Wednesday, July 3, 2013

Keystone's Morning Wake-Up and Midday Market Action 7/3/13

Egypt is in disarray with Mursi not willing to step down but the army says he is in the final hours of rule. Two Portugal ministers resign as this country is tumbling into crisis. The 10-year Portugal yield jumped above 7%, then 8%. The Portugal market is down -6% with banks selling off in excess of -10%. The bank deposits in Portugal will likely be subject to confiscation just like Cyprus a la a bail-in. Greece continues to fall apart unable to pull out of its depression and now jeopardizing the bail-out requirements so there is a trio of trouble ongoing ahead of the U.S. shortened trading session. Egypt turmoil sends WTIC crude over 101 and Brent oil is at 104.76 nearing 105. The pre-holiday market buoyancy may be crushed by the geopolitical risk. S&P futures are -10 about four hours before the opening bell.

Keybot the Quant is long. UTIL 480.75 and GTX 4735 are causing market negativity. The bulls will need to regain one or both these levels to take markets higher. XLF 19.26, SOX 459.80 and RTH 51.65 are causing market bullishness. The bears need to push one of these three parameters under the level shown to create strong market downside. If one of the three fail, and the SPX drops under 1607 and lower, Keybot will likely flip short. Interestingly, S&P rating agency downgrades three large banks, Barclay's, Credit Suisse and Deutsche Bank, and, along with the bank losses in Portugal, may create negativity for XLF today. In addition, the Fed approves the Basel rules and Dodd-Frank requirements which places restrictions on banks. The Fed will impose stricter rules on the large banks in the months ahead. So add it all up and financials should take a few thwacks today.


The SPX 1618-1624 resistance gauntlet has held this week. The 8 MA is under the 34 MA on the 30-minute chart and the SPX is under the 200 EMA on the 60-minute chart signaling bearish markets for the hours and days ahead. For the SPX today, starting at 1614, and considering the current negativity to begin the day, the bears need to push under 1607 and  this will accelerate the move lower to test the 1598-1600 support in quick order. The 20-day MA is 1616.63, the 200 EMA on the 60-minute is 1618.87 and the 50-day MA is 1623.94. The bears will rule moving forward if the SPX stays below these three key moving averages.


Mortgage Applications are released at 7 AM and have been in a downtrend. The Challenger and ADP Job Reports at 7:30 AM and 8:15 AM, respectively, will provide insight into Friday's Job Report. International Trade is 8:30 AM. Jobless Claims are moved one day early and released at 8:30 AM. ISM Non-Mfg Index is 10 AM so markets may take a stutter step on this release. Oil Inventories 10:30 AM and Natty Gas Inventories at noon. Markets close at 1 PM today. Markets tend to be bullish in front of a holiday but the geopolitical risks are dictating market direction this morning. The dollar/yen is back under 100 down to 99.75, in concert with lower S&P futures.


Note Added 6:00 AM:  S&P's -8.5.  Dow -74. Nasdaq -17. WTIC oil is up to 101.09 and Brent oil is 104.80. Gold and silver are up slightly but not receiving as strong a safe haven bid as would be expected considering the Egypt and European turmoil. Portugal 10-year yield is 7.6%. Euro 1.2960. Dollar/yen 99.78. Dollar spot is 83.44.

Note Added 6:38 AM:  S&P's -10. Dow -83. Nasdaq -20. WTIC crude oil 101.08. Brent oil 104.83.  Euro 1.2964.  Dollar/yen 99.76.  The Egyptian army's ultimatum for Mursi expires at about 11 AM EST.  This is two hours before the closing bell today so the fireworks may begin before tomorrow's holiday. The video running on television showing the unrest in Egypt will foster market negativity.

Note Added 7:38 AM:  S&P's -8.3. Dow -65. Nasdaq -16. Oil is really starting to run. WTIC oil 101.37. Brent oil 105.27. Gold and silver receiving firmer bids higher. Euro 1.2960. Dollar/yen 99.30. Mortgage Applications are weak for another weak, basically the last couple months, continuing to question the housing recovery despite all the rosy talk.

