Saturday, January 31, 2015

TYX 30-Year Treasury Bond Yield Daily Chart Oversold Falling Wedge Positive Divergence

The 30-year bond yield prints a new record low on Friday at 2.226%. Global markets and world economics are printing history each day and you get to witness it in real-time. The falling note and bond yields around the world create the whiff of deflation in the air. The bond orgy (traders and the Fed chasing notes and bonds so prices are up and yields down) should take a temporary pause since the chart displays the green falling wedge pattern (bullish for yields), oversold conditions and universal positive divergence across all indicators (green lines). Note the bounce in yield two weeks ago due to possie d but the MACD line and ROC (red lines) were weak and bleak wanting to see another lower low in yield which is now received resulting in universal possie d and a launch for yield on tap.

The pink dots show yield extended below the moving averages so a mean reversion (higher yields) is desperately needed. Since yields are in for a short term bounce, money will be leaving Treasuries and some of that dough will find its way into stocks and likely fuel a temporary recovery rally in equities.

The TYX weekly chart remains nasty. Stochastics and RSI are oversold but the indicators are weak and bleak trending lower so after this shorter term bounce due to the possie d on the daily chart yield will likely leak lower again and come back down for another look at the low yield (to satisfy the weakness on the weekly chart). So a more substantive and sturdy bottom may occur for yields say in mid-February through March.

Concerning ETF's, TBT is the same basic chart as above with the same technical analysis and TLT is the inverse ETF exhibiting a rising wedge, overbot conditions and negative divergence desiring a spank down. Keystone does not have any trades on in Treasuries but over the coming days say into early February you would think about being long TBT which should receive a quick and strong bounce and short TLT that will be moving inversely dropping quickly. The move will be short-lived so it is only for nimble traders. Yields will find a firmer footing during February into March and then likely stagger sideways through the year with a very slight upward bias. 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, January 30, 2015

SHAK Shake Shack IPO First Day of Trading

On Thursday evening, 1/29/15, the Shake Shack IPO prices at $21 far above the original 14-16 range and revised 17-19 range. The tiny burger chain trades under the symbol SHAK.

Today, Friday, 1/30/15, traders are tripping over each other to buy the burger-maker. As the fry cook behind the counter at the local greasy spoon quips, "You want some fries wit dat?"

The market makers took about an hour to zero in on an opening price; a lofty $46. More time goes by and then the SHAK IPO begins trading with loud cheers as the price opens at $49 well above the $21 offer a +130% gain. The chart says 47 for the open. The IPO has already doubled and more in price in the opening seconds (the 21 price serves as the base). The NYSE floor takes on a festive atmosphere despite the broad market weakness occurring. The euphoric celebration welcomes a blowout price debut for the tiny burger chain that only has 63 locations. Yes, comically, only 63 locations. That's funny.

Traders are tripping over each other to buy Shake Shack that is only predominant in New York City. The restaurant locations outside of New York are actually underperforming but investors are throwing their wallets at the market makers begging for shares. SHAK remains elevated all day long ending up +119% (more than a double) on its first day of trading.

Investors are throwing their money at a fry cook that promises to open new stores and compete with an already crowded fast food casual restaurant field. Shake Shack is a New York thing and the city is also the hub for the NYSE so the traders may be blinded from developing a subjective opinion. Investors think all the future Shake Shacks will be an instant success and the restaurateur may become another CMG. In these parts, rural Pennsylvania, many people will not be impressed. SHAK will blend in with the two dozen other fast food casual style restaurants popping up on each street corner. In some communities, knowing Shake Shack is a New York thing will only alienate the fledgling restaurateur. Time will tell.

As comedian Lesley Nielsen said when asked if he ever gambled or took chances, "Certainly, every time I order take out." 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.

AAPL Apple Daily Chart New All-Time Record High Sideways Channel Negative Divergence Developing

Apple prints a new all-time record intraday high today at 120.00 to the penny. Interestingly, AAPL then fell on its sword and retreated without printing a new all-time closing high. The 119.00 on 11/26/14 remains the all-time closing high. Last time the AAPL charts were posted sideways was the projection which occurs. Apple has moved through the 107-120 blue sideways channel for over three months.

The red lines show negative divergence in place now that price printed a higher high. The short green lines show some remaining long and strong juice for the near-term so the projection would be that price prints another high, probably a new all-time closing high, but the next price highs should serve as the top. The weekly chart is negatively diverged indicating a double top pattern as very likely. So price may bounce over 120 on Monday or pull back a couple more days then go back up to 120. The 120-130 area is in play for the few days ahead as it tops out. The approach to AAPL would be scaling out if you are long. Apple is not desirable as a long play due to the neggie d. A short would be possible but best to wait for a few days or week or two as described when price should top out.

Since the charts are hinting at topping behavior, the assumption is that the Apple Watch may end up as a dud. The nice thing about cell phones was being able to ditch the watch and gain freedom for your wrist. Who wants to go back to something strapped around your wrist? The Watch is Tim Cook's big initial technology product offering and if it fails confidence will be lost in his leadership. If the global economy continues to cool, folks will not have money to spend and all Apple product sales will suffer including the transactions on Apple Pay. The mobile payment technology is another unknown. Why would you add another level of complexity to your life with Apple Pay? The system cannot handle all transactions so you have to have a credit card anyway so what is the point of Apple Pay? Many early adopters want to be cool so the only folks using the system are the ones telling each other how cool they are using Apple Pay. Get the system working for 100% of transactions in a few years time and that is when Keystone will join the club.

