Wednesday, April 30, 2014

Keystone's Midday Market Action 4/30/14; EOM; FOMC Rate Decision; YELP

Fed Chair Yellen has received the tablets down from on high and the FOMC rate decision answer is about to be distributed to the minions at 2 PM within the hour. The expectation is for the Fed to continue with an additional $10 billion taper of QE moving forward. No surprises are anticipated. The comments on how winter weather may have effected the economy will be key. Today is EOM. April began at 1872.34 so the bulls have another positive month planned unless the bears growl over the next couple hours. SPX is currently printing at 1880.

Keybot the Quant is long. The algo identifies copper and financials as the two key market drivers moving into today. JJC 37.50 is key and price stays under and collapses under 37 showing copper in clear retreat making bears very happy. This action helps create a lid on the market upside. XLF is 21.91 remaining elevated above the key 21.80 level the algo identifies as the bull-bear line in the sand. Equity markets will sell off if XLF drops under 21.80. Market bulls are fine if XLF stays above 21.80. The banks will respond to the FOMC decision. The dollar/yen is 102.12 and the euro is running strongly higher at 1.3866. Thus, the dollar/yen currency pair would be expected to cause weaker equities but it is not since the dollar is weaker due to the stronger euro and the weaker dollar is creating the bulk of the move lower in the dollar/yen rather than a stronger yen that would create more market weakness. WTIC crude drops under 100 to 99.59. The 10-year yield is 2.666%. The VIX is under 14 helping bulls.

Note Added 1:37 PM:  The standard deviation bands on the SPX 30-minute chart are squeezing in real tight now (reference previous chart) building to a crescendo as the scroll is unrolled and the masses receive the Fed answer in 20 minutes time. The tension mounts. SPX 1881. XLF 21.93 bulls are keeping the banks well bid. VIX 13.66. TRIN 1.04 neutral at 1.00 not knowing which side to choose.

Note Added 2:10 PM:  At 2 PM, the FOMC Rate Decision is to continue with an additional $10 billion QE taper as expected. The decision was unanimous and the Fed says economic conditions are picking up after the winter slowdown. The Fed is quick to say that low rates will continue as far as the eye can see after QE ends. The Fed remains on target to end QE in the September-November time frame. The Fed has gone to great lengths to back track on Yellen’s mistake about the first rate hike occurring six months after QE ends so targeting eight or more months would point to May-July 2015 for the first rate hike; about one year or so from now. Equities take the data in stride and are unresponsive, just like Bruce the bloodhound that lays on the living room floor. SPX 1881. Gold is flat at 1294. VIX up a touch to 13.78. The 10-year yield does not move at all at 2.664%. XLF 21.96 so banks remain strong keeping equities elevated. TRIN falls to 0.96 four pennies on the bull side but call it neutral. Dollar/yen dead flat at 102.18.

Note Added 2:16 PM:  Markets are exactly where they were before the Fed announcement. Everyone is standing around looking at each other. Now what? The tight bands on the 30-minute charts for SPX, VIX and XLF are squeezing in tighter and tighter. The 15-minute and 10-minute charts have tight bands as well. Equities may decide on a move in the coming minutes, over the next one-half hour, and run with this directional move for the next day or so. The session may end with a wild finish.

Note Added 2:34 PM: The SPX price is testing the 1882 resistance so bounce or die. Next resistance above is 1884 and it is stronger resistance than the 1882. The 1878 is strong support. The Nasdaq turns positive.

Note Added 2:54 PM:  Bulls are pushing higher with XLF moving towards 22 and VIX printing the lows at 13.35. SPX is attacking the 1884 resistance; the bears last stand. Oddly, the TRIN is 1.06 on the bear side; bulls will need to see the TRIN fall under 1.00 and drop lower.

Note Added 2:57 PM:  Bulls overtake the strong SPX 1884 resistance so next target resistance is 1891. Bears will need to push price under 1884 immediately, now, or they are going to sit back and watch more upside occur into the 1890's.

Note Added 3:07 PM:  TRIN 1.21 now firmly in the sell camp despite the move higher in equities. XLF 21.95. VIX 13.47. SPX 1882 so the bears are mustering up all courage possible to hold the 1884 resistance at all costs. SPX 1900 is likely on tap if bulls close above 1884.

SPX 30-Minute Chart 8/34 MA Cross Tight Bands

The 8 MA is above the 34 MA on the 30-minute signaling bullish markets for the hours ahead. The FOMC Rate Decision occurs within the hour and the standard deviation bands are squeezing in for a big move one way or the other (green oval). The red lines indicate negative divergence which wants to see lower prices in this time frame but anything can happen considering the Fed decision.

Today the bears sent the SPX lower to curl the 8 MA downwards but the bulls are roaring back negating any hopes of a negative 8/34 cross. Bears need the 8/34 cross or they got nothing. S/R is 1891, 1884, 1882, 1878, 1874. April began at 1872.34 and today is the last day of the month, EOM, so the bulls will print another positive month unless price is driven lower over the next couple hours. 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 9:18 AM on 5/1/14: The bulls win out yesterday keeping the 8 MA above the 34 MA and also the tight bands are squeezing out a vertical move higher in this 30-minute time frame. This new thrust may last a couple days which would take stocks higher into the weekend, however, markets remain very susceptible to news flow. The Ukraine situation continues to deteriorate and the Monthly Jobs Report is tomorrow morning. SPX price stalled at the strong 1884 resistance but any move up through 1884 targets the 1891 level next.

Tuesday, April 29, 2014

Keybot the Quant Turns Bullish

Keybot the Quant flips back to the bull side at the opening bell today at SPX 1874. The financials are stronger giving the bulls the nod. This whipsaw is not particularly surprising considering yesterday's very odd and rare price behavior. Stay alert for a whipsaw back to the bear side today or tomorrow. The bears likely need both JJC under 37.50 and XLF under 21.80 to place the algo in position to go short again. Copper, financials and semiconductors all remain in the bull camp creating market lift.

