Tuesday, January 28, 2014

Keystone's Morning Wake-Up 1/28/14; Consumer Confidence

As highlighted on the weekend charts and the SPX S/R missive, three key support and resistance levels are in play; 1788, 1781 and 1772-1775. Price played around at each of these levels yesterday and then closed at the 1781 support. Further technical damage occurs since the COMPQ (Nasdaq) and RUT small caps both lost their 50-day MA's, thus, all the major indexes are now below the 50-day MA's, a very bearish indication. Usually after a large down move, the following day is a sideways day with a downward bias, like yesterday, providing time to digest the move. Same thing on the upside. Typically a large up day will be followed by a sideways day with an upward bias.

The price candlesticks for SPX and Dow show a bull-bear fight yesterday ending in a draw with price closing in the middle of the day's range. The Nasdaq and RUT candlesticks, however, show price closing more in the lower half of the candlestick showing that the bears were a bit more in control. AAPL laid an egg last evening and is hurting the tech sector today. iPhone sales are only 51 million when everyone expected 58 million. Apple missed the boat with the screen size. Folks want less expensive phones with a larger screen size rather than a skinny screen.

The SPX hourly and minute charts are setting up with positive divergence as highlighted yesterday so a near-term bottom would be anticipated for a potential quickie long play. The SPX daily and weekly charts remain extremely weak, however, so further downside is anticipated for the weeks ahead overall. President Obama speaks tonight so a market bounce may occur due to proposed new spending for companies as well as optimism moving into the Fed decision tomorrow afternoonChairman Bernanke's stint at the Fed ends in a few short days and the decision tomorrow afternoon is his last swan song so he will likely not want to make any waves. Chair Yellen will now drive the bus.

The 100-day MA is 1764.24 and rising. The 20-week MA is 1778.25. The 200 EMA on the 60-minute is 1821.68. Keybot the Quant is short. The bears are cruising. To stop the selling, the bulls need either UTIL 494.90 or GTX 4780. The bears need SOX 522.40 to create another broad market down leg. For the SPX at 1781, the bulls need to touch the 1796 handle an upside acceleration will occur to send price back above 1800. The S&P futures are +9 but the bulls will need a bit more than that. The bears need to push under 1773 to accelerate the downside and since the important 1772-1775 would be lost, markets will be in far more serious trouble.

The BPSPX is on a market sell signal (reference the chart from a day or so ago). Interestingly, the CPCE drops to 0.53 continuing to show the ongoing complacency in markets. Even with the market drop off the top of -3.7% for the SPX, traders are sanguine about the move and have little fear of any substantial move lower from here. Bears salivate at this behavior since it hints at a slow and steady drip south for markets over time.

Durable Goods Orders are released at 8:30 AM. Case-Shiller House Price Index after that. The Richmond Fed Mfg Index is 10 AM but most importantly, Consumer Confidence hits at 10 AM and will create a market pivot point. The 2-Year Note Auction is 1 PM. The 2-10 spread has dropped to 242 basis points making the bankers sad that hoped for a steeper yield curve.

Watch UTIL 494.90, GTX 4780, SOX 522.40, and SPX 1796 and 1773 to determine market direction. Perhaps equities will find a near-term bottom (due to possie d on hourly and weekly charts) and move higher into the Fed tomorrow afternoon but the utilities, commodities and semiconductors will point the way. If UTIL, GTX and SOX remain status quo, markets will likely float along sideways all day. Monitor the 1796, 1788, 1781 and 1772-1775 support and resistance levels. In general, bulls win big above 1796. Bears win big under 1772-1773

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