So the projection is for AAPL to remain buoyant for a few days or week or two. Watch the RSI to see if it becomes overbot, or not. The short green lines need to turn red with negative divergence when price makes a new high and that will take a few days ahead. Once that occurs, the weekly chart should remain negatively diverged and the top should be in for Apple. From this 120-130 area the downside would be the lower channel rail at 106-107 for starters, then the gap fill at one hundo then 95 support then likely lower as the year ends and 2016 begins. The key to Apple will be the price action in February especially early February. With such a successful company it is hard to imagine an extended pull back will occur as described. After all, AAPL can increase the buyback and boom, price can bounce in a heartbeat. Or activist investor Carl Icahn may create drama boosting the price.

Even though a stock is a great company that fact can be detached from stock price. The PE remains low but buybacks have a way of distorting these values; the PE of 9 to 12 is 12 to 15 without the buybacks and obviously not as cheap. Apple will be interesting to watch going forward. Keystone does not have a position long or short and does not plan to trade Apple. If long take the money and move on. If thinking about going long AAPL it is likely best you don't. 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 Moving Average Ribbon

The SPX logs a strong down day thus far but overall staggers sideways. The 20 MA crosses down through the 50 MA which is bearish so next watch to see if the 20 MA can stab down through the 100-day MA, or not, and if the 50-day MA rolls over and heads down for a cross of the 100. The 150-day MA at 1997 is critical since it has provided the support for the SPX since Fall. Yesterday price stabbed below as the long lower shadow line of the candlestick shows but the bulls staged a strong recovery when Fed Chair Yellen started promising Senators that she would not raise rates for a long time.

Watch the pink 150-day MA at 1997 since bad things will happen below here. Price is now between the 100-day MA at 2010.19 offering resistance and the 150 offering support. Bulls win above 2010. Bears win big under 1997. Other key moving averages are; the 20-week MA at 2017.70 (that created a ceiling this morning), 10-month MA at 1982.23, 12-month MA at 1962.84 and 50-week MA 1957.59.

The lower standard deviation band is 1987.11 and price teased here yesterday but has not yet made a strong touch. When price violates the bottom band it will want to recover to the middle band currently at 2029 and falling. The indicators are indicating sideways action. Use the RSI 50% level to see which side is winning. The money flow is trading lower and may act as a weight to drag prices 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 12:11 PM: Here is the test of the 100-day MA at 2010.25. Price is 2010.28. You know the drill. Bounce or die time. If the bulls push higher stocks will likely remain buoyant into the weekend. If the bears hold the line at the 100-day MA resistance, price will start lower towards the 150-day MA at 1997. What say you bulls and bears? Price is at 2010 and must decide a path forward. Who will run with the ball?

Note Added 12:16 PM: Bounce. The bulls take the ball and run higher. The SPX is at 2014.40 so it will test the 20-week MA at 2017.70 for a bounce or die decision. There is strong horizontal price S/R at 2040, 2038, 2032, 2018-2019, 2011 and 2002-2003. Thus, a strong resistance gauntlet is at 2018-2019. Bulls win big above here and will have further legs higher. Bears should be fine if they hold the 2018-2019 resistance. The 2011 price S/R level lines up with the 100-day MA at 2010 forming a strong 2010-2011 support gauntlet so bears will win big under 2010-2011 and will send price back down to 2002-2003 S and potentially a test of the critical 150-day MA at 1997.

Note Added 12:24 PM:  The SPX is at 2015. Bulls win above 2018-2019. Bears win under 2010-2011. The battle lines are drawn.

Note Added 7:41 PM:  Well look at that. After a wild ride today, the SPX drops to close at 1994.99. The 150-day MA is 1996.94. Failure. The bulls will receive daily beatings as long as the bears keep the SPX under 1997. The 150-day MA has served as strong support so it is no mistake that price stopped here. You know what happens on Monday first thing. Yes, price must decide to bounce or die from 1995-1997.

Thursday, January 29, 2015

SPX 2-Hour Chart Sideways Channel

Stocks fell out of bed yesterday. Note the last four candles which takes the price action back to this time yesterday at 2042-ish. The sideways blue channel at 2002-2061 is in play thus far this year and price sits at the bottom support at 2002-2003 deciding to bounce, or die. Key SPX S/R is 2018-2019, 2011, 2002-2003, 1998, 1996.52 (key 150-day MA), 1993 (this year's closing low), 1988, 1985-1986, 1982, 1981.82 (key 10-month MA), and 1978. The importance of the 150-day MA cannot be overstated. Look at a daily chart with the 150 MA and you will see important price touches in October and important support levels in December and two weeks ago. The stock market goes down the rabbit hole if the 150-day MA at 1996.52 fails.

Another key level the old-timer's follow is the 10-month MA at 1981.82. The 1982 support level is the 'last chance corral' for bulls. If 1982 fails the SPX is likely headed to the low 1900's next. The indicators are weak and bleak (red lines over the last few hours) wanting to see lower lows after any bounces occur. Price may place a near-term bottom in the 1988-1998 area. The SPX will bounce or die from this 2002 level. 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 9:48 AM: It died. The SPX drops to 1993; this is the closing low of the year thus far so time to bounce or die again.

Note Added 9:59 AM: SPX prints a LOD at 1992.53 and bounces displaying the strength of the 150-day MA support. As mentioned above, the game changes if the 150-day MA fails; markets will turn very ugly quickly. The bulls send price back up to 2001 so the SPX will back kiss the 2002-2003 resistance for a bounce or die decision. Watch the support/resistance levels listed above to gauge the strength of the price move in either direction.

