Friday, July 31, 2015

SPX 2-Hour Chart

The 2-hour chart ruled the day yesterday as described in the previous message. Stocks sold off early in the session on Thursday but recovered due to the long and strong chart indicators on the 2-hour. Low volatility is allowing the bulls to remain in full control. Here is a look at the 2-hour. Price continues higher but negative divergence appears in the histogram and stochastics. The stoch's are also overbot. So a spank down is expected and occurs (red arrow), however, the other chart indicators are long and strong and the RSI has not moved into overbot territory. Thus, the expectation is for price to recover and print another high, and it does this morning.

This high creates a tweezer top vibe but the MACD line and  money flow remain long and strong wanting to see a higher high in price after any pull back. Thus, the near-term top for stocks remains from two to four candlesticks away which is 4 to 8 hours trading time which places stocks into this afternoon and Monday after all the indicators negatively diverge.

Price is maintaining above the 50-day MA at 2099.53 and 20-week MA at 2099.39. The important 200 EMA on the 60-minute chart is 2098.72 signaling bullish markets for the hours and days ahead. The strongest price support is at 2121, 2118, 2110, 2108, 2105 and 2099. The 2098-2100 level is an uber critical gauntlet of support with bulls in full control above. The SPX is above the 2110 resistance so 2118 is likely the destination where a bounce or die decision will occur. VIX is down to 12.02 ready for an 11-handle so the bears got nothing. Stocks should top out in the near-term, however, either late today or on Monday. 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 11:34 AM:  The VIX drops to 11.88 so bulls celebrate by slapping the bears in the face. SPX 2113.

Thursday, July 30, 2015

SPX S&P 500 60-Minute Chart 200 EMA Cross

The bulls overcame serious technical resistance yesterday although the joy may be under scrutiny to begin today with S&P futures -8. Price ran above the important 200 EMA at 2098 signaling bullish markets for the hours and days ahead. The bears need to send the SPX under 2098 as soon as possible. Price back kissed the 200 EMA and moved higher although a more solid back test is likely needed. The weak futures should bring price down for the critical back kiss of the 200 EMA where price will either bounce, or die.

The SPX pierced above important moving averages and last week's high so watch these support levels today;

2118 price resistance
2110 price resistance
SPX begins today at 2109
2108 price support
2105 price support
50-day MA 2100.19
20-week MA 2099.21
2099 price support
Previous week's high 2098.63
200 EMA on the 60-minute chart 2097.88
100-day MA 2095.38
20-day MA 2092.93
2091 price support
2086 price support
150-day MA 2084.28

The indicators are turning negatively but the MACD line and money flow are long and strong wanting another high in price after any pull back in the hourly time frame. Thus, markets may top out around lunch time or this afternoon. The RSI has not yet become overbot so that may allow further upside.

The SPX 2-hour chart shows long and strong indicators across the board so a higher high in price is expected and it may take from 3 to 6 candlesticks to roll over with neggie d which is 6 to 12 hours which would target anytime this afternoon or tomorrow for a near-term market top. It would not be surprising to see stocks higher this afternoon after weakness in the morning since the 2-hour chart indicators are long and strong. Watch the 2-hour chart indicators to see when negative divergence occurs to identify the near-term top. Bears need SPX under the 200 EMA on the 60-minute at 2098 or they got nothing. 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 S&P 500 Monthly Chart

The SPX monthly chart continues to forecast a multi-year top at hand a la 2007. The red lines show the negative divergence that creates downside pressure. The bears need the indicators to start printing lower lows to start a strong downside move. The MACD line is trying to print a lower low. The red rising wedge pattern is very ominous since the collapses from rising wedges can be quite dramatic. Price is extended above its moving averages requiring a mean reversion. There is also negative divergence in play comparing the 2007 top to the current top.

July ends tomorrow and the month began at 2063. Price is at 2109 about 46 points above as the white candlestick shows with an up month on tap. The market bears would need to begin pounding markets lower today to make a run at 2063 and a negative month. The potential positive month with highs near all-time record highs, however, is not as rosy as in the past since the chart indicators no longer have any oomph and are not printing higher highs.

The chart is consistent with a multi-year top. This would jive with the 18-year cycle that is in a secular bear from 2000 to 2018. Keep in mind that sharp strong rallies are very common in secular bear markets such as the 2003-2007 rally and the current 2009-2015 rally. It would not be surprising to see the bears growl into 2018 and the stock market down three of the next four years.

The Dow monthly chart is the same set up only slightly more negative since the money flow, stochastics and MACD line are all printing lower lows trying to drag price lower. The Nasdaq monthly chart has been the most bullish maintaining a sliver of long and strong strength in the MACD line. That is why Keystone had said you have to continue to be patient for the market top a couple three months ago. The COMPQ came up and prints new all-time record highs this month, however, all the indicators, including the MACD line are now in negative divergence. So tech is now indicating a multi-year top and flattening and rolling over to the downside would be expected going forward. Watch the leaders such as AAPL, NFLX, FB and AMZN that are single-handedly sending stocks higher--never a good sign for markets.