Note Added 8:19 AM:  ADP Jobs Report is 188K jobs in line with what is expected for Friday in the 150K-200K area. S&P -8.  Dow -70.  Nasdaq -17. Holy smokes. Look at oil run. WTIC crude oil 101.83.  Brent oil 105.49. Euro 1.2969.  Dollar/yen 99.62 recovering higher.

Note Added 8:32 AM:  Dramatic improvement in futures. S&P's -3. Dow -22. Nasdaq -5.5. The data and ADP number creates the boost. Dollar/yen 99.73.

Note Added 10:19 AM:  Having technical difficulties here today with the computers. UTIL 476.53. GTX 4749. XLF 19.41. SOX 468.41. RTH 52.31. VIX 16.97. TRIN 0.72 which is very bullish for today. SPX 1608.78.  LOD 1605.57. Keystone took profits on SPXU and SKF exiting both long positions (which are short S&P and short financials, respectively) and will look to reenter.

Note Added 10:36 AM:  Oil inventories down more than expected. Oil continues higher as the television screens show the Egypt protests live. WTIC crude 101.72.  Brent oil 105.60. SPX flat at 1609. GTX joined the bull camp today and XLF remains in the bull camp.

Note Added 11:10 AM:  Egypt is at its deadline now. There are millions of people in the streets. The European close is on tap. The SPX calmly motors along sideways through 1608-1611. The stock market closes withing two hours until Friday morning.

Note added 11:30 AM:  SPX breaks up through the sideways range now at 1612.17.  Keystone took profits on MUX exiting this long position. Will look to reenter. MUX remains very attractive moving forward for the weeks and months ahead.

Note Added 11:52 AM:  SPX moving through 1612-1613. The 20-day MA is 1616.83.

Note Added 11:57 AM:  Utilities are moving higher. UTIL now at 479.65 heading towards the 480.75 level that will create more upside for the broad indexes. SPX at highs of the day now at 1615.69, testing the 20-day MA resistance.

Note Added 11:59 AM:  UTIL 480.21 moving higher.  WTIC oil 101.39.  Brent oil 105.83.

Note Added 12:41 PM:  SPX moves up into the 1618-1624 resistance gauntlet and is rejected. SPX is fighting at the 20-day MA at 1617.03. ECA and CLF are set up nicely as potential speculative longs.

Note Added 12:46 PM:  UTIL 479.28.  The 200 EMA on the 60-minute is 1618.61 and the 20-day MA is 1616.98. SPX is printing 1615.87.  Keystone bot ECA and CLF opening new long positions. Also bot more KOL adding to this ongoing long which is the long coal ETF.

Note Added 1:12 PM:  SPX finishes at 1615.41 under the three important moving averages highlighted above. Price also makes another attempt at busting through the 1618-1624 gauntlet, and fails.  The last day or so, it has been highlighted how the 50-day (1624.68) is moving higher, and 20-day (1616.96) lower, so this creates a sideways bracket for price to move through, which would be 1616.96 - 1624.68, or to keep it simple, 1617-1625.  The 1626-1627 is very strong resistance so that top side at 1625-1627 forms a strong confluence of resistance. The SPX closes under this range so that is a plus for market bears. UTIL is 479.14 continuing to provide bear juice. GTX is 4755 and XLF is 19.44, so if the 4735 or 19.25 level is lost, respectively, that will provide bear juice to send markets down under SPX 1600. Bulls will obviously focus on pumping utilities come Friday morning. Keystone's two short-term signals (200 EMA on 60-minute chart and 8/34 MA cross on 30-minute) remains bearish although the 8 MA is curling to the upside now hinting that the bulls may launch a surprise attack on Friday morning.  Happy July 4th to everyone. Time to commence eating large amounts of apple pie.

16 comments:

  1. Hello there boys and gals! :)

    Today we wil have a meaningful bottom in the area 1588 - 1596 (values in SPX 500 cash market).

    After that 1645-1654 and, maybe, higher values in 7-10 trading days...

    Good luck all! Let the games begin! :D
    [today my music background: Guns'n'Roses - Patience ... :) ] - need that in case of bottoms and tops :D ....

