Friday, May 30, 2014

SPX 2-Hour Chart Upward-Sloping Channel Overbot Negative Divergence

The bulls launch price higher on the thin holiday volume and taking advantage of the lull period until Draghi provides the ECB stimulus on Thursday. A back kiss to the top rail at 1912 support would be prudent. The indicators are all negatively diverged wanting to receive a spank down. Someone needs to tap the SPX on the shoulder and tell it to sit down.

Watch to see if the RSI can make another high to squeeze out more upside price juice, or not. Ditto the MACD line. The way the chart is now, the neggie d should hold firm and down should be the path forward likely targeting 1912-ish support at the top channel trend line where price would either then bounce, or die. The SPX prints another intraday all-time record high for four consecutive days this week now at 1921.30 as the highest print in the SPX in history. Copper turns negative today. RTH is 58.96 well above the 58.59 bull-bear line in the sand (identified by Keybot the Quant algo) so the bulls are using the retail stocks to keep equities elevated. 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 7:09 AM on 5/31/14: The bulls are relentless pounding higher squeezing out 3 more points of upside on Friday. The SPX prints a new all-time intraday high at 1924.03 and new all-time closing high at 1923.57. Firm negative divergence remains across all the indicators so the chart above remains valid and a slap down continues to be expected perhaps after Monday's opening bell. 

NYHL New Highs-New Lows Daily Chart

The green circles show the stock market bottoms when it is time to buy. The red circles show the market tops when it is time to sell. As price hits or nears the standard deviation lines the tops and bottoms are signaled. The new lows appearing on the chart in mid-December and early February identified the market bottoms. What do you think will happen going forward?

The stock market continues to make new highs at the end of 2013, and then a March top, another late March top, then more market tops into the current all-time high print in the SPX yesterday at 1920.03, while the NYHL drops. The number of new highs are decreasing and number of new lows are increasing as the stock market prints new highs and this is a multi-month trend. In a robust stock market, the number of new highs should be increasing and the number of new lows should be decreasing; the opposite of what is occurring. 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.

SPX Daily Chart New All-Time Record Intraday and Closing High Upper Band Violation

The bulls keep the party going by goosing the retail sector yesterday with RTH above 58.59. Materials, biotech and energy sectors also helped create the thrust higher. The SPX prints both a new all-time intraday and closing high at 1920.03. Price remains well above the upper standard deviation line and desperately needs to revert back down; at a minimum a sideways consolidation. The SPX is at the top trend line of the rising red wedge and negative divergence remains across the multi-month time frame (red lines). However, the bulls are creating near-term juice taking advantage of the holiday thin trading as well as the lull period ahead of when Draghi announces the ECB stimulus plan next Thursday.

For yesterday's new price high, the money flow moves flat negatively diverging not endorsing the move higher in price. Stochastics are overbot wanting to see price pull back for a rest. There is long and strong juice for the VST with RSI and MACD line so price should come back up to current levels after any pull back today through early next week. The RSI and MACD strength will likely carry stocks at elevated levels to the Draghi announcement. The expectation is for weakness to reenter markets early June since the near-term strength should not overcome the prior highs for the indicators.

Carry the red rising wedge out to two apex end points. First, use the thin red trend line for the lower part of a wedge and that will point to late June-early July where price would have to exit the wedge, and rising wedges are bearish, so a market top would be projected here at 1920-1940 within the next six weeks and more likely within three weeks. Using the two thick red lines for the rising wedge, an apex occurs out in August-September at 1960-1980 as a market top and wedge failure area. The low volume, and overbot and unagreeable indicators do not favor the latter outcome but in these markets you never know.

QE is set to taper and wind down in the September-November timeframe so stock market weakness would be anticipated by, say, September or sooner. Thus, if the markets do not top over the next month or so, the bulls may be able to keep the party going, albeit more of a sideways party, into and slightly beyond Labor Day. The monthly charts receive a new print today and May will log an up month. Near-term projection is a sideways stumble with a slight upward bias for a few days, say through 1900-1928, and then a down move should begin. Draghi would be the wild card that may keep the party going beyond late next week. Market bears got nothing unless they send retail stocks lower RTH under 58.59. BNNY is collapsing pre-market on weak earnings so this should set a negative tone for the retail sector. 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 8:45 AM:  BNNY laid an egg losing -16% but BIG beats on earnings and jumps +11% continuing to show a mixed picture for the retail sector. Consumer spending data, however, shows a decrease in April for the first time in one year. The global economy is supposed to be doing great but companies continue firing workers, consumers are spending less and structural unemployment for the middle class and poor is here to stay. The Fed makes the rich richer, however, with their easy money. Look at the top 1%. Former MSFT CEO Steve Ballmer buys the LA Clippers basketball team for $2 billion. Ballmer no doubt sends a thank you note to former Fed Chairman Bernanke and current Fed Chair Yellen on behalf of himself and all the wealthy. The rich stick together and now Bernanke is rewarded for taking care of the big banks and wealthy 1% by attending speech gigs and luncheons, sponsored by the wealthy, at $250K a pop. Yellen salivates knowing she will receive her monetary rewards as well in a few years for making the rich richer through Fed policy.

Thursday, May 29, 2014

Keystone's Morning Wake-Up 5/29/14; GDP

The palindrome SPX all-time closing high remains at 1911.91 from Tuesday. Yesterday, however, the SPX prints a new all-time record intraday high at 1914.46. Markets are typically weak through the new moon which was yesterday afternoon and interestingly, the SPX peaked above 1914 and closed under 1910. Q1 GDP is released at 8:30 AM and is expected to be negative. The first GDP read last month was a paltry +0.1% one single hair positive. GDP will set the market tone to begin the day. S&P futures are +1 as this is typed 2-1/2 hours before the opening bell.

The 10-year yield slips to 2.425%. The 200-week MA at 2.39% will act as near-term support. Traders and analysts discuss the reasons behind the drop in yields. The majority consensus, the same folks that called for higher yields this year, now say that lower yields do not indicate a weaker economy. Do you believe them? The 150-day MA slope on the RUT continues to flatten but it remains positively sloped so the cyclical bull market in stocks remains. Watch the slope of this moving average since it will identify the conception of a cyclical bear.

The BPSPX remains on a strong market buy signal. The VIX and put/calls remain low indicating that traders are complacent and without worry. The Fed tapering of QE has no impact on the stock market. The $85 billion per month QE stimulus is down to about one-half of this amount now and headed to zero in October-ish. The question is when does the market react to the slowing spigot of easy money? What is critical mass? In the prior QE's, that typically ended in June time frames, the markets would start selling off about one month ahead of time in May. Therefore, the end game for stocks should arrive by October since the program will be at zero by then, or, anytime prior to that depending on when the light bulb goes off in trader's minds that the Fed easy money will end.

