Tuesday, July 23, 2013

Keystone's Morning Wake-Up and Midday Market Action 7/23/13; DD; MO; T; UPS; AAPL

NFLX lays an egg with earnings after the bell yesterday and is whacked about -6%. TXN tempered the tech negativity saying it will beat estimates. Telecom mergers take place overnight providing a boost to this sector and T earnings are on tap. China promises 7% growth or higher. This hints that the PBOC will provide easy money policies to maintain this growth so the S&P futures are +4 at this writing a couple hours ahead of the opening bell. The FHFA House Price Index is 9 AM and will receive attention in light of the weak Existing Home Sales yesterday. Richmond Fed Index is 10 AM. 2-Year Treasury Note Auction is 1 PM and is important for the 2-10 spread which dictates if the banks are at an advantage, or not. Earnings of interest today are AAPL-tech, AKS-steel, APD-industrial, DPZ-pizza, DD-chemicals, FCX-copper and gold, ITW-industrial, LMT-defense, MO-smokes and divvy, NBR-oil, NSC-rails adn coal, PNRA-bread, RSH-retail, T-telecom and divvy, UPS-shipping bellwether, UTX-defense and industrial, VLO-refiner, VMW-tech and WAT-water. Apple earnings are after the closing bell.

Copper and volatility rule the roost. The smack down in volatility on Friday and Monday has created the SPX thrust towards 1700. The bulls are in good shape as long as VIX stays under 14.18.  Bulls will receive upside fuel, like yesterday with the SPX nearly touching 1698, if JJC (copper) moves above 39.21. JJC starts today at 39.05. Copper is weak in early trading. So bulls need JJC 39.21 for happy time and bears need VIX 14.18 for happy time. If JJC stays under 39.21, and VIX stays under 14.18, the markets will float along sideways with an upward bias. For the SPX starting at 1696, the bulls need to touch the 1698 handle, only a couple points higher, and it will be smooth sailing above 1700 in quick order. Bears need to push under 1691 to accelerate the downside. A move through 1692-1697 is sideways action today. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullishness for the hours and days ahead. Bears need the SPX to print 1695 and lower to curl the 8 MA to the downside. Watch JJC 39.21, VIX 14.18, and SPX 1698 and 1691 to determine market direction.

Note Added 10:48 AM:  JJC is at 39.20 exactly on top of the 39.20-39.21 bull-bear line in the sand. Markets will move higher with JJC at 39.20+ but will weaken under 39.20. Whoa, there is a big spike to JJC 39.24. VIX is inching higher this morning up to 12.92. Bulls are trying to pump copper to gain upside juice. TRIN is 1.03 unwilling to choose a side yet today. The SPX touched the 1698 handle, in fact printing a new all-time high at 1698.78, but could not hold the 1698 level for 7 to 10 minutes to lock it in, so the SPX peters out and drifts lower. JJC 39.20 is the rudder for the market ship today, above and markets will recover, below and markets will weaken.

Note Added 12:24 PM:  JJC floats up to 39.30 and now at 39.25 remaining above the critical 39.21 level. VIX moves over 13 but now trails lower to 12.65. TRIN is 0.82 choosing the bull camp. Thus, copper floats up a bit, and volatility and TRIN drop a bit, so the SPX recovers off the lower limit for today at the LOD at 1691.13 to print 1694.04. Dollar/yen is 99.73 dropping from the 100 level this morning so the slightly lower dollar/yen (stronger yen) move creates a slightly lower move in equities. UTIL (utilities) are flat at 507, bouncing in the 505-509 area as highlighted in this morning's chart, trying to decide on a direction. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets ahead, however, the 8 is now moving lower and is set to perform a negative 8/34 bearish cross in about one hour's time. Therefore, the bulls must catapult markets higher right now to prevent this cross from occurring. Watch JJC 39.21. It's a lazy hazy day of summer.

