prints HOD 1696.75 eyeing the 1699 level. VIX flat lining at 13.42. TRIN 0.76 creates upside. Dollar/yen 98.25.  10-year yield 2.68%. SPX may tease 1700 moving into the 2 PM announcement.

Note Added 11:20 AM:  The 8 MA is above the 34 MA on the 30-minute chart signaling bullish markets ahead. HOD remains at 1696.75, a 4-handle gain after the 1693 was breached. GTX is 4820 with a big up after the threatened weakness a short time ago.

Note Added 1:53 PM:  FOMC Announcement a few minutes away. The HOD at 1696.75 still holds. SPX is now at 1689.68 well off the highs.  GTX 4839.  VIX 13.69.  SOX 478.37. TRIN 0.83.  Copper up big; JJC 38.18.  Gold and silver are down. Oil is up.  Dow 15532 after printing an intraday all-time high at 15634.32.  10-year yield 2.66%. Please take your seats and focus your attention on the center ring. The jugglers are finishing up; here comes the clowns.

Note Added 2:02 PM:  No change to purchases; 85 billion. Fed to remain accomodative. Economic activity expanded modestly (old word moderately) but unemployment rate remains elevated. Downside risk to economy has diminished. Fed's George dissented since she is more concerned about inflation. Sounds like same-o, same-o. Equities are floating higher on the news. SPX 1694. Dow 15570. VIX is flat to negative at 13.36. 10-year yield is 2.64%.

Note Added 2:09 PM:  SPX 1691. VIX 13.45. 10-year yield 2.66%. Jumpy tape has changed direction five times in last ten minutes.

Note Added 2:13 PM:  SPX 1692.  VIX 13.40. 10-year 2.65%. Settling in the middle of the two extremes since the news.

Note Added 2:30 PM:  SPX 1693.  VIX at low of day at 13.26 helping bulls. TRIN 0.79. 10-year 2.62%.  Dollar/yen 98.00. Markets are erratic and need some time to line out.

Note Added 2:48 PM:  SPX 1696 printing a new HOD at 1697.17 which is a feather in the bulls cap. Dollar dropping so that sends dollar/yen lower to 97.85.  Silver turns positive on weaker dollar so traders are believing in the more QE philosophy. Thus, equities float higher since the Fed spigots remain on indefinitely. Euro is up to 1.3326 moving opposite the dollar. Up euro in concert with up equities. VIX 13.04 sends the SPX higher.

Tuesday, July 30, 2013

Keystone's Midday Market Action 7/30/13

SPX 1684.  SOX 473.89 two points above danger. VIX 13.94 moving up today but remaining short of the 14.28 the bears need. VIX and SPX were both positive this morning which hinted that something is going on with volatility today. So VIX will likely become a bigger player now forward. GTX is 4799 remaining above the 4785 danger line.  So the bulls are hanging on despite the afternoon lull in the markets. Copper is collapsing today. TRAN is sitting exactly on its 20-day MA at 6427 deciding up or down.

SPX came down to tease the 1681-1682 support level that is important for today, and bounced. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead but the 8 is looking like it wants to stab down through over the next one-half hour or so. TRIN 1.03 reflecting market indecision unable to choose a side today. The SPX has explored today's upper limit at 1691-1692, and now the lower limit 1681-1682, and does not know which way to move, this 1681-1692 range is now a two-day range. Thus, bulls win above 1692 as 1700+ is on the way. Bears win under 1681 with the important 1670-1672 support on the way. Watch SOX 471.15, VIX 14.28, GTX 4785, and SPX 1681 and 1692. Whichever parameter gives way will send the markets in that respective direction.

Note Added 2:52 PM:  Banks keep weakening in recent days. One of the main reasons that equities keep floating higher to make new all-time highs is the financials. Traders that want to become bearish see the strength in financials and instead stay bullish. This may be changing. JPM is hit with a 400 million fine for alleged energy market manipulation. No wonder the protests and riots in the world are increasing. The banks continue to step on the average citizen, making billions in ill-gotten gains, then paying a token fine, and then everyone heads to the Hamptons for fun in the sun. No one ever goes to jail. No one is ever charged with wrong doing. Are the markets rigged? Of course they are. Bulls are jamming SPX higher to try and curl the 8 MA upwards and avoid the negative 8/34 cross mentioned above.

Note Added 3:00 PM:  The 10-year yield is 2.61% at the top of the one-week sideways range 2.56%-2.63%. $TNX is in a 5-week sideways range 2.46%-2.70%. SPX dead flat at 1685. SOX almost 475. VIX 13.74 dropping a quarter over the last hour allowing markets to float upwards off the afternoon bottom. GTX 4804.  TRIN 0.92. The 8 MA just stabbed down through the 34 MA on the 30-minute chart by only 2 pennies signaling bearish markets for the hours ahead but obviously, this may change back again before the closing bell. If the bulls push higher they should be able to reverse the negative cross once again to continue the indecisiveness and drama.