Note Added 10:05 AM: Here is the back kiss of 2002-2003 resistance with price at 2002. Bounce or die. If price dies, a retest of the critical 150-day MA at 1996.54 is likely on tap. Did Keystone mention how critically important the 150-day MA is? Also watch the LOD at 1992.53; note how price bounced off the 1993 which is the closing low for the SPX thus far this year. Of course more negativity would be expected if the 1993 fails. Failure at 1993-1997 will create market mayhem. Bulls must keep the SPX above 1997 or they are in serious trouble.

Note Added 7:53 AM on Friday morning, 1/30/15: The bulls started pushing lower but could not produce a sustainable breach of the lower levels discussed above. Just when the markets were going down the rabbit hole, as usual, the Fed steps in with jaw-boning. Fed Chair Yellen was speaking to Senators, providing a wink and a nod, nudge, nudge, know what I mean, know what I mean, where she said intrest rate hikes are a long way off. Bingo. Instant market recovery. The central bankers are the market. Stocks also continue to move in sync with the dollar/yen and oil. Oil dropped midday taking stocks lower and then late-day oil recovers providing the boost in stocks into the closing bell. The SPX ends at 2021 with a HOD at 2024.64. Key S/R is 2061, 2046, 2040, 2038, 2032, 2018-2019, 2011, and 2002-2003. So price is playing around between the 2032 resistance and 2018-2019 support, thus, bulls win above 2032 and bears win below 2018-2019. S&P futures are weak in the overnight session projecting a loss at the open for the SPX of 6 to 12 handles. Price should fall through the 2018-2019 S so watch to see if the 2011 support holds, or not. The SPX 2-hour chart above wanted another price low yesterday due to the indicators remaining weak and bleak as price printed the low candlestick, however, Yellen's dovish talk created the big bounce as always overriding technicals and fundamentals. The chart is not tipping its hand now and needs to print a couple candlesticks to provide hints. The SPX looks set to explore the 2011 S and perhaps 2002-2003 support so there will be bounce or die decisions needed at these levels.

BDI and SOX Print 666

Cue the Twilight Zone music after yesterday's trading since both the BDI and SOX print the mark of the beast "666." Is it a simple coincidence or a signal from the world beyond? Interestingly, the SPX bottomed at 666 in March 2009. The Fed has created a wondrous world of boundless imagination. Where's Rod Serling when you need him? 

Twilight Zone Theme

BDI Baltic Dry Index Weekly Chart Collapses to 666

The Baltic Dry Index plummets to an ominous 666 in recent weeks reflecting a sick ocean shipping environment. The BDI is a key global economic bellwether since ships transport coal, coke, iron ore, steel, cement, powders, resins, grains and many other cargo's that grease the wheels of the global economy. If the global economy was strong, the BDI would be far higher. Shipping rates are negatively impacted by an over-capacity of ships (shippers purchased many new ships over the last three years) but a bludgeoning down to 666 is clearly reflective of an extremely sick global economy. The weakness also highlights the impact from China's economic activity falling off a cliff.

The BDI is in the cellar so there is no where to go but up. The weakness, however, indicates that a global economic malaise would be expected to continue for a very long time. The red lines show how the drops in shipping rates correlated to stock market pull backs. Note how over the last two years the charts strongly diverge with the BDI predicting market weakness but the stock market remains buoyant and prints new all-time highs; clear evidence of the power of the central bankers especially the Fed and BOJ. Banks and companies are using the liquidity to buy stocks and perform financial engineering such as buyback programs to pump stock prices higher. Sadly, the easy money is not used to buy equipment, expand factories or hire workers. The central banker money is making the wealthy and elite classes, that own stocks, filthy rich. The stock market is due for a large pull back a la the 2008-2009, 2010 and 2011 selloffs and the BDI is cheering for this outcome. 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, January 27, 2015

SPX 60-Minute Chart 200 EMA Cross

The drama in the prior 60-minute chart played out with the SPX coming up ready to pierce up through the critical 200 EMA at 2038.17, however, price receives a spank down. The move is a textbook back kiss and should make the bears smile since it opens the door for lower prices. The MACD line is weak and bleak wanting a lower low in price for the one-hour time frame after any bounce would occur. The price action through the 2002-2061 channel continues for 2015.

So the table is set for Wednesday. Bulls win big if the SPX moves above 2038. Bears win big if price remains under 2038 signaling bearish markets for the hours and days ahead. Watch the cross closely since it determines the very near term market direction (in the hourly, minute and perhaps daily time frame). Bulls got nothing unless they push the SPX above 2038. There is also strong horizontal price resistance at 2038. Also, the 20-day MA is 2038.75 so the 2038-2039 gauntlet carries weight. Good things happen to market bulls above SPX 2038-2039. The bears rule the markets as long as the SPX remains below 2038-2039. 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 Thursday morning before the opening bell, 1/29/15: The bears win the day yesterday. The bulls attacked the 2038-2039 gauntlet after the opening bell but could not overcome the resistance level. Price drops down to the bottom blue line, the lower rail of the one-month sideways channel at 2001-2002.

NYA NYSE Composite Weekly Chart 40-Week MA Cross

This is one of Keystone's key cyclical market signals that is creating daily drama. Plain and simple, if the NYA is below the 40-week MA this year the stock market will be down on the year. If the NYA recovers above the 40-week MA and stays there, stocks will have a shot at printing a positive year. So the stakes are high and price moves above and below the key 40-week MA at 10812 today ending under the 40-week MA at 10812 signaling a cyclical bear market ahead (for weeks and months).

