Monday, September 9, 2013

Keystone's Evening Nightcap 9/9/13

Copper (JJC 39.96) lead the markets higher. Sunday evening told the story. Retail (RTH 53.74) jumped at the opening bell so the rally was in full gear.  The SPX 1665 held until the Syria positive news pushed markets through the 50-day MA at 1666.68 (watch to see if price can hold the 50 tomorrow). The Syria rally today pushed the SPX up through 1665 (remember the 1640-1665 range from Friday) creating an upside acceleration. The thrust was created on news that Syria may work with Russia and the international community to account for its chemical weapons. So the politicians are able to kick the can down the road and avoid a Syria strike. The markets rally, and more folks will continue dying in Syria, but everyone is back slapping each other all afternoon anyway. Markets do not like indecision and may realize in the coming days that the Syria problem will only continue and fester.

Copper, retail and financials are the market drivers right now. XLF 19.94 is the key parameter for Tuesday and will provide the thumbs up or down for markets at the opening bell. XLF is 20.03 creating bullishness in the markets moving forward unless the bears can push XLF under 19.94, so XLF will indicate market direction from the get-go.  Also watch RTH 53.74 and JJC 39.96, both are causing bullishness, the bears need to move one or both under the levels shown to create market downside. The bulls need the utilities sector to move higher to provide more equity upside. Keybot the Quant is long now but a move back to the short side would be anticipated as the week plays out. For the SPX starting at 1672, bulls only need one positive point, so watch the overnight S&P futures, and the rally will accelerate after the opening bell. Bears are trying to stop the thrust higher by pushing financials, retail and/or copper lower.

The TRIN prints another uber low number so the markets need to sell off to relieve the uber bullish pressure. At the same time, the CPC and CPCE put/call ratios indicate that markets are at a significant top right now and should begin to sell off at any time in the days ahead. The SPX may be targeting the gap at 1680-1685. The strongest S/R is 1669, 1685 and 1691. So the anticipation would be a top in the SPX between here, 1672, and the gap. The next month will prove interesting. Maintain short protection and it is likely prudent to accelerate the pace of ditching longs and adding shorts since time is likely short. The markets may not see these highs for months, or one or two years, or longer, once the selling begins. The 8 MA is above the 34 MA on the SPX 30-minute chart and the SPX is above the 200 EMA on the 60-minute chart both signaling bullish markets for the hours and days ahead so watch these two signals to indicate the start of a market move lower.

NFIB Small Business Optimism Index hits at 7:30 AM; it has been on the flat to gloomy side for months reflecting a lackluster business environment. JOLTS Report is at 10 AM and this provides data on job openings. The 3-Year Note Auction is 1 PM. President Obama speaks to the American people tomorrow night at 9 PM EST, but it does not seem necessary since they all plan on kicking the chemical canister down the road now, which created today's war-relief rally
XLF 19.94, RTH 53.74 and JJC 39.96 dictate market direction for Tuesday.

Keystone took profits on the TLT long trade exiting the position. Will look to reenter as the 10-year yield likely makes one last move higher towards 3% again but should roll over again. TLT is likely a good place to park money if looking for hiding places from a pending market sell off. TLT should move sideways to sideways higher moving forward (bonds up yields down). Also took profits on the long coffee JO trade exiting the position. Then, reentered JO today to establish a new long JO position. The long coffee trade remains Keystone's fave commodity and should move steadily higher for weeks and months to come, another good place to hide some dough. Also took profits on DNDN exiting this long play. Then bot it back in again on the intraday pull back and DNDN exploded higher again for a 5% jump, so that was taken as a twenty-minute day trade, and the position was exited. Then in the afternoon DNDN was reentered again establishing a new long position. DNDN should have more upside but it is a very speculative biotech play. Also bot SMN, a speculative 2x inverse materials ETF, opening a new long position. Materials were very strong today, check XLB, and likely have more momo go juice, but SMN has attractive positive divergence and a falling wedge forming pointing to upside ahead, which is bad for basic materials and markets in general. Also bot SPXL, the triple X long S&P, only as a countertrend play. Looking at the put/call ratios this evening, SPXL is the last ticker in the world you want to own. It will be nice to see a market bounce tomorrow so this can be exited, even if a bounce does not occur, and markets begin the selloff, it may be wise to throw SPXL back as soon as possible. 