Note Added 3:11 PM:  That did not take long. Now the 8 is above the 34 again by a few pennies signaling bullish markets for the hours ahead. This flip-flop 8/34 behavior simply does not occur often; it is very rare. It verifies that markets are frozen in place about to jump one way or the other but still do not know which way. Keystone took profits on the IYZ short covering the position. Will look to reenter short as telecom should have plenty of downside ahead. Also bot JO which is long coffee opening a new long position. Long coffee remains a Keystone fave moving forward for the considerable future.

Note Added 3:49 PM:  The 8 MA stabs down through the 34 MA on the 30-minute signaling bearish markets ahead. This flip-flop action is ridiculous. Markets must decide. There is more drama ongoing than an episode of Madmen. SOX, VIX, GTX remain bullish. TRIN 0.95.

SPX 30-Minute 8/34 MA Cross Potential Bear Flag

Bears are making a run at a negative 8/34 cross before the closing bell. With SOX at 474 there is no help there for bears. Volatility is moving higher today which provides bear fuel. This morning both the SPX and VIX were higher hinting that something was going on in volatility land. VIX is at 14 but bears still need 25 to 30 cents higher, to 14.28, if they want to growl. Watch the dark blue square to see if the negative cross occurs, or not. For now, the 8 is above the 34 signaling bullish markets for the hours ahead.  The thin blue lines show the diamond pattern from this morning that went bust. Price gapped up at the open but then fell back down to earth around the 1683-1685 center line. The neon blue now shows a potential bear flag in play. Leg one is the drop from 1699 to 1676, 23 points. The sideways consolidation occurs now with a slight bias to the upside in price, and now we see if price wants to fall for leg two of the bull flag which starts at 1693 and would target that 1670-1672 support area that keeps coming up in recent TA. The 1670-ish may be a magnet line that price wants to explore again.

The indicators remain on the sideways vibe with now money flow and stochastics hinting at downside. All the indicators are under their 50% levels now as well in bear territory. Simply watch to see if the negative 8/34 cross occurs to show the bears retaking control, otherwise, the bulls will keep driving the bus. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 3:27 PM:  The 8 fell through the 34 MA a short time ago but the bulls already reversed the negative cross back to positive and are pushing the SPX higher again. The drama continues. The bulls remain favored with the 8 above the 34.

Keystone's Morning Wake-Up 7/30/13; Consumer Confidence

Case-Shiller data continues to show big jumps in house prices, the largest gains in years. Speculators trip over each other to buy any outhouse that comes on the market. Bubble-prone cities are in bubbles again. PFE and MRK beat by a penny but revenue and guidance are not impressive. COH is taking the pipe -6% so this will hurt the retail sector today. SAVE thwacked -6% so this may hurt the Trannies. Fertilizer and potash stocks are pole-axed, relentlessly beaten, POT crashing -26%, AGU -10% and MOS -30%. Whoa, that is intense. Copper is weak today, oil and commodities are sold off. As usual, however, gravity does not exist, and the S&P futures are pointing to a +5 to +7 pop at the opening bell. Traders are likely ignoring all bad news this week since the central bankers will be handing out candy to everyone.

Keybot the Quant is long but wants to flip short. The weakness in semiconductors, watch SOX 471.15, created the market downside yesterday. If SPX falls under 1682, Keybot should flip to the short side. Alas, futures say up not down. If SOX moves above 471.15, the bulls are back in business without worry. Watch VIX 14.26 and GTX 4785, both causing market bullishness. Any move to the bear side for these two will send markets strongly lower. GTX may be affected by the commodity negativity mentioned above. If bulls move SOX back above 471.15 and VIX and GTX stay bullish, the SPX will be moving towards 1700 again.

For the SPX starting at 1685, the bulls need to move above 1691, and hold it for a few minutes, and an upside acceleration will occur pointing the way to 1700. The futures indicate that this test at 1691 is on tap at the open.  The bears need to push under 1682 today to accelerate the downside. A move through 1683-1690 is sideways action. The 8 MA is above the 34 MA on the 30-minute chart signaling bullish markets for the hours ahead. FOMC meeting begins today but the announcement is tomorrow afternoon at 2 PM EST. Consumer Confidence is 10 AM and will create a market pivot point so the initial market direction is not too important until 10 AM. Watch SOX 471.15, SPX 1691 and the 8/34 cross on the 30-minute to determine market direction.

Note Added 10:12 AM:  Markets pivot to the upside after the 10 AM pivot. Consumer Confidence remains above 80 which is five-year highs. SOX jumped above 471.15 at the opening bell. Say no more. Bulls are back in business and trying to push through 1691-1692 so they can start the move to 1700. SOX is pushing towards 474 which will provide bull fuel today. VIX is on the plus side at 13.46, by pennies, but up nonetheless so with the SPX up and VIX up, one of them is wrong today. TRIN is 1.14, bearish, and creates negativity making the bulls work to move higher. The sideways behavior continues as the markets decide on the path ahead. Above SPX 1692 and the bulls should start running higher. Watch SOX 471.15 and GTX 4785 today, both creating market lift. Time for a snooze in the hammock under the oak trees on this clear summer day.

