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.

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