Keep watching it to see who ultimately wins. Once the NYA moves about 100 or 200 points away from the 40-week MA that will identify the direction ahead so bulls win above 10900 and 11000 and bears win under 10700 and 10600. The diamond pattern may be a continuation pattern where price breaks out to the upside or a trend change pattern where price may break down. The sideways nature of the chart is not tipping its hand. The RSI is sitting exactly on the bull-bear fence at 50. Diamond patterns are not reliable patterns to make a projection but the pattern does show a decision is at hand since the shape has played out. So within a couple weeks the winner should be identified. For now, the bears own the markets for the weeks and months ahead through 2015. This can quickly change to the bull camp if the NYA bounces only 30 points.  The drama continues. 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 on Thursday morning, 1/29/15: The NYA finishes yesterday's trade collapsing -1.7% to 10604. The market bears are drunk as skunks partying the night away as the path for 2015 becomes bleaker.

SPX 60-Minute Chart 200 EMA Cross Sideways Channels

The fight for the 200 EMA on the SPX 60-minute chart at 2038.37 continues. The SPX is at 2030 under the critical bull-bear deciding line signaling bearish markets for the hours and days ahead. Bulls need SPX above 2038.37 or they got nothing. The critical 20-day MA is also at 2038.69.

Price is moving through the 2002-2061 sideways channel for this year. Looking at the big picture the strongest S/R is 2094, 2091, 2088, 2082, 2079, 2075-2076, 2067, 2061, 2046, 2040, 2038, 2032, 2018-2019, 2011, 2002-2003, 1998, 1988, 1985-1986 and 1982. Narrowing down to the tighter ranges, price is at 2030 between the 2032 overhead resistance and 2018-2019 support. Bulls win above 2032 since price will run to 2038 to retest the critical 200 EMA decider line. Bears win under 2018-2019 since price will next drop to 2011 for support.

The MACD line and stochastics are weak and bleak so a recovery move may occur for a candlestick or two (one or two hours) but weakness would be expected to reemerge until positive divergence can develop for all indicators. The 2018-2019 support may serve as a magnet for price to decide if it wants to base there, or fail there. The SPX dropped to a LOD at 2019.91 after the opening bell and bounced. 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 12:39 PM: The SPX is 2034 overtaking the 2032 S/R. If price stays above 2032, it will set its sights on the 2038 horizontal resistance which is also at the 20-day MA at 2038.69 and the 200 EMA on the 60-minute at 2038.37. This 2038-2039 resistance gauntlet carries serious street cred. Bulls win big above 2039. Bears remain in great shape if the SPX remains under 2038.

Note Added 1:28 PM: Whoa. Ho, ho, ho. The jump to test 2038-2039 occurs quickly. Here it is; for all the marbles. The 200 EMA on the 60-minute is 2038.30. The SPX is at 2038.15. It is time to bounce or die and the decision controls the markets for the hours ahead. Keybot the Quant algo is tracking NYA 10812 and SOX 673.82 as the two key market directional parameters. So bulls win with the SPX above 2038, NYA above 10812 and SOX above 673.82. Bears win with SPX under 2038, NYA under 10812 and SOX under 673.82. The table is set. Who will emerge victorious?

Note Added 1:31 PM:  SPX 2039.11. NYA 10811.18. SOX 673.48. A decision is needed; the parameters are at inflection points. What say you markets? Bounce or die?

Note Added 1:36 PM: The bears repel the first attack. SPX 2037.73. NYA 10806. SOX 672.84. The bulls will probably mount another run at the critical 2038-2039 level. The stakes are high.

Note Added 1:42 PM: The 200 EMA is 2038.30. The SPX is 2038.30. Do you have a coin to flip?

Note Added 6:32 PM:  Sideways choppiness continues. The SOX and NYA turn bullish creating the early afternoon rally in stocks then both slip back into the bear camp creating the weakness into the closing bell. SPX 2030. NYA 10782. SOX 669.79.

SPX Daily Chart Moving Average Ribbon

The SPX daily chart shows the interplay of price versus moving average levels. Three days ago the bears were punched in the face with price catapulting up through the 20 and 50-day MA's after ECB President Draghi fired the QE money bazooka. The central bankers are the market. Markets have typically rallied after the big central bank announcements but then sell off just like the current pattern. The chart maintains a sideways nature shown especially by the RSI. The FOMC announcement is tomorrow afternoon creating continued market drama. 

The chart is not tipping its hand and is open to coming back up to test 2057-2067 again. The bracket formed by the 20-day MA ceiling at 2039 and 100-day MA floor at 2010 serves as a sideways range. Ditto the sideways triangle trend lines at 2048 for a break out and 2000 for a break down. The 50-day MA is 2047. The 150-day MA is 1996 and the 200-day MA is 1992. The 150-day MA continues to slope upwards which is bullish on the intermediate and long term basis; watch this closely since if the 150-day MA line flattens and rolls over sloping downwards that guarantees a cyclical bear market going forward. Note how the 150-day MA slope failed in December but the Federal Reserve pumped the markets with Chair Yellen's dovish talk to save the day. Two weeks ago the 150-day MA was threatening to roll over again.

Markets stagger sideways like drunk in Times Square on Saturday night. Bulls win above 2039. Bears win under 2010. Price is at 2030 and rising. 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 Bearish

Keystone's trading algorithm, Keybot the Quant, is back on the short side. The choppy and erratic sideways market behavior continues. The algo identifies the following parameters and levels as key bull-bear lines in the sand; NYA 10812, VIX 16.02 (remember; the VIX moves inversely to the stock market), SOX 673.90 and XLF 24.05. The stock market will not recover unless at least one of these return to the bull camp. More information is found at Keybot site;

Keybot the Quant

Note Added 12:36 PM: SPX recovers to 2034. NYA 10784. VIX 17.42. SOX 670.18. XLF 23.67. The NYA is teasing towards 10812 and the SOX towards 673.90 but for now all four parameters remain bearish.