SPX 30-Minute 8/34 MA Cross Diamond and Sideways Symmetrical Triangle Patterns

Lots of drama in the markets right now with an up or down decision required. The bulls are trying to push higher this morning with a 5 to 7 handle pop on tap for the opening bell. Curiously, this is against a back drop of copper collapsing, oil and other commodities dropping, and the fertilizer stocks getting crushed. PFE and MRK beat by a penny but do not add much to the enthusiasm. Traders likely look forward to more easy money this week from the Fed, BOE and ECB. The 8/34 cross occurred twice yesterday, down, then back up. This rarely happens. It verifies the ongoing indecision in the markets. For now, the 8 MA is 19 pennies above the 34 MA signaling bullish markets for the hours ahead. The 8/34 cross will indicate the path forward.

The dark blue lines show how price came off the top a few days ago and created a diamond pattern. The right half of the diamond is also a sideways symmetrical triangle and the price action reflects the ongoing indecision. Ditto the indicators squeezing in sideways for a decision. Today appears to be decision day. For the patterns, a move of 12 to 16 handles higher, or lower, is on tap. Each time in the recent past the bulls always win the decision. The upside move would send price to 1700+, the downside move would send price to the 1670-1672 support. Money flow hints at a a move down but the futures are being goosed this morning. It is a coin flip. Watch the 8/34 cross which tells you the market direction forward. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

TRAN Transportation Index Weekly and Daily Charts Negative Divergence Cup and Handle (C&H) Pattern

Trannies dump -1.1% yesterday and interestingly, this occurs as oil price is dropping, not rising. The charts clearly show the negative divergence spank downs on the daily from the May and July tops as well as the weekly chart that topped two weeks ago.  The daily chart, like all of the indexes and many other charts, show an ongoing 5-month sideways range. For the Trannies it is through 5900-6600.  The daily chart indicators are weak and bleak wanting to see lower lows after any bounce would occur. Watch the 50% levels for all the indicators on both charts. If the 50% levels fail, price is clearly taking a walk on the bear side moving forward.

The weekly chart shows the C&H pattern playing out in textbook fashion.  The base of the cup is 4200, the breakout line is 5400, so the 6600 level is the target, now achieved satisfying the C&H. Note how price is extended above the 20-week MA above the 50 MA above the 200 so this begs for some reversion to the mean.  The 20-week MA failure typically indicates market trouble like the top in summer 2011 which led to the August 2011 waterfall crash. Equities also sold off in Fall 2011, then May 2012, then the September-October 2012 market top and more recently, price fell under the 20-week MA. This was saved by the Fed when the members paraded in front of the television camera's each day shouting "QE Infinity!" which created the bottom. On Independence Day, 7/4/13, the BOE and ECB central bankers pumped the markets and then the Fed followed up with more happy QE talk during the Congressional Testimony two weeks ago. Obviously, the Fed, and central bankers, are the market.

From a Dow Theory perspective, all was fine with new highs in Trannies and new high in the Dow, however, TRAN is now drifting lower for a couple weeks but the Dow keeps playing around at the highs. The bulls need to see Trannies recover quickly and run above 6600 to keep the upside market party going.  Projection is lower prices moving forward for the weeks ahead. Watch the 50% levels on the indicators for clues. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Monday, July 29, 2013

Keystone's Morning Wake-Up and Midday Market Action 7/29/13

The markets pick up where they left off on Friday. Pending Home Sales are on tap at 10 AM.  The dollar/yen falls through the 98 level so the stronger yen beat the Nikkei Index -3.3% overnight. The week may be off to a calm start but the kitchen will be hot from here on through Friday. Bulls need higher copper and utilities. Bears need lower semiconductors, lower utiliities and higher volatility. Copper is negative today and utilities are flat, so the bulls are challenged.  SOX is 473.58, three-points above the SOX 470.70 line in the sand and VIX is 13.47 remaining under the VIX 14.26 line in the sand.

Bulls only needed a tiny smidge of green in the futures overnight to launch the move towards SPX 1700 but red was the color instead.  If bulls can push above SPX 1692 today, and hold it a few minutes, that will create an upside acceleration. Bears need to push under 1676 to regain downside mojo. A move through 1677-1691 is sideways action today, the move thus far. The 8 is above the 34 MA on the 30-minute chart signaling bullish markets for the hours ahead. The bears need to push the SPX under 1687 to create market negativity, otherwise, they got nothing. With JJC staying under 39.20 and UTIL under 523, the bulls cannot gather upside momo. With SOX above 370.70, VIX below 14.26 and UTIL above 481, the bears cannot gather downside momo. Everything is sideways market noise until one of these parameters makes a decision and the markets will follow in that direction.