Keybot the Quant is on the long side and RTH 58.58 remains a key sector and level of interest by the algo. The bulls sent the retail stocks higher and just when it looked like they would break up through RTH 58.58, which will guarantee SPX to the 1920's, the bulls folded like a cheap suit, and the RTH drops to 58.37 continuing to cause negativity and placing a ceiling on the equity upside. Bulls must attain RTH 58.58 to move markets higher. Although the bears have created a ceiling on equities, they cannot yet create downside without lower financials, copper and commodities. The lower euro, creating a higher dollar, will create lower copper and commodities. Copper is weak today.

The SPX 2-hour, 1-hour and 30-minute charts are poised to move lower technical-wise but positive news can always create a thrust higher out of left field. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets ahead, however, the SPX price is under the 8 MA at 1912-ish curling it lower for a potential negative 8/34 cross today. The bears need to create the negative 8/34 cross on the SPX 30-minute today or they got nothing. For the SPX starting at 1910, the bulls need to push up through 1914.50 and the upside will accelerate to 1920 in quick order. The bears need to push under 1907 to accelerate the downside. A move through 1908-1913 is sideways action.

May began at SPX 1884 so the bears need 26 handles of downside to print a negative month with two days remaining. Watch RTH 58.58, SPX 1914.50 and 1907, and the 8/34 cross on the SPX 30-minute to determine market direction. Watch to see if the Dow Industrials can print new all-time highs to match the Dow Transports, or not. A negative GDP is expected so the market risk appears to be to the upside since any positive print will likely send the bulls running higher today. What say you GDP?

Note Added 6:51 AM on 5/30/14: GDP is weak at -1% but the stock market ran higher. The lows were printing about 10:30 AM but a bottom was placed when the RTH moved above 58.58. Equities ran higher and did not look back pumped by stronger retail, materials and energy stocks. The SPX punched through 1914.50 so it accelerated to close at 1920. Watch RTH 58.59 in the Friday session. Bears got nothing without sending RTH under 58.59. Keybot the Quant remains long and the algo is in overbot territory. At the same time, the low VIX and CPC and CPCE put/calls verify the ongoing complacency. Traders have no worries about markets and are buying both stocks and bonds, and most anything else, without fear or concern. The low volatility across all asset classes is very odd market behavior and no doubt caused by all the Fed and other central banker intervention for the last five years. Markets may stumble sideways until Draghi brings the tablets down from on high on Thursday morning.

SPX 30-Minute Chart 8/34 MA Cross Upward-Sloping Channel Overbot Rising Wedge Negative Divergence New All-Time Intraday High

The SPX prints a new all-time record intraday high at 1914.46 but the all-time closing high from Tuesday, 5/27/14, at 1911.91, the palindrome, remains in place. The red rising wedge, overbot conditions and negative divergence create the spankdown on the 30-minute chart. The indicators remain weak hinting at lower lows ahead. Watch to see if the RSI and stochastics fall under 50% into bear territory. Money flow is under 50%. The 8 MA is above the 34 MA on the 30-minute chart for six days continuing to signal bullish markets for the hours ahead, however, the SPX drops under the 8 MA which will curl the 8 MA to the downside for a potential negative 8/34 cross today. Bears got nothing unless they receive the negative 8/34 cross.

The negative cross is anticipated to occur today but if it does not and the bulls pump the SPX above the 8 MA to keep the bullish 8/34 cross in place, the SPX is likely headed to the 1920's. If the bears can create the 8/34 negative cross and dump ten or a dozen SPX handles today, the table would be set for a potential run at 1884 to end the week tomorrow. Watch that 8 MA level at 1912-ish to determine market direction. Bulls win above 1912 and higher. Bears win below 1912 and lower. 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 7:02 AM on 5/30/14: The bears are unable to create a negative 8/34 cross. The 8 MA remains above the 34 MA so the bulls are trying to continue the happy party into the weekend.

SPX 2-Hour Chart Overbot Negative Divergence New All-Time Intraday High

The SPX prints a new all-time record intraday high at 1914.46 but the all-time closing high from Tuesday, 5/27/14, at 1911.91, the palindrome, remains in place. The 2-hour has been of interest since late last week waiting for the indicators to place universal negative divergence. Scroll back to the prior 2-hour chart for further study. Price made an equal high over the last two candlesticks and all the indicators are now negatively diverged so price receives an initial spank down late yesterday. Price may bounce as it back kisses the upper blue channel rail at 1908-1910 but the expectation is that price falls back down into the channel as a few more candlesticks print and the negative divergence exerts its force.

The teal dots show how price reverts to the mean each time it becomes overextended to the upside, like now. The channel is very reliable to identify the tops and bottoms (pink dots) so the anticipation is that price moves towards the bottom blue trend line again. May began at 1884 and will print a positive month unless the bulls can remove 26 handles over the next two days. There are three gap fills needed underneath with the first at the strong 1891 support. 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 6:58 AM on 5/30/14: The bulls squeeze out more upside juice. The RSI above was a cheesy negative divergence set up so price ran higher to more clearly place the neggie d, which it has. Negative divergence is in place across all indicators so downside is expected.

TRAN Transportation Index Daily Chart New All-Time Record Highs

The trannies keep running higher to a new all-time intraday high at 8102.44 and all-time closing high at 8075.88. The weaker euro yesterday strengthened the dollar which sent oil weaker and transportation stocks higher (but broad market lower). The airlines continue to feel love but they are flying way too high where the air is far too thin. TRAN shows a parabolic move higher over the last couple weeks. The neon blue lines show how price makes these strong vertical moves and then retracts back to the middle standard deviation band, the 20-day MA now at 7820, and rising.

The MACD line is long and strong wanting another higher high after any near-term pull back. The RSI will likely sneak into overbot territory as well so there is a bit more juice available, but not a lot. The volume is not impressive for the strong move higher. Price is extended above the moving averages and upper band so a move down to revert ot the mean is a reasonable expectation.

From a Dow Theory perspective, higher highs in trannies and higher highs in the Dow were the norm in 2013 to end the year. The trannies made a higher high in January but the Dow could not. The downtrend was strong in January but the bulls push TRAN higher to new highs in March. The Dow continued to struggle and was unable to confirm the trannies until May where both the Dow Transports and Dow Industrials are making new highs. This confirms the uptrend from a Dow Theory perspective. Alas, the drama continues since TRAN keeps printing new highs but the Dow once again lags. The bulls need to pump the Dow higher to new all-time highs so it can continue to confirm the market rally. 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.

