Monday, August 19, 2013

Keystone's Morning Wake-Up and Midday Market Action 8/19/13

On Monday, markets tend to move the opposite direction of the OpEx Friday, which was a flat to down session. The full moon is 9:45 PM EST tomorrow night and markets tend to be bullish moving through the full moon so perhaps equities will try to find a near-term bottom for a bounce into mid-week. The SPX weekly chart favors continued weakness ahead but a bounce would be in order with the SPX now down -3.2% off the 1710 top on 8/2/13.  Watch the 50-day MA at 1657.40 and 100-day MA at 1631.37. Watch the Dow 50-day MA at 15282 and 100-day MA at 15103. The SPX is below the 200 EMA on the 60-minute chart at 1677.40 signaling bearish markets for the hours and days ahead. Markets will remain weak and in sell mode as long as the SPX stays under the 200 EMA.

The CPC and CPCE put/call ratios, and relatively tame VIX, continue to indicate trader complacency. If trading in a weekly and monthly time frame, longs should not be entered until panic and fear develops at a CPC above 1.20. Currently, traders are buying the dips fully believing in the Fed and central banker easy money, believing that markets will never go down again. The VIX 200-day MA is 14.70 and serious markets selling will develop if volatility moves above this critical moving average. The NYMO is -80 in the area where near-term market bottoms occur. The June market bottom occurred in the -95 to -105 area. The TRIN continues to favor bulls day after day with numbers under 1.00 so a higher TRIN would be expected in concert with market selling. There are no economic data releases today. URBN earnings after the bell kick off a plethora of retail earnings this week. 
HD, LOW and TGT are key.

Keybot the Quant remains short with four key parameters dictating market direction; UTIL 483, XLF 20.13, VIX 14.21 and RTH 54.00, utilities, financials, volatility and retail, respectively. All four are bearish. If any one parameter turns bullish, the markets will recover and bounce. Keybot will likely stay short unless three of the four turn bullish. If UTIL stays under 483, markets are in serious trouble. If VIX stays above 14.21, and then moves above the 200-day MA at 14.70 mentioned above, markets are in serious trouble. Thus, the bulls are going to fight back focusing on these four parameters. Higher yields with the 10-year Treasury now at 2.84% are sending utes lower. Financials may experience weakness in light of the JPM bribery probe where sons and daughters of Chinese big-wig's may have been given jobs in exchange for favorable treatment. The retail sector is very important this week and the earnings will either help the market bulls recover for a happy weekend, or, tank the markets. India must be monitored due to the rupee and tumbling stock market. A currency crisis may be developing that would negatively impact the globe.


For the SPX starting at 1656, the bulls need to touch the 1664 handle and the upside will accelerate. Bears need to push only 3 points lower, under 1653, to accelerate the downside. S&P futures point to a drop of -3 or -4 SPX points at the opening bell one-hour away. A move through 1654-1663 is sideways action. Watch UTIL 483, XLF 20.13 and VIX 14.21 very closely since their movement dictates market direction.


Note Added 11:57 AM:  Status quo. Utilities, financials and retail all remain weak. The VIX is 14.61 above 14.21 causing market negativity and is also fighting at the 200-day MA at 14.68. The VIX under 14.68 allows the bulls to prevent the markets from dropping, for now. Watch VIX 14.68 closely. SPX is 1654.56 flat on the day thus far. The 10-year yield is up to 2.87%. The SPX hourly and minute charts are set up with positive divergence. Keystone added to the SPXL long S&P play which targets a VST market bounce. If VIX moves above 14.68, however, the markets will start selling off in force.

Note Added 1:52 PM:  SPX 1651. UTIL 477 collapsing as yields rise, the 10-year now at 2.88%. XLF 19.85. RTH 53.44. VIX is 14.96 with a HOD at 15.01 above the 200-day MA at 14.68. It is surprising that equities are not selling off more strongly. TRIN 1.12. The SPX hourly and minute charts continue to set up or are set up with positive divergence. The money flow on the 2-hour chart is weak and bleak so the market malaise may continue for another hour or two. UTIL, XLF, RTH and VIX all want the markets to sell off strongly but the bulls are holding back the push lower, for now. INTC and AAPL are moving higher helping the Nasdaq.

