Tuesday, November 26, 2013

Keystone's Evening Nightcap 11/26/13

Utilities failing UTIL 490.64 is a key market metric today. This kept the bears in business all day long despite markets floating higher. The dollar/yen fell to 101.29 (stronger yen) so it was a head-scratcher to see equities remain elevated. Ditto the positive VIX and TRIN above 1.0. The hourly and minute charts were displaying overbot conditions, rising wedges and negative divergence as well. All these parameters are bearish, and yet markets floated higher. The thinner holiday week volume makes it easier to push the jello around the plate so the bulls use the light volume to put up a fight until they could not hold the line into the closing bell. The SPX prints a new intraday all-time high at 1808.42 but not a new closing high. The RUT prints new all-time highs. The Nasdaq prints above 4K for the first time in 13 years. Semiconductors were up strongly recovering from yesterday's malaise. Copper and commodities are weak.

Watch UTIL 490.64, JJC 39.77 and VIX 13.90. Utilities and copper are causing bearishness and volatility is causing bullishness. Bulls need UTIL 490.64 and/or JJC 39.77 and happy times are here again. Bears need VIX 13.90 which will kick in extended market downside. If all 3 parameters remain as is, markets will drift sideways into turkey day. If UTIL moves above 490.64, and SPX above 1808.50, and both remain above, Keybot will likely flip long. For the SPX starting at 1803, the bulls need to move above 1808.50 to accelerate the upside and bears need to push under 1801 to accelerate the downside. A move through 1802-1808 is sideways. November began at 1757 and the month has only 1-1/2 days of trading remaining. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead, however, watch for a negative 8/34 cross. Bears got nothing until they receive a negative 8/34 cross.

Wednesday is another big econoimc data day with Jobless Claims, Durable Goods and Chicago Fed Activity Index at 8:30 AM. Chicago PMI will cause a market stutter step at 9:45 AM. Consumer Sentiment will cause a market pivot point at 9:55 AM. Leading Indicators are 10 AM. The Oil Inventories are 10:30 AM and Natty Gas Inventories one-day early released at noon. Natty gas is up for 6 days in a row due to the wintry cold crossing the States. Pennsylvania has a few inches of snow on the ground looking out the window from Keystone's office. The 7-Year Note Auction is 1 PM and Farm Prices 3 PM. Now that is a jam-packed day. Holiday seasonality may create market bullishness into the holiday.

Black Friday is the EOM on Friday and a holiday-shortened session with the stock markets closing at 1 PM EST. It is called black Friday since this time of year is when many retailers become profitable (their books go from red ink to black ink). The Friday after Thanksgiving is also one of the busiest shopping days of the year. It used to be the busiest for decades so the Black Friday moniker stuck for a long time, and still sticks, but the busiest day of shopping is now typically the Saturday before Christmas. Many stores will be open on Thanksgiving; nothing is sacred anymore. When Keystone was young, the 'blue' laws were still in effect in the States where businesses were closed on Sunday's. This changed in the 1970's when greed and the lust for money always takes over. Perhaps Thanksgiving will now be called Black Thursday to provide a better description of the day?

The equity markets are nutty these days. The very erratic and unstable nature of the broad indexes is remarkable. Copper and commodities are weak for months but equities print new highs. This is proof positive of the Fed and BOJ easy money intervention. How spectacular is it that companies have a weak demand for raw materials, the essential building blocks of all manufactured products, but traders ignore the fundamentals since the central bankers are pumping the stock market with easy money? It is fascinating to watch. The action is reminiscent of other significant market tops. With the hourly and minute charts negatively diverging, along with the daily chart, the path for equities should be lower. 
The SPX daily chart prints a doji candlestick indicating a potential trend change on tap; follow-through to the downside would be needed on Wednesday to verify the trend change to the downside. The low volume holiday week helps the bulls but low volume can cut the other way if negative news occurs. Watch UTIL 490.64, JJC 39.77, VIX 13.90 and SPX 1808.50 and 1801 to determine market direction

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.