TNX 10-Year Treasury Yield Weekly Chart Double Top H&S

The 10-year yield collapsed to lows not seen since July of last year and dominated the trading action yesterday. The vast majority of traders have been calling for higher rates for the last few years, above 3% and 4%, but with the exception of the thrust higher last summer into the end of the year, rates remain low. The interesting aspect is why? The common sense response is that the economy is far weaker than expected and traders and investors like the idea of parking money in safety. Inflationists are quick to point out that the drop in yields is a simple short-covering move (traders betting on higher yields (lower Treasury prices) give up and cover sending prices higher and yields lower). Other reasons given are that the event is capitulatory, due to technicals and even due to the relevancy of low European rates in relation to the US Treasury. The chart says the move is not capitulatory and instead should have plenty of gas to the downside (higher prices, lower yields).

The 1.4% low in 2012 serves as a head for several inverted H&S patterns. The brown inverted H&S with neck line at 2.00% targeted 2.60% easily achieved. The purple inverted H&S with neck line at 2.30% targets 3.20% which was not achieved. The bump in yields in early 2012 skews the chart so a chartist needs to become creative sometimes. A neckline at 2.20% targets the 3.00% which was the exact top. For general purposes, the inverted H&S pattern/s can be assumed to be satisfied. This leads into the double-top formation and neon blue H&S pattern currently in play. The head at 3.00% and neck line at 2.50% to keep the math simple (2.48% would be a bit more exact) targets 2.00% which is an area of solid support as well as price congestion. The 2.00% is now in play for the weeks ahead since the neck line at 2.48%-2.50% failed yesterday.

The green lines for the indicators show the positive divergence that created the 1.40% bottom and the red lines show the negative divergence that created the 3.00% top. The 20-week MA stabs down through the 50-week MA a very bearish development for yields. The 200-week MA continues to slope lower which is bearish and also provides support at 2.39%. The red lines show the indicators remaining weak and bleak. The histogram we will call flat so it has a hair of positive divergence that will help the yield bounce in the short term but the histogram can easily deteriorate from here. The stochastics are oversold wanting to see a bounce in yields but note how the move remains weak and bleak wanting to see lower lows in yields going forward.

The ADX is in the 20's and higher showing a strong downtrend in yields in 2012, that ended shortly after the bottom was placed. The trend higher in yields in 2013 was verified by the ADX until the year began when the ADX dropped to the low 20's and lower indicating that the uptrend ended. The ADX is headed higher so a few more points higher into the 20's and 30's will verify a strong downtrend for yields moving forward.

What does all this mumbo jumbo mean? The chart is bearish and sick and the projection is lower yields moving forward. A reasonable expectation is for the 10-year yield to move through 2.00%-2.60% for the months perhaps years ahead continuing to frustrate the majority of traders that expect inflation. Despite all the obscene Fed and other central banker money printing and market intervention, deflation may still extract its pound of flesh like the Great Depression. Especially since the universal consensus says deflation is a dead issue and no longer even on the radar screen. These are all the same analysts that said the 10-year yield should be 3.50%, 4.00%, or higher by this time this year. Inflation will not occur as long as wages are stagnant, which they are, and this is not expected to change anytime soon. For the monthly jobs report numbers, always pay close attention to wages since this will tell you if inflation is a concern, or not. It is not. The food inflation in the news should ebb and flow with the weather.

TLT is the big ETF winner this year while nearly everyone is sitting on the TBT boat that keeps sinking. Yields will likely slide into more of a sideways pattern moving forward. The 10-year yield is currently at 2.43%. 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, May 28, 2014

Keystone's Inflation Deflation Indicator Signals NEUTRAL Territory

(lost the post due to technical issues)

GOLD Weekly Chart Sideways Channel

Gold fell out of bed over the last couple days. Traders are not worried or concerned about any geopolitical events, not Ukraine, not deteriorating conditions in Libya, not Syria, not Nigeria, not the increasing Asian nation territorial water disputes, not the Fukishima ongoing nuclear disaster, nothing. Everything is blues skies and rosy so folks buy stocks instead of gold. Gold price is struggling at overcoming the 50-week MA and receives a spank down from this resistance. Price also fell under the 20-week MA. Both of these key moving averages are at or near the psychological 1300 level that serves as important resistance going forward.

The gold COT chart hints at further weakness in gold price so the strong 1220-1260 support area is targeted as a potential bottom in the coming weeks. The brown sideways channel will likely continue so buying gold near the bottom of the channel is a good move to ride it back up to the top of the channel. If 1220 fails, price will be down at 1180 in quick order. The 20-week MA is crossing above the 50-week MA a bullish indication. Gold will verify that up is the direction for an extended period once price moves above the 50-week MA. The current gold action is basing behavior. 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.

Gold COT (Committment of Traders) Chart

The COT reports are great indicators for commodities although the data typically lags by a week or two. The red circles show the tops in gold price and the green circles show the bottoms in gold priceGold makes two price lows over the last year; first, the price low in late June-early July 2013 and second, in January to begin the new year. Both were attractive buying opportunities.

The projection for higher gold as the year began worked out well with a strong move from 1180 to 1390 occurring at the March top. Gold fell out of bed the last couple days down to the 1260's. Ukraine, schmoocraine. The Ukraine civil war has no effect on gold price, no one appears worried or concerned about geopolitics, and Modi's election in India is also not boosting the yellow metal price. The COT is currently more consistent with a top in gold price, and the drop over the last couple days confirms this. Remember, the COT lags a week or two. Gold is not attractive to buy until the red and blue bars move closer to the zero line as the green circles in the margin show. The 1220-1260 zone is a strong prior consolidation area for gold price and may hold to create the new green circles. 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.

The chart is from Free Commitments of Traders Charts web site and annotated by Keystone. Many other COT commodity charts are provided at this useful site;

COT Charts

EEM Emerging Markets Daily Chart 6-Month Highs

The emerging markets are at 6-month highs so even Asia stocks are joining the big party after the January dip. The red lines show negative divergence across the board with a rising wedge which should create weakness 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.

DAX Germany Daily Chart New All-Time Record Highs Channel Breakout

Germany's market is at new record highs as well as the US. The DAX prints a new all-time record intraday high at 9951.90 and a new all-time closing high at 9940.82. Germany trades higher as this is typed. Price breaks out of the sideways brown channel and will need to back kiss the upper rail, and fill that big gap there, at some point forward. The red lines show negative divergence across the weekly  and monthly time frame but in the VST, the bulls create momo and the RSI and MACD line want to see higher highs, and today is printing a higher high. Ukraine, schmoocraine. The conflict has no effect on Germany's stock market. 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 Daily Chart New All-Time Highs Channel Breakout Overbot Rising Wedge Negative Divergence

The SPX prints a new all-time record intraday high at 1912.28 and new all-time closing high at 1911.91. Interestingly, 191191 is a palindrome. Last week we were watching who would win from the standard deviation band squeeze (pink lines and arrows) and the bulls win. The pink circle shows the bull and bear fight for control but the bulls won out moving from 1860-ish to 1912 over the last week, a 50-handle move and nearly +3%.

