Friday, September 20, 2013

Keystone's Morning Wake-Up and Midday Market Action 9/20/13; Quadruple Witching; Fed Speak

The harvest moon lights up the overnight sky. Farmers can harvest all night long with the bright light. Today is POW/MIA Day. Best wishes to all these folks who's fate was to fight others' wars. Today is OpEx Quadruple Witching so volume may be elevated at the open and at the close. Atlanta Fed expectations are provided at 10 AM. A barrage of Fed speak is on tap today to spin Chairman Bernanke's comments; George (she is an uber hawk) at 12:30 PM, Tarullo at 12:40 PM, Bullard at 12:55 PM and Kocherlakota at 1:45 PM. Looks like a tag team Studio Wrestling approach today where they all tag each other out and keep taking turns pumping the markets. DRI earnings will indicate if folks have the discretionary dough to go out to dinner these days.

Markets meander flat yesterday soaking up the upside energy from the Fed pump Wednesday afternoon. The Fed may want their money back since all the hoopla results in a paltry move in the SPX from 1705 to 1722. Bernanke did not receive much bang for the buck; 17 handles for digging a deeper hole of fiscal and monetary trouble for the United States. The bulls are driving the bus and the bears are stuffed into the luggage department. The 8 MA remains above the 34 MA on the SPX 30-minute chart (reference this morning's chart) signaling bullish markets for the hours ahead, however, the bears will attempt to curl the 8 MA lower for a potential negative 8/34 cross. Market bears got nothing until the negative 8/34 cross occurs. The CPC and CPCE put/call ratio's continue to signal a significant market top at hand (reference this morning's CPC chart).

The SPX begins at 1722. Bulls need to touch the 1730 handle and a strong upward acceleration will occur to new all-time highs. The SPX all-time high is 1729.86 so pay close attention to this number moving forward. Any move above likely leads to a day or three more of upside buoyancy. The bears have an easier road ahead today, only needing two negative points, to drop under 1720, and a downside acceleration will occur into the 1710's. The 1710 would be targeted due to the red descending triangle on the 30-minute chart. A move through 1721-1729 is sideways action to finish the week. Futures are currently flatter than a newlywed's souffle.

Keybot the Quant remains long. Bears need at least one of the following three parameters to turn bearish; GTX 4888, UTIL 483-487 and/or VIX 14.60. If all three parameters remain bullish, then markets will continue floating higher. If any one of the three turn bearish, a lid will be placed on the equity upsideGTX 4888 may be the best chance for bears since price is testing the 50-day MA at 4927, bounce or die time. SPX S/R at these levels are 1730, 1728, 1726, 1725, 1723, 1721, 1720, 1718, 1716 and 1705. Keystone added to the SSG long position (short semi's). Care must be exercised since SSG is a thinly-traded ETF.

Note Added 8:55 AM:  DRI lays an egg and is receiving a -4% beating pre-market. Looks like folks do not have the discretionary dough to go out and eat. The wealthy are wealthier courtesy of Uncle Ben Bernanke so they must have the restaurants all to themselves, and likely the fancy French establishments, they would surely not be seen in a Denny's or a Mickey D's. The separation of the classes (rich richer and poor poorer), created by the Federal Reserve, continues.

Note Added 2:28 PM:  Utilities tumble lower today with UTIL dropping under the important 486.89 at about 10 AM which places a lid on the market upside and ushered in selling. If UTIL falls under the 50-week MA at 483.35, equities will weaken further. UTIL is now printing 485.73.  Keybot the Quant, Keystone's trading algo, will be tracking UTIL 485.33 as a key number next week, 485.33 and 483.35 will be the two key numbers for next week, so at the 4 PM close check to see where UTIL ends, above or below 485.33 since that will provide an early hint on Monday morning's broad market direction. The UTIL 486.89 number only matters until 3:59 PM today. GTX is wrestling at the 4889 bull-bear line in the sand right now failing minutes ago but now trying to recover. UTIL 486.89 and 483.35, and GTX 4889, dictate market direction into the closing bell today. Market bulls will send equities higher into the close if they can push GTX above 4889 and/or UTIL above 486.89. Bears want to drive UTIL lower under 483.35 preferably, and also keep GTX under 4889. The 8 MA stabs down through the 34 MA on the SPX 30-minute chart at 1:30 PM today signaling bearish markets for the hours ahead. The SPX moves down towards the 1710 target for the red descending triangle pattern discussed in this morning's chart. Keystone took tiny profit on DXD exiting the trade. Also bot DNDN opening a new long trade.