Note Added 1:03 PM:  JJC 39.26. VIX 12.59. TRIN 0.81. SPX 1693.48. On the 30-minute, the 8 MA is 1693.67 and 34 MA is 1692.15. Price is between the two moving averages which are about to create a negative cross over the next one-half hour.  Bulls have to strongly bounce markets in the minutes ahead or they are going to lose the upside momo with a bearish 8/34 cross on the 30-minute chart.

Note Added 1:19 PM:  Right on cue. SPX bounces a couple points now over 1695. JJC 39.26. VIX 12.48. TRIN 0.86.  The VIX beach ball is kept underwater but it is difficult to continue holding it under water. Bulls must prevent the negative 8/34 cross by all means necessary and are going to need more juice from higher copper and lower volatility and TRIN. Dollar/yen is 99.69 not moving up as yet to support the SPX moving up, instead, a touch lower.

Note Added 1:39 PM:  JJC 39.29. VIX 12.44. TRIN 0.86.  SPX 1695.21. Note copper squeezing a shade higher and volatility a shade lower. Bulls are doing everything possible to keep the markets elevated. Dollar/yen 99.57 not cooperating with equity bulls.

Note Added 3:08 PM:  JJC 39.48, wowza, bulls making a statement with copper. VIX 12.60 stuck in a rut. TRIN 0.85.  Dollar/yen 99.42 continuing to leak lower. Look at how the bulls prevent the 8 and 34 MA cross on the 30-minute, curling the 8 MA to the upside again with the stick-save over the last two hours. The cross remains in play moving forward.The 8 MA is 1694.27 so the bears need to push the SPX under 1694.27 to curl the 8 MA lower again.  Regardless, this 8/34 MA cross drama will continue through the opening bell tomorrow. Interesting markets. Perhaps the Fed is keeping things buoyant until they can line up all their short positions in the off shore accounts. Looks like everyone is waiting for the Apple show in less than one hour.

Note Added 3:35 PM:  JJC 39.47. VIX 12.65.  TRIN 0.87. UTIL is 507.80 remaining unable to choose a direction from the 505-509 area. With copper running higher, utilities will become more important in the days ahead. SPX 1694.47 at the 8 MA described previously. Equities are in idle mode until they can take a bite of the Apple within one-half hour.

Note Added 3:51 PM:  SPX is weakening finally starting to roll over from the negative divergence on the hourly and minute charts, receiving a spank down. Keystone shorted RTH opening a new short position which is short retail.

Note Added 3:57 PM:  The 8 MA curls to the downside again to continue the 8/34 MA cross drama. The opening bell is critical tomorrow for an up or down market decision. Therefore, AAPL and T earnings are mucho importante. Keystone shorted IYZ (telecom) opening a new short position. T is a telecom.

Note Added 4:02 PM: The SPX prints a new all-time intraday high at 1698.78  but not a new all-time closing high. Dollar/yen 99.46; note how it leaked lower this afternoon not buying into the SPX moving higher, and, as the day finished, the SPX reversed to the downside to follow the dollar/yen. T is an odd one missing by a penny on EPS but top line beats. This is a twist from nearly all other stocks that beat by a penny and keep missing on the top line.  T closed at 35.82 and is now at 35.83, a flat reaction, so far.

Note Added 4:06 PM:  BRCM beats on EPS but misses on top line; its trading flat AH's.

Note Added 4:09 PM:  PNRA is trading lower, must have been some moldy bread. VMW beats so it jumps 11%; this will help tech and counteract BRCM now giving up -4%. The Apple tension mounts. AAPL closed at 418.99 and is sitting flat awaiting the verdict.

Note Added 4:21 PM:  JNPR is hit -7% so that is another negative for the tech sector. DD ended slightly negative today after the trumpets were blaring and long traders were tripping over themselves to buy at the opening bell. They all lost 3 bucks on the stock in a short few hours, about -6%. Chemicals are the building blocks of a strong global economy and the news continues to be unenthusiastic. UPS closed a touch negative as well, a global economic indicator since everything needs shipped including business contracts, parts and products. Perhaps the brown trucks are sitting in the parking lot with squirrels and chipmunks living on top of the engine block. It will be interesting if AAPL keeps trying to tell everyone that a skinny Smartphone screen is better than a larger screen even though the buying public says otherwise.