Note Added 7:08 PM:  They sold 'em into the close today. SPX is 1646.06 under the 50-day MA at 1657.45 and perhaps sniffing out the 100-day MA at 1632.21. The Dow already lost its 100-day MA and has been leading the broad market lower. Watch the 20-week MA at 1639.49. The daily and weekly charts remain weak but a bounce is in order. NYMO is -100 consistent where a bounce should occur, however, the CPC and CPCE put/calls continue to show complacency. VIX is now above 15, so perhaps a handful of traders are becoming more defensive. Many more traders must develop panic and fear before an intermediate term bottom can be placed. The SPX hourly and minute charts should create a bounce tomorrow. That would be good timing for the market to perform a quick recovery bounce through the full moon tomorrow night into mid-week. Earnings are key in the morning and will directly impact the futures. Bears only need to see a smidge of red in the futures overnight and before the opening bell and the SPX will be in the 1630's lickity-split. Markets begrudgingly move lower today. The dip buyers refuse to believe that markets will go down, since the Fed said it will supply QE Forever, but as the dip is bought, the markets continue lower. The SPX has dropped about 20 points so far after the UTIL 483 trap-door (50-week MA) opened.

56 comments:

  1. I'll cover my shorts here.
    I don't like what I see.

    Frankie

    ReplyDelete
  2. My opinion is that market wants to rally and expects even the smallest reason now.
    On 5 H MACD will soon make a bullish cross for a run to the upside for the next aprox. 2 days.

    V.

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    Replies
    1. Errrr, or not...
      Sold my longs, full short 100% now.

      KS if a bounce to the upside comes for far can it go ? 1700? 1680? 1660 ?

      Thank you,

      V.

      Delete
    2. Meant "how far can it go?" :D?

      V.

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    3. As a starting point, the 200 EMA on the 60-minute at 1676, and the 1685 strong support turned resistance, are both important overhead resistance points. SPX is at 1652 now.

      Delete
  3. V,
    If you were already short, that's one thing. But why would you go 100% short here?
    Mark

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    Replies
    1. It's not going up, it's going sideways.
      If it will go up I'll close.

      V.

      Delete
    2. Yes, but sideways is not down. Even if it does go down, do you see enough downside to make a meaningful profit on the shorts. Don't get me wrong. I'm not disagreeing with you or saying you're wrong, but it's hard for me to see your rationalization. You went from 100% long to 100% short. If the market direction is unclear, I don't understand being 100% anything (except maybe cash, but not really). It just sounds like that casino "all in" moment, which requires 100% confidence. Do you have that here?
      Mark

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    3. You're right ...exited my shorts in cash on break-even.
      Observed a ending diagonale on 60 min charts spx 500 - this might be the last triangular down formation before strong upside (check last 36 hours on a 60 min spx 500 chart).

      Thank you Mark for your remarks!
      You can consider I've lost my mind for a second with this criss-cross between longs and shorts!
      :)
      V.

      Delete
  4. Dear KS can you make the background gray instead of black as it is impossible to read much for majority of people. Thank you.

    ReplyDelete
    Replies
    1. I second you. KS, Please.

      Thanks,
      P

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    2. The white on black is fine by me, but by all means whatever the old folks in bifocals need.

      Delete
  5. White and black seem like the highest contrast there is.
    Can you explain why black background is an issue? Which majority is it that does not like white on black?
    No offense intended; just curious.
    White on black is excellent for me.

    Rich-slc

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    Replies
    1. Thank you. Well many people have weaker eyesight and for them white over black is literally like is a strain. It already has a dark blue backgrounder which is ok but there are other nicer font combinations that could be soothing. Show me any pro site with black background.

      Delete
  6. "White and black seem like the highest contrast there is."
    Exactly. Any other colors will technically be hardy to see with the human eye. Get yo eyes checked geezers.

    ReplyDelete
  7. V.

    I thought you were adamantly committed to being 100% long because of your ew count.

    The S&P is down 3 points, and now you have reversed to 100% short. What happened to the ew count that you endorsed?

    ReplyDelete
  8. Just another gentle vote for a light background if it's possible some day. I'm no optometrist, but I believe white text on black background causes the same optical problems that make nighttime driving hard on ageing eyes. The right eyeglasses may or may not help.

    Over-age-40 eyes experience increased "intra-ocular light scattering, glare sensitivity, and photostress recovery time." Blurred vision and eye strain, in spite of perfect vision acuity in daylight.

    Signed, 50-ish Geezer

    ReplyDelete
  9. The background and text colors comments come up from time to time. You can make that adjustment on your browser. For Chrome you may have to download the text-only mode application. For Internet Explorer, for example, you would go to tools, options, general, and then the accessibility tab and check the box that removes the colors. Then all text displays as black on a white background. The other browsers will have similar set ups. So find out how you can remove the colors on your browser, there is a setting available, and then you can view as black on white. Look for a box that allows you to not display colors, or a text-only box.

