Tuesday, October 29, 2013

Keystone's Morning Wake-Up and Midday Market Action 10/29/13; Retail Sales; Consumer Confidence

PPI and Retail Sales hit within one-half hour. Case-Shiller House Price Index is 9 AM.  Business Inventories and Consumer Confidence will create a market pivot point at 10 AM. The 5-Year Note Auction is 1 PM.  The FOMC 2-day meting begins today and the Fed decision is tomorrow at 2 PM EST. Traders believe that QE will continue well into and beyond March 2014 so the announcement is expected to be uneventful. Interestingly, equities are in a similar position as the 5/22/13 market top when Chairman Bernanke rattled markets creating a near-term top. Earnings continue with APD, AMP, ADM, CBI, DDD, JCI, LLL, LNKD, GT, X and YELP.

Watch UTIL 506.22, JJC 40.19 and VIX 14.60. Utilites and copper are currently creating market negativity and capping the upside helping the bears while the low volatility is helping the bulls. Any change to these 3 parameters will push the markets in the same direction. Copper is higher in early trading. Both the SPX and VIX were higher yesterday so one of them is wrong and today we find out which. For the SPX starting at 1762, the bulls need to touch the 1765 handle and an upside acceleration will occur. The bears need to push under 1758 to accelerate the downside. A move through 1759-1764 is sideways action.

Markets may favor a sideways path into the Fed decision tomorrow afternoon despite any pops or drops. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Bears need a negative 8/34 cross on the 30-minute or they got nothing. The SPX hourly and minute charts are set up with negative divergence so price weakness would be anticipated moving forward today. If the bulls can send UTIL over 506.22 and JJC above 40.19, and SPX above 1765, and all 3 remain above, Keybot will likely flip long. Otherwise, the bears continue to drive the bus even if they appear to be driving down a wrong-way street. If VIX moves above the 14.40-14.60 area, equities will begin selling off substantially. Bulls are fine if they keep VIX under 14.40. So it is a battle of utes, copper and volatilityWatch UTIL 506.22, JJC 40.19, VIX 14.60, and SPX 1765 and 1758. AAPL earnings beat last evening but the margins are dropping. Apple also says the holiday season sales may be the lightest in the last few years. Retail Sales will set the early tone until the 10 AM pivot...... what say you Retail Sales......

Note Added 3:15 PM: Another odd day. Retail Sales were a touch weak and Consumer Confidence was terrible but traders do not care since, if anything, that means more Fed QE. VIX and SPX are both higher; one of them is wrong. The battle with JJC 40.19 and UTIL 506.22 continues. Keybot the Quant remains short although the algo may flip long before the closing bell if UTIL moves above 506.22 and the SPX moves above 1770.88, and both stay above. Higher copper is helping the bulls while lower utilities are helping the bears. Traders are getting all bulled up ahead of the Fed. The bulls touched the 1675 handle this morning so the jump to 1770+ was in the cards. Carney at the BOE is pumping the QE talk creating buoyancy in equities. The global bankers want higher stock markets so all their rich friends become wealthier just like the U.S. Current print for UTIL is 505.34 and SPX is 1770.10. The drama continues......

Note Added 3:38 PM: JJC 40.22 above the 40.19. UTIL 504.54 below the 506.22. SPX 1769.01. VIX at 13.60, bullish under 14.60, but receiving some late day bear love moving higher. TRIN 0.94 helping bulls but only by 6 pennies. SPX hourly and minute charts continue to set up with negative divergence after incorporating today's bullishness so a roll over to the downside for the SPX continues to be anticipated. The 8 MA remains above the 34 MA on the SPX 30-minute chart signaling bullish markets ahead. The bears need to push the SPX under the 8 MA at 1770 to curl it to the downside and move the chart towards a negative 8/34 cross perhaps for tomorrow.


  1. My oscillators have not yet rolled over, so upward we go...At 1775-80 I really will have to take a shot short. Hard to believe they could snap this market upwards on the Bradley turn in an obscene parabolic push that's against God and Nature...oh wait, this is the Fed we're talking about ;)

  2. http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=11&dy=0&id=p19094658875&a=316357029&listNum=4

    why short as long as the long term indicators are bullish? just exit the short term trends and then reenter the new up trend with leverage!

    last month I made over 10% doing this when everyone was calling for debt debauchery doom!

    there will be a time when shorts are rewarded but this isnt it

    1. I mean, shorting a price target without a price time reference or in the face of charts like this one is just willful suicide in my opinion...