The forecast is that markets are or have peaked out with a multi-year top and lower prices are expected for the stock market for the weeks, months and perhaps a couple years ahead. 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

The 10-year yield is staggering sideways through 2.3%-2.5% for the last couple months. Yield is dipping lower, however, the indicator are mixed as the yield topped out one month ago. From a longer perspective, the chart is moving into a sideways symmetrical triangle pattern (much easier to see on the monthly chart). Note the moving averages above moving sideways which hints that yield will continue sideways.

It will not be surprising to see yield move higher to the top trend lines at 2.4%-2.5% over the coming couple weeks but the longer term expectation is for continued sideways movement squeezing into the 1.9%-2.4% for a couple months, then into a tighter 2.0%-2.3% range in the Fall. Of course a breakout above the upper blue trend lines would be a game changer. Treasury bulls need to keep prices high and yield under 2.50% while Treasury bears need to see yield jump above 2.50% to signal the long-awaited move higher for rates. 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.

WTIC Oil Weekly Chart

There is lots of interest in the oil charts. Price is collapsing over the last month from above 60 down to 47, a -22% crash (reversing the +20%+ springtime rally). Last summer oil peaks above 100. The tight white standard deviation bands squeezed-in for a huge move on tap. The bears win with the big move to the downside. Oil price bottoms early this year with a W pattern bottom. The bottom of the W is 40 and top of the W is 51-53 that targets the 60-64 area that was achieved.

Price violated the lower standard deviation band on the way down so a move to the upper band occurs in May so a move to the middle and perhaps lower band is on tap next and price is nearing the lower band (red dot). The chart indicators are weak and bleak except for the stochastics that are oversold wanting to see a bounce in oil price. Further lows appear on tap after any bounce, however, if price comes down to the 40-ish level at the prior lows, the light green lines should hold exhibiting positive divergence. Therefore, those expecting a big plunge in oil with 30 coming fast will likely be disappointed.

Oil prices will likely stagger sideways through the 40-52 range perhaps through the end of the year. Deflationary pressures should continue with ongoing less demand and more supply in a slowing global and Chinese economy, however, Middle East war and other geopolitical factors act as a counterbalance. 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, July 28, 2015

SPX S&P 500 Daily Chart 6-Month Sideways Channel Island Reversal Important Moving Averages

Stocks log a five-day downtrend after traders had become complacent and worry-free. Price came down to the 200-day MA at 2064 and bounced. The extremely important 10-month MA is also at 2064. The light blue lines show the island reversal pattern that occurred. About two weeks ago, price gapped higher and then spent 10 days on the island above 2080. Price then came back down and fell directly through the same gap as the upside creating the island reversal. Price will likely want to revisit this 2077-2080 area.

The dark blue lines show the ongoing six-month sideways channel through 2045-2130. Bulls win big above 2130. Bears win big under 2045. The battle continues in the middle. The red lines show negative divergence across all indicators across the five month time frame where price punched out new all-time highs. For the last few days, the indicators are weak and bleak wanting to see further lows after any bounce. S&P futures are up a robust +12 three hours before Tuesday's opening bell.

The slope of the 150-day MA is an important cyclical signal that you can use to gauge all your stock positions. Very simply, the stock or index is in a cyclical bull market pattern if the 150-day MA slopes higher and in a cyclical bear market pattern if the slope is downward. The pink line shows the steady rise over the last few months as traders drink Fed booze and inject ECB crack into their veins buying stocks regardless of price. The central bankers will always support the stock market so traders show little concern or worry. The pink circles show recent times where the 150 threatened to roll over but the central banks are always there to keep pumping and save the day. The early July flattening was rolling over but that was saved by the ECB that saved Greece. The spike higher and Greece bailout rally boosted the slope of the 150-day MA to make the bulls happy. Now the 150 is flattening again. Will the 150-day MA roll over and start sloping lower? If so, the stock market will trend lower for weeks, months and perhaps a year or two ahead.

On today's prospective bounce, watch the gap level discussed above at 2077-2080 and if that gives way an important battle will take place at the 150-day MA at 2084. Reference the prior SPX S/R missive for price levels that will attract price.

Keystone's proprietary trading algorithm, Keybot the Quant, remains long and is tracking financials and volatility. The market bulls need VIX under 13.85 to prove they have the beans for a sustainable upside rally. The market bears need to push XLF under 24.82 to accelerate the market selling and Keybot will likely flip short. If financials remain bullish, and the volatility remains bearish (VIX above 13.85), then stocks stagger sideways with an upward bias.