Sunday, January 25, 2015

SPX Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Markets the Week of 1/26/15

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for trading the week of 1/26/15. Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and important S/R. The SPX all-time intraday high is 2093.55 on 12/29/14 and the SPX all-time closing high is 2090.57 on 12/29/14. The high for this year is 2072.36 and the low for this year is 1988.12.

For Monday with the SPX starting at 2052, the bears only need one negative point in the S&P futures, to push the SPX under 2050.50 after the opening bell, and the downside will accelerate. The bulls need to touch the 2063 handle and bingo, the upside will accelerate to immediately test the 2067 R. A move through 2051-2062 is sideways action to begin the week.

The CPC put/call ratio spiked to 1.28 indicating fear and panic and a near-term bottom at hand but the behavior is out of sync as to what would be expected. There was a large push for put buying on Friday and much of that may be due to the Greece elections where results are coming in as this is typed. Nonetheless, the CPC indicates enough fear to create a near-term bottom. If markets sell off, the fear should grow and the CPC should move higher and that would provide more confidence in identifying a near-term bottom with an even higher CPC. Monday and Tuesday may be interesting days if the CPC decides to continue spiking higher (stocks would plummet).

January ends on Friday, EOM, and as the ole Wall street adage says, "as January goes so goes the year " so there may be some price jockeying for position at the starting year and starting month number at 2059 as the week plays out. The 2059 will determine if January is an up month or down month. Price came up on Friday through the strong 2061 resistance but never made It to the 2067 R so a test of that level may be on the come.

The 2057-2067 resistance gauntlet is important. Bulls win big above 2067. Bears remain in the game if they can hold 2067. Price thrusts up through the 20-day MA and 50-day MA’s at 2046-ish last week creating bull juice. The 2043-2047 support is important and price will want to back kiss these important moving averages; the 20-day MA at 2043 and 50-day MA at 2047. The 2038-2040 is another strong gauntlet of support underneath. If the 20-day MA fails, price will be at 2038-2040 lickity-split. The 1988 is the low this year thus far and note the importance of the 10-month MA at 1987. When markets venture lower and lose the 10-month MA, serious trouble will begin.

Looking at the big picture the strongest S/R is 2094, 2091, 2088, 2082, 2079, 2075-2076, 2067, 2061, 2046, 2040, 2038, 2032, 2018-2019, 2011, 2002-2003, 1998, 1988, 1985-1986 and 1982.

2094 (12/29/14 All-Time Intraday High: 2093.55)
2091 (12/29/14 All-Time Closing High: 2090.57)
2079 (12/5/14 Intraday High: 2079.47)
2076 (11/28/14 Intraday High: 2075.76)
2075 (12/5/14 Closing High: 2075.37)
2073 (11/26/14 Closing High: 2072.83)
2072 (1/2/15 Intraday High for 2015: 2072.36)
2071 (11/21/14 Intraday High: 2071.46)
2064.62 Previous Week’s High
2062.98 Friday HOD
2063 (1/22/15 Closing High for 2015: 2063.15)
2058.90 January Begins Here
2058.90 Trading for 2015 Begins Here
2056 (11/18/14 Intraday High: 2056.08)
2051.82 Friday Close – Monday Starts Here
2050.54 Friday LOD
2046.89 (50-day MA)
2046 (11/13/14 Intraday High: 2046.18)
2042.95 (20-day MA)
2037.63 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2019 (9/19/14 Intraday High: 2019.26)
2016.82 (20-week MA)
2011 (9/18/14 Closing High: 2011.36) (9/4/14 Intraday High: 2011.17)
2009.14 (100-day MA)
2007 (9/5/14 Closing High: 2007.71)
2005 (8/26/14 Intraday High: 2005.04)
2004.49 Previous Week’s Low
2003 (8/29/14 Closing High: 2003.37)
1994.85 (150-day MA; the Slope is a Keystone Cyclical Signal)
1993 (1/15/15 Closing Low for 2015: 1992.67)
1991 (7/24/14 Intraday Top: 1991.39)
1988 (7/24/14 Closing High: 1987.98) (1/16/15 Intraday Low for 2015: 1988.12)
1987.04 (10-month MA; a major market warning signal)
1986 (7/3/14 Intraday Top: 1985.59)
1985 (7/3/14 Closing High: 1985.44)
1970.05 (200-day MA)
1968 (6/24/14 Intraday Top: 1968.17)
1966.85 (12-month MA; a Keystone Cyclical Signal) (the cliff)
1963 (6/20/14 Closing High: 1962.87)
1956 (6/9/14 Intraday Top: 1955.55)
1954.30 (50-week MA)
1951 (6/9/14 Closing High: 1951.27)

Saturday, January 24, 2015

NYA NYSE Composite Weekly Chart 40-Week MA Cross Cyclical Bear Market

The bears were crying in their beerski's last Thursday evening as the bulls regained the 40-week MA but in Friday trading the bears slapped the bulls in the face pushing the NYA back under the 40-week MA signaling a cyclical bear market ahead for weeks and months perhaps longer. Of course this battle will continue. The bulls were able to recover from the October failure, and also recover from the December failure.

Type "central banker collusion" into the search box at the right margin and bring up two prior articles that describe in detail how the Fed, BOJ, ECB and other central bankers collude and coordinate to pump the stock market higher saving the day in October and December.