    Cheers,

    V.

    ReplyDelete
    Replies
    1. Things may hit the fan at 11 AM EST when the Egyptian army's ultimatum against Mursi expires. So that's a little over 3 hours from now.

      Delete
    2. I see. I guess there are interests too big to let the situation out of control. Probably US intelligence is boiling there already...
      My projection is stricly TA based not a fundamental projection.

      V.

      Delete
    3. ''Dramatic improvement in futures.''

      it's pump and dump :)
      my targets are still hard and real :)

      V.

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    4. maybe another day :)
      my shorts stops were hit :)

      V.

      Delete
  2. KS,

    A few weeks ago you were positive on the gold miners like NEM and IAG, also favorable towards WLT.

    Are you still positive on these stocks? If you are still positive, how would you manage the risk on these positions from current levels? 10% stop loss?

    thanks,

    TW

    ReplyDelete
    Replies
    1. TW, nearly all the miners, shippers, gold, silver plays appear attractive moving forward for days and a few weeks ahead. Things may roll over again but there should be a near term recovery. The slowing global economy, especially China, is slapping the commodity stocks more these days, but they have already been beaten for a couple years. On stops, using mental stops is best since the market makers will not gun for the stops in the computer. For traders following trends, and trading safer, lower risk, lower return, 2 or 3% is a good area to target to limit a loss. In speculation, where top and bottom calling is the norm, more dangerous and speculative trading, more rope is given to the trade, sometimes as the ole Wall Street joke says, enough rope to hang yourself. LOL. Setting stops is very much individual and based on risk tolerance, time frames, available capital and many other reasons. Will probably update charts over coming days.

      Delete
  3. Well said, Thanks KS!

    ReplyDelete
  4. Happy July 4th for KS, Arnie, Shane, GS guy (which stoped posting here as I observed) and all our friends from US!

    V.

    ReplyDelete
  5. Thank you for sahring such a great knowledge with us……. We also provide best stock tips, free commodity tips, mcx ncdex calls, intraday future tips, equity tips, and soon….. visit share Market India and MCX NCDEX Tips and Nifty Trading Tips

    ReplyDelete
  6. In Asian and European sessions the SPX 500 futures were seriously pumped up ...I think the bears will have a serious problem on Friday and Monday ...
    now SPX 500 futures @ 1623.75

    V.

    ReplyDelete
  7. Europe may continue their low rate but US will not continue play the game with them because we have to worry about our debt ceiling, we will still going to taper. Draghi needs to keep Europe calm since they're in really bad shape.
    Sure, we will get a rally on Friday, possibly to fill the gap up to spx 1630 zone that it did not completely fill on 7/1, hod=1626.61

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  8. Market used to gap up with good job report but now is different it may gap down due to worries of tapering.

    ReplyDelete
    Replies
    1. Do you know what worries me more?

      If the bulls don't accept now a visit of 1520-1536 area and push up to 1680-1699-1712 area (as i guess they will do next week) from that area 1680-1712 they will be forced to visit an area slightly lower than 200 dma , maybe as low as the base of the wedge developed since Nov'2012 - 1350 area.

      It's all about giving and receiving.
      If bulls don't learn that a slightly deeper adjustment (to/lower than 200 dma) is the path to higher highs (1850-2000 on spx 500) and they still push now for higher highs they will learn (once more?) in a violent way what means a good correction. What was until now (less than 10%) was child's play... after 15-23 July all the bulls will learn the hard way what means a good correction.

      V.

      Delete
  9. Remember good economic data or news means no more money printing!

    ReplyDelete
  10. Yep, it is a twisted mess due to the central banker intervention. The BOE and ECB pumped the markets on July 4th holiday with promises to 'keep rates low for an extended period of time'. Futures may have a strong jobs number priced in now, but if over 200K jobs, that may be too good and cause selling, good news is bad news, if the number is very low that would indicate more QE, bad news is good news, but it is all a crap shoot. Jobs Report is 8:30 AM EST two hours from now.

    ReplyDelete

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