A key gauge to tell you market direction after the opening bell is the VIX 15.38 level (the 200-day MA). As explained in the prior chart (scroll back to review the chart), the bears will growl strongly above 15.38. If the VIX drops back under the 15.38 today, the bears got nothing. 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.

Monday, July 27, 2015

SPX Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 7/27/15

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for trading the week of 7/27/15. 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 2134.72 on 5/20/15 and the SPX all-time closing high is 2130.82 on 5/21/15. The low for this year is 1980.90 which identifies the starting point of the huge February rally.

For Monday with the SPX starting at 2080, the bulls need to push above 2106 to accelerate the upside above 2110 in quick order, a formidable task. The bears need to push under 2077, only three points lower, to accelerate the downside. S&P futures are -7 about 2-1/2 hours before the opening bell on Monday morning. A move through 2078-2105 is sideways action to begin the week. The CPC and CPCE put/call ratio's are elevated so a near-term bottom should occur any day forward. Stocks may  become buoyant into and through the FOMC two-day meeting Tuesday and Wednesday.

The 150-day MA at 2084 is a critical resistance level. The slope of the 150-day MA is important in determining the cyclical path ahead and the moving average continues to threaten to flatten and roll over to the downside. The 150-day MA will move lower if price stays under. If bulls poke up through SPX 2084, the 2091 level is next and will occur quickly which then sets up an attack of the 2095-2099 resistance.

If the bears push under 2076-2077, a test of the 2072 support will occur quickly. The SPX began the year at 2059 so stocks are positive on the year by a smidge up +1.0%. July begins at 2063.11 with only five trading days remaining in the month. The key 10-month MA is at 2065 which signals serious trouble ahead for the stock market if it fails. The 200-day MA is 2064. The 12-month MA is 2052 which represents a cliff edge where stocks can collapse into complete free fall; at a minimum an acceleration lower would be expected.

Looking at the big picture the strongest S/R is 2135, 2131, 2126, 2123, 2121, 2118, 2114, 2110, 2099, 2091, 2081, 2079, 2076, 2072, 2067, 2061, 2056, 2046, 2040, 2038, 2032, 2030, 2023, 2019, 2011, 2002-2003, 1997-1998, 1993, 1988, 1985-1986 and 1982. The SPX moves choppy sideways through the 1990-2120 range for the last nine months with price attempting to break out above the 2120-2130 level in April, May, June and July but failing all four times. The 2050-2130 sideways channel range is in play for the last six months; an 80-point range. The March and July lows are at the 2040-2050 level which would create mayhem if this support fails.

2135 (5/20/15 All-Time Intraday High: 2134.72)
2133 (7/20/15 Intraday High 2132.82)
2132.82 Previous Week’s High
2131 (5/21/15 All-Time Closing High: 2130.82)
2130 (6/22/15 Intraday High 2129.87)
2128 (7/20/15 Closing High 2128.28)
2126 (4/27/15 Intraday High: 2125.92)
2124 (6/23/15 closing High: 2124.20)
2121 (4/24/15 Intraday High: 2120.92)
2120 (2/25/15 Intraday High: 2119.59)
2118 (4/24/15 Closing High: 2117.69)
2117 (3/2/15 Closing High: 2117.39)
2106.01 Friday HOD
2102.26 (50-day MA)
2100.29 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2096.45 (20-week MA)
2095.39 (100-day MA)
2094 (12/29/14 Intraday High: 2093.55)
2091 (12/29/14 Closing High: 2090.57)
2090.57.36 (20-day MA)
2083.88 (150-day MA; the Slope is a Keystone Cyclical Signal)
2079.65 Friday Close – Monday Starts Here
2079 (12/5/14 Intraday High: 2079.47)
2077.09 Friday LOD
2077.09 Previous Week’s Low
2076 (11/28/14 Intraday High: 2075.76)
2075 (12/5/14 Closing High: 2075.37)
2073 (11/26/14 Closing High: 2072.83)
2071 (11/21/14 Intraday High: 2071.46)
2064.75 (10-month MA; a major market warning signal)
2063.64 (200-day MA)
2063.11 July Begins Here
2058.90 Trading for 2015 Begins Here
2056 (11/18/14 Intraday High: 2056.08)
2053.07 (50-week MA)
2051.93 (12-month MA; a Keystone Cyclical Signal) (the cliff)
2046 (11/13/14 Intraday High: 2046.18)
2019 (9/19/14 Intraday High: 2019.26)
2011 (9/18/14 Closing High: 2011.36) (9/4/14 Intraday High: 2011.17)
2007 (9/5/14 Closing High: 2007.71)
2005 (8/26/14 Intraday High: 2005.04)
2003 (8/29/14 Closing High: 2003.37)
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)
1986 (7/3/14 Intraday Top: 1985.59)
1985 (7/3/14 Closing High: 1985.44)
1981 (2/2/15 Intraday Low for 2015: 1980.90)
1968 (6/24/14 Intraday Top: 1968.17)
1963 (6/20/14 Closing High: 1962.87)

Note Added Monday evening, 7/27/15: The SPX drops to an intraday low to begin the week at 2064 bouncing from the 200-day MA at 2064 and 10-mth MA at 2064. The battle will continue on Tuesday.