Note Added 4:36 PM:  AAPL beats due to better than expected iPhone sales. iPad sales missed expectations and the guidance is lower moving forward but traders are focused on the better iPhone sales and send the stock to 430 about 11 bucks above the closing price, +2.6%. So it is happy time, a ripe apple instead of a rotten one.

41 comments:

  1. just pick your poison as you like it:

    in minor 3 = wave 5 = wave 1 = target= 1705.87
    in minor 3 = wave 5 = 1.618*w1 = target 1713

    next after those targets for minor 3:
    minor 4 = target 1662-1670

    I don't consider what is happening now as signs of minor 4.
    This theory would be valid only if:
    in minor 3 = wave 5 = 0.618*w1 = 1698.22.

    But I didn't saw during US session today or yesterday none of this values (including 1698.22).
    So, we're still in minor 3 of int v of major 3!

    GS guy

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    Replies
    1. One more detail: the US opening today was at 1698.60 so this might qualify for a truncation.

      Not so sure yet, but wanted to note this thing.
      I'm still not convinced that we have finished minor 3.

      GS guy

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  2. What would change your mind and make you think 1698 was the end of a truncated 3 of v?

    Thanks, BK

    ReplyDelete
  3. 3 things :
    a. loosing 1699 pivot lower level (1692)
    b. loosing 1680 level
    c. loosing of 1673 level (lower level of 1680 pivot)

    I bet (it's a question of betting now already cause we're in a ending diagonale and this s*its can break when they want=technically hard to determine) we will see 1706 or 1713. I don't think minor 3 has ended- but it's just my opinion.

    GS guy

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    Replies
    1. I don't short here if that was the question.
      The risk-reward is not too ok for a short trade.
      Be patient.

      GS guy

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    2. Agreed on the short end. I was more asking from the getting out of long end perspective.

      Your workers may not like you but I certainly do. Love your great input. Thanks again. If you ever want to overpay a good actuary, I can both work for you and like you.

      BK

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    3. 1692 held.
      the up move now must get over 1695 to not be just a back-kiss of former support of ED.
      watch potential reactions at 1695.

      longs/stocks can be unloaded in 1700-1713 area (after 1700 will be broken to the upside all TV and media will yell that OMG, new historical highs !=> that's where you sell in their face!)

      You have to be aware that the technical target for wave 5 of int v of major 3 is in the 1770-1780 area.
      But no sane person can/will have to wait those dangerous levels to unload longs/stocks.

      After potential minor 4 to 1662-1770 wave 5 of int v of major 3 will come. I recommend to be 100 % in cash during wave 5 of int v of major 3 ABOVE the peak of wave 3 of int v of of major 3 (doesn't matter where the peak of wave 3 of int v of major 3 will be).

      GS guy

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    4. also , for all:
      shorts can be loaded DURING wave 5 of int v of major 3 and only ABOVE the maximum point of wave 3 of int v of major 3.

      The quantities of shorts must be calculated according to a good risk-reward ratio.
      Knowing the technical target of all Major 3 (1770-1780) you can load step by step shorts in a quantitative parabolic fashion (first a little bit, than more shorts , than even more shorts -> the maximum amount of shorts loaded can be done in the 1770-1780 area). If last up wave truncates you still won't have any longs, will have some shorts and some cash (and that's a perfect position! More short will be added after Major 4 start).

      Sorry BK , not hiring. Now I work with 9 people - each having more than 20 years trading experience all in big investment banks. That thing told you (that they don't like me) was in fact a joke- we all are friends here. Managing the volumes that we do requests a high level of quality of interpersonal approach.
      Remember that (among others) trading is about managing emotions also, you understand this thing don't you?

