Saturday, November 30, 2013

Keystone's Trading Week in Review and Key Events Ahead 11/30/13

On Friday, 11/22/13, Asia markets trade flat with the Shanghai negative. The dollar/yen is 101.24. Aussie dollar drops -0.8% as the RBA contemplates a rate cut.  Copper is higher. U.S. futures are flat. The 10-year yield is 2.79%. Germany’s IFO business sentiment is 109.3 far exceeding consensus, however, the remainder of Europe, such as France, does not share the happiness.  Draghi speaks at the European Banking Conference and says ‘he acts for all of Europe’. At a different event, ECB’s Nowotny says the long-term impact of low rates must be closely monitored. The euro is 1.3521. GS predicts steep losses for gold coming in 2014. Hedge fund manager Paulson says he will not add to his gold holdings.  The majority of traders are very negative on gold and gold miners. The broad indexes drop at the opening bell but immediately recover as the dip buyers trip over each other eager to buy long.  Equities steadily move higher all day long. The VNCE Vince designer clothing retailer IPO opens for trading and catapults over +40%. The IPO orgy this year is reminiscent of the dotcom bubble orgy in late 1999 early 2000. The JOLTS Job Openings Report shows an improvement in hiring and a 69,000 increase in job postings. INTC lowers guidance and it is beaten -5.4% keeping the semiconductor sector flat to negative today. ROST drops -8%after it guides lower and says the competitive retail pricing environment twill hurt earnings. Long traders are receiving the melt-up everyone is looking for with the Dow well above 16K and the SPX above 1800. FU collapses and is halted from trading. FAB Universal is suspected of selling pirated movies in China and the stock has dropped from 7.5 to 3.1, almost -60%, in 7 days. PPG is expanding capacity to produce the next generation materials for the manufacture of Smartphone, tablet and computer screens. The dollar/yen remains elevated all day long at 101.30 (weaker yen) creating the bull fuel for the stock market. The Fed and BOJ central bankers are the market; a tag team of stock market pumpers all year long. A chart circulates among floor traders and across the Internet that shows the SPX chart overlaying the chart from the 1929 crash period where the SPX would be at the exact top now. Very few take the graph seriously and instead traders keep buying stocks to fuel the market upside. The day ends in a bullish euphoria with the SPX closing above 1800 for the first time in history. The SPX is up 9 points, +0.5%, printing a new all-time intraday high at 1804.84 and new all-time closing high at 1804.76. The Dow remains above 16K, up 55 points, +0.3%, printing a new all-time intraday high at 16068.78 and new all-time closing high at 16064.77. The Nasdaq is up +0.6% to 3992 remaining 8 points shy of the 4K round number. The RUT is up +0.5% printing a new all-time intraday high at 1125.64 and new all-time closing high at 1124.92. Trannies are up +04% but do not print another all-time high.  Biotechs, a stalwart outperforming sector this year, lead higher this week. For the week, the SPX gains +0.4%, up 7 consecutive weeks, Dow +0.7%, Nasdaq +0.1% and RUT +0.8%. The small caps slightly outperformed to the upside due to the strong biotech sector. Copper is strongly higher for 3 consecutive days. The 10-year yield is 2.75% and the 2-10 yield spread drops to 249 (banks need to see a spread of 255+ to confirm happy times ahead).  Allegion will replace JCP in the S&P 500. JCP drops -1.4% AH’s. Television business personality Maria Bartiromo announces her departure from CNBC today. She is joining the FOX Business Network. Bartiromo, a.k.a. the ‘money honey’, is best known for providing the first news reports from the floor of the NYSE 20 years ago. The talking head business commentators float between Bloomberg, CNBC and FOX as their contracts expire. Fed’s Tarullo says global central bankers need to develop tools to avoid future bank runs. The Whitehouse delays the healthcare enrollment deadline for 2014 from 12/15/13 to 12/23/13. In addition, the start of the 2015 enrollment period in October 2014 is changed to November 2014, one week after the mid-term elections instead of before the elections. This allows the democrats an advantage since health costs will sky rocket due to the low enrollment of healthy young people, and folks will not see these big increases in their premiums until after they vote. The Whitehouse, and democrats as a whole, have stopped using the ‘Obamacare’ moniker. Any mention of Obamacare on the websites has been removed. The president no longer says the word ‘Obamacare’ in his speeches. He is distancing himself from the debacle since his approval ratings are dropping. Obamacare is now part of the American lexicon and folks will not easily shift to saying the ‘Affordable Care Act’. Of course, the republicans will tout the word ‘Obamacare’ even more going forward. 9 States now refuse to honor President Obama’s request to allow the existing health plans to continue. These States and the insurance companies cannot turn on a dime depending on what the Whitehouse dictates on any given day. Millions continue to receive cancellation notices and must find new insurance within the next month.

On Saturday, 11/23/13, MSFT’s Xbox One sales topped 1 million on the first day matching PS4’s strong release. The U.S. Energy Department is selling off its multi-million dollar Fisker loan guarantee to a Chinese business man resulting in a taxpayer loss of about $140 million. The loss strikes another blow to the Obama Administration’s green policy which previously lost millions of taxpayer dollars with the Solyndra debacle. The monthly price of electricity continues to trend higher in America providing a touch of inflation in an overall ongoing disinflationary and deflationary economy. Comet ISON is set to move around the sun over the coming days. Solar flare activity increases but remains far below what is expected since this year is the peak year for the 11-year solar cycle. Solar flare events, although rare, are important, since they can cause serious electronics disruptions which may impact markets. Retailers worry that the Obamacare debacle, now with the deadline for enrollment occurring 2 days before Christmas, will dampen holiday spending.

On Sunday, 11/24/13, the Phillipines typhoon disaster aftermath continues with the death toll now rising above 5K. China extends its air defense zone to encompass the disputed Diaoyu islands. The action escalates tensions between Japan, Taiwan and China. The U.S. worries that an incident may occur due to the increased turmoil. The U.S. and five other nations reach a 6-month agreement with Iran that freezes their nuclear program in exchange for ‘modest’ relief from sanctions (about $7 billion). The sanctions are greatly hurting Iran’s economy and oil revenues have fallen drastically over the last year. Iran is planning to build two more nuclear power plants at the Bushehr site. Israel is unhappy with the agreement since the sanctions were finally beginning to bite. The euro is 1.3542. The crude oil price drops on the Iran deal. Winter storms move across the U.S. creating transportation difficulties.              