Sunday, July 26, 2015

VIX Volatility Daily Chart

The 200-day MA on the VIX chart is a key short term market signal; above the 200-day MA is bearish; below bullish. The VIX begins the week at 13.74 well under the 15.37 level keeping the bulls in charge. The major selling events this year were in January which gave way to the February rally (VIX drops under 200-day signaling the all-clear) and in March and late June-early July. When the VIX drops under the 200 the fix is in and bulls win.

Keybot the Quant, Keystone's proprietary trading algo, identifies VIX 13.85 as the most important parameter currently impacting broad stock market direction. On Friday, the VIX ran above 14, the HOD is 14.73, and it looked like time for the bears to growl. The growl turns into a whimper, however, when VIX drops back below the 13.85 level. Thus, markets will remain in happy bull mood if VIX is under 13.85. Market selling will occur if VIX moves above 13.85 but bulls should be able to keep the selling to a short term event if the VIX stays under 15.37. Above 15.37, and the stock market will be dropping like a stone. These levels will remain in play all week long give or take a few pennies either way. 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 Monday evening, 7/27/15: The VIX jumps above both the 13.85 and the critical 200-day MA at 15.38 ushering in market negativity. Tuesday is very important trading to see if the bears can keep the VIX above 15.38, or not.

Saturday, July 25, 2015

SPX S&P 500 2-Hour Chart

As mentioned in the prior SPX 1-hour chart, the 2-hour chart indicators were weak and bleak wanting to see price weakness into Friday afternoon, which occurred. Here is a look at the 2-hour and the indicators remain weak and bleak so lower lows in SPX price would be anticipated after any weak bounce occurs, in this 2-hour candlestick time frame.

The RSI is oversold, ditto the stochastics, which sets up for a bounce ahead. Price came down to 2079 stopping at a large gap from 10 days ago at 2076-2080. The SPX is under the 150-day MA at 2084 a negative market signal. The critical 10-month MA, watched by the old-timer's, is at 2065. The 2065 is critical support so price may want to tap on this level and make a bounce or die decision. July began at 2063.11 and the year began at 2058.90 adding more drama to this general price area. The 200-day MA is 2063-2064.

Encompassing the 150-day MA, 200-day MA, 10-mth MA and horizontal price S/R, this 2063-2086 level is an important bounce or die battle zone. Bulls win big above 2086 and stocks will likely run to 2100 in quick order. Bears win big under 2063. Under 2056 and large serious losses will begin mounting for the stock market as equities slide down the rabbit hole and the potential end to the six-year rally begins.

The indicators are weak and bleak as highlighted above so it may take from one to four candlesticks to turn the indicators into positive divergence, especially the MACD line, so 1 to 4 candlesticks are 2 to 8 hours trading time; so a bottom may occur in stocks anytime Monday or Tuesday. One or two up-down jog moves, with a lower low in price, may occur until the MACD line turns possie d, then the bulls will be back at bat. 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.

CPC and CPCE Put/Call Ratio Daily Charts Signal Near-Term Bottom At Hand

The CPC and CPCE put/call ratio's leap higher on Friday indicating palpable worry, fear and angst by traders. A tradeable bottom in stocks is at hand and will begin anytime in the days ahead. Usually the snap-backs are sharp which hints that Monday may be a rally. The central banks control the markets so if the PBOC (China) announces more stimulus today or tomorrow, of if the BOJ (Japan) or ECB (Europe) print more money early next week the bounce will begin quickly. If the central bankers remain quiet some further weakness in stocks may occur early in the week to further develop a bottom but the put/calls say a near-term bottom is on tap for stocks in the days ahead say beginning anytime next week.

The FOMC two-day meeting is on Tuesday and Wednesday so stocks will likely float higher into Fed Chair Yellen's promises to run the printing presses dropping dollars from helicopters indefinitely. This bullish outcome is in sync with the charts above.

The green circles show the recent forecasts for stock market bottoms and the red circles are predictors of market tops all of which occur. The put/calls are elevated right now; what do you think will happen? 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, July 24, 2015

SPX S&P 500 60-Minute Chart 200 EMA

The SPX is above the 200 EMA on the 60-minute at 2101.17 signaling bullish markets for the hours and days ahead, however, price fell under the 200 EMA yesterday but closed above. This battle will continue today and the stakes are high. Bulls win big if the 2101 support holds; the SPX will move up to the all-time highs. Bears win big if 2101 fails; the 2080's will be targeted as a first stop lower.