Note Added 2:33 PM:  UTIL is 485.76; under 486.89 so that creates negativity, but above 483.35 creating positivity, and sitting on top of the 485.33 number that will replace 486.89 at 4 PM and provide the early read for Monday morning. High drama. GTX 4897 which will create lift for equities since it is above 4889.

Note Added 2:56 PM: GTX 4896 so the bulls are keeping their heads above the 4889 danger line and preventing the equities from falling further today. UTIL 485.66 still dancing around the same area as described above and only 33 cents from the important UTIL 485.33 number for next week's trading. SPX LOD is 1711.46. The last of the five 65-minute daily market segments begins. Gold is down 36 bucks to 1332. The 10-year yield is 2.74%. Oil and copper is weak today, and commodities in general, as shown by the GTX drama.

Note Added 3:19 PM: GTX will end in the bull camp. UTIL is 485.50 continuing the dance around the key 485.33 on tap for next week. The UTIL closing print will tell a lot about market direction forward.

Note Added 3:25 PM:  SPX 1710 handle so the red descending triangle pattern highlighted in this morning's chart is satisfied. UTIL 485.16.  High drama.  Now under 485.33 which is a feather in the bear's cap for next week, if it holds. Bears would be very happy if UTIL loses 483.35 before the close. Bulls are not done, they need UTIL 485.33+ for a happy weekend.

Note Added 3:56 PM:  UTIL is printing 485.33.

Note Added 4:01 PM:  UTIL closes at 485.17, under 485.33, so this will cause market bearishness moving forward, but bulls keep price above 483.35 so this dance continues come Monday. On Monday, if UTIL moves above 485.33, the broad indexes will move up, if UTIL moves under 483.35, markets move down. Markets will move flat if UTIL stays between 483.35 and 485.33. Thus, interest rates will be important. The 10-year yield is 2.74%. If yields move down, utes move up. If yields move up, utes move down. SPX finishes at 1709.74 with a LOD at 1708.89. Perhaps the pesky recent CPC and CPCE uber low put/call ratio's are beginning to flex their muscles? BBRY cans 40% of its workforce, 4500 jobs, and the stock plummets -20%. BlackBerry is now smashed up to make blackberry pie. Where will these folks find new jobs? No where.

Note Added 5:35 AM on 9/21/13:  Isn't that something? UTIL was still settling out after the close and the closing print is 485.33 smack-dab on top of the 485.33 number highlighted by Keybot today. Amazing how the algo knows the numbers in advance. Anyone, however, can identify that number with the 15-week look-back technique. The old-timers pay a lot of respect to the utilities weekly trend and the weekly close is always compared to the close 15-weeks prior. If you go to YHOO, and bring up the Dow Utilities, then historical data, then the weekly data, count back 15 weeks and you will find 485.33. This number is key for all of next week. On Monday it will tell you market direction based on which way UTIL moves off the 485.33, up or down. The utility 50-week MA is the other important number useful in gauging markets. This is 483.41. Keybot projects the intersection points of price and the parameter and uses a 483.35 number currently. The 50-week MA is referred to as the trap-door for markets if it is lost. This was a big win for bulls by moving UTIL above 483.35 on the Bernanke rally. So UTIL 485.33, 483.35 and GTX 4889 are key parameters that will dictate market direction on Monday. CPC moves up to 1.05 hinting that there is a tiny whiff of worry in the air. The reason that UTIL parked at 485.33 is because the markets are traded mainly by robots. Most algo's have the above utility parameters programmed into their models, as Keybot does, so the computers simply shut her down directly on top of the key 485.33 number which will be sorted out next week.

34 comments:

  1. This price action on SPX 500 does not scare me at all.
    If 1710 and after that 1705 would be broken, yes , this might be a problem.
    But for the moment , no problem for bulls!
    Below 1705 to 1700 and lower and my heart will beat faster! :)

    V.

    ReplyDelete
  2. I apologize if I missed discussion on this - - but am wondering about relationship between recent announcement on continuing QE and impending vote on debt ceiling.

    - Feds continue QE 'as-is' in an effort to keep markets aloft (although it appears many thought there should have been at least some tapering)

    If republicans do not vote to support a raise in debt ceiling, then current Fed administration can/will announce QE taper (related to not taking on more debt).

    Current administration accomplishes two things - implements economically responsible taper policy, (which may have negative market outcome), but gets to blame negative outcome on someone other than themselves.

