Friday, October 25, 2013

Keystone's Morning Wake-Up 10/25/13; Durable Goods; Consumer Sentiment; UPS

Stocks stagger sideways in the Thursday session since UTIL stays above 498, SOX above 488.95 and VIX under 14.79, and, on the bear side, JJC under 40.19. Thus, status quo. The same parameters dictate market direction today; bears need lower utes, socks and vol while bulls need higher copper. Copper is lower in early trading today. Late-day yesterday, the bulls were pumping copper to create the market upside into the closing bell but are yet unable to attain JJC 40.19. Reference this morning's copper chart for further study. Watch UTIL closely this afternoon since for all of next week price must stay above 506.22, otherwise a ceiling is placed on the market upside. At 4 PM today, UTIL will tell a lot about the markets. If UTIL drops today and ends sub 500, this signals trouble ahead for stocks. If UTIL finishes at or near 506 today, then next week will likely see new all-time highs in the SPX. The bulls must maintain UTIL above the 503-506 level for the whole next month, otherwise, this will create a drag on equity markets. Keybot the Quant is short but if JJC moves above 40.19, and the SPX moves above 1754, and both remain above, Keybot will likely flip back to the long side.

For the SPX today starting at 1752, the bulls only need 2 points, to touch the 1754 handle, and an upside acceleration will occur to test the all-time high at 1759.33. The bears need to push under 1746 to accelerate the downside. A move through 1747-1751 is sideways action. S&P futures are flat at this writing about 2 hours before the opening bell. Durable Goods Orders are 8:30 AM. Consumer Sentiment at 9:55 AM will create a market pivot point. Ditto Wholesale Trade at 10 AM but it is unclear if this release and/or Durable Goods will occur due to the government shutdown. Notable earnings today are UPS, UPS and UPS. Did someone mention UPS? This global shipping bellwether will set the tone for markets. PG earnings are in line. ETN, NOV, SHW, SPG and WY are also of interest. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Bears got nothing unless they can create a negative 8/34 cross on the 30-minute. Watch UTIL 498, UTIL 506, SOX 488.95, VIX 14.79 and JJC 40.19. There may be lots of drama with copper and utilities today. The SPX price is extended above all moving averages on daily, weekly and monthly charts signaling a need for a reversion to the mean (lower prices).

Note Added 11:20 AM:  Equities pivot lower at 10 AM. JJC is 39.99 under the critical 40.19 bull-bear line in the sand. UTIL is 503 above 498 creating market lift today but 3 points short of the 506+ needed by the closing bell today. SOX is higher above 489. VIX is 13.20 under the 14.79 bull-bear line (which is bullish for markets). Thus, all is status quo with the parameters remaining in their respective bull and bear camps. The SPX touched 1754 so it shot to higher to test the all-time high at 1759.33 falling less than one-point shy thus far today at a HOD at 1758.46. The beat goes on. Copper is key today. If JJC would move above 40.19, and now the SPX will need to move above 1759, and both stay above, Keybot the Quant will likely flip long.

Note Added on 10/26/13 at 5:00 AM: The bulls could not push copper above JJC 40.19 so the broad indexes stumbled sideways for much of the day. A late-day push higher occurred as utilities were goosed to target the UTIL 506.22 number that Keybot identified. The bulls close the session with UTIL above 506.22 which will help maintain market elevation come Monday, as long as UTIL can maintain the 35 cent advantage at 506.57. Isn't it amazing how Keybot can identify these areas and levels of interest before they occur? This little robot is the David Blaine of Wall Street. The SPX prints a new all-time intraday high at 1759.82 and new all-time closing high at 1759.77. JJC 40.19 and UTIL 506.22 are key market metrics for next week. The 8 MA remains above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. The copper trading overnight Sunday will likely dictate the broad market direction after Monday's opening bell. If you are bullish the markets, you want to see higher copper since it will move the SPX another ten or so handles higher. Bears want to see weak copper and if the dollar bounces as the charts show (type 'USD' into the search box at the right to bring up the dollar charts for further study), this should weaken copper and commodities moving forward. GTX collapsed last week.  Keybot the Quant remains short through the weekend. Interestingly, UTIL above 506.22 does not really add bullish oomph to markets, it simply supports the elevated equity numbers. If UTIL drops under 506.22 on Monday, this would be gravy for bears creating negativity to start the ball rolling downhill. It is interesting to see new all-time highs print. If there was ever a time for a significant negative global event to occur to catch traders with their pants down, it would be this weekend. Next week's trading may write epic history as markets determine if they are at a multi-year high inflection point a la 2000 and 2007, or not.