The green lines show a 'W' pattern bottom (bullish), positive divergence and oversold conditions that created the bounce. The Greece resolution occurs and the bulls never looked back. The SPX jumped above the 200 EMA punching the bears in the face. For the 'W' pattern bottom, the 'W' is from 2045 to 2085, to keep the math easy, 40 points, so the 2125 level is targeted to the upside, which occurs satisfying the 'W' pattern. The red lines show the rising wedge pattern (bearish), negative divergence and overbot conditions creating the spank down from the top. Price is now attempting to bounce and S&P futures are up +5 with the Friday session set to begin in about three hours.

The indicators are positively diverged (thin green lines) supporting a bounce, however, the MACD line is weak and bleak wanting price to come back down again for a lower low after the bounce. So stocks may start the day buoyant but into lunch time may falter and perform a major test of the 200 EMA. The RSI never reached oversold levels as yet so that remains on the table. A falling wedge pattern (bullish) may be developing and an up-down jog move would print in the apex of the wedge at the 2097-ish level. After a couple hours of trading check the chart to see if positive divergence is occurring with the MACD line, or not.

Watch the 200 EMA at 2101.17 since it determines the winner going forward for the hours and days ahead. The SPX begins at 2102 giving the nod to the bulls to begin the day. The SPX 2-hour chart shows stochastics wanting to support a bounce early in the day but the RSI, MACD line, histogram and money flow are all at lower lows, weak and bleak, so in the 2-hour time frame lower lows in price are desired for at least a couple candlesticks forward which would be 4 or 5 hours out which places stocks into this afternoon's trading. 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 Saturday, 7/25/15: The market bears came to play yesterday slapping stocks lower. The SPX tumbles through the 200 EMA signaling bearish markets for the hours and days ahead. The bears are in good shape going forward as long as the SPX remains under the 200 EMA on the 60-minute chart at 2100.29 drifting lower; call the 2100 level the line in the sand for the 200 EMA and for the stock market for near-term trading.

SPX S&P 500 Daily Chart Three Black Crows

The SPX prints three down days in a row creating a 'three black crows' candlestick pattern. The pattern confirms the trend change off the top and forecasts a weak stock market ahead. The pattern occurred in March with prices closing at the intraday lows, however, after a fourth down day stocks recovered in the spring time rather than fail. Interestingly, price did retreat again in late June early July to come back down to the late March lows, where the Greece resolution bounce occurred.

The 50-day MA is 2103 and price is at 2102 so a pivot will occur from this level today. Bulls win above 2103. Bears win below 2103. Time will tell if the three black crows lead to further market weakness this time around. 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.

Thursday, July 23, 2015

CPC Put/Call Ratio Daily Chart

As highlighted last week, the low CPC and CPCE put/call ratios signaled a near term market top due to complacency and lack of fear; and it occurs. Stocks floated higher for a few days and are now reversing receiving the spank lower. The expectation is that the bears should flex their muscles sending the stock market lower until the CPC moves above 1.20 to show that fear and panic is in the markets. A move above 1.20 will signal a tradeable near-term bottom. 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.

SPXA150R S&P 500 Stocks Above 150-Day MA Weekly Chart

The chart shows the number of stocks above their respective 150-day MA's. During the robust stock market party in 2013, 2014 and into this year, there are consistently 75% or more of stocks above their critical 150 MA. Now, there are only one-half of the stocks in the S&P 500 above their respective 150 MA. This is a bearish signal for equities going forward. A strong bull market should maintain the SPXA150R above 68%-70%. Bears are in control under 70% (for a continuing trend lower). If the chart drops under 38%-40% that will signal a reversal to the upside on tap for equities just like after the August 2011 market crash. 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.

NYHL NYSE New Highs-New Lows Weekly Chart

In a robust and strong stock market, you want to see a broad-based rally since that has staying power and long legs. The green upward-sloping channel verifies the upside party in stocks after the August 2011 waterfall crash. As stocks made new highs, more individual stocks were printing new highs verifying broad market strength. Now, not so much.

The red channel shows the consistent lower lows and lower highs in the NYHL going forward. This signals that fewer and fewer stocks are making new highs. Since the stock indexes remain near record highs, these stocks are obviously propping up the market. The concept is verified by the wild upside party in tech stocks a couple weeks ago including AAPL, FB, AMZN, NFLX, GOOGL. The lock was broken open on the liquor cabinet door at the NYSE so traders could celebrate the never-ending bull market fueled by central banker Keynesianism.

The problem with fewer stocks leading the gains in the indexes is that when these stocks pull back the shock to the broad indexes to the downside can become very dramatic. Less new highs and more new lows in the stock market indicate trouble ahead for equities. 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.