Some interesting ETF plays under potential consideration this week are long DBA, TLL, HDGE, SJB, JO, ERY, SKF. Interesting individual stock longs of interest are MUX, OSUR, TRQ and SD. Some shorts of interest are KKD, MYL, RTH, XRT, DIS, TSLA, DPZ and BA. DBA is long commodities. TLL is short telecom but it is thinly-traded. HDGE is a bear fund. SJB is short high-yield. JO is long coffee. ERY is short energy. SKF is short financials. MUX and TRQ are miners. OSUR is a biotech. SD has had high short interest so it may be prone for a large pop. KKD is short donuts. MYL is short pharma and the PFE and MRK results tomorrow will dictate the action in this sector. RTH and XRT are short retail plays. The Mouse House looks weak with a negative divergence top, ditto electric cars, pizza and airplanes, respectively.

Note Added 10:02 AM:  Pending Home Sales are weak which was expected. SOX is 472.34 teasing lower so it may create drama and theatrics today like Friday as it is in the 470.70 neighborhood. If SOX 470.70 fails, the stock market should head south in force. Bulls are not concerned with semiconductors remaining elevated. VIX 13.56 only 70 cents from VIX 14.26. TRIN is 0.90 bullish as usual. The bulls laugh each day as they maintain a low TRIN. SPX 1688.25. Dollar/yen 98.09. 10-year yield 2.59%. Crude and copper lower, gold and silver higher.

Note Added 10:09 AM:  SOX 471.71 now only one thin point from causing market mayhem.

Note Added 10:17 AM:  SOX 470.88. Use SOX 471.15 as the line in the sand rather than 470.70 (these numbers are constantly recalculated by Keybot). This is failure right now but bears will need to hold it a few minutes. If so, markets should sell off strongly. Whoa, there's a bounce to SOX 471.25 stopping the negativity. Watch SOX 371.15 since it rules the show today.  Under SOX 371.15 is thumbs down for the stock market. Above SOX 471.15 and bulls are fine today. The theatrics begin.

Note Added 10:23 AM:  SOX 472.05, big bounce. Nothing to see here, move along, move along. VIX 13.55. TRIN 0.88. SPX 1687.62.

Note Added 2:40 PM:  SOX failed at 471.15 at 11:06 AM. The weak semi's sent equities lower today. Keybot the Quant remains long but if SOX stays under 471.15 and the SPX drops under 1676, the algo will likely flip to the short side. SOX is oscillating above and below 471.15 for the last 45 minutes trying to make a decision. If SOX moves higher, equities will move higher into the closing bell. If SOX stays under 471.15 and lower, equities will sell off into the bell.  VIX is 13.40 at the lows for the day so the crushing of volatility during the session once again creates market lift. TRIN 0.81 on the bull side today. SPX 1688.36. The 8 MA stabbed down through the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours and days ahead but the 8/34 cross can go either way due to the current market indecision. Bears can smile if they keep SOX sub 471.15.

Note Added 3:20 PM:  SOX 470.49 so the bears are happy. VIX 13.47. TRIN 0.83. SPX 1686.12. Dollar/yen 97.86 so the lower dollar/yen pair is in sync with lower equity markets. Copper is now positive. The 10-year is 2.59% flat all day. The 8 MA just moved up through the 34 MA on the 30-minute chart signaling bullish markets ahead. This 8/34 cross behavior verifies the erratic, unstable and indecisive markets right now, like a deer in the headlights ready to leap but does not know which way.

Note Added 3:59 PM:  SOX 469 handle.

TNX 10-Year Treasury Note Yield and SPX Daily Chart Asset Relationship

The Fed and other central bankers have the markets tied in knots with many asset relationships skewed. Typically, lower commodities should be in sync with lower equity markets but the commodities have been weak for months, and Keystone's Rind Index signal has been on a market sell since April, but, the central banker money is stronger than fundamentals and equities print new highs.  The 10-year yield moved in sync with equities for the last few years. A lower yield is a move towards disinflation and deflation and is in concert with equities and commodities selling off. A higher yield is in sync with equities rising. This relationship has changed to yields up and stocks down, or, is wrestling with this change right now, and may revert back.

The higher rates hurt the telecom, real estate, home builders, REIT's and utility sectors so this makes sense that the weakness will create pressure on equities as a whole. The gray boxes above show yield and stocks moving in sync. As yields move higher, stocks move higher, as yields move lower, stocks move lower. Mid-April things change. The circle in April is where yields and stocks diverged, when the Boston Marathon bombing occurred. But, a likely greater effect on markets then was the BOJ increasing their money printing and yen bludgeoning during April which sent the dollar/yen pair higher and U.S. equities higher. The divergence in late April was short-lived since yields then moved higher with stocks again, the gray box, for May. This first week of May turning point was the Fed adding the words 'increase or reduce QE' to their statement. Traders latched on to the 'increase QE talk' and stocks catapult to the May top. Yields print their low at 1.64% and start higher at that time.