28 comments:

  1. message for bears ...lol! :)

    http://www.youtube.com/watch?v=WZEJ4OJTgg8

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  2. if there is a swing to the lows 1740's today

    i'm going long

    BB

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    1. Overall target would be around 1797

      BB

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    2. No, BB, target of primary 3 = 1.618 * primary 1.
      considering primary 1= primary 3 = 1779 , primary 3 at 1.618* primary 1 is 2051.xx point in spx.

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    3. That is a funny vid. That tag line "Resistance is Futile" was in the broad lexicon for a couple years after that movie was released. Keystone had a hat with that saying on it but gave it to a Star Trek fan years ago.

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  3. Also looking at MRK for a quick in and out after the current short term trend is finished - initial go long target $45.77 - depending upon price action. Dec 13 45 calls is what I am interested in.

    BB


    BB

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    1. Lower 'go long target' would be 45.55 any lower and it would break the long term wedge and I wouldn't touch it FYI until confirmation that the short term trend was up

      BB
      BB

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    2. Sounds like a good plan. The MRK daily chart shows a weak MACD line and the RSI is slipping lower so another low is likely. The 200-day MA is 45.51 which is support. Weekly chart is weak and bleak so nimbleness is the word. Playing the short bounce in the daily time frame will take perfect timing since it should turn quickly and print far lower, probably 44 for starters. The long play is like picking up nickels in front of a bulldozer but if you snag it at the 200 it should work out, you have to watch it closely, however, if you put the trade on. The guess would be that MRK is sub 44 to end the year.

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  4. JJC's moving in the opposite direction. My gut, which has been 85% accurate, says that this feels like 2012. All through the summer you were expecting a pullback, but the markets kept melting gradually upwards. Then, came fall and everything felt overbought and unrealistic, but the markets kept melting gradually upward. And everyone would say "but this isn't realistic". A long gripe session would ensue about the Fed butchering the dollar... and this is how you build a bubble, etc. But the markets kept melting gradually upward. And it was hard to go short, because every time you did, you ended up losing your butt. And it was to stay long, because there was a nagging suspicion that the bears were technically right. It's just that no one lives in that reality anymore. It's easy to be a giddy bull, staggering drunk like the blow-hole who posted above me. But when you think that grandma's still have their IRAs invested in this mess, it's not so funny anymore. Because eventually the bubble's gonna break and gram's is gonna panic. And at 76, she's gonna start working at Walmart. And if anyone thinks that's funny, they need to get their head checked out.
    Mark

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    1. narrative is not analysis...your left brain will betray you! lol

      the short term time price relationship is wearing thin here but there are cycle indications that suggest the trend is going to 1800ish before a major correction and that correction is scheduled for December or early January depending what you look at.

      We are in a minor wave 5 right now and it could end at just above the previous high but that is unlikely given the VO, cycles, and this


      http://stockcharts.com/h-sc/ui?s=$SPX&p=W&yr=3&mn=6&dy=0&id=p86105105236&a=289471133&listNum=2

      and the long term meridian that is VERY bullish!!!

      http://stockcharts.com/h-sc/ui?s=$SPX&p=W&st=1980-01-01&en=(today)&id=p59758794395&a=310690990&listNum=6

      unless there is a major correction below that meridian then we are in for a bubble ala 1995.

      It will collapse but there are NO SIGNS of that yet.


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    2. http://stockcharts.com/h-sc/ui?s=$NYSE&p=W&yr=3&mn=0&dy=0&id=p42325982992&a=313353269&listNum=6

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    3. My 85 year old mother has a new information packet on her desk from Scottrade. She must have stopped at the local strip mall Scottrade and picked it up as it has some fellow's ST business card attached. She's never had money in the stock market before, only traditional things like CDs. I'm going to have a talk with her tonight about bubbles before she does anything dumb. LOL.

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    4. you may want to look at the charts I posted today and realize that there is money to be made here and that if the meridian is real then the bubble will go at least until 2016

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  5. has any one heard of the fingernail indicator?

    Tom

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  6. I read somewhere about a back indicator is that similar?