    ReplyDelete
    Replies
    1. Thanks! Should have thought of that myself. Cool. Just hope I didn't just lose your pretty charts.

      Delete
  10. Where have all the flowers gone?
    Long time passing?
    Where have all the flowers gone?
    Long time ago?

    The 65 week cycle is still working. We are in a topping formation.

    INTC and APPL will be deflated. As CSCO goes so goes the market.

    ReplyDelete
    Replies
    1. Maybe Peter Paul and Mary can change the lyrics to 'where have all the green shoots gone?' The markets are looking more like 'Puff the Magic Dragon' going poof.

      Delete
  11. Excited my longs at 1651 around 11AM

    BB

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  12. seems amusing to me that nobody remember my message posted at one of the previous articles :)

    1650 breached goes to 1630.
    but 1630 has a very special position in a very very bullish scenario :)

    come on, go down!

    V.

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    Replies
    1. I remember, that means spx will not go down beyond 1570-ish for minor c of int.A of major 4. Correct?

      Delete
    2. Yes, but it might also mean that 1560-1709 was only minor 1 of Int v of major 3, 1709 - 1630's is minor 2 of int.v of major3 and next is minor 3.
      all wave should reach 1770-1780's if it develops like that.

      All technicals are extremly oversold and more downside to 1630's will get all bears to sleep (or shorting like crazy up to 1770's).

      The overbearish price action will eliminate the bears from the game...again. All the downside energy is exhausted in a simple a-b-c decline from 1709 instead of developing something more complex that includes also the principle of waves alternation.

      never saw multiple days closed outside lower BB's! This is a multiple sign for bottom!

      V.

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    3. got long here.
      this is bottoming behaviour.

      V.

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    4. So V, will you trying to get back into longs or are you stil scare and worry or are you waiting for 1630s to get back in?
      I believe positive divergence should be near..Wed and Thur.

      Delete
    5. already in long. will add if at lower levels.
      if it's a 'c' wave it already has a fibo relation with 'a'
      if it's a 5 waves down pattern , currently it's in it's 5th wave - a place to add longs.

      V.

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    6. Good for you V!
      I like to see everyone here making some money:)

      Delete
  13. Overall the SPX weekly chart May - August is looking very similar to the 2011 market top Feb - June. Stochastics, RSI & MACD almost exactly replicating. Call me crazy, but I guess we will see if it follows the same pattern over the next 2 months......

    C.

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  14. stopped out my longs with a serious loss.
    my set up was not good.
    will stay in cash for the moment

    GS guy

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    Replies
    1. if I've marked the bottom with my move I'll explode!

      GS guy

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    2. GS, welcome back!
      Why did you do it?
      I mean why did you stopped out your longs?
      Just wait for the bounce...

      I remember you mentioned that you will not stop out without some kind of a profit...and you even teach us not to be easily get shaky over another 10 points drop...

      Delete
    3. GS ,

      You closed your longs at a fibonacci level of retracement ?!?!?
      wave a= 1709-1685
      wave c = 261.8% * wave a = at 1645 - already reached!

      ???????????????????????????????????????

      V.

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    4. GS,
      Don't feel bad, we all have been there.
      If you want, Tuesday morning still some down side, it's not too late to go long for a small bounce to make up some of your loss.
      GL!

      Delete
    5. Oh hell!

      It's a double bottom in ES futures on 60 min!
      I need a break, I need a long break when I'm making mistakes like that!

      GS guy

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    6. GS guy,

      My non-professional opinion is that you should get long.
      I follow other traders and elware_trader has this chart:
      http://4.bp.blogspot.com/-Ea6o6DvA1UU/UhMQ04u1ayI/AAAAAAAAJQI/oXClXTgYdMw/s1600/SPX+20.08.2013+15+M.png

      we are almost at the end of the down move (if we didn't even finished it!)

      V.

      Delete
  15. Good to see you GS. :)

    C.

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  16. gs guy, are ur indicators telling u we're going a lot lower to around 1625? Scott, are u still long?

    ReplyDelete
  17. The SPX 2-hour, 1-hour, 30-minute and such charts are set up with positive divergence so a bounce should come. Daily and weekly charts, however, remain weak, so the bounce should only qualify as a relief rally. NYMO is -100 so it may be a more substantive bottom. CPC and CPCE put/calls show complacency continuing. TNX 10-year yield moved up again today but it should move lower. The 1685 was an important level on the way down. So mix it all together and sprinkle some voodoo dust on it all, and it looks like a relief rally for a couple days or few, then the market downside should resume. The August waterfall crash scenario is on the table. If NYMO continues lower to -120 or more we could be in the midst of a really ugly month, like August 2011.