More information is found at Keybot's site;

Keybot the Quant

Note Added 10:50 AM: The drama continues. JJC 37.50 on the dot. Bears are trying to stop the market upside. Whichever way copper pivots from here the broad equity markets will follow.

Keybot the Quant Turns Bearish

Keystone's trading algo, Keybot the Quant, flips bearish at SPX 1859 yesterday afternoon. Financials, semi's and volatility sent markets lower but the rise in semi's and drop in volatility late day created the rally into the closing bell. As always, stay alert for a whipsaw especially with S&P futures pointing towards a strong start for today. Bulls need XLF 21.80 to confirm the rally and likely have Keybot flip back to the long side. Bears need SOX under 567.10.

More information is found at Keybot's site;

Keybot the Quant

Monday, April 28, 2014

Keystone's Morning Wake-Up 4/28/14; Russia Sanctions; Pending Home Sales; HLF; BWLD

The bears receive downside fuel with weaker retail stocks. Bulls need RTH above 58.95 to receive the upside nod. Bears need either XLF under 21.77, JJC under 37.47 and/or VIX above 14.75 to receive downside juice. Keybot the Quant remains long. Bears need at least 2 of the 3 parameters (XLF, JJC, VIX) to turn bearish to create the conditions for the algorithm to go short.

Watch the VIX 200-day MA at 14.40 a critical bull-bear market signal. VIX is at 14.06 favoring bulls by 34 cents. Bears need VIX above 14.40, and especially 14.75, or they got nothing. The BPSPX remains on a market sell signal (see this morning's chart for further study). A Dow Theory non-confirmation remains since the Dow Industrials cannot print new highs this year to confirm the upside in the trannies (reference this weekend's chart for further study).

For the SPX starting at 1863, the bulls need 15 points today to touch the 1878 resistance level to create an upside acceleration, a difficult task but not at all impossible. S&P futures point to a gain of from +5 to +9 for the SPX at the opening bell. Bears only need three points lower, to push under 1860, to accelerate the downside. This is the important 1859-1860 support level highlighted in this morning's chart. The 1859 is strong support and the 200 EMA on the 60-minute is 1860.48. The SPX is above the 200 EMA signaling bullish markets for the hours and days ahead so bears got nothing until they receive the negative 200 EMA cross under 1860.48. A move through 1861-1877 is sideways action for Monday.

Key SPX S/R is 1897, 1891, 1884, 1878, 1872, 1868, 1859, 1848, 1841, 1831, 1828, 1815 and 1808. Markets are not reacting negatively to the news of new sanctions against Russia today. Sanctions, schmanctions. More bluster. Bulls are fine above 1859-1860Bears will growl strongly under 1859-1860. Pending Home Sales are 10 AM. Dallas Fed Mfg data at 10:30 AM. HLF and BWLD earnings after the bell.

Will geopolitical turmoil ever matter to traders and investors? Bulls need stronger retail stocks. Bears need weaker banks and copper and higher volatility. Watch RTH 58.95, XLF 21.77, JJC 37.47, VIX 14.75 and SPX 1878 resistance and the critical 1859-1860 support to determine market direction. April began at 1872.34 so price may want to play around at this level into month-end on Wednesday. The 20-day MA is 1862.39. The 50-day MA is 1858.35

SPX 60-Minute Chart 200 EMA Cross

The SPX is above the 200 EMA on the 60-minute at 1860.48 signaling bullish markets for the hours and days ahead. Bears got nothing unless they push price under the 200 EMA. Price teased a failure on Friday but the bears did not have the oomph to push lower. Now the histogram, stochastics and money flow want to see a positive divergence bounce. The RSI and MACD line leaks lower wanting another low. The tight standard deviation band squeeze results in a sharp move lower, that penetrates the lower band so a move back to the middle band at 1873 is in play. April began at 1872.34 so this 1872-1873 level may see action as the month ends on Wednesday to determine if the month is positive or negative. The year began at 1848.36.

Key SPX S/R is 1897, 1891, 1884, 1878, 1872, 1868, 1859, 1848, 1841, 1831, 1828, 1815 and 1808. Markets are not reacting negatively to the news of new sanctions against Russia today. S&P futures are +5. Bulls are fine above 1859-1860. Bears will growl strongly under 1859-1860This 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.

BPSPX Bullish Percent Index Daily Chart Remains on Market Sell Signal

The saga with the BPSPX continues with the market sell signal remaining in place. The six percentage-point reversals are key and so is the 70% level. In January, the bears receive the six-point drop to receive a market sell signal and then in late January the double whammy sell signal when price lost 70. The bulls create a bottom in February receiving the market buy signal mid-month then the double whammy buy signal which sent equities higher.

In late March the markets top out again and in early April the BPSPX performs the six-point reversal and loses the 70 level, both about the same time receiving the double whammy market sell signal which remains in place. Bulls create a bottom at 65 so the six-point reversal is 71. Therefore, 70 is more important where a market buy signal would occur and the double whammy buy signal is 71. Bears are fine and the market sell signal remains in effect as long as 70+ does not print. 
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.

Saturday, April 26, 2014

Dow Theory Non-Confirmation Continues

The Dow Industrials continue to not confirm the upside in the Transports so the market rally remains unconfirmed for a Dow Theory perspective. At the end of last year note how each high in the Dow is confirmed by the trannies and visa versa. The joy ended on the last day of 2013. To begin this year, the Transports continue higher fueled by airline stocks and buoyant railroads. The double purple circle shows the trannies printing another new high but the Dow ran out of gas unable to confirm. Equity markets sold off creating the February bottom. The Transports were printing new highs again in March and this month. The Dow recovers as well and teased a new high in early April, actually printing a new intraday all-time high so the Dow Theorists threw confetti and began blessing the market. This only lasted a few minutes, however, since price collapsed that day and the Dow continues to non-confirm.

