Keybot the Quant remains long and identifies three key parameters today that dictate market direction; UTIL 480.40, SOX 462.50 and VIX 14.28. The session begins with utilities and semiconductors creating bullishness and volatility creating market bearishness. UTIL and SOX remain bull friendly, moving higher, creating market buoyancy sending the SPX to 1652. The VIX drops to 14.37 but remains a hair above the 14.28 so the bears are hanging on by a fingernail. If VIX drops under 14.28, the SPX will rocket launch to the 1660's. If VIX 14.28 support holds and the VIX stays above and heads higher, the equity markets will weaken. VIX 14.28 is the key item to watch today.
Scroll back to the SPX 30-minute chart for further study. The SPX continues to play inside the apex of the rising wedge as traders grab a sandwich to refuel for the afternoon. The 30-minute chart is negatively diverged with the higher price print. The 1-hour chart is negatively diverged but the RSI just moved higher so it looks like the bulls can keep the SPX elevated for another couple hours. Ditto the 2-hour chart which is set up with negative divergence but the RSI, only now moving to +70 for an oversold RSI, has some additional juice. Another one to three candlesticks for the 2-hour could allow the bulls to stretch things out for 2 to 6 hours longer. The SPX 1649-1650 level is strong resistance, that has now given way to the upside. The 1652-1653 is strong resistance and price is battling here right now. A move up through 1653 opens the door to 1666. It is a matter of if the minute and hour charts can roll the SPX over from the current print at 1653 this afternoon.
The FOMC minutes are tomorrow afternoon, about 8 hours of trading time away. It is difficult to see the SPX holding out for that long to hear the minutes but that may be what the indexes are hinting. New money comes into the market to begin the month and especially this month since it is the start of a new quarter and new half. Typically by the fourth day of the month the bullish affects of new money wane, so this has likely ran its course as of today. Volume is shamefully light again today, there must be only one-half dozen guys trading all the stocks as tumbleweeds roll through the exchange and crickets sound off in the background. The move up in the SPX right now does not mean a lot unless the VIX drops under 14.28. TRIN is 0.65. Say no more. These low TRIN's provide victory to bulls each day. However, with three consecutive days of sub-one TRIN's, a snap back to the plus one side is required which would correspond to market selling perhaps arriving this afternoon or tomorrow. Bulls will rule today if the TRIN stays in the 0.6's or lower. Keystone took profits on ECA exiting the trade and will look to reenter. ECA should have plenty of upside ahead. Also bot NEM opening a new long trade.
Note Added 1:22 PM: VIX 14.34, the bears keep holding on by their chinny, chin, chin, only six pennies from the 14.28 bull-bear line in the sand. The SPX punched through the strong 1653 resistance but for only 4 minutes before moving back under. TRIN 0.63. UTIL is 485.85 and SOX is 471.12 both well above their danger levels highlighted above, so this allows the bulls to keep the broad indexes elevated.
Note Added 3:38 PM: VIX exactly on top of the 14.28 bull-bear line in the sand as identified by Keybot. What say you bulls and bears? TRIN 0.65. SPX 1654. SPX minute and hourly charts are content with rolling over here forward but the bulls are trying to keep the broad indexes elevated into the closing bell.
Note Added 3:46 PM: VIX 14.32. TRIN 0.68. SPX 1652.
Note Added 4:01 PM: It took all day but the negative divergence on the minute and hourly charts is beginning to usher in weakness but the closing bell saves the day. Price should continue to roll over to the downside, unless of course, if the Fed announces more QE happy talk overnight. VIX ends above 14.28 (price needs time to settle) so the bears wipe beads of sweat from their foreheads and are given another day to fight. Copper was whipped hard today and that was largely ignored. Dr. Copper remains in sick bay but the Fed intervention keeps pumping equities. SPX finishes sitting on the strong 1652-1653 support/resistance waiting until tomorrow to make a decision. TRIN finishes at 0.75 but the three days of low TRIN's should resolve tomorrow with a TRIN above 1.00 all day long which equates to equities selling off.
Seems like the test of 1654 is right now.
ReplyDeleteLet's see ...
V.
my thoughts are that tomorrow's Bernanke conference (after the FED minutes) might provide some soothing to the market... if that was not the case the minutes would have been enough to spook the market.
DeleteV.
Yep, there is your 1654 V. SPX poked above 1653 but this only held for four minutes before slipping back under. Lots of drama today as usual. Bernanke speaks after the closing bell tomorrow so his words will not impact markets until Thursday morning. FOMC Minutes are released 2 PM EST so the markets can trade for a couple hours after that. Traders will look for any mention of tapering and if so, time frames for tapering.
DeleteSo bullish this week, next week even much more bullish due to OpX...looks like market going all the way without looking back unless a sell off after fomc tomorrow. Hopefully Fed will confirm the plan for September Taper still in tact.
ReplyDeleteVIX 14.28 is key, if it is lost, the bullish scenario comes to be, if 14.28 holds and moves higher, markets will begin selling off. Markets are at a critical juncture right now. VIX 14.28 will tell you the answer today.
