Wednesday, July 17, 2013

Keystone's SPXA150R Indicator

The SPXA150R is a Keystone Short-Term Market Signal. Once price moves above 80, this signals that the rally is becoming mature. At 85, it is best to consider closing out longs and bringing on shorts. At 90, this is typically a gift to the short side since shorting from this level should always end with a happy bear party.  The weekly chart shows the significant market tops in red and bottoms in dark green. Note that the markets have remained elevated in recent years purely due to the Fed money-printing. The last significant corrections were the August 2011 crash and the May 2012 pull back.

The daily chart drills down for a closer look where price almost tagged the uber over-the-top bullish 90 level. This area is consistent with a market topping out. Can there be further upside? Sure. The SPXA150R may sneak up above 90 but that will simply signal the all-clear for the bear side. Note how price has not yet matched the May top but the SPX is already at the May highs and printed new all-time closing highs the last several days. This divergence shows that the stock market is making new price highs but the number of stocks above their 150-day MA are decreasing. In a robust rally, you would expect these stocks to be increasing in number, thus, another hint that the rally off the 2012 bottoms are long in the tooth. The bulls will enjoy more market upside if the SPXA150R moves above 90, although it will be short-lived, while the downside will accelerate as the SPXA150R drops under 85 and then under 80 and heads lower. Projection is for equities to top out in the coming days (if 90 is hit a couple weeks) and move lower for the days, weeks and months 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.

1 comment:

  1. Hey KS, I am thinking of beginning to scale in shorts tomorrow. According to this, it looks like a good bet, but there's a lot of buzz around the 1700+ mark. Is this ratio basically saying that price could dump anytime going forward?

    We got an awful retail number on Monday, which I really expected to drive SPX to 1700 under the anticipation of more fed crack cocaine, but that didn't do it. Today's action also played out weaker than expected considering OPEX buoyancy, so my guess is that entering shorts is a relatively good idea right now. I guess I'm Leary because the bulls have blown the bears away in bounce or die scenarios this year. It's been a nightmare for shorts. Each time we anticipate a pullback, there come the bulls with some cockeyed rocket fuel. What are your thoughts here?



Note: Only a member of this blog may post a comment.