Trannies got whacked yesterday -1.6% now a couple hundred points off the recent highs. Market bulls need the Dow to start printing new all-time closing highs above 16.6K to keep the rally party going. 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.

QQQ Nasdaq ETF Daily Chart Head and Shoulders Expansion Pattern

The Nasdaq head and shoulders is receiving a lot of attention by arm chair technical analysts these days. The brown lines show the H&S pattern in play with head at 91 and neckline at 84 which will target 77 if the neckline fails. Price is printing the right shoulder currently so watch to see if the 50-day MA at 88.39 serves as a ceiling for the right shoulder, or not. The H&S remains in play as long as the right shoulder remains below the head at 91. If price prints above 91 a new upper range will open up.

Price is nestled between the 20-day MA at 86.72 below and 50-day at 88.39 above. The move from this bracket will provide a hint on the preferred direction forward. Price continues to print lower lows and lower highs after the peak in early March and is forming an expansion pattern that would ultimately target the lower H&S target. Thus, in a nutshell, the H&S pattern would be nullified with a move above 91 but the downside target of 77 will be in play if price loses 84. The bears need to hold the 50-day MA resistance ceiling and 89.5-ish resistance, otherwise, the bulls will gain upside strength. 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 Chart Sideways Symmetrical Triangle Upper Band Violation Negative Divergence Developing

Traders are tripping over each other to buy utilities and consumer staples stocks each thinking they are smarter than the other hiding out in high dividend and safety plays in case there is any broad market downturn. If the markets head south, as is expected moving forward with the stock market already at a multi-year top or placing the top within a month or so, nothing will be safe. All sectors and stocks will be beaten. Utilities rolling over to the downside are typically a bad omen for stocks so the top in 2013 was very ominous. However, the Fed, BOJ and other central banker intervention continues to overrule any negativity.

Utilities begin launching in December and catapult from 475 to over 550 in less than four months, a huge +16% upside orgy. The sideways symmetrical triangle pattern targets the 560 level (490 breakout plus 70 handles for the vertical side of the triangle equals 560) so price is already close enough for government work. Stochastics, money flow and the histogram are all topped out and ready to give up the ghost. Ditto the RSI and MACD line over the one year time frame, however, in the short term, on this weekly basis, the RSI and MACD line want to see some further highs in the week or three ahead.

Volume is decreasing as price continues the parabolic rise. Price has violated the upper standard deviation band so a move back to the middle band at 511 and rising is in play. Keystone follows the weekly trend by comparing the current print to the print 15 weeks ago and bulls are completely in charge with a continuing uptrend. The 50-week MA is also important but price is well above this 500 level as well. In a market downturn, all those running into utilities right now for safety and a dividend will likely become very disappointed. A price drop to 500-530 will negate the joy of a dividend.

Price has momo so utes need a couple-few weeks to top out and the 560 remains in play but the expectation is for a top and roll over to the downside sometime over the next month. Utes appear too far extended to buy long and are not yet topped out to go short. 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.

Friday, April 25, 2014

Keystone's Midday Market Action 4/25/14; Consumer Sentiment

Consumer Sentiment is a key market metric and the University of Michigan number is 84.1 the best level since last summer. Typically, higher gasoline prices will dampen the mood but instead folks remain optimistic. Ukraine schmoocraine. Weak housing data, no worries. AMZN stumbling. F drives into a ditch this morning. No worries. Complacency rules. Now analysts say stocks like GM, F and IBM are a 2015 story when only a month ago they said buy with both hands since they will catapult to the moon in short order. The market circus continues. Yesterday was a mixed market day with the Dow printing a very rare flat day at zero cents gain and loss; not seen since the 10035.34 print on 12/24/01, over 12 years ago. The secular bear cycle remains in play for the 18-year cycle from 2000-2018 so perhaps this action provides a hint that the Dow has a meeting planned for 10K-12K over the coming years to finish the most reliable 18-year bear cycle.

Looking at today, the theatrics continue. Equities take on a sour tone because of Ukraine turmoil with traders finally paying attention to geopolitical events. Keybot the Quant remains bullish. The retail sector and copper help create the recent boost in stocks. Watch RTH 58.96 and JJC 37.46. RTH collapses back into the bear camp today but copper remains bullish, respectively. So retail sector weakness is creating broad market weakness. The VIX climbs higher to 14.41 one penny above the critical bull-bear level at the 200-day MA at 14.40. The VIX will lock in market weakness ahead if it stays above 14.40. Keybot is currently identifying VIX 14.75 as the bull-bear line in the sand a tougher criteria. Keybot is also watching XLF 21.77 now at 21.87 creating bullishness. Equities will take a strong leg lower if the banks fail at XLF 21.77.

This morning's charts highlight support and resistance levels. The SPX 1858-1860 level is key and the 20-day MA is at 1862.43. If the 20-day MA fails, stocks will likely accelerate lower. The BPSPX is 68.20 remaining on a market sell signal. The bulls need BPSPX above 70 to receive a market buy signal. Sunday is a Bradley turn day so a market inflection point is expected give or take a few days so the Bradley may be identifying a near-term market top. A new moon occurs on Monday at 1 PM and equities are typically weak moving through a new moon. The new moon also offers an opportunity to initiate military conflicts since the side with the superior night vision technology wins. Ominous timing considering the Ukraine turmoil.

Watch VIX 14.75, XLF 21.77 and JJC 37.46 to determine market direction. Watch the 20-day MA at 1862.32. Whoa, as this is typed, the SPX is 1862.10. Failure. Hold on to your socks. This 1858-1863 support level is critical as discussed this morning.