At the 5/22/13 top, Bernanke says taper and his hawkish tone causes equities to sell off in force into the June bottom. Note how the yields went straight up from there. This is where the interest-rate sensitive stocks mentioned in the prior paragraph sold off and helped send the broader indexes lower. Since that May top, yields are moving opposite to stocks. The question is will this relationship continue or will yields and stocks revert back to the up yields is up stocks relationship? Note how stocks are at the May highs again but the yields popped from 2.0% then and never looked back, now hanging around at the recent highs at 2.60%-ish. So the bond market has priced in higher yields and likes these current levels. The jury is out as to whether the higher yield lower stocks and lower yield higher stocks relationship continues, or not. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Sunday, July 28, 2013

SPX Daily Chart Upward-Sloping Channel Negative Divergence

The thin blue lines show the upward-sloping channel in play and how price obeys the various intervals. Right now price is sitting on the second from the top thin blue line deciding if it wants to touch the top of the channel again at 1700-1710. The green lines and falling wedge in June identifies the bottom but a cheesy bottom it was. Stochastics were barely oversold and RSI and MACD line wanted to see lower prices not higher prices. But the Fed heads were out in force day after day pumping QE which established the bottom, then the BOE and ECB fired the money bazooka's on July 4th Independence Day creating a fireworks rally from 1610 to 1685 in a heartbeat, only about one-week's time. Then Chairman Bernanke pumped the markets with the Congressional Testimony (equities are typically buoyant through the semi-annual Fed testimony) to create the move to near 1700 falling one-point shy at 1699.

The maroon lines show negative divergence across all indicators across the three-month time frame indicating that this move higher in equities has less oomph than May's rally. The top a few days ago was a three-day intraday top with price threatening a 1700+ break-through but falling short. This 3-day drama satisfied the small momo remaining in the money flow and MACD line so price really has no reason to move higher. The negative divergence has rolled price over to the downside and the stochastics, RSI and money flow are starting to print lower lows to create a weak and bleak profile. Technical-wise, price has no need to move higher but if Bernanke coughs and it sounds like QE the SPX will be up and over 1700.

Watch to see if price wants to come up for a look at 1700+. If so, monitor the thin red lines in the margin for the indicators. If price prints a higher high than last week, but all the indicators remain negatively diverged (under the thin red line), markets will roll over to the downside. If any of the indicators print above the thin red line, then the bulls will have juice for a few more days forward. Projection is for the SPX to roll over at any time forward and move sideways to sideways lower for the weeks ahead. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Key Events and Market Movers for Trading the Week of 7/29/13

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week:  Earnings season continues with a broad section of companies reporting and a focus on pharma, consumer staples and housing. The week ahead is full of drama including Consumer Confidence, GDP, ISM Mfg Index, the Monthly Jobs Report, month-end and a bevy of central banker QE pumping from the Fed, BOE and ECB. The week will be eventful.  The Sequestration budget cuts create concern over a second half slowdown this year. The Debt Ceiling limit and CR (Continuing Resolution to fund the government) deadlines occur in September. Politicians must solve the U.S. fiscal mess within the next 8 weeks but they will take a vacation during August. The Whitehouse scandals and Obamacare problems are distracting politicians from addressing the fiscal mess. Traders are not concerned since the politicians will always kick the can down the road and vote in favor of pumping the stock market higher but any stumble would impact markets very negatively. Listen for any saber-rattling this week ahead of the August recess now only days away which may spook markets. Congress is in session for one more week which is a negative for markets. The European debt crisis continues but is held at bay by BOE and ECB easy money QE talk and both will step up to the microphone this week. Cyprus is bankrupt, Greece remains in depression, Portugal yields are on the rise, Spain and Italy remain challenged, and France’s debt-to-GDP ratio is particularly worrisome. The ECB’s OMT bond-buying program, not fully accessed as yet, creates faux stability. Merkel (Germany) does not want any nation to exit the euro before her re-election in September but will not care afterwards. The next ECB Rate Decision and Press Conference is Thursday, 8/1/13.  Draghi leaves rates unchanged 7/4/13 and 6/6/13 after a one-quarter point cut to 0.5% on 5/2/13. The euro dropped like a stone due to Draghi’s dovish talk on 7/4/13.  A lower euro is needed to help the European manufacturing, export and automobile sectors and pull the continent out of recession and depression.  Europe must also compete with the race to debase (currency wars) ongoing around the world. A lower euro will send the dollar higher and short place negative pressure on commodities and equities.   The China hard versus soft landing saga continues. China is propping up the banking system to avoid collapse.  Copper and commodities have tumbled lower since February and took a dive last Friday as China announced a planned cut-back in all manufacturing activity.. Dr. Copper is a valuable market indicator but the Fed and BOJ central banker policies are distorting markets, masking price discovery and not allowing markets to properly correct. The ‘protectionism’ wars are underway as Europe, China, U.S. and Russia all threaten each other with tariffs. The equity markets continue to ignore the geopolitical landscape but the oil market is paying attention. Egypt is in chaos causing crude oil prices to catapult higher. Oil dropped last week but in light of the violence over the weekend, crude may become buoyant again. Syria is out of control with 100,000 dead from its bloody civil war. There are 4 million Syrian refugees. 10% of the Syrian people are now in Jordan. One in every 200 Syrians have died during the conflict over the last couple years. Countries bordering Syria cannot support this influx of people causing destabilization across the Middle East. The Turkey unrest continues.  Egypt, Turkey and Syria turmoil causes a big jump in oil prices which sends gasoline prices higher, crimping retail spending and leading to lower consumer sentiment.  In addition, the Brazil social unrest continues although he Pope’s visit is continuing without serious incident. A new global theme is taking hold that common citizens are fed up with the bailouts and preferential treatment for the wealthy while everyone else suffers. Protests across Europe continue with a flare-up in France. Geopolitical risk is getting priced into the oil markets but is not properly priced into the equity markets.  Q2 earnings season is underway with about 68% of the companies beating the lowered estimates. Top line revenue numbers remain flat or weak which does not reflect a strong economy as well as hinting that the structural unemployment problem will only worsen.  This season sees the lowest amount of positive earnings surprises in the last four years.  The most important earnings are highlighted in red below and other key earnings are in bold.  MRK and PFE will greatly affect the Dow and the pharma sector as well as setting the market mood. MA indicates the health of the consumer, or lack thereof. CLX and K provide input to the blue-chip consumer staple sector.  What will appear in the bowl of corn flakes Thursday morning? There are key housing sector stocks reporting such as MAS, MHK, and others that will directly indicate the strength of housing, or lack thereof. The Fed and BOJ easy money created asset bubbles in dividend stocks, healthcare, staples, utilities, telecoms, REIT’s, MLP’s, high-yield instruments, home builders and blue chips in general. The interest rate sensitive sectors such as utilities, REIT’s, homebuilders and telecom will sell off if Treasury yields rise. Keybot the Quant trading algorithm remains bullish. The central bankers create the market rally over the last few weeks; the BOE and ECB clearly pumping equities on Independence Day and then the Fed pumping during the Congressional testimony one week ago.  The lower volatility sends markets higher.  Volatility is now under 13. The market bulls will cruise higher if VIX stays below 14.18. The market bears will growl if VIX moves above 14.18.  A higher VIX, at these levels and higher, will create large intraday and day-to-day point swings in the broad indexes. Semi’s are also key this week. Bulls will move equities higher if SOX stays above 470.70.  If SOX 470.70 fails, it will be a game changer and the broad markets will begin selling off in force.  The NYMO, CPC, CPCE, SPXA150R, SPX:VIX and other charts are consistent in signaling that markets are forming another top like May. On the esoteric side, the new moon is 8/6/13 so markets would be expected to be weak early next week.  The next Bradley turn is a major turn date on 10/8/13. Solar flare activity was increasing one month ago but is now benign again.  Solar activity is expected to increase this year and may affect electronics, communications and markets as the year moves along. Broad market topping and roll over action is anticipated as the weeks play out.  The epic and historic market action continues.