On Monday, 11/25/13, Asia markets move higher except for the Shnghai which is negative. BOJ’s Kuroda says the 2% inflation rate is ambitious. Dollar/yen is 101.70 so the S&P’s futures are higher as well at +6. Japan proceeds with removing fuel rods from a unit at the troubled Fukishima nuclear plant. The decommissioning is now expected to take up to 40 years. Thai anti-government protests continue. Moody’s cuts Posco’s (steelmaker) rating due to concern over debt.  The futures move strongly higher perhaps on Iran optimism with the S&P’s +8, Dow +65, Nasdaq +13. Copper bounces strongly higher but drops to the flat line overnight. Brent oil drops -2% and falls briefly under 105. WTIC crude oil is down -1.3% to 93.62. 10% of the world’s oil reserves are in Iran. The 10-year yield is 2.75%. Natty gas continues higher as cold weather and storms hit the States. Gold continues lower to 1231 since Middle East tensions are decreasing on the Iran nuclear deal. The Saudi’s and Israel are against the Iran nuclear deal. Middle East politics make for strange bedfellows.  RBS business practices are questioned since they appear to be squeezing out private companies. RBS’s lack of lending is hurting small and medium-sized companies, pushing companies into default. RBS is 17% owned by the U.K. government.  RBS is up +0.4% unaffected by the negative press. The Sinabung volcano eruption in Italy increases in intensity.  Economics professor Jeremy Siegel repeats his calls for a higher stock market moving forward. Siegel was correct all this year with the Dow reaching his 16K target last week.  Gasoline prices increase for the first time in 2 months as the holiday shopping season begins. U.S. banks are considering raising fees on depositors.  U.S. companies are considering plans to have employees contribute more towards their health insurance plans. WMT CEO Duke resigns and young McMillon is the successor. WMT jumps +0.7%.  SHLD jumps +7% on news that it may split and sell off parts of the company. Top executives depart the flailing BBRY.  The wealthy in America are surprisingly holding 39% of their assets in cash. The trading week begins and the broad indexes move higher with the higher dollar/yen (weaker yen). The Nasdaq ($COMPQ) hits the psychological 4000 level for the first time since September 2000, 13 years ago. Of course back then, tech was collapsing off the 5K top a few months earlier. The Hunger Games sequel is well received at the weekend theatres but traders wanted more and bludgeon LGF -7.3%. BAC upgrades CAT and it trades up +2.2%. China is investigating QCOM, a tech darling stock this year, for possible business practices violations. QCOM drops -2.3% and sends semiconductors lower causing the broad indexes to leak slightly lower. Both the equities and VIX are up so one of them is wrong. China billionaires and millionaires are buying U.S. real estate, especially California, at a record pace and are the main buyers on the high-end.  The Chinese are also buying art, collectables and vineyards. The behavior of the Chinese wealthy is similar to the behavior of Japan as they bought the U.S. real estate market before their collapse into the 2-decade deflation in the early 1990’s. Ditto the enthusiasm with wealthy Americans at the 2000 and 2007 market tops, and now, as shown by the popularity in the art, collectible and classic car sectors, as well as elevated real estate prices currently. The Pending Home Sales Index, however, is weaker than expected and this forecasts less closings moving forward. The broad indexes leak lower as the dollar/yen drops from 101.70 to 101.60 (stronger yen).  In the afternoon, the dollar/yen moves higher to 101.70 (weaker yen) so equities move to the highs of the day, then in the final hour, the dollar/yen drops towards 101.45 so the broad indexes sell off losing all the earlier gains and ending the day flat. The Nasdaq oscillates above and below 4K ending at 3995. The Dow prints a new all-time intraday high at 16109.63 and new all-time closing high at 16072.54. The 3 major indexes have now all crossed their psychological levels; SPX 1800, Dow 16K and Nasdaq 4K. Analysts are now touting SPX 1900 and Dow 18K targets as easily achievable; the market hubris is growing larger. Social media is sold off today with FB -3.1%, LNKD -1.7%, YELP -6.7% and P -4.3%, all off much lower lows earlier in the day. QIHU is downgraded and it dumps -8%. The Iran nuclear deal euphoria fades as the day moves along. Gold and oil recover. President Obama tries to drum up support for the deal but many in Congress, in rare bipartisan agreement, call the deal weak. Israel’s Netanyahu call the Iran deal a “historic mistake” and the Saudi’s are not happy either. The Obamacare web site malfunctions again.  The self-imposed deadline date, where the Whitehouse said the web site would be fixed, is 11/30/13 only 4 days away. Television personality Katie Couric joins YHOO as Myers continues her spending spree.  CGC will be the new ticker symbol for the Chrysler IPO coming in Q1 2014.

On Tuesday, 11/26/13, Asia markets are flat to lower. The dollar/yen drops to 101.47 (stronger yen) so the Nikkei is lower. BOJ says there are risks to the economy moving forward. 5 major banks (Barclay’s, Deutsche, Bank of Nova Scotia, HSBC and Societe Generale), that set the daily gold price, are under scrutiny for potential gold price fixing. Currently, there are no allegations of actual gold price fixing although the business practices of these 5 banks are called into question. Gold is a $20 trillion marketplace. European markets are flat. ECB’s and Bundesbanks Weidmann voices concern over the ever-increasing reach of central bankers since it will lead to future instability. ECB’s Coeure says rates can be cut further and negative rates are a possibility. French bankruptcies print record highs. The global central banker intervention is obscene. Natty gas prices continue higher due to the cold weather sweeping across the States. Housing Starts are cancelled until 12/18/13 due to the government shutdown.  Brent oil recovers back above 111 as the Iran deal details are studied more closely.  MW launches a takeover move at JOS when only one month ago JOS was trying to acquire MW. This turnaround flip-flop is called the Pac-Man defense in reference to the popular video game. If the deal is completed, ‘you will like the way you look’ in your ‘buy-one-get-five-free’ suits. TIF beats on earnings and guides higher so the stock explodes +7% higher. The Fed creates a higher stock market with QE making the rich richer and the wealthy continue to spend. The wealthy Chinese are major high-end spenders these days buying luxury goods, art and real estate.  Futures are flat moving into the opening bell.  CBRL serves up disappointing earnings, blaming the government shutdown, and drops -6%. DSW trips on earnings and is beaten -5%. U.S. bank earnings are down -3.9% printing the first year-on-year loss since 2009 but traders continue to run into the financial stocks on the long side, anticipating a steepening yield curve. Equities move flat with some upward buoyancy into lunch time. Dollar/yen remains flat at 101.45. Consumer Confidence is weaker than expected just like last month. Richmond Fed Mfg Index is better than expected. The RUT prints a new all-time intraday high at 1131.88.  AAPL is upgraded and jumps +1.7% above 530.  Apple and strong semiconductors send the Nasdaq higher now at 4016, a new 13-year high. Natty gas continues higher. The 10-year yield drops to 2.69% so homebuilders move higher but surprisingly, utilities collapse. VIX is higher.  Equities collapse in the final one-half hour of trading with the SPX finishing flat but printing a new all-time intraday high at 1808.42. The Nasdaq closes at 4018 above 4K for the first time in 13 years. The trifecta of bullishness continues with the Dow over 16K, SPX over 1800 K and the Nasdaq above 4K. The RUT prints a new all-time intraday high at 1136.24 and new all-time closing high at 1134.53. After the bell, HPQ reports healthy earnings and jumps +5%. Pope Francis calls ‘unfettered capitalism’ a ‘new tyranny’ and asks why no one cares if a homeless man dies of exposure but it is big news if the stock market moves two points? The Pope asks the wealthy to help the poor and disadvantaged.  Bitcoin hits a record price $947. CME margin debt hits another record level at $412 billion (margin debt tends to peak at market tops). Concern grows in the States over home equity loans and lines of credit where debt holders have to start paying down the principal moving forward. Hurricane season ends with the lightest season in about 30 years. Two U.S. B-52 bombers fly through the disputed Japan islands air space in defiance of recent claims by China that all aircraft needs to notify them first.