    ReplyDelete
    Replies
    1. Nope, treat them both as entirely separate problems. The Fed said no taper, and there is not another FOMC meeting until late October, and this does not have a planned press conference. Simply assume QE Infinity is in place until further notice, this is the 85 billion per month purchases.

      The Continuing Resolution (CR) deadline is the last day of the month, Monday, 9/30/13, only 10 days away. The CR funds the U.S. government. Congress implements all kinds of projects and they have to be paid for, so the CR continually funds everything previously agreed to. So that is hte drama, there may be a shutdown, there will be high drama on Sunday 29th and Monday like the end of last year on New Years.

      Then the deadline for raising the U.S. debt ceiling is in mid to late October. Secretary Lew projects that the U.S. will hit the debt ceiling sometime between 10/18/13 and early November and he can take some measures to stretch this a month or two. But his will be the next drama directly after the CR. Treat them as three separate items.

      Delete
  3. QE is not going anywhere. Sit back and go get a slice of blueberry pie.

    You can expected QE5 before a taper begins.

    FeS2

    ReplyDelete
    Replies
    1. Yep, Fed has no choice, perhaps it will be QE 36 before it blows up, or now, QE3 and QE4?

      Delete
  4. The Milk Man asked me if I have heard about this fantastic stock buying opportunity today.

    FeS2

    ReplyDelete
    Replies
    1. His sister drives the taxi and his brother is the shoe shine boy.

      Delete
    2. Ahahahahahah!!!

      Delete
  5. BREAKING NEWS: on cnbc I saw that Donald's the guy for FED on Monday, not Yellen.
    Who's this Donald ?

    Shocking!

    Frank

    ReplyDelete
    Replies
    1. There is nothing on the news wires. That would be Don Kohn. Many point to his age, 70+, as an issue but it should not be. Perhaps an announcement next week. Yellen, Kohn, Bernanke or Geithner? Take your pick.

      Delete
  6. It doesn't matter, buy buy buy, the stock market can never go down! Ironman supports QE infinity for safer and more prosperous society for all!!!

    FeS2

    ReplyDelete
    Replies
    1. "... Ironman supports QE infinity for safer and more prosperous society for all!!! ..."

      Yes, it's 1923 Germany all over again.

      While Bernanke is studying the Great Depression and trying to avoid part deux, the parallels to the early Weimar years from a decade before that are piling up un-noticed.

      Delete
    2. The Weimar republic was the uber inflation, the famous picture of the lady taking a wheel barrow of cash and burning it in the stove to generate heat and cook since it is worth more as a fuel than actual currency. Inflation remains on a milk carton, the economy remains in more of a disinflationary funk for now. But you are right at some point in the future, once the Fed damage starts to unwind, look out, hyperinflation may be on the table.

      Delete
  7. I'm being sarcastic.

    FeS2

    ReplyDelete
    Replies
    1. The early Weimar years were pretty high cotton. Empires were built. Old debts were paid off with newly printed money. The stock market soared.

      Maybe it's going to be different this time. :)

      Delete
  8. UTIL and GTX are providing all the drama today. The 8/34 negative cross occurs on the 30-minute so bears can crack a small smile.

    ReplyDelete
    Replies
    1. UTIL closed at 485.33 on the dot. Amazing how keybot identifies these critical levels with such precision.

      FeS2

      Delete
    2. Yep, the number had to settle out and ended directly on top. The 485.33 is simply the weekly close 15 weeks ago, the 15-week look-back number is very important for utilities, and in turn, dictates broad market direction.

      Delete
  9. Market goes up, TESLA goes up; market goes down, TESLA goes up. Like I said, buy buy buy! What could possibly go wrong here?

    FeS2

    ReplyDelete
    Replies
    1. Daily chart is now negatively diverged across all indicators. Weekly chart is negatively diverged except for MACD line, so it is likely in its last move higher. Perhaps a week or two away from its top. 80/20 rule says 180 would lead to 220 and it closed at 183, so that makes it tricky. Momo's are dangerous to short, so maybe keep watching for another week or two.

      Delete
  10. V or BB or GS,

    Are u still counting waves?
    Can you tell if we are in Major 5 already since Major 4 never go below 1600s (lowest=1627 on August 28)?
    Things turn around so fast that am lost myself.

    If we are in Major 5, what are we looking for? 1800-ish?

    Thank you for your help.