On trading, Keystone took profits in FUEL the other day and bot HERO for a long position. HERO already bounced and Keystone took profits exiting the position. Also bot FUEL reopening a long position as it drops again. Keystone also took profits on the WLT trade exiting that position. The ARO, WLT, FUEL and HERO plays all remain attractive on the long side going forward. In a strong market downturn these stocks should hold up better since they are already bludgeoned. The positive divergence on the weekly and daily charts should aid the recovery in these bloodied stocks and push them sideways to sideways higher for weeks to come. Keystone also continues to add SJB, JGBS, MGPHF and SSNI. Caution is needed since these plays are thinly traded. All of the tickers listed are long plays (SJB is an inverse against HYG so is actually bearish). Keystone continues to hold and add inverse ETF's against the broad market since a multi-year top is likely forming now, or is already in place, or will top out within the next month or two.

Note Added 11:10 AM: VIX is 14.66 very near the 14.75 bull-bear line in the sand that will add bear fuel to markets. XLF is 21.84 remaining above the 21.77 bull-bear line in the sand. SPX is 1862.04 losing the 20-day MA at 1862.32 but this fight may continue a short while. Since the VIX and XLF are not green-lighting the bears, the SPX should recover. Bears need either VIX above 14.75, XLF under 21.77 and/or the SPX under 1860-ish, or they got nothing.

Note Added 11:41 AM: Equities recover off the lows. The dollar/yen is 102.06 refusing to give up the 102 level so this helps the bulls maintain market buoyancy. The BOJ is there supporting the stock market in collusion with the Fed. Bears need a stronger yen (dollar/yen under 102), higher volatility, lower financials and lower copper, or they got nothing. The bulls maintain the 20-day MA support and bounce. So, nothing to see here, move along, move along. Bears need to eat a big lunch so they have energy to make another push lower. They do not have the oomph so far today to create any market damage. The 10-year yield is 2.65% showing that traders continue to prefer the perceived safety of Treasuries rather than risky stocks.

Note Added 1:33 PM: Status quo. Bulls walk around with a feather in their cap since the SPX remains above the 20-day MA at 1862.37, XLF above 21.77, JJC above 37.46 and and VIX remains under 14.75. However, the bears are trying to get a toe-hold and create negativity with the VIX above the 200-day MA at 14.40. VIX is now printing 14.09 nine pennies on the bear side causing market weakness. Since the VIX is at the 200-day pivot use this as the key metric for the short time ahead. Market bulls win if VIX drops under 14.40. Market bears win if VIX stays above 14.40 and win big above 14.75. Dollar/yen is 102.14 so the weaker yen (from 102.06 up to 102.14) keeps stocks buoyant.

Note Added 1:43 PM: The SPX comes down for another look at the 20-day MA and bounces. Bears did not eat a big enough lunch since they do not have energy. It's probably do it or die time for bears today. If they do not push lower then the bulls will likely take the ball and run stocks higher into the closing bell. The VIX 14.40 level will tell you the story. VIX 14.48.

Note Added 1:46 PM:  VIX 14.41 bears holding on to the 200-day MA at 14.40 by one penny. It's do it or die time. Bears must bounce VIX and send it higher to begin market selling carnage to end the week. Bulls must flush the VIX lower to catapult markets higher into the closing bell. High drama ...... VIX is stuck at 14.41, blow on it and see which way it goes.

Note Added 1:49 PM:  Here it is for all the marbles. VIX exactly at 14.40; whichever way VIX pivots the markets will move the opposite way. SPX is at 1864.75. The tension mounts....

Note Added 8:14 AM on 4/26/14: Bears could not keep the VIX above the 200-day MA so the bulls are happy. The bulls also close the SPX out above the 20-day MA and above the 200 EMA on the 60-minute. The bears, however, did close the Dow under its important 20-day MA.

SPX 60-Minute Chart 200 EMA Cross Downward-Sloping Channel

The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead (scroll back a couple messages to study that chart). The SPX is above the 200 EMA on the 60-minute at 1860.34 signaling bullish markets for the hours and days ahead, thus, bears need to push price under 1860.34 to pop the champagne corks. Marry the 1860 level with the confluence of support at 1858-1859 on the daily chart and the 1858-1860 level now takes on huge importance. In addition, the critical 20-day MA is 1862-1863. If the 20-day MA fails the 1858-1860 support will likely fail. Bulls are fine above 1860-1863. Bears win and will growl strongly if 1858-1860 fails.

Note the W pattern bottom that targeted 1875 which was easily attained. The red rising wedge and negative divergence creates the top and spank down three days ago. Price is making lower lows and lower highs in this time frame so watch to see if the downward channel is maintained. The indicators are weak and bleak indicating a preference to see price move lower for a few candlesticks which would be for a few hours time. It appears that it may be fate for price to test 1858-1860 support, or more broadly 1858-1863 support, where a critical bounce or die market decision will be made. The SPX is currently printing 1866.98 at the lows of the day with a LOD at 1866.94.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 6:46 AM on 4/26/14: The SPX ends the week at 1863.40 and the 200 EMA on the 60-minute is 1860.48. The 20-day MA is 1862.39. So the bulls manage to close above these two critical support levels to receive a feather for their caps.

SPX Daily Chart Fibonacci Retracements Potential Diamond Pattern

The SPX continues sideways through 1820-1890 for almost three months and more specifically 1840-1890 for the 2-1/2 months. Key S/R is 1897, 1891, 1884, 1882, 1878, 1874, 1872, 1868, 1859, 1855, 1848-1849, 1841, 1831 and 1828. The 20-day MA is 1862.75 and 50-day MA is 1858.49. April began at 1872.34. There are only three days remaining in the month to determine a positive or negative month. The year began at 1848.36. For the big rally in February-March from 1740 to 1897, the 50% Fib retracement was 1815 exactly where the bounce occurred two weeks ago. For the rally from 1815 to 1883 over the last few days, the red lines show the Fibonacci retracements. The 32% Fib is 1858, 50% Fib 1850 and 62% Fib 1842. Note how the Fib's line up with the S/R above so this creates strong magnets for price at 1858-1859, 1848-1850 and 1841-1842.