    2. I mean, like 5% of my indicators are showing weakness! Why do most traders walk around with "THE END IS NEAR" signs in their hands? I can't take the narrative any more.

      This is a criminal enterprise nation of rats and rat f'ers and the corrupt sheeple at slop trough but the Central Banking War Machine will keep this game in play until they have to squeeze the marrow from your bones!

      Dont just hand it to them in your trades by sticking to the narrative in your head!

      LIBERATE yourselves from your stories.


  3. Scott,
    I couldn't agree with you more. There's two kinds of mentality that I see in trading that are counterproductive in my opinion. I know because I see it in myself sometimes and that's when it's time to regroup. The first mentality is the gambler mentality, playing every day like it's a casino. When I hear people talking "all in" or "all out," "100% long" or "100% short," I know I'm talking to a gambler. The other scenario is the one that you just mentioned. I've been listening to the end-of-the-world mantra since 09. It hasn't happened yet. While there's underlying meat to some of the arguments, I can't walk around on daily basis thinking about the black hole that's about to swallow the planet earth. There's nothing I can do about that. Gambler mentality cost me half of my net work a few years back. There was a time when I swore of trading altogether, but then I realized: "no, I need to stop gambling and think about capital preservation". Since then, I have continued to position myself in such a way that I have less risk. I experience meaningful gains, when the markets do what I think they're going to do, but I'm never at risk of losing my butt either. If my thesis is dead wrong, my downside is manageable. It also makes it so that I don't have to spend all day watching the market, fearing that I may miss out on that nano-second of opportunity. Sometimes, I go days at a time without even looking at the market.

    1. I agree with most of what you say here but there a times when an all in and leveraged position makes sense.

      That said, here is some bear analysis that I respect and the time projection in this analysis matches my Dec/Jan intermediate top. I do not yet agree that the time project confirms a major top is coming because of the meridian and other regression data I've been talking about.

      Now there may be a major top coming but the long term meridian that I keep highlighting WILL HAVE TO BE NEGATED on the downside before a major top can be confirmed

      we are very far from that happening!


    2. http://stockcharts.com/h-sc/ui?s=$SPX&p=W&yr=10&mn=6&dy=0&id=p90962955467&a=289471133&listNum=2

      you're not going to get a major decline as long as this chart looks the way it does....

    3. if 1600ish holds on the next scare then the second top projection in Peter Eliades analysis is the one to look for - I have some projections (that I have to review as to accuracy now) that indicate that the bubble will pop in 2016 but Peter's view of May 2015 is viable.

      One way or another the bull/bear conflict will be resolved very soon and we will know if the mother of all bubbles is going to expand into the next couple of years.

      Remember how everyone a month or so ago saw divergence in the AD line when it really wasnt there. There will have to be BIG divergence in the AD line prior to any major top.

    4. lol Thank you for the charts, I can assure you that I did not pick that point out of thin air. I know we are going generally up quite a ways further than this.

  4. The market looks extended and Keybot is about to flip long, isn't it...

    1. how does something look extended? again that is just a narrative -

      it WILL BE extended when charts like this start to rollover!


      thats it for me today - people love the voices in their left brains and will create reality from there.


    2. Scott I like your input and analysis, not quite as much as you do, but why don't you do your own blog?

  5. Looks like lots of bullishness remains. We will not have to wait long now, markets should commit to a direction over the coming days. Keybot still has not flipped long as yet, almost this morning and it may into the closing bell, but not yet. Typically, the max that Keybot typically would let SPX price to go against the position of the algorithm is about 30 handles and these do not happen often. So 1746 to 1770-ish is 24 handles which is a big discrepancy for the algo. Keybot is most concerned with JJC 40.19 and UTIL 506.22. We are likely at an important market inflection point right now; that is why you see this type of wild behavior. The coming days, tomorrow with the Fed, should be wild. The Nasdaq Composite would not update today for a couple hours--more computer glitch stuff in the markets, an interesting time for that to show up. Simply take it all as it comes. If you are bullish, you can celebrate with UTIL 506.22. If bearish, you can celebrate with JJC 40.19.


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