The 3-1/2 month sideways channel through 1816-1897 (brown lines) results in a breakout to the upside. The bearish red rising wedge remains in play with price nearing the upper trend line. Price has violated the upper standard deviation band so a move back to the middle band, the 20-day MA at 1884.70 and rising, is on the table. Three trading days remain in May and the month started at 1883.95. The 1884 level is also strong support so a confluence of support is in place at 1884-1891.

Negative divergence remains over the multi-month time frame (red lines) but the bulls are developing short-term momo. Stochastics are overbot. Volume remains below average and surpassed the buy days last week, however, volume is lower than the one selling day last week. Price is enjoying the jump higher from the tight standard deviation bands. The SPX needs to back kiss the 20-day MA since this is critical S/R but also since the upper band was violated. The question is does the move lower occur by Friday to tease at creating a negative month under 1884, or, does the SPX simply print a positive month for May, remaining elevated this week, and back kiss the 20-day MA next week? Markets may stumble sideways into next Thursday, 6/5/14, when ECB's Draghi will bring the tablets down from on high and tell global markets which way to go.

Overall for the weeks forward, the chart is bearish due to the rising wedge, negative divergence and overbot stochastics, however, in the VST, the bulls are creating momo so a move through 1897-1920 may occur into the first week of June. A back kiss would be needed to the brown line, the top rail of the channel where the break out occurred, at 1897-ish. If bears are going to make a run at creating a negative month for May (under 1884), they have to begin the trek lower today without delay. If markets finish flat or higher today, the month of May will likely end positive on Friday. 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, May 27, 2014

RTH Retail Sector 10-Minute Chart Overbot Rising Wedge Negative Divergence

Keystone's trading algo, Keybot the Quant, has the ability to identify the parameters most greatly impacting broad equity market direction at any point in time. Currently it is the retail sector. The bulls must move RTH above 58.61 to prove the rally is real and plans to continue for a few days this week. The S&P futures point to a strong opening. Independent of how far the stock market jumps higher, watch RTH 58.61, since if it remains under 58.61, the market upside will fade and roll over. If RTH moves above 58.61 and remains above, the bulls win and SPX will be setting its sights on SPX 1910-1930.

The overbot stochastics, rising wedge and negative divergence (red lines), want to see a spank down in this VST time frame (only 10-minute candlesticks) so today may be quite the drama around RTH 58.61. Watch RTH 58.61 since it is the rudder steering the stock market today. The dollar/yen moved up to 102, now back to 101.95, so the higher dollar/yen (weaker yen) creates stock market lift. If RTH is above 58.61 and the dollar/yen above 102, the market bulls are having a big party and the bears do not have a chance. If RTH remains under 58.61 and the dollar/yen remains under 102 heading lower, the bears will be content and the stock market will weaken. 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 9:37 AM: RTH jumps to 58.69 then 58.66. The bulls are in good shape, however, the dollar/yen is at 101.90. Watch RTH 58.61. Let the festivities and market theatrics begin for another day.

Note Added 9:39 AM: RTH 58.61. Yep, the drama is underway today.

Note Added 9:41 AM: RTH 58.63. The bulls are scratching and clawing to maintain the RTH 58.61 level. The bulls may be able to maintain this posture for this morning but as the SPX 2-hour negative divergence locks into place today (see this morning's chart), things should roll over to the downside. It will be an interesting day. Whoa, the drama is in full swing. RTH 58.60 now.

Note Added 9:54 AM: RTH 58.63. The bull-bear line in the sand is RTH 58.60-58.61. Bulls are winning by a couple of pennies.

Note Added 10:11 AM: RTH 58.58. Use RTH 58.59 as the bull-bear line in the sand (the algo constantly calculates this number and it is drifting slightly lower over time).

Note Added 10:14 AM: RTH 58.59. The drama continues for today; as the retail sector goes, so goes equities. Dollar/yen 101.97 creeping higher which keeps the bulls in good shape today.

Note Added 4:57 PM: How do you like these apples? Both the RTH and dollar/yen close at their respective pivot points, RTH 58.58 and dollar/yen 102, to delay the final drama until tomorrow, Wednesday. (Keybot started today with the RTH 58.61 bull-bear line but it moved lower to RTH 58.58 as the day played out--exactly where price ended. How does Keybot calculate these numbers ahead of time?) The SPX prints a new all-time intraday high at 1912.28 and new all-time closing high at 1911.91. This is funky; 191191 is a palindrome. For Wednesday, the market bulls win if the RTH moves above 58.58 and the dollar/yen moves above 102. The market bears win if the RTH drops under 58.58 and the dollar/yen moves below 102. Tuesday's are up 90% of the time over the last four months so this seasonality rang true today again. Equities are typically bearish moving through the new moon which is tomorrow. The new moon is the best time to launch a military strike if you have superior night vision technology. The retail sector tells the story tomorrow.

Note Added 6:07 AM on 5/28/14: To add more drama, KORS releases earnings before the bell, and are a great gauge on consumer spending, especially higher-end, and will impact the retail sector, which in turn will dictate the broad market direction. KORS may hold the key for markets and will provide the thumbs up, or down, for equities upon their earnings release.

SPX 2-Hour Chart Upward-Sloping Channel Overbot Rising Wedge Negative Divergence Developing

This is where the 2-hour left off at on Friday with negative divergence on the stochastics, histogram and money flow, but the RSI and MACD line remain long and strong in the VST wanting to see another price high before they set up with neggie d to confirm a top and pending smack down. The red rising wedge apex ends at the top rail of the upward-sloping channel in the 1903-1907 area. The thin blue upper trend line is in the 1909-1913 area.

The 1897 resistance was a target as a potential near term top but the pre-holiday light-volume bullishness drives the stock market higher. Trading should remain thin today as traders nurse hangovers from the Memorial Day festivities. The all-time high for the SPX is 1902.17 from 5/13/14 and the bulls are on target to take this out at the opening bell with S&P futures +6. Price has already violated the upper standard deviation band six days ago so a move back to the middle band, the 20 MA at 1887 and rising, is on the table. There are only four trading days remaining in the month of May which began at 1883.95 so there may be drama at this level this week.

The SPX is at all-time highs in uncharted territory. SPX S/R is 1902, 1901, 1897, 1891, 1889 and 1884. Price is set to print new highs with the rising RSI and MACD line but the histogram, overbot stochastics and money flow will create negativity. Then price will rise again where the RSI and MACD line would be expected to indicate neggie d which would open the door to a downside move. Thus, if it takes one to three candlesticks more to set up the universal neggie d for a move lower, that is two to six hours of trading time, so a projection would be that the SPX may top in today's trading. With thin volume this may be a reasonable expectation. The new moon occurs tomorrow and stocks are typically bearish about two-thirds of the time moving through a new moon.