·         Monday, 7/29/13: Pending Home Sales 10 AM. Dallas Fed Mfg Survey 10:30 AM. Earnings: AMKR, APC, BMC, CALM, LNG, EMN, ENZN, FIRE, FLOW, GDI, GLRE, HIG, HLF, HTZ, JEC, L, MTW, MAS, NTRI, NU, KWR, ROP, SCLN, SPG, SOHU, SONS, USU, VECO, VRTX, WYNN, YRCW.
·         Tuesday, 7/30/13: FOMC meeting begins. S&P Case-Shiller Home Price Index 9 AM. Consumer Confidence 10 AM. Earnings: AET, AFL, APU, AMGN, ACI, BXP, BYD, BWLD, CERS, GTLS, CBI, COH, CVLT, DDD, DSX, ETR, EZPW, FISV, FDP, GNRC, GNW, GDOT, GLW, HBI, HRS, HW, HEP, HDSN, IACI, JBLU, MAKO, MSO, MRK, NANO, NOV, NCR, OXY, ODP, OKE, PFE, QCOR, S, GT, TRMB, VRTS, WM, X.
·         Wednesday, 7/31/13: EOM. Mortgage Applications 7 AM. ADP Jobs Report 8:15 AM. Employment Cost Index and GDP 8:30 AM.  Treasury Refunding Announcement 9 AM. Chicago PMI 9:45 AM. Oil Inventories 10:30 AM. FOMC Meeting Announcement 2 PM. Farm Prices 3 PM. Markets are typically bullish from the last day of the month through the first four days of the new month. Earnings: AGN, AMT, BALT, BAH, CBS, CNW, CTRP, CW, DWA, EGC, GRMN, GNK, HES, HCBK, H, IPI, KS, LVLT, MAR, MA, MET, MUR, NI, PSX, REV, SAM, SODA, SO, SLCA, VG, WFT, WFM, WMB, YELP.
·         Thursday, 8/1/13: BOE rate decision.  ECB Rate Decision 7:45 AM EST and Press Conference 8:30 AM. Motor Vehicle Sales. Challenger Job-Cut Report 7:30 AM. Jobless Claims 8:30 AM. PMI Indexes. Construction Spending and ISM Mfg Index 10 AM—market pivot point. Natty Gas Inventories 10:30 AM. Earnings: ACOR, ACTV, AIG, APA, ARNA, ADP, AVP, BZH, BDX, BZ, CAH, CHK, CI, CLX, CME, COV, DYN, ED, HK, ITT, K, LNKD, MELI, MOD, MHK, MWW, MYL, NILE, NYT, NUS, ONNN, OPTR, PPC, PWR, SKUL, SWN, STEM, SFY, TLAB, TDC, TSO, TWC, VCLK, VPHM, WLT, WTW, XEL.
·         Friday, 8/2/13: Personal Income and Outlays and Monthly Jobs Report 8:30 AM.  Factory Orders 10 AM—market pivot point. Earnings: ANR, AXL, BPL, CVC, CBOE, CDW, CVX, ETN, IT, HST, IMGN, RUTH, SEE, UPL, VIAB.


