Monday, December 1, 2014

Keystone's Morning Wake-Up 12/1/14; PMI and ISM Mfg Index

The markets are moving fast these days allowing little time for commentary updates. Today is no different with the Hong Kong unrest, weak China PMI, German PMI in contraction and Moody's downgrading Japan's credit rating. The cold December winds are blowing. S&P futures were down -13 overnight but recover to down -6. The SPX hourly and minute charts are agreeable to a pull back, as well as the SPX daily chart, however, the daily chart is open to a three-day jog move of down-up-down then roll over. Reference this morning's charts for further study.

Oil and commodities may finally catch a break as the USD chart shows this morning with the US dollar wanting to pull back in the short term to take a rest. Gold and silver recover intraday overnight as the dollar begins to soften from above 88.4 to 88.1. A drop in the dollar will help send oil and other commodities and metals higher. December begins today with the SPX at 2068 with the all-time high at 2076 and all-time closing high at 2073.

Keybot the Quant remains long for well over one-month's time. As explained on the weekend in the Historic October-November 2014 Stock Market Rally Created by Global Central Banker Collusion article, the central bankers have created one heck of a rally from the 1820 low in mid-October to the 2076 high. Since mid-September, the SPX has dropped 100 points then recovered 256 points for a 356 point move in only eight weeks time; this is 17% of the SPX!! The S&P 500 has moved about one-fifth of its entire value through decades of history in only eight weeks time.

The BPSPX is at 73.80 off the 76.5 high on Thursday. The bulls continue to enjoy the double whammy buy signal but the bears could create a double whammy market sell signal if the BPSPX falls under 70. Type 'BPSPX' to bring up a chart for further study. The VIX remains low, CPC and CPCE put/call ratios came back down, all indicating ongoing market complacency. Traders are chasing AAPL and MSFT buying those stocks with total disregard for price. The CBOE SKEW remains elevated which urges caution.

The NYHL continues to print lower highs over the last two years as the stock market prints higher highs; in other words the new stock market highs are occurring with fewer stocks making new highs. Thus, a smaller group of stocks such as Apple and Mr Softy are driving the upside. The rally is not broad-based and this is also evident by the weak Russell 2000 (RUT) small caps.

The RUT 1187 level is key and price pierced up through but could not maintain the level. If 1187 is taken out, then price will seek a test of the 1213 high in July. Continue watching the RUT 150-day MA slope since this tells you if the Russell 2000 is in a cyclical bull or cyclical bear pattern and it is in a knock-down drag-out fight since summer time. Bulls need to send the 150-day MA slope positive to declare bull victory ahead like the parade of television pundits and analysts proclaim. Bears need to send the 150-day MA slope negative which guarantees a cyclical bear market for equities for the weeks, months, perhaps a year or two ahead.

Tax loss selling typically occurs in early December so if there was a time for a market pause it would be now. Money comes into the market for the new month which helps create buoyancy. There is a cluster of three Bradley turns into the end of the year on 11/22, 12/7 and 12/26. Bradley turns do not predict direction only that a market inflection point is at hand either a trend change or sometimes an acceleration move up or down. The 11/22/14 turn date window may have created a top last Friday. Equities are already in the next window for the 12/7/14 turn date which will run now through 12/12/14. The turns indicate that there may be a very jumpy roller coaster ride for stocks to finish the year.

Staying on the esoteric side, Keystone's Eclipse Indicator window for a market sell off to begin is closing right now at 11/30/14-ish and may have identified a significant market top. A few more days and week or two needs to play out to provide perspective. The window was open during November to right now for a major top to occur.

The algorithm is tracking volatility as the key market parameter currently impacting broad stock market direction. Watch VIX 14.38; VIX begins at 13.33. If the SPX drops under 2065 and the VIX moves above 14.38, Keybot the Quant will likely flip short. Keybot the Quant remains long since late October. If markets sell off and the VIX moves above 14.38 the selling will be sustainable going forward. If the stock market sells off at the opening bell but the VIX does not move above 14.38, the bears got nothing and the stock market will recover. Watch the VIX 200-day MA at 13.82 since above here and the bears are gaining traction. If the VIX does not go above 13.82 the bears have absolutely no strength at all and the bulls will continue the party.

For the SPX for Monday starting at 2068, the bulls must touch the 2076 handle and bingo, the 2080's will occur quickly. The bears need to push under 2065 to accelerate the downside, only three points lower, and the S&P futures have been weak all night long into the morning. Use the VIX 13.82 and 14.38 levels explained above to directly gauge the strength, or lack thereof, of the market selling. The PMI manufacturing number is out at 9:45 AM EST and the ISM Mfg Index is 10 AM. Markets will likely pivot after the ISM. VIX 14.38 is going to tell you if the bears got game and are growling strongly (moving above VIX 14.38), or, if they slip on a banana peel and fold like a cheap suit (staying below VIX 14.38).

Note Added 5:44 AM on Tuesday morning, 12/2/14: Yesterday was a volatility dance jerking the stock market to and fro inversely. The Keybot the Quant algorithm remains long and identifies VIX 14.48 as the key bull-bear line in the sand currently that determines if markets move higher, or lower. If the VIX moves above 14.48 and the SPX under 2050, Keybot will likely flip short. Bears got nothing without higher volatility. The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead, however, the central bankers ride to the rescue as usual. The PBOC is rumored to decrease the reserve requirement ratios for banks again so the Chinese stimulus creates a party in Asian and European stocks as well as US futures. S&P +5. All Hail the central bankers! The central bankers are the market. Kneel at their feet since the modern-day money-changers provide your sustenance.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.