DeleteVIX 14.27 while 1653-1654 verified.. hmmm.. :)
DeleteV.
Oh my God!
ReplyDeleteSo much action, so much thrill! :)...just love it....
SPX is rumbling under 1654 just like Romeo singing his love below Juliet's balcony :)))))) .... quite a drama there! :D!
V.
Hi v, r u looking at spx going for another correction?
ReplyDeleteThere are 2 possibilities here:
Deletea. the next possible correction might appear from 1662-1666 down to 1637-1640 (maybe triggered by Bernanke tomorrow..maybe, not fully sure)
b. you gotta be careful with shorting here ... if it's int.5 we are now right in the minute 3 of minor 3 of int.5 - the best part of this up wave.
My opinion is not fighting this market. You're not here to fight , you're here to make money.
This int. 5 might end in the 1680-1699-1712 area with a more serious correction of 3-4 weeks down to 1500-1550 (but that should be in September or August). Until then I don't know if it makes sense to short (especially a 3'rd internal wave of an up-wave)
V.
Yep, lots of late day drama. SPX 1654 and VIX 14.28, things have to break one way or the other but the closing bell is only fifteen minutes away and it may end the game before one side or the other wins today.
ReplyDeleteWatch it magically gap up again tmr over 1654 to 1660 perhaps...
ReplyDeletewhatch the China data: trade balance, and mostly : new loans.
Deletemight make the difference tomorrow.
V.
After the close, with the VIX holding above 14.28, and the SPX 1652-1653 resistance holding, and the hourly and minute charts showing negative divergence roll over, and the uber low TRIN's three days in a row, the nod has to go to the bears for tomorrow, however, anything can happen overnight.
ReplyDeleteV.,
ReplyDeleteHard to see how one can prosper from your posts!
One minute you say, "SPX is rumbling under 1654 just like Romeo singing his love below Juliet's balcony :)))))) .... quite a drama there! :D!"
Next minute you say, "b. you gotta be careful with shorting here ... if it's int.5 we are now right in the minute 3 of minor 3 of int.5 - the best part of this up wave."
With you, it is always "this" or it could be "that"!!
Hello,
DeleteYou need to make your own decision. This blog is to provide you with info and comments, questions and answers, whatever... "YOU" are still the one to analyze and finalize your decision!
:)
DeleteA few things to say here: in the first post I tried to make a joke :) describing the up-down process in the 1653-1654.
In the second post I was more serious and presented that possibility here: a potential correction if minute 3 of minor 3 of int 5 ends and don't extends more than it already has done.
As position, we are now in the minor 3'rd wave of int 5 in minute 3. That means that minor 3 isn't done yet. When it will be done a correction MIGHT appear (minor 4 10-15 points) if it doesn't triangulate or makes some kind of sideways pattern. If minor 4 will just go sideways I don't know how this might help somebody that's shorting and it's underwater now.
Yes corrections will be of course, but the up wave that started from 1560, as it develops, it targets the 1680-1699 area or potentially higher (1700-1712).
Thank you for your feed-back.
V.
p.s. a piece of advice: beware of those who tell you: "do this, do that" instead of presenting the possibilities, the options and the analysis instruments.
KS, I have a dumb question, when a triangle is forming..does that means it's going to be sideways for a while? (like the sox chart you posted earlier this morning)
ReplyDeleteThank you.
You have to watch it as it forms. Usually you need a couple price prints above, and a couple below to start to see a sideways triangle develop so you draw the upper and lower trend lines and then see if price keeps bouncing up and down inside the triangle as it works towards the apex where it will have to decide one way or the other. SOX broke out to the upside. The indicators dictate the direction forward. You have to look for positive or negative divergence, if neither are convincing, and the indicators are meandering sideways, then the price will as well. In general for chips, the INTC downgrade created the negativity two days ago then a bounce occurs yesterday. If you study the Smartphone and cell phone data, the sales estimates are all coming down, many folks that wanted a Smartphone already own one. The bread and butter for chips has been the cell phone market. Now it is highly competitive and companies are trying to take each others share, so they end up beating each other up, so chips should suffer moving forward.
DeleteWell KS, WLT is opposite of a Walter Matthau character, anything but boring and sluggish, wow. A few more porkchops but of course I miss most the fireworks after writing my bottoms in of 10.29 yesterday and 10.92 today, I fail to hold position two days in a row on those numbers and miss the rocket ship to the planet coal. An odd couple of days for the ol' Wlt. but a hot dog is a hot dog and a a coke a coke, so I'm happy
ReplyDeleteCoals likely have a lot more erratic action ahead. The higher natty prices will send coals higher. Cooler weather coming so natty may drift a touch lower in coming days. China data is weak overnight.
DeletePresident Truman quipped decades ago, "Give me a one-handed economist, since all my economists say on the one hand..., and on the other hand....." LOL
ReplyDelete