·         Monday, 8/5/13: ISM Non-Mfg Index 10 AM. Markets are typically bearish through the new moon. Earnings:
·         Tuesday, 8/6/13: International Trade 8:30 AM. JOLTS 10 AM. 3-Year Auction 1 PM. New moon. Earnings:
·         Wednesday, 8/7/13: Mortgage Applications 7 AM. Oil Inventories 10:30 AM. 10-Year Note Auction 1 PM. Consumer Credit 3 PM. Earnings:
·         Thursday, 8/8/13: Chain Store Sales. Jobless Claims 8:30 AM. Natty Gas Inventories 10:30 AM. 30-Year Bond Auction 1 PM. Earnings:
·         Friday, 8/9/13:  Wholesale Trade 10 AM. Earnings:


·         In September:  The Debt Ceiling Limit and CR Continuing Resolution to fund the U.S. government deadlines occur.  Politicians must develop solutions over the next 8 weeks but will be on vacation during August. The Whitehouse scandals are distracting politicians from addressing the fiscal problems.
·         In September:  Merkel (Germany) seeks re-election and will not want Greece or other nations to exit the euro before the election, but will not care afterwards.  Perhaps Greece or other nations, and/or Germany will exit the euro in the future.
·         In Q4 2013:  European bank stress tests will occur.

----------------------------  2014  ----------------------------------

·         On Friday, 1/31/14: Chairman Bernanke’s term ends at the Fed, unless there is news during Q4 2013 that he will stay on. Yellen and Summers are the two front-runners but the Whitehouse said candidates are not selected as yet and the decision will not occur until the Fall. Equity bulls will be ecstatic if Yellen receives the nod because QE on steroids will occur.
·         Friday, 2/7/14:  Winter Olympics begin in Sochi, Russia, through 2/232/14. Watch $RTSI and RSX.
·         In March 2014: ESM is officially ‘fully operational’. The banking union schedule has been delayed from January 2013 to January 2014 and now to March 2014.

SPX 30-Minute Chart 8/34 MA Cross Potential H&S

The bears are not allowed to shine. The 8 MA crossed under the 34 MA to signal bearish markets ahead but on the Independence Day holiday the BOE and ECB central bankers fired the money bazooka's and the SPX ran from 1605 to 1680 on one week's time. The CB's sure know how to pump.  The 8 crossed under the 34 again signaling market trouble on 7/16/13 but the semi-annual Fed Congressional Testimony was on tap and markets are always bullish in this period, and, as Chairman Bernanke pumped the QE Infinity talk, the markets recover again from 1670 to one-point shy of the psychological 1700, in a few short days. The bulls have the easy road this year since the Fed's central mandate is to keep the stock market elevated at all costs. The Fed's main hope is to continue buying time. The longer they can keep things afloat, the better the chances that the economy may pick-up and recover. Alas, even the lowered expectations for earnings are not providing impressive results verifying the sick, slow-growth economy. The central bankers are the markets.

The red rising wedge, overbot conditions and negative divergence created the smack down off the top but the move lower was short-lived once again.  Volatility is crushed lower over the last week to create further market buoyancy and the 8 MA moved above the 34 MA late Friday to signal bullish markets for the hours and days ahead. The indicators are long and strong in this time frame so a run to 1700+ is back on the table for the next 3 to 6 candlesticks, maybe more, which is 2 to 3 hours, let's call it Monday lunch time or afternoon. At that time negative divergence would be expected again. The blue lines show an H&S under development that is printing the right shoulder right now. Of course if price moves above 1700 the pattern is nullified although any print above 1700 would serve as a new head for a potential H&S. If 1672 fails, the low 1640's are targeted. The small blue circles show gaps that will likely need filled. The price action on Friday came down for the low which filled the gap from 7/17/13.

Note how the stochastics were the only indicator that was oversold on Friday, another cheesy bottom as many have been recently, the markets are never allowed to correct properly. For now the bulls want to run higher with the 8/34 positive cross on their side. Bears need to sharply drop markets to reverse the 8/34 cross. Any smidge of green in the futures overnight will likely point to SPX 1700+ on Monday. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Saturday, July 27, 2013

SPX Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 7/29/13

SPX support, resistance (S/R), moving averages and other important levels are provided below for trading the week of 7/29/13. The bulls print new all-time highs last week with the all-time high only one single hair from the psychological 1700.  The Fed's POMO pumps at 11 AM EST on Thursday and Friday clearly spike the markets higher. The Fed is the market. The moving average ribbon is extended again with price above the 10-day MA above the 20-day MA above the 50, above the 100, above the 150, above the 200. Price typically tops with this behavior but 1700+ is definitely on the table, especially since the 8 MA spikes above the 34 MA on the 30-minute chart signaling bullish markets for the hours ahead.