The red lines show the negative divergence and rising wedge for price that created the top and spank down to begin April. Price is consolidating sideways currently and hinting at a diamond pattern. If a diamond, price will drift down towards 1830-1850 then back up to 1850-1870 then be at the right edge of the diamond at 1850-ish for a critical up or down decision in May. Note the selling volume days far outweighing any bullish days. Equities are tired and running out of gas. The brown circles for volume clearly show distribution taking place with the so-called smart money handing off the bag to Joe Sucka. This is why the hype on television is maintained so funds can pump and dump stocks to the greatest extent before markets roll over.

Equities remain weak as this article is written. The SPX is 1870.39 down 8 points on the day. Watch the support at the 20-day MA at 1862-1863 since if this is lost price will likely accelerate lower. A test of the first Fib retracement at 1858-1859 should be in play. Overall, the projection is for sideways to sideways lower stocks for the weeks and months to come. 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.

HYG High-Yield Corporate Bond Fund Weekly Chart Upward-Sloping Channel Rising Wedge Overbot Negative Divergence Upper Band Violation

If in high-yield, it is time to run for the hills. High-yield instruments remain the darling of investors but the weekly chart shows that this bull parade has gone on long enough. The red rising wedge, overbot conditions and negative divergence (red lines for the indicators) all want to see a spank down and lower prices moving forward. In addition, price continues to violate the upper standard deviation band which will require a move back to the middle band, the 20-week MA, under 93, at a minimum. Price is at the upper rail of the blue rising channel so a move to the bottom of the channel at 92 is easily in the mix as well as a move down to 90-91 the bottom band.

Big shots like Warren Buffett continue to say there are no bubbles in markets. High-yield is a bubble about to pop. Corporations may have lots of cash, that is being used for buybacks, however, they have taken on huge debt as well and the net effect over the last few years is indebtedness so do not let the numbers fool your eyes. A corporate debt crisis can very likely provide the fuel for the next financial crisis that may only be a stone's throw away. Watch your wallet.

The bears were ripped off last summer with the indicators wanting lower prices to continue after the May 2013 top in high-yield but the Fed's easy money is too powerful. Note the volume dropping off ever since the top early last summer. It is time to play 'Taps' for HYG and high-yield instruments. This may sound like blasphemy since high-yield has provided the mother's milk of higher markets over the last couple years but all good things come to an end. HYG can be shorted moving forward. Keystone holds SJB on the long side, an inverse ETF that moves opposite of HYG, so obviously the SJB chart is the mirror image of HYG above showing a falling wedge, oversold conditions and positive divergence looking for a bounce and multi-month recovery (caution is required since SJB is thinly traded but there are many ways to short the high-yield area including options).

Projection is for high-yield to roll over and move sideways to sideways lower for the weeks and months to come. 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.

Wednesday, April 23, 2014

SPX 30-Minute Chart 8/34 MA Cross

The 8 MA remains above the 34 MA on the 30-minute signaling bullish markets ahead. However, the bears are driving the 8 MA downwards and are trying to stab through the rising 34 MA in the candlesticks ahead, perhaps on either side of lunch time. Bears got nothing unless they achieve the negative 8/34 cross.

The red lines show the negative divergence spank down off the top. RSI and stochastics were also overbot. Note the gap fill needed at the 1872 support. The indicators are weak and bleak and the RSI and stochastics are crossing down through the 50% level into bear territory so lower lows would be anticipated for a few candlesticks forward. Key SPX S/R is 1897, 1891, 1884, 1882, 1878, 1874, 1872, 1868, 1859, 1848, 1841, 1831, 1828, 1816, 1808, 1803 and 1800. 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 12:41 PM:  The bears push lower today and the 8 MA and 34 MA are converging only separated by two points or less now. The bulls are not making it easy, however, and the bulls keep the SPX flat and try to push it higher to prevent the negative 8/34 cross from occurring. The 8 MA is 1877.69 and dropping so as long as price stays under this level the 8 MA will continue lower to create the negative cross. If bulls can push price above 1877.69 and higher they will succeed in maintaining the 8 above the 34 forecasting continued bullishness in markets. The SPX is at 1877.65 so the pivot from here is key. The 1878 is also strong overhead resistance so bulls win above 1878 and bears win below 1878.

Note Added 12:45 PM: The bulls push the SPX to 1878.08 but whoops...... now at 1877.86. The fight at 1878 continues. The bears have an opportunity here but must push the SPX lower right now without delay. Each minute that goes by with the SPX at 1878 and higher means the bears are going to fold like a cheap suit and the bulls will ride on to victory.

Note Added 1:32 PM: SPX 1878.01; the beat goes on. Dollar/yen 102.33. These are the two pivot points. Both will move up, or down, together. RTH 58.97 is a key bull-bear level identified by Keybot the Quant algorithm. RTH is 58.88 on the bear side causing market negativity and placing a lid on the market upside. Bulls must go through RTH 58.97 to paint the picture to SPX 1900. Lots of drama is occurring with the 8/34 cross that remains bullish. The 8 MA is 1877.55. The 34 MA is 1876.26. Now only about a buck or so away from each other. The SPX is printing 1877.66. Bears must quit fooling around and push price lower if they want to take control of markets, otherwise, the bulls will begin to party into the closing bell. TRIN is 1.04 moving lower towards the neutral 1.00 level but has been 1.3-1.4 for much of the day representing orderly non-panic selling in equities.

Note Added 1:47 PM: BPSPX remains on a market sell signal but bulls are pushing price up to 68.80 now only 1.20 away from the 70% level that will create a market buy signal. Equities will have to make a commitment one way or the other this week as signals and parameters set up at inflection points. The lollapalooza of earnings releases will set the market tone. AAPL after the bell in only about two hours time carries a lot of clout and will either create market happiness, or sadness.

Note Added 2:32 PM: The 8 MA is 1876.83. The 34 MA is 1876.78. Five pennies difference.

Note Added 2:37 PM: The 8 MA is 1876.79. The 34 MA is 1876.77. Two pennies difference.