On Wednesday, 11/27/13, S&P cuts ratings on Malaysian banks. The IAEA inspects the progress of the Fukishima nuclear disaster cleanup. Merkel reaches a deal forming a German Coalition government. The EU hits China’s solar glass manufacturer’s with tariffs—the global ‘protectionism’ wars escalate. The U.K. considers bringing a complaint against RBS for questionable business practices.  The Justice Department plans on investigating MS and others on questionable business practices. The U.S. banks likely face over $100 billion more in legal costs to address mortgage-related lawsuits.  Winter storms continue across the States killing 11.  Mortgage Applications are weak for 4 consecutive months. Durable Goods Orders are weaker than expected. Jobless Claims are down. Equities drift higher after the opening bell. Consumer Sentiment is 75.1, better than expected. The semiconductors drop with ADI -5%, BLOX puking -23% and TXN -1.4% but HPQ is carrying the tech sector up +8%. Utilities are weak as the 10-year yield climbs to 2.74%. Equities remain elevated courtesy of the dollar/yen now punching up through 102 (weaker yen provides stock market upside fuel).  Bitcoin prints $1031 now over the 1K psychological level. Traders ask when will bitcoin be equal to an ounce of gold?  TIVO is beaten -5%. At 11:45 AM EST, Berlesconi receives an expulsion vote from the Italian Senate and is no longer immune from prosecution. The days of bunga-bunga parties are now a distant memory and he may now have to serve house arrest or jail time. Copper is beaten lower. The SPX is moving sideways through 1802-1808 for the last 3 days. At the bell, the SPX prints a new all-time closing high at 1807.23 but is unable to print a new all-time intraday high. The Dow prints a new all-time closing high at 16097.33 but is unable to print a new all-time intraday high. The Nasdaq jumps +0.7% to 4045 printing a new 13-year closing high. The RUT is up +0.6% printing a new all-time closing high at 1141.33 and new all-time intraday high at 1141.50. The weaker yen (BOJ easy money policies) is driving the stock market higher; the dollar/yen remains elevated at 102.15 all day long creating buoyancy in stocks. Berlusconi is expelled from the Italian Parliament and he calls for a ‘day of mourning’. UBS bans social media chat rooms to limit the interchange between traders and external sources that may be construed as insider trading. Under the cover of darkness, on the eve before the Thanksgiving holiday, when most folks are already enjoying time with family and friends, the Whitehouse says another Obamacare delay will occur with web site enrollment of small businesses now pushed off for one-year’s time. In addition, the Whitehouse lowers expectations and delays a marketing program for Obamacare on fears of continued web site crashes. The web-hosting is switched from VZ to HPQ. The web site and health insurance mess continues with 50 people losing their health insurance for each one that has signed up for the Affordable Care Act (ACA). Retailers are concerned that this daily drip, drip, drip, of depressing health insurance news will negatively impact holiday spending. Prior Fed Chief Greenspan says there is no stock bubble in markets and the U.S. should grow at 2% next year (the Fed has never been able to identify any asset bubble ahead of time and in fact, Greenspan’s and Chairman Bernanke’s easy money policies are what create the new asset bubbles such as the current dividend stock bubble). Future Fed Chair Yellen repeats this Fed mantra stating days ago in her testimony before the Senate that she sees no asset bubbles in markets currently. Crane collapses at Brazil’s world cup stadium killing two.  Brazil needs the economic shot in the arm from the World Cup but is behind schedule with preparations and continues to deal with social unrest. Thailand protests continue against the government with protestors targeting the army and ruling party headquarters. Rumors circulate that bags of cash are exiting the country.

On Thursday, 11/28/13, RENN misses on earnings and guidance is lowered so it is axed -11%. NIKK closes at 15550 the highest level since 2007 overtaking the May highs. Dollar/yen is 102.23. The weaker yen is pumping the Japan and U.S. stock markets higher. China increases property curbs to cool down the obscene housing bubble. Prices in China real estate rise in all locations again. Burberry’s China trademark is revoked which would allow local manufacturers to pirate their designs.  Germany unemployment rises. European markets trade flat. Spain Q3 GDP rises +0.1%. ECB’s Constancio says negative deposit rates would only be considered in an ‘extreme’ situation. Cyprus bank deposits are shrinking. BOE’s Carney addresses concerns about the U.K. housing bubble. Folks are buying $1 million real estate with as little as 5% down payment.  Markets are closed in the States for the Thanksgiving Day holiday and at 5 AM EST the U.S. futures are S&P +5, Dow +58 and Nasdaq +13.5. Happy Hanukkah.  The winter storms create transportation headaches for the U.S. Pennsylvania, New York and New Jersey are hit the hardest. The bitcoin frenzy grows more insane as price hits $1170 nearing the price of one ounce of gold. A 5.7 magnitude earthquake occurs at Bushehr, Iran, less than 30 miles from their nuclear facilities. Confusion grows over the Iranian nuclear deal. Each side appears to have a different understanding of the deal which means there is potentially no deal.