Next week begins with price between strong resistance above at 1692 and strong support below at 1687. The bulls need to push up through 1692, so all that is needed is a glimmer of green in the futures overnight Sunday, and the bulls will be testing 1696 in a heartbeat and beginning the trek to 1700+. The bears need to push under 1687, but more importantly, 1676, the low on Friday, a formidable task but not impossible, to regain downside mojo. A move through 1677-1691 is sideways action for Monday.

Equities are in uncharted territory these days at all-time highs never seen before. A breach of 1699 will likely send price into the 1720's. Keystone's 80/20 rule says 8's lead to 2's so 1680 hints that the 1720's are on tap. Bulls, however, need copper and utilities to climb higher to achieve the higher SPX numbers, and both are not currently cooperating. The bears need to push volatility higher and semiconductors lower to initiate market selling.  Semi's were on the verge of collapsing at SOX 470.70 but the Fed money pumps saved the day, along with the late-session crushing of volatility, placing the bulls back in charge. There is only three days remaining in July, that started at 1606, so it looks like the bulls will print a positive month barring catastrophe. Price has not back-kissed the 20-day MA at 1663.01, or the 50-day MA at 1644.63, and a test of one or both would be expected moving forward. For now, the bulls rule moving into the new week of trading. Key S/R levels are 1699, 1696, 1692, 1687, 1685, 1683, 1680, 1675-1676, 1672, 1669-1670 and 1666.

·         1699 (7/23/13 All-Time Intraday High: 1698.78) (7/23/13 Intraday HOD for 2013: 1698.78) (Previous Week’s High: 1698.78)
·         1698
·         1697
·         1696 (7/22/13 All-Time Closing High: 1695.53) (7/22/13 Closing High for 2013: 1695.53)
·         1692
·         1691.85 Friday HOD
·         1691.65 Friday Close – Monday Starts Here
·         1691
·         1687.69 (10-day MA)
·         1687 (5/22/13 Intraday High Top: 1687.18)
·         1686
·         1685
·         1684
·         1683
·         1681
·         1680
·         1678
·         1676.03 Friday LOD
·         1676 (Previous Week’s Low: 1676.03)
·         1675
·         1672
·         1669 (5/21/13 Closing Top: 1669.16)
·         1666
·         1663.01 (20-day MA)
·         1661
·         1659.02 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
·         1659
·         1655
·         1654
·         1652
·         1651
·         1650
·         1649
·         1647
·         1644.63 (50-day MA)
·         1640
·         1639
·         1636
·         1634
·         1632
·         1629
·         1627
·         1626
·         1624
·         1623
·         1618
·         1616.35 (20-week MA)
·         1614
·         1611
·         1610.95 (100-day MA)
·         1609
·         1607
·         1606 (July begins at 1606.28)
·         1605
·         1600
·         1598
·         1597
·         1593 (4/12/13 Market Top: 1593.30)
·         1589
·         1586
·         1583
·         1579
·         1578
·         1576 (10/11/07 Intraday High: 1576.09)
·         1569.78 (150-day MA; the Slope is a Keystone Cyclical Signal)
·         1569
·         1565 (10/9/07 Market Top: 1565.15)
·         1564
·         1563
·         1561
·         1560 (6/24/13 Intraday Low)
·         1556
·         1553 (10/31/07 Top: 1552.76) (3/24/00 Top: 1552.87)
·         1552
·         1551
·         1548
·         1546
·         1544
·         1539
·         1536.28 (10-month MA)
·         1536
·         1531
·         1530.81 (200-day MA)
·         1528 (3/24/00 Closing Top: 1527.46)
·         1525
·         1524 (12/11/07 Top: 1523.57)
·         1521
·         1520
·         1518
·         1517.50 (12-month MA; a Keystone Cyclical Signal) (the cliff)
·         1516.18 (50-week MA)
·         1516
·         1514
·         1512
·         1509
·         1505
·         1503
·         1500
·         1498 (12/26/07 Top: 1498.85)
·         1495
·         1489
·         1485
·         1481
·         1476
·         1475 (9/14/12 Intraday HOD for 2012: 1474.51)
·         1472
·         1468
·         1466 (9/14/12 Closing High for 2012: 1465.77)
·         1465
·         1461
·         1460
·         1457
·         1456
·         1453
·         1447
·         1446
·         1444
·         1441
·         1440 (5/19/08 Intraday HOD for 2008: 1440.24)
·         1438 (9/13/12 Fed Announces QE3 Infinity)
·         1435
·         1433
·         1431
·         1430 (12/12/12 Fed Announces QE4 Infinity and Beyond)
·         1429 (11/6/12 President Obama Election Top)
·         1427 (5/19/08 Closing High for 2008: 1426.63) (2013 Begins at 1426.19)
·         1424
·         1422
·         1419