      GS guy

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  4. Hello GS guy,
    First of all, thanks much for all your postings here.

    "After potential minor 4 to 1662-1770 wave 5 of int v of major 3 will come. I recommend to be 100 % in cash during wave 5 of int v of major 3 ABOVE the peak of wave 3 of int v of of major 3 (doesn't matter where the peak of wave 3 of int v of major 3 will be)."

    For the above, when you said "ABOVE the peak...", do you mean above 1770-1780 zone where should all be in cash?
    or do not ride the minor 5 up due to truncate anytime?

    Thank you.

    ReplyDelete
  5. if you read one more time the phrase you will understand.
    so: wave 3 get to 'x'
    wave 4 get down some 25-35 points.
    than wave 5 jumps up , equals the maximum point of wave 3 (the 'x' level) and goes up some more.

    when I say "ABOVE the peak" I mean above 'x' , above the peak of wave 3 (the 'x' level) but during wave 5.
    So: during wave 5 when the market gets OVER 'x' (maximum point of wave 3) you should not hold longs or stocks anymore, but you should think dipping into some short, as described (quantitative parabolic fashion).

    Fifth waves in SPX truncated a lot during this bull market since March 2009, so I know what I'm saying.

    Just proposing here a good risk-reward strategy.

    GS guy

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    1. Anon,

      I know it's hard to have the feeling that you leaved money on the table.
      But you should think at this thing:
      PRESERVATION OF CAPITAL IS YOUR FIRST MAJOR GOAL!!!!

      Think for a second: you have 100$.
      You short/long the market.
      You get underwater some 10% and you hit stop loss.
      Now you have 90$.
      If your next trade will be a winner (+10%) you will not gain the 10$ lost cause 10% of 90$ it's = 9 $!

      Do you understand why preservation of capital is SO IMPORTANT?

      GS guy

      Delete
    2. Yes, thank you for your kindness clarification and explanation. Greatly appreciated.

      Delete
  6. Thank you...much appreciated! Respectfully request that you keep the forum updated with this compelling forecast.

    ReplyDelete
    Replies
    1. only at tops and bottoms! :)
      also I'd like to remind all that might even gain 1$ out of my calls: please donate 10% of earnings to someone poor or to a poor family.
      Please do that and that will be my payment.
      It doesn't matter if your a person, or an investment fund or a bank or whatever!
      Please help my project!
      I don't get anything for what I'm doing - just your kind participation in my project - donating 10% of earnings to one person/family that needs those money (health, poverty, social problems)!
      I don't have any instrument of control to see if you do/don't do that, I rely on you!

      Please don't let me down if I can prove I'm not letting you down!


      Thanks,
      GS guy

      Delete
    2. GS Guy,

      I've followed this site for a while but never took a position based on KS or your analysis. I've studied your comments over the past few months and I've found them highly informative. I've started to take positions recently from some of the calls on this site so long as they align with my own analysis. I promise a minimum of 10% donation to those less fortunate should I (we) make money. :)

      Delete
    3. ok,
      you have to be aware that my calls are medium to long term! (only on major waves and/or primary waves).
      So I'll be here some 1-2 weeks more than we'll talk more later in September/October ;).

      So: when I give an advice, a call, I'll pinpoint also the time target (+/- 1 week) and the price target (+/- 20-30 points).

      My project is based on a different social approach of those that really can do things and make a difference.
      And I'm asking you to help me.
      Changes can be made also peacefully not only by revolutions and stuff like that.

      GS guy

      Delete
  7. Anyway , you should be aware that the market has the freedom to turn at any point. Don't wait for a certain value of market to sell your stocks/longs. Market now has a topping behaviour - you have to be aware of that! Might go up some more or might cut the show now!
    But sweet profit is always a sweet profit!

    GS guy

    ReplyDelete
  8. thanks for all the updates KS! Glad I sold NFLX last thursday for 270.. This smack down was already in the charts.

    Market may well have finished 3 of V, but refuses to go down, despite bad earnings (y'day MACD, NFLX, today DD) typical bull... so this suggests still in that pesky 3rd!?