On Friday, 11/29/13, Comet ISON burns up and disintegrates as it passes the sun.  A SpaceX (Elon Musk) launch to place a satellite in orbit continues to face delays.  Australia rejects ADM’s $2.6 billion takeover deal of Graincorp, which drops -23%, since the deal is contrary to national interests.  Asian stocks are flat to lower with the Nikkei printing a +9.3% monthly gain. Japan inflation sneaks higher at levels not seen since 1998. Dollar/yen is 102.33. China flies war planes through the disputed air space above the Japanese islands escalating tensions. Eurozone inflation is a hair higher than expected and unemployment a hair lower. Euro is 1.3614. Ukraine freezes plans to join the EU on pressure from Russia. S&P raises the credit ratings on Spain and Cyprus but lowers the Netherlands rating based on economic growth prospects. Germany’s retail sales drop for 2 consecutive months and unemployment rises for the 4th month. 25% of Spaniards say they would consider leaving Spain for better economic opportunities. Markets reopen for trading for a shortened session.  Today is EOM and the most bullish day of the year. Today is Black Friday one of the top busiest retail sales days of the entire year that will provide an early gauge on the retail shopping season. Traders are optimistic holding the least amount of puts in the retail sector in 3 years. The overnight shopping shows robust crowds and sales especially at BBY, WMT, LTD and TGT. iPad Air is selling well and about 75% of the Smartphone sales in Japan are the iPhone.  AAPL jumps +0.7% pre-market pushing Nasdaq futures higher to +17. S&P +5. Dow +50. Unions picket in front of WMT stores protesting over low wages. The 10-year yield is 2.76%. Bitcoin hits $1236.  Marc Faber of The Gloom, Boom & Doom Report appears on business television and says a massive speculative bubble is in place across nearly all asset classes including stocks, bonds, bitcoin and farmland. Faber cites the Case-Shiller PE Index in the mid-20’s but is not shorting the market aggressively as yet.  He warns investors to lower their expectations moving forward. Equities move higher after the opening bell with new record highs printing for the major indexes againBIDU, TSLA, NFLX and other momo stocks jump over +1% higher, pumping the Nasdaq higher.  WTIC crude oil creates a death cross with the 50-day MA dropping down through the 200-day MA. Both the SPX and VIX trade higher in early trading; one of them is wrong.  The bulls are in control until one-half hour before the early 1 PM close when sellers enter driving the Dow about 70 points lower off the top. The SPX, Dow and RUT finish flat on the day and the Nasdaq positive. The Nasdaq is pumped by the high flyers, biotech and large-cap tech stocks such as AAPL. AMZN gains +2% moving vertically higher on joyous holiday shopping expectations. The SPX prints a new all-time intraday high at 1813.55. The Dow prints a new all-time intraday high at 16174.51 venturing ever-nearer the inflation-adjusted Dow high at 16219. The Nasdaq closes at a new 13-year high at 4060 now well above the psychological 4K level without even performing a back kiss as yet. The RUT prints a new all-time intraday high at 1147.00 and new all-time closing high at 1142.89. The biotech sector pumps the small cap RUT higher.  Interestingly, the VIX jumps over +5% higher in the final minutes of trading. Gold drops -5.4% to 1251 during November. For the week, the SPX is flat, ditto the Dow, the Nasdaq is up +1.7% and RUT up +1.6%. The Dow prints 12 new all-time record highs during November. For the month, the Dow is up +3.5%, SPX +2.8%, Nasdaq +3.6% and RUT +3.9%. The bulls appear unstoppable due to the Fed and BOJ money-printing. The central bankers are the markets. On the eve of when the Obamacare web site is supposed to be fully functionally, the Whitehouse says there will be intermittent outages on the site from 9 PM EST to 8 AM tomorrow morning. Margin interest is now in excess of $410 billion catapulting higher week after week as long traders chase the markets higher; greed is taking over. The margin interest is now at lofty levels like the October 2007 market top. The CPCE put/call ratio drops to 0.48 verifying the uber complacency in markets and signaling a significant market top in place. Traders are completely worry-free and do not believe that markets can sell off since the Fed will not taper QE until March.

On Saturday, 11/30/13, today is the day the Whitehouse promised that the Obamacare website would work properly. Television personality Barbara Walters interviews President Obama and the First Lady where he tries to defend his trustworthiness after the 3 years of lies about the Affordable Health Care Act. The usual Black Friday shopping mayhem occurs at stores and malls with a few shootings, one sick soul shooting another over a big screen television, stabbings, a bomb threat and lots of pushing and shoving. It is always amazing how quickly humans can turn into animals. Consumers are happy with stores busily slitting each others’ throats with competitive sales, 40% off, 50% off, 60% off and more. Retail analysts report that this is the most promotional holiday shopping season since 2008, when the stock market was crashing.  Sales on the Internet jump strongly. The retail sales numbers appear strong, however, at what cost to margins?  N. Korea forces a U.S. hostage to apologize for war crimes. There is no word on when he will be released. N. Korea will likely use him as a bargaining chip to receive aid in exchange for his return. A U.S. war veteran, held as a hostage in North Korea, is forced to apologize for war crimes. North Korea is likely using the vet as a bargaining chip to gain aid from the U.S. South Korea bans the import of all fish from the Fukishima nuclear disaster area. Fish and animals along the west coast of North America are showing signs of radiation sickness. Radiation monitors across the U.S. are showing ever-increasing levels, especially along the west coast in California, with radiation fallout and ocean contamination from Fukishima the culprit. The main stream media continues to ignore the ongoing Japan nuclear disaster. The U.S. airlines are told to comply with the Chinese requests for flying over the disputed airspace above the Japanese islands.

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On Sunday, 12/1/13, there are 24 days (3 weeks) remaining in the holiday shopping season until Christmas and 30 days until the EOY. There are 21 trading days remaining in the year.

On Monday, 12/2/13, Asia PMI’s.  Europe PMI’s.  Construction Spending and ISM Mfg Index 10 AM will create a market pivot point. A new moon occurs in the evening. Markets are typically bearish moving through the new moon. Markets are usually bullish at the start of a new month. Cyber Monday. Vice president Biden visits China, Japan and South Korea this week.

On Tuesday, 12/3/13, Motor Vehicle Sales.

On Wednesday, 12/4/13, Mortgage Applications. ADP Employment Report. International Trade. Productivity and Costs. New Home Sales and ISM Non-Mfg Index 10 AM will create a market pivot point. Oil Inventories. Beige Book 2 PM will create a market pivot point.

On Thursday, 12/5/13, ECB Rate Decision 7:45 AM EST and Draghi Press Conference 8:30 AM. The ECB cut rates last month but the euro remains elevated. Draghi needs a weaker euro to stimulate the European sick man.  He likely needs to announce another LTRO program (Europe’s QE) so his press conference will be key. Chain Store Sales. Challenger Job-Cut Report. Jobless Claims. GDP. Factory Orders. Natty Gas Inventories. Fed’s Fisher speaks.

On Friday, 12/6/13, Personal Income and Outlays and Monthly Jobs Report. Consumer Sentiment 9:55 AM will create a market pivot point. Fed’s Plosser and Evans speak. Consumer Credit.

On Saturday, 12/7/13, ….

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On Sunday, 12/8/13, …

On Monday, 12/9/13, ….

On Tuesday, 12/10/13, NFIB Small Business Optimism Index.  JOLTS Job Openings Report. Wholesale Trade. 3-Year Note Auction.

On Wednesday, 12/11/13, Mortgage Applications. Oil Inventories. 10-Year Note Auction. Treasury Budget 2 PM.

On Thursday, 12/12/13, Jobless Claims. Retail Sales. Import and Export Prices. Business Inventories. Natty Gas Inventories. 30-Year Bond Auction.

On Friday, 12/13/13, PPI. Congress provides a detailed road map to handle the U.S. budget crisis moving forward.

On Saturday, 12/14/13, …

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On Sunday, 12/15/13, during Q4, European bank stress tests will begin and take one year to complete (there are likely 10% of the 128 banks undercapitalized with no clear way on how to recapitalize these troubled institutions). The one-year timeline is chosen to keep stretching things out in the hope that the European economy recovers before further bad news occurs. Also during Q4, Germany’s high court must decide if the ECB’s OMT program is constitutional and Europe must finalize all plans for the new banking union.

On Monday, 12/16/13, Empire State Mfg Index. TIC data. Industrial Production. 2-Year Note Auction.

