Wednesday, July 17, 2013

Keystone's Morning Wake-Up 7/17/13; Chairman Bernanke House Testimony

The futures were flat to down but as soon as Chairman Bernanke's comments hit the wire, the markets jump higher, the S&P's are pointing to a +6 opening. Housing Starts were weaker than expected so that may be encouraging bulls as well since bad news is good news in these twisted markets. BAC earnings beat on EPS with a slight miss on the top line but it is trading up pre-market, along with BK, and encouraging the bulls. Mortgage Applications continue the downward trend with less refi's although mortgages are flat to slightly higher. Bernanke's Q&A session begins at 10 AM EST so that will nudge markets to and fro. Oil Inventories are 10:30 AM. Beige Book is 2 PM which should create a market pivot. Heavy-weight tech hitters EBAY, INTC and IBM are at bat after the closing bell so tech may stumble sideways awaiting the results. Traders give the YHOO results last evening the benefit of the doubt as it trades higher this morning. CSX earnings beat and it trades up so this will encourage the coal sector.

The 8 MA is below the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours and days ahead, however, an upside thrust at the opening bell may chart the course for the bulls to reverse the 8/34 cross back to the bull side. VIX 14.20 remains key. Very simply, bears win above 14.20, bulls win below 14.20. For the SPX starting at 1676, the bulls need to touch the 1684 handle and the all-time high at 1687 will be quickly tested and likely give way to the 1690's. A +6 move in the SPX would set up the 1682-1684 test. Bears need to push under 1672 to accelerate the downside to the strong 1669 and 1666 support levels. A move through 1673-1683 is sideways action today. Watch the 8/34 MA cross on the 30-minute, VIX 14.20, SPX 1684 and SPX 1672 to determine market direction.

Note Added 9:05 AM:  S&P's +7.

Note Added 9:47 AM:  Here is the test of VIX 14.19-14.20 that determines who wins today. Bounce or die.

Note Added 10:29 AM:  Bernanke is set to speak but they are having trouble with the audio microphone so the Q&A is delayed....here we go...... VIX 14.22 bearish by a hair. TRIN 0.91 slightly bullish.

Note Added 10:31 AM:  VIX 14.17 now testing the critical 14.19-14.20 again. TRIN 0.91.  SPX 1682.75.

Note Added 10:37 AM:  VIX tumbles to 14.10 so SPX jumps to touch 1684 and HOD at 1684.75. TRIN 0.95. Bernanke has the magic touch; looks like the all-clear signal for bulls is given as the testimony begins.

Note Added 10:46 AM:  The bears are tenacious. The SPX could not hold 1684 now printing with a 1681 handle. VIX 14.20. TRIN 1.08. Use VIX 14.19 as the line in the sand today that will dictate market direction.

Note Added 11:16 AM:  It is a circus today. VIX now back below 14.19 at the lows at 14.06 which makes for happy bulls. TRIN 0.96. Jumpy markets continue as Bernanke continues to take Q&A. The euro is leaking lower sending dollar higher and gold lower. Donuts (KKD) are weak and coffee (JO) is strong.

Note Added 11:45 AM:  SPX 1680.71. HOD remains at 1684.75 rupturing today's upside bull target at 1684, however, it could only hold a couple minutes before failing. VIX 14.08. TRIN 0.87 becoming more bullish. Bernanke testimony continues. Interestingly, he has mentioned  that increased purchases are possible due to weak economic data, however, he just said "the Fed may increase purchases 'for a time'." For a time is a whole new ball game. Bernanke is admitting that QE Infinity is not inifinity and that he cannot continue on the current path indefinitely. This takes bluster out of the euphoric dovishness but will anyone in the the main stream media notice this faux pas?  An increase in purchases could only occur for a time. The comment will likely go unnoticed.

Note Added 12:09 PM: SPX 1680.18. Price is playing around with a descending triangle on the 1, 2, 3 and 5-minute charts with triangle base line at 1679.50-ish. A drop under 1679 should pave the way to a test of the 1672-1674 support area. VIX is 14.05 so it does not want to see the SPX drop any further. Ditto the bullish TRIN 0.88.  Markets are stumbling sideways. Volatility says the bulls are winning so far today.

Note Added 12:20 PM:  SPX rises over 1682 so that negates the descending triangle pattern mentioned. The price move today is lots of sideways through the 1679-1684 range, so bulls win above 1684, bears win below 1679. VIX drops under 14 to 13.95 so volatility wants the bulls to win today, so far, however, the minute charts shows a potential falling wedge developing (so VIX may simply be building a new base for price and move higher as the next minutes or hour or two plays out).

23 comments:

  1. Can't remember the last time we went two days without, but no POMOs today (Wed) or tomorrow and the active POMO days this week are on the small side. Don't know what to make of it, but in a centrally planned world hardly seems coincidental given Bernanke testimony. There were POMOs during February testimony and one POMO last July. Liquidity however remains short term high as the monthly MBS settlements continue this week through Monday.

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    Replies
    1. Maybe they figured that since the congressional testimony is typically always bullish, why not back off a bit?