    ReplyDelete
  11. "Louis Federal Reserve Bank President James Bullard said the central bank could start winding down its $85-billion monthly bond purchase program during its October meeting"

    ReplyDelete
    Replies
    1. Yep, that sent some traders in a tizzy. The main idea from this statement is that it confirms complete and utter confusion as to what the Fed is doing. Fed has more transparency but also lots more confusion and non-clarity. Markets are probably not so concerned about the taper back on the table for Halloween as much as they are concerned over the Fed now showing day after day that they are clueless and floundering.

      Delete
  12. He's been saying that forever. The fed has no credibility. Don't even bother listening to them, just watch the technicals and watch their actions.

    FeS2

    ReplyDelete
  13. One observation for you, KS. :)

    Look at the economic calendar for next week! :)
    http://www.fxstreet.com/economic-calendar/

    As a proof (!) of the fact that FED has high communicational skills (lol!) we will have the pleasure of listening of 11 (yes, eleven!) FED and FOMC members speeches! Also, a few ECB's Draghi speeches next week!

    The global circus arena opens again - we will have monkeys, giraffes, bulls and bears, a whole animal arsenal of a true fable (as everyone knows, a fable is a story about human manners, using animals - just like the CB's appearences!).

    They don't even understand that MORE is certainly less!

    This whole communicational circus (in fact more smoke and mirrors for traders instead of hard economical facts, fundamental numbers and companies results as guidance for markets, not FED crap) is a sign that the FEDs understand that they are the main attraction point of this market-circus, the crazy mon(k)ey in the circus that can execute amazing and funny tricks! (like all CB's, afterall!...not only about FED)

    More is less and less is more , Mr. ben, when it comes to communication! Do you have a FED PR job for me Mr. ben ? I can show you some amazing communicational tricks!
    As exemple: when some dumb reporter will ask you where the 'taper' has gone you can answer that he's deaf, no 'taper' was mentioned EVER (as Ben did - "I don't remember mentioning the September meeting as a specialone" - quote: Ben Bernanke), but a 'tapir' (that funny tropical nocturnal animal, also brought to the global circus - the stock markets!). So, stupid reporter, that was a TAPIR brought to circus, not a taper!

    11 FED speeches and more ECB speeches next week? This is CBs' communicational 'delirium tremens' (if you know latin) ...or violent 'smoke and mirrors' delusion in real-time!

    Enjoy it! :) And keep a hawk's eye on KS's eclipse indicator (we're in that period!) and also on Bradley turns!

    V.

    ReplyDelete
    Replies
    1. credit for that joke with taper-tapir go to blogger Pretzel... but was to funny and had sense to not requote it!
      :)
      V.

      Delete
    2. Aha hahahahaha, a tapir. Lol. That's a good one.

      Good night gentlemen. Be well this weekend, eat well, take a walk, read a book; maybe Peter Schiff : Americas coming bankruptcy. Haha. See you Monday.

      Fes2

      Delete
    3. PMI's are very important since that will move the copper and commodity markets, which will affect JJC and GTX, two components that make up Keybot.

      Delete
  14. THE VERY PROOF THAT FED RELEASED AGAIN the results of FED meeting prior to the official announcement!!!

    it's science-based proof that at least one big bank KNEW that there would be no taper in September!!!!!

    http://www.maxkeiser.com/2013/09/the-great-fed-robbery-smoking-gun-evidence-that-a-wall-st-bank-front-ran-the-feds-no-taper-on-insider-info/

    it's aboout how fast (in nanoseconds) can information travel and how fast can a stock order be inputed and executed also!

    READ THIS RIGHT NOW!!!!
    If SEC does not start an investigation on this I will know that the whole establishment is corrupt to it's very roots! The big banks, The FED, SEC and all the other special commissions !

    Only in case someone is a psy medium in that big bank would those market orders would be executed the same time with the FED release!!!! It's not about fast bots or other things!
    Technically the time delay between information received and action executed is not enough not even for a machine!!!!!!!

    SEC ! REACT!
    FED is a pile of corruption!

    V.

    ReplyDelete
    Replies
    1. v/ gs guy -

      maybe you should just trade the romanian stock market.

      Delete
  15. Can you guys recommend a good book on TA?

    FeS2

    ReplyDelete
    Replies
    1. There are lots of books and each one has certain tidbits in it that are helpful. The easiest way would be to simply use ChartSchool on StockCharts.com. It will show you all the various chart patterns and how to use different indicators to project prices forward. Simply click the ChartSchool tab and work through all the offerings.

      Delete

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