    ReplyDelete
  9. if bulls can't regain 1695 and more I will have to consider the option that wave 3 finished truncated at 1698.60 (last wave 5 of minor 3 of int v of major 3 has a relation of 0.62*w1 of minor 3=1698).

    So: Bulls, are we continuing NOW this minor 3 to the upside OR NOT?
    Decide now! At 1696 and higher!

    GS guy

    ReplyDelete
  10. GS, Thank you for your continued informative & detailed posts here. I have a question. Once you have profits, what is your suggested technique to preserve them? Stops? Targets? Pivots? Thanks in advance, Rich

    ReplyDelete
  11. Hey GS guy-

    Despite overwhelming emotion to short here, I have elected to preserve capital, thought you would like to know that. Haha.

    On a more serious note, if wave 3 is truncated here, then I presume the 1680 pivot area @ 1673 will be lost as well, right? Basically, if wave 3 truncates today, then we wont see the uptick to 1750. Correct?

    FeS2

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    Replies
    1. We still have to see how things develop, FeS2.

      For now, I want to see 1696 taken to the upside - that will keep minor 3 of int v of major 3 alive.

      GS guy

      Delete
  12. Rich R,

    All techniques and more are good using the right combination.
    Look, we've had this up trend since 1560. A lot of pivot were broken to the upside. Step by step at each pivot one could have lightened on stocks /longs. It's just one idea. You know, it's all about everyone's risk inclination - how much risk can someone cope with?
    It's a combination of them.

    GS guy

    ReplyDelete
  13. Keystone once told me, "Trade the market that's in front of you." It was some of the wisest advice I ever got.

    The market in front of my screams short, but considering the theme of this year has been bear trap upon bear trap at every step of the way, I am more apt to believe that 1695 will be regained and bears will suffer one more spike up to 1705 before a pullback.

    That sounds about right for the 2013 theme song. Bears are wondering, havent we suffered enough? The answer is NO. Markets can always top higher.

    FeS2

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    Replies
    1. FeS2,

      do you want some good advice?
      beware of bears or bulls and mostly beware of permabulls or permabears ! Any affinity is a distortion of mind and analitic power!

      Be a swinger on bigger waves (primary/majors)! Do you know how great it is? Low risk, big money on both sides (long/short).... why bother wanting the market to do a certain thing as bear or bull?
      At the end of a big primary or major wave I risk only 20-30 points to the upside/downside closing positions ahead of the peak/bottom. But 85-95% of the profits are mine, only mine!!!
      I'm a medium to long term swinger.
      Why bother with day trading that can break your mind when you can make gushing money on longer periods?


      GS guy

      Delete
    2. "... Keystone once told me, "Trade the market that's in front of you." ..."

      A variation of "trade the market you have rather than the one you want".

      Wise.

      Delete
  14. Good advice. More money, less risk.

    Thanks pal

    FeS2

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    Replies
    1. yes.
      for this year it's simple: in maximum 2 weeks maybe 2 and 1/2 weeks we will top.
      load a cart of shorts!

      Around mid to end September will be the bottom.
      Load a cart of longs/stocks.

      After that the big top will be met next year at the end of winter - load 2 big carts of shorts. And that's it!
      No head-banging! Lots of money!
      So you have: end of July/start of August ; mid to end September (maybe into October - maybe!); than February, March or April 2014.
      Simple, very simple!
      And avoid Vix options - it's rubbish! Work with leveraged options on S&p 500 or DOW or whatever suits you! Crystal clear simplicity! And profits obtained get them in cash in bank and invest in other things less volatile! hard solid dividend stocks bought on bottoms, land, homes.... extend!

      GS guy

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    2. GS, If we close below 1695 right now are you going to buy some shorts?