The importance of this chart cannot be overstated. If the NYA remains under the 40-week MA, stocks are going to finish lower this year and the universal consensus on Wall Street for SPX 2150-2350 will be incorrect. If you remain bullish the market, you need the NYA above the 40-week MA, otherwise you will lose money week after week moving forward.

The fight continues on Monday. The stock market is in a cyclical bear market going forward unless the bulls can regain the 40-week MA. 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 Tuesday, 1/27/15, at 11:30 AM: The NYA recovers on Monday above the 40-week MA so the bulls celebrate all night long. However, this morning, stocks collapse and the NYA drops under the 40-week MA signaling a cyclical bear market pattern for the weeks and months ahead.

Friday, January 23, 2015

SPX 2-Hour Chart Negative Divergence Developing

The bulls keep pushing price higher and the MACD line remains long and strong. The RSI is not yet overbot (it may or may not become overbot).  Those are two bullish items but the other indicators (red lines) are negatively diverged wanting to see price roll over. The matching top over the last four candlesticks is cheesy. Price barely prints a matching high. Considering the MACD line, price likely wants to test the strong 2067 resistance since it came up this far. When that occurs, the MACD line will like turn neggie d and that will create the short-term top.

The MACD line will need one to three candlesticks to turn neggie d so that is 2 to 6 hours of trading time so price may not peak out until Monday. If the RSI reverses to the upside and prints a higher high then the SPX will run to the 2075-2076 strong resistance. The thought now is that price should remain in this 2054-2067 range and top out between now and early next week.

The strong S/R shown by the brown lines is 2075-2076, 2067, 2061, 2046, 2040 and 2038. Watch the MACD line to see when it rolls over. 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 3:02 PM: Stocks are sliding late-day. SPX is down to 2055 and dropping. MACD line is flat.

USD US Dollar Index Monthly Chart 11-Year High Fibonacci Retracements Inverted H&S

The dollar is running parabolic from 80 to 95 in only seven months a gain of +19% huge for a currency. The dollar is rising a ridiculous +2% and more per month for over a half year. The US dollar chart is the inverse of the XEU euro chart. For the big move in the dollar and euro during 2001 to 2008, the euro is at its 62% Fib retracement but the dollar is only nearing its 50% Fib at 96.06.

The dollar is at highs not seen since 2003. The RSI is overbot, ditto stochastics. The indicators are long and strong wanting higher highs in the monthly time frame after a pull back occurs. Negative divergence should develop in the months ahead creating a top. The 96 and 102 Fib's are in play. The brown inverted H&S targets 113 but that can occur a year or two down the road. The breakout at 90-92 is important so price would be expected to come back to show it respect (200-week MA is 89.81). The dollar may simply stagger sideways through 90-102 for 2015 into 2016 and frustrate those looking for a continued vertical spike higher.

The indicators are wanting higher highs in the dollar in H1 2015 but the dollar should peak perhaps in the February-July time frame. The 113 and 120 levels are probably not on the radar until 2016-2018 but if the euro plummets from here through 1.08 towards parity, the dollar index will be spiking up through 102 towards 108, however, this is not currently expected. The expectation is for the rise in the dollar to slow and the drop in the euro to slow but both will remain around current levels for a few weeks and months. 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.

XEU Euro Daily Chart 11-Year Low

The euro daily chart is bludgeoned lower with ECB President Draghi's baseball bat. Draghi is running the printing presses non-stop flooding the world with euro's. Grab some and buy stocks. Everyone else is. The euro falls like a stone after the ECB QE announcement from above 1.1600 to 1.1166 an over -4% drop.

The stochastics are oversold and positively diverged so they will work to create a bounce. The other indicators are weak and bleak but much of the beating is already priced-in since the indicators are buried in the cellar. The RSI is down to 15, MACD -2 and lower, and ROC -5.4. Once you get so low there is no where to go but up. So a bounce woudl be expected but the indicators will want a lower low until they can set up with possie d.

The red dots show price extended to the downside so a mean reversion will be required (bounce). Price would be expected to stabilize sideways but a few more days will be needed first with the euro likely printing under today's 1.1166 for a lower low next week. The indicators will set up with positive divergence in the coming days and that will identify the firm near-term bottom for the euro. 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.

XEU Euro Weekly Chart 11-Year Low Price Extended

The weekly chart shows the complete collapse of the euro over the last few months and this week. As Keystone always says, the collapses out of rising wedges can be quite dramatic. This qualifies as a dramatic collapse from the red rising wedge. The indicators are oversold and the RSI, histogram and stochastics are positively diverged wanting to see a dead-cat bounce in this weekly time frame. The MACD line and ROC are weak and bleak so they want another lower low in the euro after any bounce occurs in this weekly time frame.

The red dots show price now extended to the downside under the 20 MA under the 50 MA under the 200 MA so a mean reversion will be needed (bounce). The pink box shows the ADX exploding higher above 51 verifying that the downward drop in the euro is a strong trend in the weekly time frame so this verifies lower lows ahead after any bounces. The ADX on the monthly chart does not show a strong trend in place on a longer term monthly basis as yet but clearly in this shorter several week basis the trend is strong and lower.

Those looking for the euro to plummet towards parity in quick order may be premature according to the indicators. The RSI and stochastics want to see a recovery bounce right now. The euro would be expected to stabilize after some choppy action occurs for a few weeks with a downward bias. At this time the euro is not expected to move below the 1.08-1.12 support zone. It may spend much of the year playing around in this range and parity may not come at all during 2015. However, a falling knife may keep falling--the next several days will be important. 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.