On Tuesday, 12/17/13, FOMC 2-day meeting begins. Is QE taper talk on the table? CPI. Housing Market Index. 5-Year Note Auction. A full moon occurs. Markets are typically bullish moving through the full moon. Markets are typically bullish from a Tuesday low to a Wednesday high for OpEx week.

On Wednesday, 12/18/13, Mortgage Applications. Housing Starts. Oil Inventories. 7-Year Note Auction. FOMC Meeting Announcement and Forecasts 2 PM which will create a market pivot point. Chairman Bernanke Press Conference and Q&A from 2:30 PM to 3:30 PM will move markets.

On Thursday, 12/19/13, BOJ 2-day meeting begins. Jobless Claims. Philly Fed and Existing Home Sales 10 AM will create a market pivot point. Natty Gas Inventories. 5-Year TIPS Auction.

On Friday, 12/20/13, BOJ rate and policy decision. OpEx Quadruple WitchingGDP. Atlanta Fed Business Inflation Expectations. Kansas City Fed Mfg Index.

On Saturday, 12/21/13, ….

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On Sunday, 12/22/13, ….

On Monday, 12/23/13, the initial sign-up period for Obamacare ends (extended from 12/15/13) for those beginning insurance on 1/1/14. The Whitehouse needs 7 million people (mainly healthy young people) to sign-up by March, otherwise, the program will start bleeding money and require a future bailout by the taxpayers. Personal Income and Outlays. Chicago Fed National Activity Index. Consumer Sentiment 9:55 AM will create a market pivot point.

On Tuesday, 12/24/13, Durable Goods Orders. FHFA House Price Index. New Home Sales. Richmond Fed Mfg Index. Markets Close Early for Christmas Eve.

On Wednesday, 12/25/13, Markets are Closed in Observance of Christmas holiday.

On Thursday, 12/26/13, Markets Reopen for Trading. Mortgage Applications. Jobless Claims. Oil Inventories.

On Friday, 12/27/13, Natty Gas Inventories.

On Saturday, 12/28/13, …..

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On Sunday, 12/29/13, …..

On Monday, 12/30/13, Pending Home Sales Index. Dallas Fed Mfg Survey. Farm Prices.

On Tuesday, 12/31/13, EOM. EOQ4. EOY2013. S&P Case-Shiller. Chicago PMI 9:45 AM will create a market pivot. Consumer Confidence 10 AM will create a market pivot point. Gold is down on the year for the first time this century.

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On Wednesday, 1/1/14, Markets are Closed in Observance of New Years holiday. A major Bradley turn date occurs where a major market directional move is expected in the 12/23/13 through 1/8/14 time frame. The Bradley turn does not predict direction, only that a strong move will occur one way of the other. Another Bradley turns in quick order so the beginning of the year may be a wild ride for the stock market. A new moon occurs. Markets are typically bearish moving through the new moon.

On Thursday, 1/2/14, Asia PMI’s. Europe PMI’s. Markets Reopen for Trading. Motor Vehicle Sales. Mortgage Applications. Jobless Claims. Natty Gas Inventories. Oil Inventories (one-day delayed).

On Friday, 1/3/14, …..

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On Thursday, 1/9/14, a Bradley turn date occurs where a market directional move is expected in the 1/2/14 through 1/16/14 time frame. The Bradley turn does not predict direction, only that a strong move will occur one way of the other.

On Wednesday, 1/15/14, a Continuing Resolution (CR) is needed to fund and keep the U.S. government open.

On Thursday, 1/16/14, a full moon occurs. Markets are typically bullish moving through the full moon.

On Wednesday, 1/29/14, Chairman Bernanke conducts his last official two-day meeting (1/28 and 1/29) as Chair of the FOMC.

On Friday, 1/31/14, Chairman Bernanke’s term ends at the Fed. New Chair Yellen takes over.

On Friday, 2/7/14, the Debt Ceiling Limit is hit where the U.S. may default on obligations. Treasury Secretary Lew will use extraordinary measures to extend this time forward so late February or early March is a likelier deadline. Winter Olympics begin in Sochi, Russia, through 2/23/14.

On Saturday, 3/15/13, the deadline for the Obamacare sign up period ends. The Whitehouse needs 7 million people (mainly healthy young people) to sign-up by today or the program will be bleeding money profusely and require a taxpayer bailout.

On Wednesday, 3/19/14, new Fed Chair Yellen talks at the conclusion of her first FOMC meeting (3/18 and 3/19).

In February/March, Fed Chair Yellen testifies before Congress.

In March, the ESM is officially “fully operational.” The Euro banking union is in place after delays from January 2013 to January 2014 and now to March 2014.

In April, MSFT no longer supports Windows XP.

In June, employer mandate provisions begin for Obamacare with many workers likely forced into part-time 30 hours per week or less employment.

On Tuesday, 11/4/14, mid-term elections. The 2-year presidential race for 2016 begins.

On Saturday, 11/15/14, the enrollment period for Obamacare in 2015 begins (pushed forward from 10/15/14 by the Whitehouse and democrats in November 2014; voters will not experience the sticker shock of higher insurance premiums, since too few healthy young people are signing up to support the program, until after the election).

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© The Keystone Speculator. All Rights Reserved. 2012. 2013.

CPCE Put/Call Ratio Daily Chart Signals Significant Market Top

The put/call ratio saga with CPCE and CPC continues. The red circles show market tops and the green circles show market bottoms. The uber complacency and fearlessness in the market is rampant with long traders now trained like Pavlov's dog to push equities higher each time a Fed head speaks, which is now 2 or 3 times per day, or, when the BOJ further bludgeons the yen, sending the dollar/yen higher and the Nikkei and U.S. stocks higher. The Fed and other central bankers are the market. The CPCE clearly illustrates this mindset with traders 100% convinced that QE tapering will not begin until March 2014.  Traders are staggering around holding half empty wine bottles, already raising their hands to order up more Fed booze and central banker easy money crack cocaine to keep the party going. The bullish fun feels like it will go on forever. It is a party to end all parties.

The chart says the fun will end, however, and end any day forward. We have been monitoring the uber market complacency with the put/call ratios for about 5 weeks now. A roll over in the broad indexes would have been expected by now. The Fed and BOJ have taken the tag-team approach, like phony Studio Wrestling entertainment, where the stock market was pumped by Yellen's dovish confirmation talk, which then flowed into the constant daily barrage of Fed speakers saying that QE Infinity will continue forever, which then flowed into the BOJ weakening the yen over the last month, all creating the stock market upside orgy. Long traders are docile and complacent, feeling very comfy and secure with the Fed snuggie keeping their upper body warm and the BOJ fuzzy slippers keeping their feet warm. The CPCE 0.48 print says the snuggie will be pulled away, the slippers torn from their feet and the long traders thrown out into the cold moving forward.