Note Added 2:42 PM: This is comical with the bears so close to a negative 8/34 cross they can taste it, but they cannot cross the finish line. Like a bunch of drunks laying down in a tug-o-war contest, exhausted, neither side able to pull their way to victory.

Note Added 2:44 PM: Bingo; it took the bears all day but they stagger across the goal line. The 8 MA is 1876.75. The 34 MA is 1876.76. The bears create a negative 8/34 cross which signals bearish markets for the hours ahead. See if the bears can hold the negativity through the closing bell to lock-in the bearishness moving forward.

Note Added 8:50 AM on 4/25/14: The Thursday session occurs, yesterday, and the joyousness in AAPL and FB created a happy market day albeit only for the opening minutes. Equities move flat yesterday and note the drama on the 30-minute with the 8/34 cross. It is a knock-down, drag-out, bull-bear fight to the finish with neither side willing to back down with the 8 and 34 MA dancing a sideways dance trading punches. Directly before the Friday opening bell the SPX begins at 1878.61 with the 8 MA at 1879.02 and 34 MA at 1879.05. How do you like that? The bears are holding on by a hair on their chinny chinny chin chin with a negative 8/34 cross by only three pennies predicting bearish markets for the hours ahead. Obviously, you have to wait to see separation so the winner of the 8/34 cross fight is clearly identified and the market direction forward confirmed.

Tuesday, April 22, 2014

Keystone's Midday Market Action 4/22/14; YUM; T; GILD

The bulls create another up day drinking the Fed's booze and staggering higher. The dollar/yen remains elevated at 102.60 so the weaker yen provides bull fuel. The VIX fell under 13 adding more bull fuel but is now recovering back above 13. The retail sector provides bull juice with RTH moving above the 58.97 critical line in the sand. RTH sneaks above 59 but is tentative so watch it closely. Bears need RTH under 58.97 as soon as possible which will stop the market upside. Bulls will continue moving higher if RTH stays above 58.97. XLF 21.77 remains a key bull-bear line in the sand. XLF is 22.03 moving higher today so that adds bull fuel as well.

Trannies print new highs and the Dow Industrials continue to try and print new highs to confirm the rally from a Dow Theory perspective. The Dow is coming off the highs as VIX moves back above 13 now at 16555. The Dow Theorists need closing prints above 16580 and higher to receive a confirmation for the rally. The BPSPX remains on a market sell signal but is up to 68.40 today only needing a one and one-half point more to receive a market buy signal. The put/call ratio's signal rampant complacency remaining in markets the typical behavior seen at market tops.  TRIN is 0.97 dead flat at the 1.00-ish level. For such a robust up day the TRIN should be down at 0.7 or 0.8 or lower. Interestingly, the 10-year yield is steady at 2.73% so money is not moving out of bonds into stocks; money is simply moving into stocks. Perhaps traders are buying equities with money received inside the Easter card on the weekend.

The SPX punched through the strong 1874 resistance so price immediately catpulted above 1880. Watch the SPX S/R at 1874, 1878, 1882, 1884, 1891 and 1897. The SPX all-time closing high is 1890.90 and all-time intraday high 1897.28. The SPX 2-hour chart is set up with negative divergence except for the MACD line so price should peak out and roll over to the downside at any time today and into tomorrow. YUM earnings are key after the bell since it is a global bellwether especially as a gauge for China since the Chinese are big fans of the Colonel's Kentucky Fried Chicken (KFC). T and GILD earnings are also important after the bell.

Keystone took profits on the ARO and FUEL launches today exiting both long positions. Rocket Fuel received its rocket fuel as discussed the other day. Both look good moving forward. Will look to reenter both. Also bot WLT opening a new long position. Walter has been bludgeoned but it has attractive positive divergence. Considering the market complacency think long and hard about any long position held. At least if a quick and sudden downdraft occurs in markets stocks such as ARO, FUEL and WLT should weather the storm better since they have already been beaten down.

Note Added 2:56 PM:  TRIN 0.97. VIX 12.92 under 13 helping bulls. RTH is 58.98 one single hair above danger creating market bullishness, nope, check that, RTH now sitting exactly on the critical 58.97 bull-bear line in the sand. Whichever way retail stocks pivot the broad market will follow. XLF 22.04. SPX HOD at 1884.89 holds for now. SPX is printing 1883.90 so the bears are trying to keep price under the strong 1884 S/R highlighted above.

Note Added 3:07 PM: RTH 58.91 so the pivot was lower. Bears are not going down without a fight. Some market weakness enters as retail loses the coveted RTH 58.97 level. VIX 12.96. Markets will drop more if VIX moves above 13 but will remain elevated into the close if volatility remains under 13. TRIN 0.98. XLF 22.00.

Note Added 3:13 PM: Whoa, Nellie. VIX catapults to 13.23 in an instant. RTH 58.90. XLF 22.01. TRIN 1.02 remaining flat but now favoring bears by two pennies. SPX drops under 1882 due to the weaker retail stocks and higher volatility over the last few minutes.

Note Added 4:03 PM: RTH is 58.86 finishing on the bear side creating market weakness under the 58.97 bull-bear line in the sand. XLF is 21.96 creating market bullishness above the important 21.77 level. VIX is 13.21 under 14.50 bull-bear line creating market bullishness. Watch these three stooges tomorrow. 

SPX 2-Hour Chart

The bulls move relentlessly higher. The SPX punching up through the uber strong 1874 is a stick in the bear's eye and note how price immediately catapulted above 1880. The red lines show a rising wedge now in play as well as overbot stochastics and negative divergence sans the MACD line. The short green line for the MACD line and lack of a negative cross wants price to print another high. Therefore, if it takes one to four candlesticks to roll over that is 2 to 8 hours so by the close tomorrow it is a fair assumption that equities will peak and roll over. The print at today's closing bell may serve as the near-term top.