XEU Euro Monthly Chart 11-Year Low Fibonacci Retracements Sideways Symmetrical Triangle Downward-Sloping Channel

The euro drops to the 62% Fib retracement of the rally from 2001 to to 2008 from 0.84, under parity (1.00) to 1.58. The 62% Fib is 1.1213 and the euro is at 1.1261 printing a LOD at 1.1166. If price ventures lower under the 62% Fib a full 100% retracement down to 0.83-0.85 is on the table. Rick Santelli mentioned the Fib retracement on CNBC business television so reference that video if you want to study the Fibonacci retracements more closely.

Sometimes a 76% Fib retracement will occur and that is at the 1.02 level. The big question is if the euro moves to parity at 1.00 (dark blue square). The breakdown out of the red sideways symmetrical triangle is projecting a move to 90. The downward-sloping channel shows the euro approaching the lower support rail and this support continues in conjunction with the 1.08 horizontal support. The stochastics are oversold and will create the initial dead-cat bounce in the monthly time frame. The indicators such as RSI are weak and bleak wanting lower lows after any bounces, but the RSI is oversold as well so a basing would actually be expected say during H1 2015.

The 1.08-1.12 level is sturdy support. It would not be surprising to see price move through 1.08-1.15 into summer time. In other words, the expectation for a continuing collapse in the euro may be premature. Nonetheless, when a price is dropping like that it is hard to know where the bottom is.

The pink boxes show the strong trends over the years like the downtrends in the euro in 1998 and 2000-2001. The uptrend was strong in 2003-2005 and also again as the peak was placed in 2008. After that peak, however, the ADX falls like a stone and there is no strong trend in place for the last six years and this is proven out by the sideways move through 1.20-1.50. That may change since the euro fell out of bed when Draghi fired the QE money bazooka yesterday. The euro is plummeting but the ADX is only at 19. The downtrend in the euro is not strong in this long-term monthly basis until the ADX moves up into the pink box. If the ADX remains at 20-ish and flat or lower, then the euro will likely flatten out and not drop as much as everyone thinks.

The stochastics should create a near-term bottom now into February for a bounce but then weakness should continue on the monthly basis. The 1.08-1.12 range has a good chance of holding into summer time. The next few days are important to see if the knife keeps falling, or not. 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.

NYA NYSE Composite Weekly Chart 40 MA Cross Cyclical Bull Market

The NYA moved above the 40-week MA at 10805 yesterday creating bull rocket fuel. Stocks are in a cyclical bull market if price is above the 40-week MA but in a cyclical bear market if price is below the 40-week MA. There was failure in October where the global central banks had to collude and coordinate to save the day. Then in December another failure which was saved by Fed Chair Yellen flapping her dovish wings at the FOMC meeting to save the day. Now more shakiness to start the year but the ECB steps in to save the day yesterday. You have to be blind if you cannot see that the central bankers control the markets.

The NYA is at 10829 in the bull camp creating broad market lift. Bears got nothing unless they push NYA under 10805 and if they do, stocks will begin dropping in earnest 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 10:49 AM:  NYA drops to 10810. Each day is a new day of market drama. The 40-week MA is very important so price is coming down for a back kiss to show it respect and make a bounce or die decision. NYA 10812....... 

Note Added 10:54 AM: Big bounce. NYA 10827. Nothing to see here, move along, move along...

Note Added 1:51 PM:  NYA 10838. 

Note Added 3:04 PM: NYA drops to 10810 late in the session. Stocks are moving lower. The 40-week MA acts as a magnet. Time for another bounce or die decision. Will it bounce again?

Thursday, January 22, 2015

Keybot the Quant Turns Bullish

Keystone's trading algo, Keybot the Quant, flips to the bull side this afternoon at SPX 2054. The NYA Index exploded above 10805 sending equities on a rocket ride. The bulls will receive additional upside juice if XLF moves above 24.11 and/or the VIX drops under 15.85. More information is found at Keybot's site;

Keybot the Quant

Note Added 3:51 PM: A few minutes in front of the closing bell the SPX is at 2062. NYA is 10851 well above the 10805 line in the sand. XLF is 24.01 under the 24.11 in the bear camp causing market negativity. VIX is 16.58 above the 15.85 line in the sand in the bear camp. Bears need NYA 10805 or they got nothing. XLF and/or VIX need to turn bullish to keep the stock market moving higher. If all three parameters remain status quo, stocks will stagger sideways. One of those three parameters will flinch and tell you the market direction ahead.

Keystone's Morning Wake-Up 1/22/15; ECB Rate Decision and President Draghi Press Conference; ECB Announces 1.1 Trillion Euro Stimulus ($1.3 Trillion)

The global market movie reaches a climax over the next couple hours as the ECB decision and press conference is imminent. The ECB decision is 7:45 AM EST and more importantly, President Draghi provides details on the new QE stimulus program at 8:30 AM. Futures, European indexes, currencies and bonds will react.

At 7:20 AM, S&P futures are +3. Dow +32. Nasdaq slips negative. The spu's were up far higher a couple hours ago. DAX (Germany) is down a smidge -0.1%. FTSE (UK) is up +0.5%. CAC (France) is dead flat. Dollar/yen 117.57. Euro 1.1633. Oddly the euro is rising ahead of the announcement when a large QE money bazooka should smack the euro lower. Is the ECB move already priced in? Do insider traders already know the outcome? The pound climbs to 1.52. Gold 1283. Copper drops to 2.587. Traders ignore old-time market bellwethers like copper since the central bankers throw a money party every day directing traders to keep buying stocks.