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  18. I did mention some days ago we are in a negative lunar fortnight and the tidals of Reedy point gave a low on wednesday. Sofar it seems to be working. Coincidence? We'll see.

    ReplyDelete
    Replies
    1. Andre, I don't get what you're saying, please explain.

      Delete
  19. http://solarcycles.net/


    This site gave a negative lunar period, starting last week (untill end of this week). The tidal information from Reedy point are a proxy for the gravitational force of sun and moon. When the force is strong (= low lowtides), the market go down. And visa versa.

    The last week Reedy point gave a high on wednesday. As the whole period was negative it produced a sideway market. Once de tidels synchronised with the period, they were both down. Last week I posted this and forecasted a low on wednesday (tomorrow).

    ReplyDelete
    Replies
    1. I see Andre.
      And according to the same analysis when should be the next high after wednesday's low? (it doesn't matter if a lower high or a higher high on chart)

      Thank you,

      V.

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  20. Next high should be around aug 28th. Then a low sept 6th and a high sept 12th.

    Allow for 1 day before and after; it's not a machine ;-)

    When dates fall in the weekend its either friday or monday.

    ReplyDelete
    Replies
    1. OK, Andre, Thank you.
      And if I don't bug you too much... the next low after 12 Sept's high ? I'm trying to make a connection with my EW structure.
      Thank you
      V

      Delete
  21. That would be sept 18th.

    Would you share your part of the analysis?

    ReplyDelete
    Replies
    1. Yes Andre, with pleasure!

      So, merging your data with my E-waves projection something like that has resulted:

      the low of 21 aug (+/- 1 day) is correspondent with the end of Minor A of Int.A or all Int. Wave A in the area 1635-1640 or lower at the 1628 pivot (1621-1635).

      the high of 28 aug (+/- 1 day) could be correspondent to either Minor B of Int.A or to Int. B in the area 1680-1687.

      Considering the following 3 dates (6 sept/12 sept/18 sept) and the FED meeting on 17-18 sept'2013 we could have a subdividing Int.C that could reach 1480-1530 area as it follows:
      Int.C-Minor A: 6 sept'13
      Int.C - Minor B: 12 sept'13
      Int.C - Minor C: 18 sept'13.

      Now I can't offer price targets for each mino wave of Int.C but the end of minor C-Int.C should be in the 1480-1530 area.

      It is possible that FED conference could mark the lowest point of the correction and kick-start a rally into September and October to about 1680 (marking a weekly/monthly lower high) or to new highs (1770-1780's) in October (during October's second half).

      Nobody here should take this analysis as something certain, a piece of "holy truth" :) ..it's just a projection.

      Thank you Andre,

      V.

      Delete
  22. Interesting stuff. Keystone monitors the moons and the full moon is Tuesday evening. This contrasts, however, with the down projection since markets tend to be bullish through the full moon, so a low may occur Tuesday moving into a higher high for Wednesday or Thursday. Markets could still drop to a low on Wednesday morning and then rebound strongly higher which would satisfy both techniques over the next couple days.

    ReplyDelete
  23. As I said, allow for 1 day before and after; so the low may very well be today.

    More for the lunatics. One lunar month takes 29,5 days. 4 'moons' take 118 day, which is a cycle in the day chart (sma 118). Mayor turns come every 2*4 moons or 3*4 moons (most are 2*4 or roughly 8 months).

    Within every moon you have 14/15 day periods (cycle up, cycle down). Within these periods I can see 2 turns in the tides.

    This gives 5 lunar cycle levels. The combination gives insight in trend strenght.

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    Replies
    1. Thank you Andre, very interesting.
      For today, E-waves wise, I see a rally could unfold to 1665-1670 (as Minor B of Int.A) and today into tomorrow, or tomorrow a fast drop to the area 1635-1640 or lower at the 1628 pivot (1621-1635) could appear.

      If today the market sustains prices above 1670 and closes that way - this up wave could qualify for Int.B (targeting 1680-1687). If 1664/1665-1670 are real strong R levels, this is just Minor B of Int.A, with a minor C of Int.A to follow.
      I'll repost this message at the main today's article.

      V.

      Delete
    2. Free 30 day trial just found this online, it might be helpful. http://lunatictrader.com/?Download

      Delete
  24. One more thing. Because the moon moves through the magnetic 'tail' of earth there is usually a 3 day delay between the full moon and a high in the market.

    http://science.nasa.gov/science-news/science-at-nasa/2008/17apr_magnetotail/

    ReplyDelete
  25. V, I posted this earlier, not sure you saw it,,,looks interesting. http://lunatictrader.com/?Download

    ReplyDelete

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