INDU Dow Industrials and TRAN Transportation Index Weekly Charts Dow Theory Signals Downside Confirmation

The Dow Theorists have been flagging the non-confirmation and roll over of the trannies as compared to the industrials in recent weeks. In its most simplistic form, Dow Theory requires new highs in the Dow Industrials to be confirmed by new highs in the Dow Transports, or visa versa to verify that the stock market remains in an uptrend. Conversely, lower lows in the Dow confirmed by lower lows in the trannies point to a sick stock market ahead. The concept stresses the importance of transportation stocks including rails and truckers vital to the economy and shippers such as UPS and FDX. Dow Theory has been around for multiple decades and is one of the oldest market indicators used by technicians. However, there are a dozen different methodologies behind identifying the confirmation and non-confirmation signals each having a minor twist to the overall concept. Keystone has a simple mind so to keep things simple, the important highs and lows are identified in the charts above.

On the Dow chart, stocks continue to print new highs through 2013, 2014 and into this year. Each day, traders drink Fed wine, snort BOJ crack cocaine and inject ECB heroin buying stocks with easy money without any fear or worry. The trannies participate in the upside orgy party confirming the Dirty Thirty at every higher high.......until the last days of last year. The red dot shows TRAN non-confirming with a lower high in December. The Dow continues printing new highs into the May top but trannies continues leaking lower developing lower lows and lower highs.

The non-confirmation transition zone gives way to a confirmation to the downside with the Dow printing a lower low from May into July and the Transports also printing a lower low in the same time frame. The two key indexes are confirming the downside move and now in a pattern of lower lows and lower highs which is bearish for the broad market going forward. Market bulls need both indexes  to break out above the upper trend lines of the downward-sloping red channels to reverse the negativity and return to a confirmation to the upside. For now, the bears are in control of the stock market for the weeks and months ahead. 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.

UPS United Parcel Service Weekly Chart 20/50-Week MA Cross Signals Cyclical Bear Market

Shippers UPS and FDX are key economic bellwethers. Parts for manufacturers, products and goods for stores and paper contracts for business deals are all delivered by the guy in the brown truck sporting brown short pants. One of Keystone's cyclical market indicators is the 20/50-week MA cross on the UPS chart. The stock market falls into a cyclical bear market starting 11 weeks ago with the 20-wk MA failing under the 50-week MA signaling trouble ahead for equities. Stocks, however, continue to make or hover at new all-time record highs which verifies the power of the global central bankers and their sick money-printing schemes.

Price is under the 20-week MA so this will drag the 20 lower increasing the divergence away from the 50-week MA creating further market negativity. Bulls need to push UPS price higher pronto, otherwise, the six-year bull market orgy is at an end. As long as the 20 remains under the 50, the expectation is for a weaker stock market going forward for weeks and months to come and perhaps longer. 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 Index Weekly Chart 40-Week MA Cross Signals Cyclical Bear Market

Keystone has posted this chart many times as it is a key cyclical market signal. Stocks will trade higher for weeks, months and perhaps a year or two or more if NYA price is above the 40-week MA. Conversely, stocks will sell off for weeks and months and perhaps longer if price is under the 40-week MA. Type 'NYA' in the search box to bring up prior discussions on this chart for further study. Keystone documented how the central bankers stepped in at each failure on the chart to save the day. Will the central bankers be able to save the day again?

The NYA fell under the 40-week MA two days ago signaling a cyclical bear market ahead so monitor this chart closely going forward. If the NYA remains under the 40, the stock market is headed for a serious pull back. Market bulls can celebrate by drinking more Fed wine and watching stocks rally if the NYA moves back above the 40-week MA. Note the ominous rising wedge pattern. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

UTIL Utilities Weekly Chart Market Sell Signal

The Wall Street old timer's use the utilities as a key indicator for broad market direction. Norman Fosback describes the methodology in the Stock Market Logic book from decades ago. Two key concepts are followed, the weekly uptrend based on the closing number 15 weeks prior, and, the 50-week MA. When the weekly trend turns negative the stock market is headed for trouble and when the 50-week MA fails a double-whammy of fate awaits. This double-whammy is in play now but markets continue to remain elevated. This is proof of the power of the central banker's Keynesian money printing schemes.

Count 15 weeks back to see if the utilities are in a weekly uptrend or downtrend. Last year into early this year the Fed wine is flowing like water as the weekly  uptrend remains in tact. The stock market sold off to begin the year but recover in February to present. The utes were in a weekly uptrend and above the 50-week MA which helped create the recovery. As the March winds begin, however, the utilities drop under the price level from 15 weeks prior creating a trend change (red circle); utes are now in a weekly downtrend. Usually, the stock market will peak and begin a substantial sell off within zero to a couple months time after the trend change occurs.

The weekly downtrend remains in place from March to present. This week the comparable week 15 weeks ago is the maroon circle. Next week the comparable week is the blue circle. In general, for the next seven weeks, the weekly closing price is above the 586-ish level. Thus, market bears will be happy if UTIL stays under 586 since their reward will eventually develop with stocks selling off. Bulls will recover and ruin the bear's negativity if UTIL moves above 585-ish. This level coincides with the 50-week MA so the 585-586 level takes on epic importance moving forward.