US Treasury yields are; 2-year 0.52%. 5-year 1.38%, 10-year 1.91%, 30-year 2.51%.

One week ago the ECB said a 500 billion euro QE package would be provided. Then a couple days ago 550 billion euro’s were hinted. Yesterday, the ECB leaked a potential package of 50 billion euro’s per month for at least one year for a total QE package of 600 billion euro’s ($58 billion per month for a total of $700 billion US dollars). 

Traders are focused on the details that Draghi will provide at the 8:30 AM EST press conference especially the duration of the 50 billion euro ($58 billion) per month program since it determines the size of the total QE program providing shock and awe, or not. Traders are expecting a one trillion package which would extend the program into 2016; the 50 billion euro’s per month would run until August 2016. Draghi may surprise with a larger than 50 billion euro per month program. A 60 billion euro’s ($70 billion) per month QE would create a one trillion total by May 2016. So pay attention to the amount and duration of the new QE program.

What will sly ECB head Mario Draghi offer to the masses? He is a magician that always holds a surprise up his sleeve. A total package of one trillion or more euro’s is expected with the current consensus, based on leaked information for 50 billion euro's per month ($58 billion) that runs for one year either into early, or late, 2016, for a range of 600 billion to one trillion euro's ($700 billion to $1.1 trillion).

Keybot the Quant remains short but markets are a coin-flip due to the ECB. The algo is fixated on SOX 672.36 and NYA 10800. Bulls win big if NYA moves above 10800 and the Keybot the Quant algorithm will likely flip long. Bears win big if the SOX drops under 672.36 signaling market selling ahead. Semi's were weak in last evening's afterhours trading. If SOX remains above 672.36 and NYA stays under 10800 the stock market will stagger choppy sideways with a slight upward bias.

The fight at the 200 EMA on the SPX 30-minute chart at 2035.18 continues. Bulls win big for the hours and days ahead if the SPX moves above 2035 and higher. Bears win big for the hours and days ahead if the SPX remains under 2035 heading lower.

Keystone exited the VJET long trade yesterday. The stock received the positive divergence launch so profits were taken. Keystone will look to reenter today or in the days ahead since there should be more upside ahead.

Note Added 7:34 AM: S&P +5. Dow +46. Nasdaq +6. Euro 1.1635 rising. Gold 1284.

Note Added 7:40 AM: S&P +6. Dow +45. Nasdaq +7. Euro 1.1629. The DAX remains negative and FTSE and CAC positive. Gold 1284. US 10-year yield 1.93%. Yields are rising. German bund 0.57%. WTIC oil is 48.86 and Brent oil is back above 50 to 50.28. The ECB statement decision is a few minutes away......

Note Added 7:55 AM: The ECB leaves rates unchanged and says further announcements are on tap at 8:30 AM. The market reaction is muted with the US futures floating higher. S&P +8. Dow +61. Nasdaq +12. Euro drops to 1.626. Dollar/yen 117.54. Gold 1286. US 10-year yield 1.93%. German bund 0.57%.

Note Added 8:07 AM: S&P +11. Dow +90. Nasdaq +15. Euro 1.1628. Dollar/yen 117.61. US futures move higher with the lower euro and retreat if the euro moves higher. Gold 1291. US 10-year yield 1.92%. German 10-year yield 0.56%. DAX recovers to the flat line turning positive. Traders are excited ready for Draghi to fire the QE money bazooka.

Note Added 11:30 AM: The Keystone the Scribe site provides the details on the ECB QE program and the real-time impact on markets. Draghi announces a 60 billion euro per month program that lasts until September 2016 but he is quick to say the easy money will continue as long as the +2% inflating mandate is not met. Traders were unsure if the announcement was open-ended QE or not but the rise in stocks verify that more traders view the ECB QE similar to former Fed Chairman Bernanke's QE Infinity. The ECB QE is 60 billion euro's for 19 months for a total of $1.1 trillion ($70 billion per month for a total of $1.3 trillion). Draghi provides shock and awe exceeding the one trillion number although confusion remains over the true amount of the QE since the ECB is rolling prior programs into the new program. The Dow is up 134 points and the SPX gains 18 points. The bulls are running with the euro collapsing down to 1.1423. German bund yield drops to 0.451% on news of increased bond-buying coming in the months ahead (higher bond prices create lower yields). US 10-year yield 1.88%.

Note Added 11:33 AM: The SOX drops under the 672.32 key bull-bear level identified by the Keybot the Quant algo but then recovers. The NYA runs up to test the critical 10805 level and is rejected on the first try. NYA is currently printing 10782 and SOX is 675.53. Thus, SOX remains above the critical 672.32 and NYA remains under the critical 10805 so equities move sideways choppy with an upward bias. SPX is 2047. Bulls win big with NYA above 10805 and Keybot will likely flip long. Bears win big with SOX under 672.32. Europe ends in sea of green with the DAX gaining +1.4%, FTSE +1% and CAC +1.7%.

Note Added 3:42 PM: The NYA moves above 10805 this afternoon poking a stick in the bear's eye. Keybot the Quant algorithm flips long at SPX 2054. Note that the SPX also moved above the 200 EMA on the 30-minute chart at 2035 this morning forecasting bullishness ahead. The SPX also moves up though the 20 and 50-day MA cluster at 2046. The RUT moves above its 50-day MA at 1179 that would no longer hold as resistance after six days. Watch NYA 10805, XLF 24.11 and VIX 15.85 to determine market direction forward. The upside market orgy is in full swing. Caligula just arrived at the party pouring Fed wine and ECB whisky into golden goblets for bullish traders. All Hail the central bankers! The central bankers control the markets.