    Gregg Paulson

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  7. As long as the major houses and hedgies want to stay committed long, this will help support the markets and limit downside like the pull backs show this year thus far. There is a difference from 2012 however since the indicators were mixed, some neggie d but RSI remained long and strong. The frustration on the bull side is really from Feb-March to now. Commodities collapsed but did nothing to pull equities down, this only happens rarely. Then the BOJ started yelling Banzai!! raping the yen in every way possible which caused the Nikkei explosion higher. All that easy money floods into U.S. stocks and European bonds and stocks that created the lift in the spring and summer. it is all money pumping. Now the charts are negatively diverged, over extended on a price above the moving average basis, and the top standard deviation bands are tagged on the monthly, weekly and daily charts, and the put/calls are in the cellar with the low VIX. This set up is a lot different than the prior tops over the last year, it may be the real deal a la 2000 and 2007. We will know over the next month or so.

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    1. Fourth line should say 'frustration on the 'bear' side'.....

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  8. Selling the DEC13 1700 Call Fut. Option ES pursuant to the bearish signaling. Also a thorn of sort long a 10 lot of DEC13 KC @NYBOT and soft bidding JO

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  9. http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=5&dy=19&id=p82642178045&a=303885030&listNum=4

    http://stockcharts.com/h-sc/ui?s=JNK&p=D&yr=0&mn=5&dy=0&id=p44984731283&a=310937947&listNum=6

    http://stockcharts.com/h-sc/ui?s=FAGIX&p=D&yr=0&mn=3&dy=0&id=p76157264904&a=306374258&listNum=4

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  10. True story, apparently. As reported on BBC's Radio 4. A man was recently overheard shouting in a British supermarket, "Darling, do we need parmesan for both houses?" That about sums up where we are. Have a good weekend, KS.

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  11. http://www.flickr.com/photos/75188609@N07/10479061725/

    hmmm...


    http://stockcharts.com/h-sc/ui?s=$RHNYA&p=D&yr=0&mn=1&dy=0&id=p48206186574&a=310949422

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    1. That is an interesting chart, you can see how RHNYA above 95 (now at 95.42) identifies the market tops while under 35 identifies the market bottoms.

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  12. Next pullback not due until Mid Nov. staying lev long.

    the thrust is with US - lol

    the lack of divergence here is taking us to 1800

    watch for a big red candle on this one when price just pullsback moderately...

    http://www.flickr.com/photos/75188609@N07/10480841645/

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  13. JJC 40.19 and UTIL 406.22 are key for next week. The bulls must attain JJC 40.19 or equities cannot move higher. Thus, the copper trading overnight Sunday will dictate market direction come Monday. If there was ever a time for a significant negative global event to occur, which would catch everyone with their pants down, it would be this weekend.

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  14. Happy weekend everyone!

    I have asked before, where the demand is coming from. The answer I received is China and to use of our country spending money that they don't have while living at home. Both are fallacious

    If one had visited China, as I do at least four times a year, you would see that their economy Is tenuous at best. They're attempting housing coupled with data that I wouldn't bet my ex-wife money on makes for a scary situation.


    There is no viable Chinese middle-class, scarier still is the fact that companies are starting to pick up and look for lower labor venues such as the Philippines.

    When you have as many great hairs as I have, you've seen it all.

    Reread Cisco's release and
    The Chinese middle-class is nothing but a pipe dream. Propagated bye

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    1. Yep, it appears all those new empty cities come with prices far too high for the average folks to afford. The migration from rural life to urban life cannot occur if the housing is too expensive to afford. Wages would have to go up which will not occur, like you say cheaper labor elsewhere nowadays. In Vietnam, many will work all day for only a hot dog and a Coke (exaggerating). So the housing cost would have to come down which also will not happen due to all the mortgage paper that needs repaid faster. China realizes this problem and over the last year have tried to increase the buiding of more affordable housing but it is too little too late. In the U.S. early last century the folks moved from the farm to the city but it takes decades for this move to occur. This is one of China's mistakes thinking they could flip a switch and folks would magically move from the farm to the city. In the U.S., the oldest son would typcially make his way to the city, the other siblings stayed behind to continue farming and such, then after a couple years once the older son was established and met some people, found work and got established, perhaps another sibling would make way to the city receiving help from the older bro laying the groundwork. These transitions take years, decades. Then there is the concern about keeping the farm going and what the parents will do once the children seek fame and fortune in the big city. It's interesting that China can keep it all going so long. Perhaps when it cracks, it will be a large swift crack. We are all connected and the worst global market events occur as cascading events, from Asia markets to European markets to U.S.

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  15. That should read Potemkin housing.

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    1. Good ole Potemkin villages. Everyone should read about them and correlate it to modern markets and politics.

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