Note the price action from March through May in relation to the 50-week MA; do you think this moving average is important? Utilities lost the 50-week MA support in early June and remain under. The above chart is very bearish for stocks and it is surprising (well not so much since the central bankers have pumped markets higher for the last six years) that a significant selloff has not begun. As long as UTIL remains under 585 for the coming weeks, the expectation is for a large pull back in the broad 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.

Monday, July 20, 2015

Copper Weekly Chart at 6-Year Low

Copper drops to a 2.47 handle this morning teasing at six-year lows. Dr. Copper is a key economic bellwether perhaps the most important market parameter since about 5 pounds of copper are in the average car and about 50 pounds in a house. Weak copper indicates that the two important market drivers, the automobile and housing sectors, are likely weaker than thought. Lower copper and commodities are a deflationary indicator. 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 Weekly Chart at 5-Year Low

Gold drops to 1104 as this message is typed to five-year lows. China data on the weekend indicates that their buying of gold is at a slower pace than expected. The higher dollar also punishes gold. The Indian festival and marriage season is coming which may create stability in the yellow metal. 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.

Sunday, July 19, 2015

ABX Barrick Gold Weekly Chart Lower Band Violation

ABX is another gold miner fave of interest to many traders. The same theme continues. The lower band violation is in play and price is extended to the downside; both would like to see a bounce. However, the indicators are weak and bleak over the last month (red lines) wanting to see another lower low after a bounce. The green lines are more constructive showing positive divergence in place over the multi-month period that will eventually lead to a recover for Barrick.

The standard deviation bands tightened in May and squeezed price lower since the US dollar index jumped higher. Patience is required for gold and gold miner stocks. August appears a much more attractive time to pick bottoms. Watch the USD dollar index since a higher dollar sends gold and gold miners lower and a lower dollar will send gold stocks higher. 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.

NEM Newmont Mining Daily Chart Lower Band Violation

NEM is crushed last week on the stronger dollar. Gold and gold miners are beaten as the dollar rises. NEM earnings are on tap on Wednesday afternoon so there may be some fireworks ahead. The red rising wedge, overbot conditions and negative divergence create the smack down off the top in May. The green lines show some positive divergence developing, and indicators are oversold, however, the RSI and MACD line remain weak and bleak wanting lower lows after any price bounce occurs.

The lower band is violated so a move back to the middle band at 23 and dropping is in play. The chart says a bounce should occur but then price should leak lower again to satisfy the RSI and MACD line. Thus, NEM is not attractive as a short and would be more attractive as a long but only after a couple weeks or so to allow the indicators to develop possie d. Of course the earning release can create a dramatic move later in the week either a euphoric catapult higher on better than expected results, or an utter collapse if the news is bad. It is best to be patient and wait for that drama to play out. NEM may not set up as an attractive long until into August. 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.

GDX Gold Miners ETF Weekly Chart Downward-Sloping Channel Lower Band Violation

The gold miners are crushed in concert with gold over the last month as the US dollar index catapults higher. The technical analysis on the miners is similar to the metal itself in the previous gold post. The red lines show a 2-year downtrend in place with the downward-sloping channel. Price is at the lower channel rail. Price is violating the lower band so a move to the center band, at a minimum, at 18.83 and dropping is in play.

The green lines show positive divergence in the multi-month time frame which is bullish, however, over the last month, due to the rising dollar, the indicators are weak and bleak (red liens) wanting to see lower lows in price after any bounce occurs. The GDX is at record lows not seen since early 2009 in the heart of the stock market crash. In March 2009, former Fed Chairman Bernanke started printing money with QE1 to destroy the dollar and goose the stock market, which he did, and gold catapulted higher.

Note the money flow printing a lower low in November of last year (red line). this indicator told you that price wanted to come back down again after a bounce occurs due to the possie d with the other indicators. The bounce occurs and gold started the year on a positive note, but that weak and bleak profile on the money flow dragged price back down to the current lows. Money flow is now positively diverged across the last nine months which is bullish. The miners appear to be a waiting game just like the metal itself. It is not prudent to short at this point and price will need at least a couple weeks to wash out for a tradeable bottom. Patience is probably the key word if you are a gold bug and gold miner enthusiast. The GDX may become more tradeable from the long side in early August.

The same technical analysis holds for NUGT but as a general rule all 3x ETF's and ETN's should not be played in the 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.

GOLD COT (Commitments of Traders) and Daily Charts Lower Band Violation Price Extended to Downside

The gold COT report chart shows the tops in gold price with the green circles and the bottoms in gold with the red circles. The blue and red bars are squeezing in towards the center in sync with prior bottoms in the gold price. The question is if the next prints show a move outward in the bars, or remain flat to moving more towards the center line (blue and red dots). COT information lags the price charts.