It does not appear that price wants to go up to the all-time high at 1897.28 again but in these markets anything is game. The all-time closing high is 1890.90. HOD today is 1884.89 only six points away. SPX overhead resistance is 1874, now support, 1878, now support, 1882, 1884, 1891 and 1897. So above 1884 will open the door to 1891. The CPCE put/call ratio chart previously posted forecasts a top in markets now or the days ahead so choose your poison; the 1884-ish and 1891 levels are candidates to provide the market ceiling.

The RSI is not oversold so the bulls may create a Caligula-style orgy to test the all-time high at 1897 (pushing RSI higher) especially if a parade of blow-out earnings occur. YUM earnings after the bell are a global bellwether. Projection is for the SPX to peak before the bell today or tomorrow and roll over to the downside. 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.

CPCE Put/Call Ratio Weekly Chart Signals Significant Market Top

The rampant market complacency continues. Traders must still be drunk from Easter as they buy stocks indiscriminately fully relaxed in knowing that Fed Chair Yellen, Queen of the Doves, will always create a higher stock market forever with easy money. There is no reason to worry; simply sit back and enjoy the ride and guaranteed higher stock market forever. Of course the regular readership here knows this behavior is a contrarian signal. The rampant complacency signals a significant market top now in place or finishing up in the days ahead.

SPX 1874 is very strong overhead resistance and April began at 1872 thus the 1872-1874 resistance is a key level the bears must hold. Mixing the put/call ratios with the SPX projections, the thought would be that SPX 1874 would have a good chance of holding now and this week and that a downside move should begin at any time forward likely by the end of the month. Short positions should be steadily increased moving forward.

The weekly print is not official until Friday so the 0.47 may not serve as the final print for the week but it verifies the complacency nonetheless. Ditto the CPC put/call. The VIX is in the 13's as well another metric verifying the laissez-faire attitude of long traders. Do not be fooled by the complacency. The bulls created a market bottom days ago with 0.75 which is a cheesy bottom.

Panic and fear will be coming just as day follows night. Increasing long positions is not attractive until the panic and fear arrives. Instead, trimming back and selling off any long you are not willing to hold for several years should be performed now. The long shopping list can be fine-tuned waiting for the blood to appear in the streets above 0.80 and higher and likely far higher since it has been so long since the markets have corrected. The over 5-year rally is one of the longest in stock market history. Watch your wallet. Do not be complacent--you will regret it as the weeks play out. The time is very near where the markets go down and they do not recover perhaps for a few years before the current highs are seen 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.

Note Added 3:03 PM: The bulls come to play again and launch up through the strong 1874 resistance so price leaps immediately above 1880 and also above 1884. SPX S/R is 1874, 1878, 1882, 1884, 1891 and 1897. The bulls want to close above 1884 since it lights the path to 1891. Bears need to push price under 1884. Since 1874 folded like a cheap suit, the 1884 or potentially 1891 level are two candidates for the market top.

Monday, April 21, 2014

SPX Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 4/21/14

SPX support, resistance (S/R), moving averages and other important levels are provided for trading the week of 4/21/14. The bulls took advantage of the expected pre-holiday bullishness and drove markets higher wall-to-wall last week. Price moving above the 200 EMA on the 60-minute at 1854.78 is a major victory for bulls and predicts bullish markets for the hours and days ahead. Bears got nothing until they push the SPX under the 200 EMA at 1855.

Price peaks at 1870 last week only a couple points away from creating a positive month for April. April began at 1872.34. There are 8 trading days remaining in the month. Flying at 40,000 feet, the big picture S/R is 1897, 1891, 1884, 1878, 1874, 1868, 1859, 1848, 1841, 1831, 1828, 1808, 1803, 1800, 1796 and 1791. Flying even higher for the even bigger picture, 1897, 1874, 1848, 1841 and 1803 are the uber-important support and resistance levels. Therefore, watch 1874 like a hawk today. The 1848 number is the strongest S/R level on the entire list and the starting number for the year, thus, very basically, bulls are well in control above 1848 while bears will take over the steering wheel sub 1848.

For Monday starting at 1865, the bulls need to touch the 1870 handle and bingo, an upside acceleration will occur. The bears need to push under 1857 to create a downside acceleration. A move through 1858-1869 is sideways action to begin the week. The 20-day MA is 1858.51 and serves as a major bull-bear line in the sand for early this week. The 50-day MA at 1851.16 is also key moving forward. Volume may be light as traders nurse a percolating stomach full of ham, beer, eggs, peeps, chocolate and jelly beans.

1897 (4/4/14 All-Time Intraday High: 1897.28) (4/4/14 Intraday High for 2014: 1897.28)
1891 (4/2/14 All-Time Closing High: 1890.90) (4/2/14 Closing High for 2014: 1890.90)
1884 (3/21/14 Intraday Top: 1883.97) (3/7/14 Intraday Top: 1883.57)
1878 (3/7/14 Closing High: 1878.04)
1872.34 April Begins Here
1869.63 Previous Week’s High
1869.63 Friday HOD
1865.09 Thursday Pre-Holiday Close – Monday Starts Here
1858.51 (20-day MA)
1856.72 Friday LOD
1854.78 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
1851.16 (50-day MA)
1851 (1/15/14 Intraday Top: 1850.84)
1849 (12/31/13 Intraday High Top for 2013: 1849.44)
1848.36 Trading for 2014 Begins Here
1848 (1/15/14 Closing High: 1848.38) (12/31/13 Closing High for 2013: 1848.36)
1832.29 (20-week MA)
1830.62 (100-day MA)
1815.80 Previous Week’s Low
1814 (11/29/13 Intraday Top: 1813.55)
1812 (12/9/13 Intraday Top: 1811.52)
1809 (12/9/13 Closing Top: 1808.37)
1807 (11/27/13 Closing Top: 1807.23)
1799 (11/18/13 Intraday Top: 1798.82)
1798 (11/15/13 Closing Top: 1798.18)
1797.89 (150-day MA; the Slope is a Keystone Cyclical Signal)
1779.02 (10-month MA; a major market warning signal)
1775 (10/30/13 Intraday Top: 1775.22)
1772 (10/29/13 Closing Top: 1771.95)
1766.19 (200-day MA; not tested for 1 year extremely odd behavior)
1752.27 (12-month MA; a Keystone Cyclical Signal) (the cliff)
1746.58 (50-week MA)
1733 (10/17/13 and 1018/13 Gap-Up: 1733.15-1736.72)
1730 (9/19/13 Intraday Top: 1729.86)
1726 (9/18/13 Closing Top: 1725.52)
1710 (8/2/13 Intraday Top: 1709.67)
1687 (5/22/13 Intraday Top: 1687.18)
1669 (5/21/13 Closing Top: 1669.16)