      Delete
  2. if we reach today/tomorrow 1700/1706 prepare (after a short pullback of 22-28 points) for 1772-1778 exactly!
    Today we started ok for this scenario.
    Never short without trend confirmation!

    Kiss'ya all folks!

    GS guy

    ReplyDelete
    Replies
    1. my scenario chances rised to 55% according to my models.
      :)

      GS guy

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    2. 62 % chances :) ...
      if market jumps over 1686.10 the chances go to 100%.

      GS guy

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  3. Hello,

    that's the link for Bernanke's House speech and conference after that (starting in about 6-7 minutes)

    http://www.bloomberg.com/live-stream/

    good luck all today,
    Thank you KS and GS guy!

    V.

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    Replies
    1. just love those sound problems :D in the House hearing!
      if Ben doesn't speak the propper words...Bang! the microphone is cut-out! Lol :)

      V.

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  4. VIX 14.19-14.20 is the line in the sand. You are correct GS guy if VIX drops under 14.19. Bears win above 14.19. The drama is unfolding right now with a test to start the day.

    ReplyDelete
  5. Busting your balls here KS.
    Your latest update quotes VIX at $19.20 with $19.19 as the line in the sand. That's no line brotha, I'm short the entire market at those levels...;)

    ReplyDelete
    Replies
    1. I'm watching you and will take all your money in seconds ;) ... you're too complacent and too self-confident!

      GS guy

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    2. Yep Anon, typo on VIX and was corrected. Quite the battle at VIX 14.19 today. VIX at the lows at 14.05 so the bulls will rule, however, a long day remains ahead.

      Delete
  6. I rebut good sir,
    "It's easy to grin, when your ship comes in
    And you've got the stock market beat.
    But the man worthwhile, is the man who can smile,
    When his shorts are too tight in the seat...
    Spaulding, get your foot off the boat!"... Judge Smails
    :)

    All kidding aside GS, I'd like to thank you directly for your contributions and comments here. Your insight is invaluable...

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  7. ascending triangle on 15 min spx chart-> that's bullishly resolved in 78% of cases.

    V.

    ReplyDelete
    Replies
    1. Do not see that V on the 15-minute. The rising wedge is say 7/11 thru 7/15 to the top, then a spank down occurs, now price came back up so it has more of a sideways range thru say, 1672-1684,or even 1666-1684, so maybe its a more of a sideways range where the bulls win above 1684 and bears win below 1672.

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    2. Interestingly, the 3-minute chart has a descending triangle vibe to it today with triangle baseline at 1679.50, looks like price just slipped under, now up for a back kiss, a move lower should send price to the 1672-1674 support. Very indecisive markets today.

      Delete
    3. sorry, typo, it wasn't on 15 min it was on 5 min but distorted.
      not valid now.
      V.

      Delete
    4. The descending triangle is negated now as well. Looks like its a sideways range V. Bulls win above 1684 and bears win below 1679. Volatility (VIX 13.95) favors bulls.

      Delete
  8. I wouldn't short here. Bounce or die track record for the bears is awful. Even with SPX at this record level, shorts might get crushed again. Wouldn't be a surprise, considering the bulls have victimized the bears nonstop this year.

    It'll never go higher than this, earnings suck, structural unemployment is high, Sequestration is looming, never go higher than the current level...famous last words.

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  9. well, it is what it is folks.
    the wave behaves like a 4 already.
    so forget all the BS stuff with 1770's and all that....
    wave 3 maybe ended at 1685.
    if bulls want to prove that wave 3 didn't ended they should take away 1686.10 TODAY, NOW!
    target revised to 1690-1710 area for the whole up move from 1560!
    So those f*cking bulls should move today above 1686.10 if they want to see 1770's in 2-3 weeks!

    GS guy

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  10. Interesting day with a sideways stumble. VIX is under 14.19 so the bulls have to receive the nod.

    ReplyDelete
  11. Rally feels like its winding down and losing steam. I hope we get come more concrete confirmation on that feeling tomorrow.

    Argon

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    Replies
    1. don't get too complacent on the downside.
      check Friday's POMO funds (!), check the fact that it's an OPEX day, consider the fact that at Friday's moment the market may already have integrated Ben's reporting idea in front of House&Senate.

      For me it's amazing that it goes only sideways for now, with 2 big Ben shows in a consecutive manner it may have been getting to much lower levels!
      What we are seeing now it's a sideways evolution before a capitulation strong up move into OPEX (last bears crushed, top finally put in the market).
      Don't get too complacent on shorting (or on longs)!

      What we have now doesn't looks like a top!
      We need a "second head" for strong negative div. on RSI 5,14 with higher highs in market, but lower lows in RSI readings. Also check MACD evolution. Also MFI.
      A final peak is still missing.

      V.

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    2. When retailers will be shaken and will fear shorting this market, that's when the market will drop! For now, it still has to rise!
      Retailers don't feel fear and they short right now - due to a potential double-top.

      They will be squeezed.
      I feel sorry for them , but they will be squeezed.
      I follow GS guy's advice to short only in confirmed downtrends.

      V.

      Delete

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