Any long position should be assessed; if you are content with holding the long for a few years, then keep it, no worries. If you are not attached to the long trade, throw it overboard. Continue working on your long shopping list but do not go into the market long side until folks are jumping out of windows and the blood is in the streets in the green circle above 0.75. If the market elevation continues, be patient, you will not be missing anything on the upside which is now like picking up nickels in front of a bulldozer. Next week should be very interesting trading. Watch your wallet. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

VIX Volatility 1-Minute Chart

In the final one-half hour of trading, the VIX shot skyward over +5.5%. Just when long traders were lulled into a sleepy contentment from the combination of turkey tryptophan and the ongoing siren song from future Fed Chair Yellen, whammo. Volatility spiked but no one noticed since happy hour for the holiday weekend had already begun. Keystone's trading algo, Keybot the Quant, is tracking VIX 13.89 as the bull-bear line in the sand, now only 19 pennies away. Bad things will happen to equities if VIX moves above 13.89. Market bulls are fine if VIX stays under 13.89. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

UTIL Utilities Weekly Charts Sideways Symmetrical Triangle

The old-timer's pay attention to the utilities sector as a market guide. A technical anaylsis book from decades gone by that should be in everyone's library is Norman G. Fosback's Stock Market Logic which describes the use of utilities as a forecasting tool. The book has a red cover that is easy to spot. For the more significant broad market downturns, the utilities sector will typically peak and roll over first, from zero to 2 months ahead of time. The utes peaked 6 months ago, but, as with many other indicators, the Fed and other central bankers have destroyed price discovery to the point that market relationships are not working as expected. There are 2 things to monitor; first the closing print from 15 weeks ago, and second, the 50-week MA. If utes are in a weekly uptrend (based on the closing print 15 weeks ago), all is fine in the broader market, but when the utes slip into a downtrend, that spells trouble ahead. If the weekly downtrend continues, price will then test the 50-week MA. Keystone calls this the trap-door since the broad markets will typically drop substantially if this level fails.

Counting 15 weeks back on the chart you see the brown circle at 483. This is a very important number for all of next week. Utes have been in a weekly downtrend recently, up until last week, and will only return to the weekly downtrend if price moves under 483. The 50-week MA is 490.56 and price has already fallen through. Usually, the weekly trend will turn bearish first, then the 50-week will fail, but as evidenced by the chart, a long-term sideways move is occurring which creates a 50-week MA failure now, but price is above the price from 15 weeks ago indicating that the utes are in a weekly uptrend. For the ongoing market action, the 483 level, the closing print from 15 weeks ago, can be considered the trap-door. Bad things will happen to equities if UTIL 483 fails in the days ahead. If UTIL regains the 50-week MA at 491+ and moves higher, the bulls rule and the SPX is on its way to 1820's.

The small rectangle shows that for the next 7 weeks, the bulls have an easy number to beat to maintain a weekly uptrend, as long as price stays above the 475-485 area. If utes fall through this 475-485 zone, the long-awaited broad market correction will arrive in force.  The sideways symmetrical blue triangle is in play. The two vertical sides are 75 handles and 110 handles. A breakout for happy bulls is from 500 so the upside target is 575-610. A breakdown for happy bears is from 485 so the downside target is 375-410. The long-term chart shows the H&S pattern break down in 2007-2008, then the inverted H&S pattern that nailed the 530-540 top, now the sideways symmetrical triangle that will result in one side the winner, the other the loser. The importance of the 483-485 level cannot be understated; if 483-485 fails, the markets are going lower perhaps substantially lower. If the bulls hold the line and send UTIL above the 50-week MA at 490.63-ish, equities continue higher.

If utilities break down, and fall under the 475-485 zone, the broad indexes will move into a bear market that will last a few weeks and months, maybe longer. Note how over the last 3 years, price remains above the 50-week MA. A mean reversion is needed where price spends an equal amount of time below the 50-week MA moving forward. A reasonable expectation is that a fight will occur at UTIL 483-485 probably on Monday or Tuesday, where price will either bounce, or die.  Caesar will rise at 483-485, extend his arm, and provide a thumbs up, or thumbs down, for markets moving forward. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Thursday, November 28, 2013

Keystone's Thanksgiving Day Reconnaisance

Happy Thanksgiving. The turkeys don't have a chance today. HappyHanukkah. The SPX staggers sideways through 1802-1808 all week long. Despite the charts wanting to see a roll over to the downside, the bulls keep equities elevated with the weaker yen. Banzai!! The dollar/yen leaps above 102 due to the BOJ weakening the yen and this creates new highs for the Nikkei not seen since 2007 and new all-time highs in U.S. equities. The broad indexes are driven higher by the central banker's liquidity. Nine months of weakness in copper and commodities verifies that trading is detached from fundamentals and simply follows the soothing and seducing siren song of future Fed Chair Yellen. Watch the dollar/yen to determine market direction. Utilities crumbled yesterday but did recover in the afternoon. UTIL is under the important 490.64 level creating market weakness but above the 481.68 number creating bullishness. For next week, the UTIL 490.64 and 482.94 numbers are key, thus, watch to see how UTIL closes the week, above or below 483. If above 483, the bulls will be in good shape. If below 483, equities are in trouble.

Bulls need utilities, copper and commodities to move higher to provide upside bull juice, therefore, in this near-term, the best fuel the bulls can hope for is with the utes crossing up through UTIL 490.64 to signal the all-clear. Keybot the Quant remains short, however, if UTIL moves above 490.64, and SPX moves above 1808.50, and both remain above, Keybot will likely flip long. The bears need to keep utes weak and send UTIL under 482-483 which will create a strong down leg in equities. The bears also need to push VIX above 13.90 which would provide bear fuel. Generally, bulls are fine if they keep VIX below 13.90. For the SPX starting at 1807, bulls only need 1-1/2 point higher, to push up through 1808.50, and an upside acceleration will occur pushing price towards 1820. The bears need to push under 1803 to accelerate the downside to 1796. A move through 1804-1807 is sideways action. The 8 MA is below the 34 MA on the SPX 30-minute chart, albeit by 2 pennies, signaling bearish markets for the hours ahead. Key support below is 1803, 1802, 1799, 1798, 1797, 17961791, 1788, 1782 and 1772.


Friday is EOM and it appears the indexes will print another up month. The rally is now 4 years and 9 months long which places it in the top 4 or 5 longest rallies in stock market history. The 18-year cycle, the most reliable stock cycle, continues along with the secular bear from 2000 to 2018. Markets are typically bullish from the last day of the month through the first 4 days of the new month as new money is put to work. Monday evening is a new moon and markets are typically bearish moving through the new moon. In addition, there is a higher chance of military events and/or terrorism around the dark new moon each month. The day after Thanksgiving, Black Friday is one of the busiest shopping days of the entire year so analysts and traders will be watching the mall parking lots.