At this juncture, the expectation is that the SPX should visit the 1884 support this week. The SPX will roll over as soon as the RSI and MACD line create negative divergenceThis 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 5:10 PM: The bulls create a new all-time record intraday high at 1912.28 and new all-time closing high at 1911.91 (a palindrome; 191191). Looking at the indicators on the 2-hour, the thrust higher early in the day created additional momo. Same-o story is in place after the upside orgy today; RSI and MACD line remain long and strong wanting another higher high (but the RSI is now overbot). The histogram, stochastics and money flow are all negatively diverged wanting lower prices now. Thus, another jog move is likely needed on the 2-hour chart; down, up, down, since the RSI and MACD line must negatively diverge to create the pending spank down. The 1-hour chart is more agreeable to bears with the MACD line only slightly long and strong and all other indicators neggie d. The 30-minute chart is negatively diverged across all indicators. Thus, early tomorrow should see some selling but the SPX will likely come up one more time to satisfy the RSI and MACD line on the 2-hour chart. One to three candlesticks, to create the jog move for price and neggie d for the RSI and MACD line may take from 2 to 6 hours, so the bulk of tomorrow's trade. If Keystone had to make a guess, equities should top out in the morning perhaps before or during lunch time and then selling will reenter markets. The retail sector must weaken with RTH dropping under 58.58, otherwise, the market bears got nothing. If RTH moves above 58.58, the bulls are going to have one big party as the SPX runs to the 1920's. RTH sits at the 58.58 pivot to begin the Wednesday session.

Keystone's 2-10 Yield Spread Indicator

The last look at the 2-10 spread was in January as the spread was teasing the critical 255 level. Traders began the year believing that financials would lead higher but so far that is not the case. Keystone uses a 255 spread as the signal line distinguishing happy banks from sad banks. The higher spread (above 255) reflects a steeper yield curve and big profits for banks. If the spread stays under 255, it shows an ongoing banking malaise and nothing to become excited about concerning trading banks from the long side.

Higher Treasury yields typically result in the interest-rate sensitive stocks such as utilities, telecom and home builders selling off while banks run higher salivating over a steeper yield curve. The 2-year Treasury note yield is 0.35% and the 10-year note yield is 2.53% resulting in a 218 basis-point 2-10 yield spread. The spread increased into the 260's at the end of last year and the banks appeared golden destined for greatness. That thinking ended the first day of the year as the 10-year yield peaked out at 3% and has collapsed. TNX has dropped from over 3% to under 2.5%, 50 basis points, in only four months time. As long as the spread remains sub 255, banks and financial stocks should remain challenged.

The 2-10 spread chart above shows the positive divergence and inverted H&S (green lines) pointing the way to the top in the 260's. Then the double-top with negative divergence (red liens) creating the spank down. Stochastics are setting up with positive divergence right now and are oversold. The histogram is positively diverged, but the RSI trends weaker in bear territory under 50%, and has not reached oversold territory as yet, and the MACD line is weak and bleak wanting to see further lows. Thus, a sideways malaise may be on tap for the 2-10 spread drifting lower to test the 200-day MA at 205 basis points in the weeks ahead. A range of 200-240 is a reasonable expectation which would keep the 10-year yield below 3% for many months forward, even a year or perhaps three. If the 2-year yield remains anchored around 0.35%-0.40%, with a 200-240 spread range, this places the 10-year yield at 2.35%-2.80% for the weeks and months ahead.

At the stock market bottom in March-April 2009, the 2-10 spread was about 200 signaling the ongoing turmoil and trouble with banks. In December 2009, the spread was up to 288 with drunken banksters toasting Chairman Bernanke's QE policies as the yield curve steepened and the wine flowed like water. The spread was 270+ into summer 2010 when another deflationary scare occurs dropping the spread under 255. Chairman Bernanke saves the equity markets with QE 2 in August 2010. In early 2011, the spread is back above 255 favoring the bankers but then in the summer of 2011 the spread falls under 255 and remains under until briefly sneaking above in December 2013. As the chart above shows, the move above the critical 255, to begin the year, could not be sustained.

During last year, the 10-year yield spiked higher and everyone thought the happy banking times were here to stay, and, as typically occurs in markets when everyone is on one side of the boat (higher rates and higher bank stocks), this is where the yields reversed, dropping the spread from above 255 to below 220.

The XLF (financials sector ETF) and KRE (regional banks) peaked in March. The coming weeks will tell if this is a multi-month and multi-year top for bank stocks, or not. The XLF will likely move higher if the 10-year yield creeps higher and sends the 2-10 spread higher. Watch the 255+ spread to see if the steepening yield curve occurs, or not. It is very hard to envision bank stocks moving higher with the yield curves flattening or remaining benign. Especially with more regulations on the investment and trading side the banks need a steeper yield curve to help generate profits on the traditional banking side.

Keystone's current projection is continued sideways and sideways lower price action for the financials ahead with the 2-10 spread remaining under the 255 mark. A period of disinflation and perhaps deflation continues to be a possibility for the next year or two, although Keystone is lonely in this camp; one of the very few Wall Street analysts with this view. Keystone is one of the extremely few analysts, rare as hen teeth, that predicted the drop in the 10-year yields this year (type '2013 Predictions' into the search box at the right to review Keystone's forecast).

The inflation, and perhaps hyperinflation moves, in the markets and economy, which must occur due to the Fed's obscene money printing scheme for over five years, are likely months and years away still yet. The 18-year stock cycle remains in a secular bear until 2018. Therefore, long stock holders are not prepared for a multi-month and multi-year cyclical bear market to finish the secular bear 18-year cycle in 2016-2019. Even if this important 18-year cycle is left-translated this time around, that would be 2016-ish as the bottom for the secular bear in stocks which may indicate a sick period of disinflation and deflation with flat rates continuing for the next 1 to 3 years, at a minimum, perhaps low rates for 4 or 5 years, at a maximum. Inflation, however, will be raging in the late 20-teens and 2020 and beyond. Watch the 255 number for the 2-10 spread to gauge if the banks are happy, or sad. A prolonged period of low 2-10 spreads should weaken the banks. Watch XLF (now trying to maintain the 22 level), $BKX, KRE, JPM, GS, BAC, C, MS, and all the other clowns.

Monday, May 26, 2014

VIX Weekly Chart Multi-Year Lows Uber Complacency

Volatility is crushed to create the market upside. Traders believe the central bankers will pump the stock market forever so trading is one big long-side party day after day. The VIX is at lows not seen in over one year's time, back at the March-May 2013 market top as well as at the multi-year 2007 stock market top.

The red circles show market tops and green circles show market bottoms. The double circles are more important tops and bottoms. The bulls are enjoying a strong upside rally fueled by lower volatility and higher financials, semiconductors and trannies. The bulls appear to be unstoppable, however, they always do at market tops as the chart above shows. What do you think will happen moving forward?