  1. Has the cult of AAPL finally returned? Apparently, they're next phone is so advanced that it lets you talk with Jesus directly. It can open up wormholes, used to teleport yourself into other places on the space-time continuum. It's that advanced, but the smartphone trades now gone pass crowded; the new smartphone is now simply the phone, replete with all that apps and gadget that one has come to expect from a cellular phone. There's even rumor that Amazon is entering into smart phone market, because it's either that or Jeff Bezos can commission a larger than life statue of himself in granite or marble.


    this chart is a great tool - has kept me in swing trades
    on the cycles when others have convinced themselves out of the cycle. Also great at confirming bear cycle bottoms...

    It also suggests a top a little later than the 23rd but my other charts suggest the 23rd is the end of the cycle.$SPX&p=D&yr=0&mn=11&dy=0&id=p56310740876&listNum=4&a=313591232

  3. gap fill jitters...

    EW followers nervous and itchin to go short. LOL!

  4. KS,

    JO really looks like a great place to hide in a long position! At its current price around $24, it is below previous major support of $36, and it is also way below its peak of $81 in 2011.

    Looking out months ahead, do you think JO has the potential to move back into the $36 - $44 range?


    1. I just bought in today and have found that in the softs its best to scale in slowly and sell it as soon as it pops good. It really looked like it was going to take off a couple of days ago - it looks like a train wreck today lets see if the daily support channel holds

    2. Yep, coffee continues to look good. This is speculative trading (calling tops and bottoms) which is a key focus of the site, so this is not the more sane regular trend-following trading that the majority of traders use. JO continues to display beautiful positive divergence on weekly and daily charts, an awesome combo. It will need to base so there will be ups and downs. It is like natty gas in April 2012 and followers of the site will remember when that bottom was called; look back at the drop at that time in natty. So same stuff, JO is a nice trading vehicle, should move up to say 25-26, then bump along for a while, maybe a few weeks or couple months but a move to say 27 into the end of the year would not be surprising, then say 31-32 as 2014 begins, then perhaps to 35-36 as 2014 rolls along. It is funny how the charts usually know what is happening ahead of time. Perhaps there is a coffee bean fungus or something like that that occurs in the weeks ahead.

  5. Hello MCAP,
    Good to see you are still around!
    What happen all of the sudden, KS, GS, and V disappear??

    1. Hi, I've been laying back in the shadows keeping an eye on things... Let em play with the averages that up gap is attravictive on GS please remind me to sell a call spread on this name after it consolidates... Just an FYI bought up some TLT Oct 4 105 calls toady at .66 also looking to put on a call spread VXX

    2. 10-year auction is today (Wed) so that will impact TLT and TBT. TLT looks good moving forward, falling wedge on the weekly, watch the 200-wk MA support at 101.97.

  6. Hi Scott,

    With today's gap fill @ 1680-ish, do you think this is a good place to scaling in shorts?


    1. the cycle isnt over until the 23rd or so...

      I would be really careful shorting eventhough the gap has been my short term target

      I'm still long here and expect the gap to be taken out but I wouldnt expect others to follow me here.

      I certainly do no expect a waterfall event of any kind within this cycle

    2. the qqq's and the rut have blown past their gaps and when they lead it is usually bullish

      and then there is the SOX which confirmed my analysis from a week or more ago that the broad top was a failed pattern and would turn bullish$SOX&p=D&yr=0&mn=10&dy=0&id=p37941865607&a=309132841&listNum=4

    3. Thank you Scotty!
      I will do some homework tonight.

  7. Calls have been spot on accurate and the TA has been dead on. Kudos to you, Scott.

    I'm not an expert, but I think scaling in could work here if you can be patient. The CPCE and TRIN numbers support short loading, but I wont be surprised to see 1720 first, on a delay in FED taper, based on the current trend. However, I am not a pro.


  8. *Hello KS*

    Are you no longer updating us with your "Midday Market Action" or "Morning Wake-Up Call"?

    Many of us are just small birds needed an Eagle to give some guidance...

    Anyway, still really appreciate what you did in the past for us.

  9. MCAP
    Are you still into NUGT these days?

  10. The SPX 1685 and 1691 levels tell the tale. Bears must hold these levels; bulls must push through. If 1691 gives way, 1700+ is a given again.


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