The 5 years of central banker intervention has destroyed price discovery in the markets. This is noted by many skewed pricing relationships and technical and fundamental signals that are providing false indications. In addition, the Internet and technology in general, has created a whole new breed of savvy traders. Thus, tried and true market indicators will have to be tweaked moving forward. This places markets in a strange place, very elevated price levels, small caps with PE's well over 20, and everyone believing in the upside forever mantra. Nearly everyone also believes that they will have plenty of time to exit the markets if a serious downdraft occurs. There is a reason for lock limits in markets. You may wake up one morning and find the major indexes down substantially and all you can do is hold on for your life if long. Also, perhaps eerily, there is a quiet calm; computer glitches and exchange outages were happening with frequency, but now, quiet. Like any parent knows, you worry when you don't hear any noise coming from the kids' bedrooms rather than when they are making noise. Simply be aware that a large market drop can occur in a heartbeat and you need to have a plan in place to handle any such outcome. Everyone will be thinking of capital preservation as market selling occurs, each one wanting to get out before the other guy thereby ratcheting price lower, while those deciding to ride it out become more and more concerned being stranded at the market top.

The rates to stock relationship is interesting these days. Traders are completely convinced of a March tapering of QE so moving forward, the majority of traders expect yields to jump higher, the 10-year yield over 3%, and for stocks to sell off. This behavior has manifested itself over the last couple months here and there and the proponents say yep, Fed will lose control, yields will catapult higher and the markets will correct. On the other hand, sometimes better economic data, like yesterday, results in the 10-year yield moving higher, and stocks moving higher. This causes traders to say that the tapering move is priced in and yields and stocks will move higher together moving forward reflective of a healthy economy. After all, this is a time tested relationship where money flows out of notes and bonds (lower prices) moving yields higher and that money finds its way into stocks. The corresponding opposites are then yields moving lower with stocks moving higher and also both yields and stocks moving lower together. The lower yield higher stock scenario is the least likely of all outcomes since it is reflective of a Fed increasing QE moving forward; pure insanity.

Keystone looks for the deflationary and disinflationary outcome, the lower yield and lower stock outcome a la 2008. The counter balance to this is the higher yield higher stock moves which occur the other way. Traders want to believe that the economy is running on all cylinders and 2014 will be a breakout year for the globe with yields moving higher and stocks moving higher, everyone hopes for that, however, that does not mean it will happen. This behavior will likely only be reflected in the bear market rallies providing further short  opportunities. The Fed wants to avoid deflation, hence the 5 years of obscene money printing. The grand experiment will likely fail. The worst outcome is the one no one even wants to talk about; when realization sets in that the planet is falling into deflation and the QE programs were for naught, only creating an even worse mess moving forward, and on top of this tragedy, the Fed no longer has any ammo. The Japan-style deflationary scenario, the U.S. is trying so hard to avoid, likely has to extract its pound of flesh. Europe is already on the verge of the deflationary spiral. Things can change but currently, the coming deflation is likely to shock and astound everyone trading global markets.

For Friday's shortened session ending at 1 PM EST watch UTIL 490.64, 482-483, VIX 13.90, the dollar/yen 102.15 as a pivot, the 8/34 cross described above and in this morning's chart, and SPX 1808.50 and 1802, to determine market direction. Dollar/yen is now at 102.25 (weaker yen than 102.15) so the futures show positivity. Time for the Thanksgiving Day festivities. Gobble gobble.

Note Added 11/30/13 at 7:36 AM:  Banzai!! Banzai!! Dollar/yen moves to 102.45 (weaker yen) so the upside market move continues. The central bankers, in this case the BOJ, are the market. The SPX prints inside the apex of the rising wedge on the daily chart (scroll back to study this chart) so next week a major decision is likely. The broad indexes gave up much of the gains into the closing bell with the Nasdaq finishing positive but the SPX and Dow negative. The day after Thanksgiving is typically up so it is odd to see the negative prints despite all the uber bullishness lately.  VIX jumped strongly higher in the final minutes now at 13.70 only pennies from the 13.89 that will cause market turmoil. UTIL finished at 487 directly in the middle of the 491 the bulls need, and 483 the bears need. Scroll forward for the utility chart posted this morning for further study. UTIL should test 483-485 probably on Monday where a bounce or die decision will likely be made, and the broad market will follow the utilities. VIX 13.89, UTIL 490.63 and UTIL 482.94 are key market metrics for next week that will dictate market direction.

WTIC Crude Oil Daily Chart Pending Death Cross Falling Wedge Positive Divergence

The fabled death cross (red circle) is about to occur for oil, probably tomorrow. A death cross is when the 50-day MA stabs down through the 200-day MA signaling bearish times ahead. A golden cross is when the 50-day MA pierces up through the 200-day MA signaling happy bullish times ahead. Seasoned technicians and chart readers pay little attention to these two patterns, they are more for the novice talking heads to tout to sell newspapers and television ad time. In fact, what typically happens is that the stock or index will tend to bounce when the death cross occurs, or, sell off when the golden cross occurs. However, over the intermediate term, a few months out, the crosses do tend to properly indicate the path forward.

And crude follows the typical scenario. The death cross did not technically occur as yet since the 50 is 4 pennies above the 200 still yet but it should cross tomorrow, Monday at the latest. The green lines show positive divergence wanting to see price move higher in this daily time frame. Bring up a weekly chart and note the 200-week MA at 91.95, a big-time over 2-year support line for oil. The anticipation is that price will bounce due to the possie d on the daily, and the 200-week MA will hold, in this near-term, but the recovery price move should only result in a sideways move through 92-96 for another month or so. Thus, if a nimble long trader you can try a quickie long trade, or, if you are losing confidence in oil and want to exit, you can exit on the bounce. The weekly chart indicators are open to lower prices. The current projection is that after the bounce and sideways behavior, into 2014, oil should come back down and collapse through the 200-week MA spoiling the 2-year plus positivity and confirming a global disinflationary and deflationary period ahead, exactly what the majority of traders do not even consider a remote possibility, and exactly what Chairman Bernanke is trying to avoid with 5 years of obscene money printing. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 11/30/13 at 8:05 AM:  The death cross occurs as expected during the Friday, 11/29 session. Oil pops off the positive divergence hitting 93.90 intrasession then closing at 92.78.

SPX Daily Chart Overbot Rising Wedge Negative Divergence Upper Band Violations

Traders, analysts and pundits all say buy stocks with both hands. Fed big-wigs Greenspan, Bernanke and Yellen all say there are no asset bubbles in markets. The Dow is over 16K, SPX above 1800 and Nasdaq over 4K. As Timbuk 3 sings, 'the future's so bright, I gotta where shades'. The blue rising wedge pattern continues, appearing like an alien spaceship lost from the History channel. There is a tiny bit more space available for price in the apex of the wedge. Note how price bounced off the bottom rail of the wedge. The market bulls know that it's ovah, as Keystone's friends in the Bronx would say, if price drops under the lower blue trend line. Bulls are fine if they can stay above the trend line. The price failures from a rising wedge can be quite dramatic. The red lines show negative divergence wanting to see a spank down, however, the RSI and money flow are trying to squeeze out a little more upside juice. 