Keystone's algorithm, Keybot the Quant, identifies the retail sector as the most influential parameter affecting broad market direction currently. Higher retail stocks will create higher equity markets for a few days or week or three more. If retail stocks remains stalled, equities will stall. Watch RTH 58.61. Bulls win big if RTH moves above 58.61. Bears stop the broad market upside if they prevent RTH 58.61. The dollar/yen keeps playing at the 102 pivot. If dollar/yen moves above 102 (weaker yen), the Nikkei and US stocks head higher. If dollar/yen moves lower to 101.90, 101.80 and lower (stronger yen), stocks sell off.

The low volatility in all asset classes currently is remarkable and unprecedented. Volatility is not only low for stocks but also bonds, Japan markets, currencies such as the yen, everywhere you look, universal low volatility. This should create caution for traders since something potentially troubling is occurring under the markets. The rise in US and Japan stocks last year was due to the BOJ stabbing the yen lower. Traders are complacent, as the low VIX verifies, since the central bankers keep pumping the stock market higher with easy money but at some point the fluff underneath has to be reconciled. Interestingly, there is only one asset class that is the most greatly under valued and under appreciated currently and is the asset class that everyone, bull and bear, are shunning. What is it? Cash. 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, May 24, 2014

SPX Daily Chart New All-Time Closing High Above 1900

The SPX prints a new all-time closing high at 1900.53 above 1900 for the first time in history. Price did not print a new all-time intraday high, however. The all-time intraday high is 1902.17 on 5/13/14. The rising wedge (bearish pattern) behavior continues with price printing at the top trend lines; also at the upper standard deviation band. The red lines for the indicators show negative divergence remaining in place but the RSI and stochastics are creating near-term upside momo.

Note the anemic volume this week. The four up days are the lowest volumes of the entire year thus far. The highest volume day of the week was on Tuesday the day the markets sold off. The thin upper trend line shows 1910-1925 in play. The standard deviation band squeeze has now sent price from the lower band at 1860-ish six days ago to 1900 now, a 40-handle bounce but the price action remains hesitant from firmly committing to a further 20-handle or more streak higher. Tuesday and Wednesday trading will be important. If the bears reverse the upside move, it has to occur early next week, otherwise, the trek to 1920 is virtually guaranteed.

If the Ukraine elections occur without any significant problems, stocks will likely head higher on Tuesday with the SPX heading to 1910. The projection is sideways to sideways lower moving forward but the bulls always find a way to maintain market buoyancy using the central banker easy money. The dollar/yen ran from under 101 to 102 over the last day so the weaker yen (BOJ money printing) fuels the stock market higher. The easy money flowed into tech, semiconductors, financials and copper to boost the broad markets and create the SPX all-time closing high. If the dollar/yen moves above 102 heading higher, the market bears do not have a chance. 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, May 23, 2014

Keystone's Midday Market Action 5/23/14

The bulls keep slappin' the bears around into the Memorial Day holiday weekend. After today's regular close at 4 PM, the stock market will not reopen until Tuesday morning, 5/27/14. Markets are typically bullish heading into a three-day holiday weekend. Keybot the Quant flipped to the long side with the robust financials creating market lift. Ditto the retail sector today. Watch XLF 21.83 and RTH 58.62. XLF is above 22 clearly in the bull camp creating strong upside in markets. RTH is 58.44 with the bulls needing 18 more cents to confirm the path to SPX 1900 and higher.

If XLF remains above 21.83, and RTH remains below 58.62, the stock market will float along sideways into the closing bell. The SPX 2-hour, 1-hour and 30-minute charts continue developing negative divergence. The indicators are ready to send price lower but the MACD lines and RSI's have a bit more life in them. Thus, two or three more 2-hour candlesticks places the markets into next Tuesday so today the price action may simply float sideways into the closing bell. The SPX hourly and minute charts indicate price topping either late today or to begin the new week after the holiday. In the short term time ahead say through lunch time, equities may drift lower but they should return to the highs which would provide time for the MACD lines and RSI's to line out negatively and create universal negative divergence for an extended move lower.

The Ukraine elections are Sunday. Copper is stronger today helping the bulls. Volatility is lower helping the bulls. TRIN is 0.83 identifying the bulls as the winner today. The dollar/yen is elevated at 101.88 helping the bulls. Banzai! Whichever way the dollar/yen goes, so goes the stock market. The SPX all-time closing high is 1897.45 on 5/13/14 and all-time intraday high is 1902.17 on 5/13/14. Keep an eye on these two numbers today; price is now printing above 1898 which would be a new all-time closing high if it holds until the closing bell. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead.

In a nutshell, bears need XLF 21.83. Bulls need RTH 58.62. Until one or the other occurs, markets stagger sideways. The time for holiday grilling and outside activity is near. The flags are flying high. Time for apple pie. Keystone took a couple heart pills to prepare for the sticker shock of beef prices as plans are made for the barbeque.

Note Added 10:57 AM: The scorecard is XLF 22.01. RTH 58.35. VIX 11.81. TRIN 0.79. Dollar/yen 101.83. SPX 1898.14. The 10-year yield is 2.53%. The bears will maintain a lid on the market upside as long as RTH remains under 58.62. WTIC crude oil is 104.28 and Brent oil at 110.52. So it will be interesting to see what oil is after the Ukraine elections on Sunday. Oil is remaining elevated in part due to conditions in Libya deteriorating. American consumers are not happy spending a big chunk of the budget on gasoline.

Note Added 7:45 AM on 5/24/14: The bulls run with the expected pre-holiday bullishness creating a new all-time closing high for the SPX at 1900.53 but not a new all-time intraday high which remains at 1902.17. The volume is anemic all week long the lowest volume of the year. The highest volume day this week was the one selling day on Tuesday. The slope of the RUT 150-day MA continues to flatten but is not yet negative so the bulls remain the winner. Financials, semiconductors and tech lead the way higher. Trannies print new all-time highs so the Dow will have to pick up the pace and print new highs next week if the upside is continually verified by Dow Theory. BPSPX remains on a market buy signal at 74.20. VIX at 11.36 is at lows not seen in 14 months. Traders remain complacent and fearless. Why worry when the central bankers will always pump the stock market higher with easy money? The 8 MA remains above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. The SPX is above the 200 EMA at 1877.65 on the 60-minute chart signaling bullish markets for the hours and days ahead. A back kiss is needed to this critical 1878 level. As mentioned earlier today, the 2-hour, 1-hour and 30-minute charts are setting up with negative divergence so this rally move should peak out at any time. The bulls keep finding ways to move higher and the RSI on the 1-hour and 2-hour charts still have a hair of upside juice as well as the MACD line on the 2-hour. Thus another one to three candlesticks on the 2-hour is  likely needed to create the neggie d for RSI and MACD line and cause a pull back. This is 2 to 6 hours of trading time which will be the bulk of Tuesday trading. This means that a new intraday all-time high above 1902 will likely print on Tuesday. If the Ukraine elections occur without incident, the stock market will be poised for more upside. The expectation would be for the market to top on Tuesday. The bulls need the retail sector to cooperate and move RTH above 58.61 to signal the all-clear for the bulls and send the SPX to 1920. The RTH came up to within pennies of this goal but fell short. RTH 58.61 will tell the market story on Tuesday. If the bulls take out RTH 58.61 to the upside, the bull rally party will be in full swing with lots higher stock market prices ahead. If the bears hold RTH under 58.61, a ceiling is placed on the stock market upside. The new moon is Wednesday, 5/28/14, and markets are typically bearish moving through the new moon. Since this is the peak of nightime darkness for the month, the chances escalate for military conflicts to occur since the side with the night vision equipment wins. So the market bears have two feathers in their caps--RTH 58.61 and the new moon seasonality but the bulls have an entire headdress of feathers on top of their head that would make Geronimo blush.