Note Added 9:52 AM: The bulls push price higher to test the strong 1868 overhead resistance, and punch up through. This opens the door to a test of the 1872-1874 area unless the bears can immediately spank price lower under 1868.

Note Added 9:54 AM: SPX 1867.64...1864.67 .... 1867.93... a fight at 1868 S/R begins the week.... 1868.33 ....

Note Added 10:04 AM: Leading Indicators beat at +0.8% providing a market boost. SPX jumps through 1868 resistance, now support and attacks the 1870 handle. If 1870 plus prints, price goes to 1872-1874 for a major decision. Above 1874 and a test of the all-time highs is very likely. Bears have to hold the fort at this critical 1870-1874 level and push price lower.

Friday, April 18, 2014

Keystone's Morning Wake-Up; Good Friday; US Markets Closed Until Monday

US markets are closed today in observance of Good Friday. Easter is Sunday. Markets reopen on Monday. This week results in a strong upside market move negating the downside action the previous week, however, on far lighter volume. The MS and GS earnings pre-market yesterday set the happy tone for financials which in turn set a happy mood for equities. SNDK earnings were better than expected so this pumps the chip stocks. Semiconductors catapult higher providing bull juice and slapping the bears in the face. The energy sector is the new favorite son jumping over +3% this week.

The 10-year yield pops 8 basis points to 2.73% settling at 2.72% representing a risk-on trade. Money flows out of notes and bonds (creating lower prices for Treasuries and correspondingly higher yields) and into stocks. A back kiss of the sideways triangle on the TNX daily chart (scroll back a few pages or type TNX into the search box at the right) at 2.67%-ish was expected, which creates a bounce, or die pivot, and yield decides to rocket launch higher back inside the safety of the sideways triangle. Looking at that chart, which shows the death cross, note how yield tagged the top of the triangle at 2.73% and fell. The range is 2.67%-2.73% of the triangle so note and bond bears, inflationists, will cheer for 2.73% and higher. Note and bond bulls, deflationists, will cheer for a drop under 2.67% again. The range keeps narrowing skinnier and skinnier to 2.68%-2.72%, then 2.69%-2.71%, and bingo, a decision has to be made next week for the 10-year Treasury.

The US and European docile approach to Ukraine causes traders to remain complacent concerning geopolitics. Apparently, Putin will be allowed to take East Ukraine since the West does not have the will to defend the region. Putin threatens to cut off natural gas supplies creating a wild +5% pop in natty gas. He says he will wait a month, however, jerking the string of the natty gas puppet any way he pleases. One-third of Europe's energy needs come from Russia.

The broad markets end mixed for Thursday. The Nasdaq and RUT small caps ran higher; biotech backed away but is up strongly for the week. IBM creates a drag on the Dow contributing 50 negative Dow points (take any Dow component point move and multiply by a rule of thumb of 8 to note its affect on the Dow). AXP and UNH blue chips also created weakness. The XLF stays above 21.77 so higher financials, along with higher semi's and lower volatility, all join to create a triumphant market rally this week.

The bulls are pushing copper higher already laying ground work for next week so start watching the 'other yellow metal' more closely in the days ahead. The SPX dropped into the 1858-1859 support zone that the bears needed and lower, but the bulls simply back tested and then ran higher to close the SPX at 1865. The SPX broke out above the 20-day MA at 1858.51. Also the 200 EMA on the 60-minute at 1854.78 which signals bullish markets for the hours and days ahead. Bears got nothing unless they push back under these critical 1858-1859 and 1855 support levels.

Bulls perform a strong comeback albeit on light volume and benefiting from the seasonal bullishness and happy talk concerning Ukraine. Last weekend the thought was raised about a wall-to-wall bull run, which occurred. The full moon was Tuesday and markets are typically bullish through the full moon nearly 70% of the time. During OpEx week the path from Tuesday to Wednesday is typically bullish. Markets are bullish the two days in front of a three-day holiday weekend. All true this time around. So seasonality favoritism overcomes the negativity associated with the up move on weaker volume. The BPSPX chart (see this morning's chart) remains on a sell signal.

On trades, Keystone added to the ongoing ARO (long retail), SSNI (long power), SMN (short basic materials) and SJB (short high-yield) long trades. ARO has to make a decision next week. Either it wants to perform a successful positive divergence bounce like JCP or will result in a crumbling mess like RSH. Note the ARO weekly chart shows a slipping money flow so some additional time, a few weeks, will be needed to place an official bottom. In the very short term, ARO should bounce from the daily chart. Also bot FUEL opening a new long position. FUEL is bludgeoned from 73 to 35 and is set up or setting up with positive divergence on the daily chart so it is sitting on the launch pad. How appropriate that its name is Rocket Fuel. A launch is expected, however, the weekly chart remains weak so in this trade timing is everything. A very short term bounce is expected then likely more weakness but FUEL should base as the weeks play out and recover higher and can likely be considered as a longer term hold moving through the year. Keystone is watching SDRL with interest for a potential long trade but give it a few more days to simmer and it can be considered next week.

Happy Easter. Stomachs are already aching percolating from a mixture of chocolate, jelly beans, hard-boiled eggs, ham and peeps.