Thursday, September 19, 2013

Keystone's Midday Market Action 9/19/13

The opening bell rings and markets are running higher. SPX prints a new all-time high at 1729.86 but no one pays attention anymore since the new highs appear a given day after day. This fuels the continued market complacency with low put/call ratio's and a VIX at 13.24.  The bulls are benefiting from the Fed no taper decision; the Fed is the market. For today, the bulls need to push above 1729.50, and stay above, to create an acceleration well into the 1730's. Price was rejected on the first try today. Bears will try to stop the upside market momo by pushing volatility higher and commodities and utilities lower. Watch VIX 14.64, GTX 4888 and UTIL 483-487. For now, the bulls remain in full command. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Bears got nothing until a negative 8/34 cross on the 30-minute occurs.

Typically, after a large up day, or large down day, markets tend to move flat the following day to absorb the energy. The full moon occurred about three hours ago and the markets were definitely bullish through the full moon period this month, as is always expected. The move forward will be interesting. After all the excitement yesterday and Fed pumping, the SPX is up about 20 handles or so. Maybe they should ask for their money back since the performance did not live up to the ticket price? The days ahead will need to play out to see if the rally is sustainable. Putting aside yesterday's orgy of excitement, traders remain complacent and the NYMO is at a lofty 87. Time is needed to allow the smoke to clear and dust to settle after yesterday's ruckus. Philly Fed, Leading Indicators and Existing Home Sales are a few minutes away at 10 AM and should create a market pivot. The first spin on the Fed decision occurs with Pianalto speaking at 11:30 AM.

Note Added 10:18 AM: Flat action thus far. Markets pivot to the downside after the data. HOD at 1729.86 holds thus far as well as the 1729.50 resistance ceiling. SPX support levels below are 1725, 1723, 1720, 1718 and 1716.


  1. KS,

    I noticed that you took short term profits on DNDN and TLT, but what do you think about these symbols as long positions for the intermediate term?



    1. DNDN is very attractive as a long but it is a speculative biotech play. Was going to reenter yesterday but decided to wait since there is a gap fill needed at 3.07-3.13, which would be a very attractive entry. DNDN may simply run higher without filling the gap. May scale in buying some now, and then if the gap fills, and then hold for a while. It is a nice trading stock since the pops are nice and strong so the profits can be taken then reload on pull backs. TBT is the ETF to play if you think rates are going up, TLT i the play for falling yields. TLT does appear attractive moving forward basing after a long beating. The weekly chart shows a falling wedge, and is holding the 200-week MA at 102, bullish. These ETF's move in smaller increments so it is hard to make high percent gains in a short time. TLT may be viewed as more of a place to hide money in the event of a market sell off coming. The majority of folks believe that rates are guaranteed to rise and the 10-yr should be back at 3% lickity-split, however, the consensus is always wrong. Folks have been calling for an explosion in yields since late 2009 four years ago and here we are. If we repeat the 1930's redux, yields may stumble sideways for the next couple years.


    that's a change of heart!knowing that FED considers no tightening until 2015-2016 , if they include in the 'tightening' the concept of QE tapering ... we may have QE ....for years ???????????????????
    read it!


    1. With the explosion in the 10-year yield over the last five months from 1.6% to 3% traders are obviously considering any tapering move to be tightening. The Fed may want folks to look at it a different way but markets are binary, when they finally decide to taper it will now likely be even more of a violent reaction. As always the question is timing and when? Probably not until later this year or early 2014 when it will be on the table again. Bernanke wants a smooth exit in the future from all the obscene money-printing he is responsible for. As Keystone's friends in Brooklyn say, "Good luck wit dat."


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