XJY Japanese Yen Weekly and Daily Charts Bull Flag

The dollar/yen is up to 101.90. Banzai! The weaker yen, created by the BOJ easy money policies, pumps the stock market higher. The chart above is the yen. So a weaker yen results in the chart price moving lower, the dollar/yen currency pair moving higher and the Japan and US stock markets, and 10-year Treasury yield, all moving higher. One big bull party as Governor Kuroda is out back beating the yen with a baseball bat. The big stock market rally last year was mainly fueled by the weak yen. The weaker yen in November and December fueled the end-of-year all-time highs.

The stronger yen in January and early February created the selling in the Nikkei and US stock markets to begin the year. The yen just received a spank down from the overhead resistance at 99, also the 200-day MA. Price violated the upper standard deviation band so a move back to the minimum should occur at a minimum, and did today with price at 98.0 for a low. A move to the lower band now at 97.41 and rising remains in play. The three red lines (negative divergence) create the smack down from the 99 resistance level but the RSI still had a little bit of juice for upside and did not yet reach overbot territory. Watch the RSI 50% level since below would lead to a further weaker yen which will fuel more upside for the stock markets and Treasury yields. Stock market bears and those looking for lower yields want to see the yen continue higher and break up through the 99 resistance.

The ADX shows the strong downtrend in place to end 2013 that fueled the higher stock market. The stock market selling in January was developing into a strong trend with the ADX heading higher, then, in early February, the ADX headed lower and is now in the cellar showing that the yen is completely trendless. It is not going up, not going down, simply floating along sideways. Interestingly, this may hint that the euro and dollar will become more important moving forward especially with Draghi poised to act in only 13 days.

The bull flag pattern is in play for the daily chart above. The first leg is 95 to 99, a 4 difference, then sideways consolidation with a slight downwards drift, then the second leg begins at 96 so the target is 100. The yen may stumble sideways for a couple days but the projection would be for a move higher to the 100 level to fulfill the bull flag. This would be in concert with the stock market drifting lower.

The XJY weekly chart is showing tight standard deviation bands with a huge move coming in one direction or the other so the current market action may be the calm before the storm. Over the next month, the yen is going either up to 103 or down to the low 90's. The direction should be apparent by the first week of June. The yen bulls (stock market bears) have a slight advantage with long and strong indicators. Watch to see if the RSI moves above 50% into bull territory, or not. Stock market bulls would want a bear flag pattern to occur on the weekly chart (red lines) but the indicators do not point to this outcome. The dollar/yen is hanging around at 101.90 so the stock market is higher. If the dollar/yen drops, the stock market dropsif the dollar/yen heads higher up over 102 the SPX will move up through 1900. 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.

Keybot the Quant Turns Bullish

Keystone's trading algorithm, Keybot the Quant, flips to the bull side yesterday at SPX 1889. XLF is 21.97 well above the 21.83 bull-bear line in the sand so the bulls are in charge. Bulls need RTH 58.62 to receive more upside juice. If RTH remains under 58.62 and XLF above 21.83, equities will float along sideways into the holiday weekend. As always, stay alert for a whipsaw move today or Tuesday. More information is found at Keybot's site;

Keybot the Quant

Thursday, May 22, 2014

Keystone's Morning Wake-Up 5/22/14; PMI's; Retail Earnings Barrage; Existing Home Sales; Leading Indicators; HPQ

The drama with XLF 21.83 continues (see this morning's chart). Keybot the Quant is short but will likely flip to the long side if the SPX moves above 1889 and higher. The bears must push XLF under 21.83 or they got nothing and face a long day of pain ahead. For the SPX starting at 1888, the bulls only need one point higher, to touch the 1889 handle, and it is off to the races higher with an upside acceleration that should take out the strong 1891 resistance in quick order and set sights on 1897 R. Bears need to push under the strong 1884 support and the 20-day MA at 1880.03 or they got nothing.

Jobless Claims are on tap shortly at 8:30 AM. Existing Home Sales and Leading Indicators are at 10 AM and will create a market pivot point. There is a barrage of retail sector earnings today including BBY, SHLD, ARO, BKE, BONT, DLTR, PLCE GPS and ZUMZ so by this evening the story will be written on the health, or lack thereof, of the great American consumer. BBY and SHLD have already laid eggs and are trading lower pre-market. HPQ reports after the bell and will set the tone for the Nasdaq for tomorrow. Futures are flat. Copper is strongly higher due to the positive China PMI number so this aids the bull case. Markets are also typically bullish in front of a three-day holiday weekend. Monday is Memorial Day and markets are closed.

The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Bears need the negative 8/34 cross or they got nothing (see this morning's chart). In a nutshell, simply watch XLF 21.83 to determine the direction and fate of the broad markets. The daily charts show tight standard deviation bands so a strong and quick move is coming for markets over the days ahead. The SPX should move from 20 to 40 handles so either to the 1920's, or to the 1840's (see this morning's chart) over the next couple weeks going into June.

Bulls can monitor resistance above at SPX 1891 and 1897 as they pop champagne corks and celebrate a sharp move higher if XLF remains above 21.83 and moving higher. Bears can celebrate if XLF drops under 21.83 and the SPX loses 1884 support then the 20-day MA support at 1880. Markets are in a near 4-month sideways range through 1815-1891, or 1815-1902 if you prefer, and in the coming days price either decides to break out above 1891-1902 and march to 1920's and higher, or, collapse from current levels and set sights on the starting year number at 1848. XLF 21.83 is what matters. As financials go, so goes the markets.

SPX 30-Minute Chart 8/34 MA Cross

The bears are smacked in the teeth again yesterday as the jump in price sends the 8 MA above the 34 MA signaling bullish markets for the hours ahead. The 8 MA will not even begin to roll over to the downside unless price drops under 1885.24 so the bulls are in party mode. The 2-hour and 1-hour charts show a similar set up with negative divergence on the indicators (red lines) but in the VST stochastics and money flow are long and strong wanting to see higher highs for price. The 1891 is strong resistance so price may need to at least touch this level.