      Delete
    3. to disclose my position:
      I'm 100% long now in options leveraged 1:10000 from 1572.
      I will close longs and load short only during wave 5 of int v of major 3 - even if it truncates and doesn't go above wave 3 peak. The loss will be minimal.
      Once again I reiterate my call: work on medium and long periods.
      Day trading was invented by us, bankers and traders, to get commissions! Remember that!

      GS guy

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    4. GS, Yes, I understood that you are not shorting until Major 3 tops, but what % chance is there that we are already in wave 5 of int v of major 3? Thanks again! Rich

      Delete
    5. Rich R,
      I understand your question.
      minor 2 was too shalow - and that would request a somewhat stronger wave 4 (about 25-35 maybe 40 points).
      I didn't see a wave 4 yet. But I've seen a wave 3 of minor 3 that subdivided.
      I'm still waiting for 1706 (w1=w5) or 1713 (w1*1.618=w5) and hope that minor 3 won't truncate (that would be a very bearish sign! although we will get a minor 4 and a minor 5 we might not see higher levels than the ones already saw). So it better not truncate here right in the minor 3!!!

      I don't recommend to retailers to do like me, I play in another league with other assumed risks versus profits!
      My advices here are retail-adapted and are adressed to those that caught the int v at the bottom / almost at the bottom (1560-1580).

      DON'T TAKE MY CALLS ON SHORT TERM - YOU MIGHT BE BURNT BY THE MARKET!

      Rich R,

      to be more clear:
      I would not mess with a minor 4.
      I load shorts only for medium-long terms.
      Loading shorts for wave 4 smells like day trading - not my style. I watch the 1,5,10 min chart to observe the morphology of waves in detail in real-time but decide and take action using 8H, daily, weekly and monthly charts.

      GS guy

      Delete
    6. '' But I've seen a wave 3 of minor 3 that subdivided.''

      I'm tired...I meant a Minor 3.

      GS guy

      Delete
  15. What do you think of VXx and UVXY as shorting tools?

    FeS2

    ReplyDelete
    Replies
    1. Avoid them totally.
      For shorting use direct shorting instruments on SPX not on VIX.
      During this major 4 you will see markets dropping steady with VIX controlled (not all the time, but you will see that also).
      What will you do then?
      Avoid VIX based product as long as QE exists!!! I know why, believe me!
      Advice all your friends to do so.
      UVXY is one of the most idiot instruments known by me. Study it's costs!

      GS guy

      Delete
  16. GS, No worries about getting burnt my the market, too late for that I already got burnt by missing this entire upmove! Just trying to learn so I can take advantage because I finally feel I am ready to do so after quite a bit of study! Of course these are your opinions only. Really appreciate your logical & also caring posts and project! Rich

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    Replies
    1. Ok, I'll stand by all of you at tops and bottoms as long as you will respect my will related to 10% donations to poor people. Something like playing 'Santa' :D!

      Now I'll go out for a walk or some coffee outside... I have a bad headache!

      See you tomorrow.

      GS guy

      Delete
  17. KS, Would you be bullish on FCX for a intermediate to long term horizon?

    thanks,

    TW

    ReplyDelete
  18. KS/GS guys

    Yeah, I studied the costs and also have made big gains and big losses. Agree, its a suckers instrument, but always looks attractive for the pop and drop approach. It becomes difficult to trades during say, a 200 point downtrend over 4 week period, because it will fluctuate with the VIX, it doesnt perform in perfect inverse lockstep to the S&P, and you wont know how to exit it; and eventually you'll lose money.

    What about instruments like FAZ, TZA, and SDS? What do you guys recommend to short with? Anyone welcome to chime in on this one.

    FeS2

    ReplyDelete
  19. I guess a better question is what leveraged ETFs work best for a broad reduction in price over an elongated period of time?

    UVXY is a very liquid product but, unless you can predict the future, is extremely problematic to trade.

    FeS2

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    Replies
    1. FeS2,

      I know that for US customers there are certain long or short.
      Look what I have found for you

      http://www.proshares.com/funds/#sort=IndexBenchmark&direction=asc&tab=overview

      V.

      Delete

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