The upper standard deviation band has been violated twice over the last couple weeks so the door is open for a move to the middle band, the 20-day MA at 1781.08, and the lower band to 1746. The 50-day MA is 1740.44 moving higher. There is strong horizontal support at 1745 as well so there is a strong confluence forming at 1745-ish that may act as a magnet moving forward. The small brown circles show how volume slides lower for the last month as price continues to make new highs. So even though the SPX is now above 1800, traders are showing less interest. Everyone must be looking around to see who the bigger fool is, but only see a mirror.

Projection is a spank down any day forward. The RSI and money flow may create a couple day jog move, which would be in concert with potential prints inside or around the tip of the apex of the wedge, however, the projection is lower. As stated above, the failures from rising wedges can be quite dramatic. Friday is a shortened session, light volume and the most bullish day of the year, so a sideways shuffle into Monday and Tuesday is a reasonable expectation. Traders are likely taking comfort in turkey and stuffing for now, but next week they may take the turkeys place, walking to the stump out back and laying their heads down. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 11/30/13 at 8:01 AM:  Price prints inside the apex of the rising wedge during Friday's shortened session. What happens next?

SPX 30-Minute Chart 8/34 MA Cross Sideways Channel H&S

The markets are on idle during the holiday week, the machines nudging price from 1803 up to 1808, then back down to 1803, and so on, through the sideways brown channel. Moving forward, bulls win above 1808-1809. Bears win below 1802-1803. The 8 MA is below the 34 MA signaling bearish markets for the hours ahead. Say what?!! The pink circles show recent teases to the bear cross but the bulls are always there to slap the bears. Even when the negative cross occurs, like one week ago, the bulls commence slapping once again within a day or two, creating a positive 8/34 cross to eliminate any idea of market downside. Is it finally time for the bears to shine? Well, the bears are not yet popping champagne corks since after all, the negative cross is only in favor of the bears by two measly pennies (1805.63 vs. 1805.65) and the indexes are printing new all-time highs. The neon green H&S is in play as long as the current right shoulder at 1807 does not move above the head. A head at 1808 and neckline at 1802 targets 1796, key horizontal support, if the 1802 fails.

The red rising wedges, overbot conditions and negative divergence create the two spank downs off the tops but the bears cannot gain any traction. The yen is weakening and the dollar/yen moves above 102, hanging around 102.15-ish all day long, so equities remain elevated. The central bankers are relentless at keeping the stock markets pumped; if it is not the Fed, it's the BOJ, or ECB, or others. ECB will likely begin a new LTRO program in the coming weeks. Nonetheless, despite the central bankers pumping the easy money crack cocaine into traders veins, the bears score a tiny victory with the negative 8/34 cross. Keep an eye on it since it will tell you market direction forward. Key support below is 1803, 1802, 1799, 1798, 1797, 1796, 1791, 1788, 1782 and 1772. If price moves above 1808 watch the thin red lines for the indicators since negative divergence remains as long as the prints do not move above the thin red lines. Well bears, is this the time Charlie Brown kicks the winning field goal or does Lucy pull the football away once again? This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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

COMPQ Nasdaq Daily Chart Nasdaq Closes Above 4K First Time in 13 Years

The Nasdaq closes above 4000 for the first time in 13 years. Back then price was tumbling lower after the dotcom bubble popped at Nasdaq 5K. This psychological milestone completes the trifecta in recent days with the Dow closing above 16K, the SPX closing above 1800, and now the Nasdaq above 4K. Everything is coming up roses for the bulls. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

SPX 2-Hour Chart Overbot Rising Wedge Negative Divergence

The 2-hour is rolling over to the downside receiving negative divergence smack downs (red arrows). Early last week, with the first spank down, the histogram remained long and strong and wanted to see another price high, so price obliged and came up for another high. The two top prints are lofty. The negative divergence is in place across all indicators and for both tops, creating both spank downs. The RSI and ROC are now weak and bleak wanting lower lows. Stochastics have not even dropped from overbot levels yet, it will have a long way down to move. Price is at the top rail of the blue channel, an ideal place to move back to the lower channel rail. The rising wedge also peaks at this afternoon's top. It looks good for the bear's, but if Chairman Bernanke shows up on the floor of the NYSE tomorrow and starts passing around envelopes with easy money inside, of course this juice will help maintain price buoyancy. The expectation is for a move to the lower channel rail at 1788-1794. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

SPX 30-Minute chart 8/34 MA Cross Overbot Negative Divergence H&S

The bulls will not allow the bears to shine. There were many parameters in the bears favor today but equities floated higher. Note the pink circle. Around lunch time it was nearly a done deal. The 8 MA was about to stab down through the 34 MA signaling bearish markets ahead, but, instead, the bulls ramrodded price vertically to immediately curl the 8 MA skyward like an airplane about to crash but averts catastrophe by pulling up at the last minute. Thus, the bears receive another slap in the face and more daily torment by the bulls. The bulls continue with the positive 8/34 cross into the closing bell signaling bullish markets for the hours ahead, but, note the large price drop in the final minutes curling the 8 MA downward again. Bears got nothing until they receive a negative 8/34 cross.

The negative divergence on the hourly and minute charts has been highlighted here over the last couple days. Late-session yesterday the spank down occurs due to the red rising wedge, overbot conditions and negative divergence. Price held the 1802-ish level after the spank down and recovered today moving up into another rising wedge (highlighted on the previous 5-minute chart). The maroon lines show universal negative divergence remaining in place, and, along with the rising wedge, created the spank down to end today's session. The RSI is now printing a lower low and under the 50% level into bear territory. The blue lines show an H&S pattern now in play that will need a right shoulder but in general, the price action would be a head, or top, at 1808.50, a neckline, or sideways channel baseline at 1802, is 6.5 difference so the downside target for price is 1795.50 if the 1802 level fails.

The chart is indicative of a chart that is rolling over so lower lows and lower highs would be anticipated moving forward. Bulls will remain happy until the negative 8/34 cross occurs, which may happen tomorrow. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

SPX 5-Minute Chart Overbot Rising Wedge Negative Divergence Spank Down

The SPX 5-minute chart into the closing bell today is a great example of the expected price action out of a rising wedge. The collapse can be quite dramatic. Remember, chart patterns work the same way in any time frame, so a dramatic drop would be expected out of any rising wedge be it on a 5-minute chart, or a daily chart, or weekly, or a monthly chart. It was surprising to see the bulls keep the broad indexes elevated all day long as the textbook rising wedge formed (both the red and maroon rising wedges) and by the end of the day the bulls ran out of gas and the overbot conditions, rising wedge and negative divergence (blue lines) create the spank down. Once the lower trend line fails, it's over, or, it's ovah, as Keystone's friends in Brooklyn would say. The indicators are now weak and bleak wanting lower lows but this is only a 5-minute chart so it only helps you forecast less than one-half hour forward. Weakness would be expected for tomorrow's opening but indicators are already at oversold levels, thus, perhaps a price basing occurs shortly after the opening bell at 1800-1802, in this time frame. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.