If the 2-hour, 1-hour and 30-minute charts need about one to three candlesticks of time for price to potentially roll over to the downside this equates to about one to six hours trading time so at least this morning perhaps into lunch time and early afternoon before price may top out. Key S/R is 1902, 1897, 1891, 1884, 1880 (20-day MA), 1878 and 1874 so 1891 and 1897 are candidates for a ceiling. S&P futures are flat as this is typed so SPX price is playing in this 1884-1891 zone and the move above or below is a big win depending if you are bullish or bearish. Bulls win above 1891. Bears win below 1884.

Bears got nothing without the negative 8/34 cross and this can only be created if the SPX drops to 1885 and starts heading lower. The bulls are running higher but the projection is that the bears should top price out perhaps today at the 1891 or 1897 resistance with market weakness beginning. If price cannot drop to 1885-1886 fairly early in the day, then things are looking good for bulls. If XLF stays above 21.83, the bulls are on easy street 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.

SPX Daily Chart Sideways Channel Rising Wedge Tight Standard Deviation Bands

The standard deviation bands are squeezing in tight for a big move probably of 20 or 30 handles or more one way or the other. A few days ago the two big down days made it look like the bears were in clover. Then Friday and Monday the bulls send price higher so the big move appears to the upside. But the bears create the down day on Tuesday to take the baton and surely price is ready to run lower. But the bulls bounce strongly yesterday overcoming Tuesday's down day to point to a breakout above. Obviously, price cannot yet decide. Any day price will commit and the SPX either goes to the 1920's or down to the 1840's. January's squeeze was straight forward and lower. The squeeze in December was tricky with a fake out move lower then the break out was actually higher closing the year at all-time highs.

The red rising wedges are in play as well as the thin neon blue line rising wedge where price is testing the upper rail right now. The brown lines show the ongoing sideways channel through 1815-1891 for almost four months, only about a 75-handle range for one-third of the year. Price is at the top of this sideways brown channel so it must either explode higher or receive a spank down from the 1891 or 1897 resistance levels. The indicators are lining out sideways not providing a firm path ahead. The red lines show negative divergence that created the recent tops. Money flow is leaking lower giving the bears a small edge. Price is above the 20-day MA at 1880.03 and 50-day MA at 1868.34 giving the bulls an edge. The 20-day MA is very important and bears need to see price venture lower to here today.

The ADX shows the January selling locked in a downward trend (ADX above 25) but the bulls reversed that negativity in February. Note how the ADX is down at 8.73 absolutely trend-less. The move up in the SPX is not a strong trend by any means. If a strong trend higher, the ADX should be in the 20's or 30's right now. The low ADX confirms the four-month sideways channel behavior for price, staggering along without a firm commitment higher, or lower. This is about to change with the tight band squeeze.

The two buying volume days this week are the second and third lowest volume days of the entire year, not exactly a ringing endorsement for bulls. The low volume likely represents Aunt Edna and Uncle George placing their entire life savings in the stock market just in time to hold the bag. Bulls will celebrate if XLF remains above 21.83 and the SPX starts taking out resistance at 1891, then 1897, then 1900, then 1902 and higher. Bears need to see price drop under the 20-day MA at 1880.03, and rising, or they got nothingThis 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.

XLF Financials Daily Chart Sideways Symmetrical Triangle Tight Standard Deviation Bands

The daily charts of the SPX, INDU, COMPQ and XLF above, as well as many others display the tight standard deviation bands that are squeezing in for a big market move now at the door step. Markets are going to commit to direction over the coming days which will bestow one side or the other with a big win. The vertical side of the blue triangle is about one to 1-1/2 point. Thus, if the bulls win and break out above 22.0, the target above is 23.0-23.5. If the bears win and price collapses under 21.7, the target below is 20.2-20.7. The 200-day MA is 21.08 and multi-month support is in place at 21-ish so the downside target would be 20.2-21.10.

Price is under the 20-day MA at 21.89 and under the 50-day MA at 21.97. The 20 is under the 50 which is a bearish market signal. Tell this to the banks which continue to find a way to remain buoyant. The thick red line is the XLF 21.83 level currently identified by the Keybot the Quant algorithm as the bull-bear line in the sand and the algo identifies financials as the most influential parameter effecting broad market direction right now. The fate of both bulls and bears is decided by XLF 21.83. Price is 21.87, four pennies above, in the bull camp, creating market bullishness and a higher stock market. Bears need to push XLF under 21.83 as soon as possible, otherwise, they got nothing.

Price is coiled for the big move but as the triangles show, the theatrics may continue into next week since there is about another 5 to 7 days available in the apex of the triangle before price has to decide which way to run. So by the end of the month, next Friday, 5/30/14, the winner will be clearly obvious. By then, either bulls are running to the SPX 1920's or bears have begun a new down leg setting sights on SPX 1848 support. XLF 21.83 tells the broad market directional story today and the path forward. Markets are typically bullish moving into a three-day holiday weekend so the bulls have a seasonality advantage. 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, May 20, 2014

Keystone's Morning Wake-Up and Midday Market Action 5/20/14; HD, SPLS, DKS; DRYS, CRM

Keybot the Quant remains short but the algo is in position to go long. If the SPX prints above 1886 and remains above, Keybot will likely flip long. S&P futures are flat to lower shortly before the opening bell. For the SPX starting at 1885, the bulls will accelerate higher with the move above 1886. The bears need to push under 1873 to accelerate the downside. A move through 1874-1885 is sideways action for today.

The key market directional drivers currently are financials and retail. Retail is taking the pipe this morning with weak earnings from HD, SPLS, DKS and TJX. Watch XLF 21.83. Yesterday's drama will continue. If XLF remains above 21.83 (now at 21.85 creating bullishness), the markets move higher and bulls win. If the XLF drops under 21.83, the bears win and markets will sell off today. XLF is trading at 21.84-21.85 pre-market so despite the weaker futures, the bulls have come to play today and are already fighting to stay above XLF 21.83 since it holds the key.

Note Added 9:51 AM: The XLF collapses through 21.83 creating market negativity. SPX 1879. So the bears beat back the bulls to begin the day. The 1878 level is strong support (scroll back to study S/R) so the bears will mean business if they push under but if the 1878 holds, the bulls can easily mount a comeback. The 20-day MA is 1879.70 so pay attention to this number to see who is winning. Keep watching XLF 21.83. Bears are fine as long as the XLF remains under 21.83. TRIN is 1.06 providing the bears a slight advantage. The beat goes on. The bulls need to send XLF back above 21.83 and the SPX above 1886 to place Keybot in position to want to go long.