On the gold daily chart, price has collapsed. to multi-month record lows losing 1150 last week and plummeting to an 1129 handle before closing the week at 1132. The brown dots show price over extended to the downside under the 20-day MA under the 50-day MA under the 200-day MA which will require a mean reversion higher. The lower band violation occurs so price will want to recover to the middle band, now at 1165 and dropping, at a minimum going forward.

The green lines show positive divergence remaining in place on the multi-month basis wanting to see higher prices ahead, however, in the very short term (VST), the red lines show weak and bleak RSI, MACD line and stochastics. So price should bounce but will come back down again in the days ahead for another low. It may take a few days to rectify the VST weakness but once that is finished, and if the longer term possie d remains in play, which it likely will, price should recover similar to the November and March bottoms.

The gold weekly chart also violates its lower band and is setting up with positive divergence but in the VST, on a weekly basis, the RSI and MACD line are weak. This  hints that lower lows may be in store for gold over the next say one to three weeks. Mixing it all together, gold may have a bumpy path ahead with a bounce on tap for a couple-few days, then lower again, then another bounce but then lower again say a couple weeks out. Gold should place a bottom but it may not occur until next week or early August. Thus, it is too tricky to jump in long right now, that would not be prudent, and it is also not desirable to short. It is likely best to wait a couple weeks where a firm bottom may appear.

The weakness in gold, as well as copper, is concerning if long the market. Stocks remain elevated and printing record highs due to the global central banker intervention. The weakness in commodities indicates global economic weakness. Deflation, the "D" word that everyone is afraid to mention, remains on the table, and in a deflationary environment gold can move lower along with everything else. The waiting game continues for gold although an edge can be given to the gold bugs. A substantive bottom should occur for gold over the next month.

The dollar index (USD) has jumped from 95.5 to 98 in the lat five days sending gold down the rabbit hole. As would be expected, the dollar chart is the mirror image of the gold chart and the same technical analysis is in play only in reverse. As the USD tops out in the near term over the coming days and weeks and pulls back to take a rest gold will recover and move higher. 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: The COT Chart is courtesy of COT Price Charts and is annotated by Keystone.

CPCE Put/Call Ratio Daily Chart Signals Near-Term Market Top At Hand

The low put/calls indicate a market top at hand at anytime in the days ahead. The low CPC under 60 was highlighted last week (scroll back to study the prior CPC and CPCE charts). The near-term top can occur at anytime in the hours and days ahead. The CPCE drops down to 0.55 matching the low from last week. That prior 0.55 low corresponded to the pull back in stocks on Wednesday afternoon, however, the joyous NFLX and GOOGL earnings, along with the typically bullish Fed  semi-annual Congressional testimony goosed stocks higher to end the week.

The red circles show market tops due to complacency and lack of fear and the green circles show bottoms due to panic and fear. There is a tradable market top occurring now and picking a spot for a short trade in the hours and few days ahead appears prudent. 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.

Thursday, July 16, 2015

FB Facebook Weekly Chart Rising Wedge

Facebook remains of interest to many. The chart was lat posted at the start of the year with the red arrow indicating a spank down ahead due to negative divergence, the rising wedge pattern and coming off the overbot conditions. Price falls from 85-ish to 75-ish but when the central bankers saved the markets in February, Facebook was a big beneficiary. Price is moving higher inside the green channel. It is interesting since the chart was very bearish to begin the year.

Over the last few weeks the short green lines show long and strong strength so one to three more weeks of buoyant prices at current levels are expected. The monthly chart is content at one to three more months of flat to slightly higher action but as the maroon lines show in the chart above, negative divergence will likely remain firmly in place over the couple-year time frame.

The projection is for FB to stumble sideways at current levels with a new high in price coming about two weeks out, then a pull back for a few weeks then a move higher again to current levels which would be the top for FB. Then more sustainable downside should begin for the months and longer ahead the move that should have continued after the start of the year. Facebook should place a multi-month or even multi-year top now through October followed by sideways to sideways down. The collapses from rising wedges can be quite dramatic so FB may end the year very ugly. FB is not an attractive long due to limited upside and also is not an attractive short since, as explained, it likely needs a few more weeks before topping out. The recent strength has created some momo. 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 Sunday, 7/19/15: FB gaps higher after the NFLX and GOOGL orgy of positive earnings. FB jumps +4.5% on Friday to 95 the upside move is a surprise. Price jumps above the upper trend line of the rising wedge. Traders are chasing the small number of stocks such as Apple, Facebook, Netflix and Google which pumps the Nasdaq Indexes and broader market indexes higher. Same analysis holds. The weekly chart indicators remain long and strong so higher highs in price expected a couple weeks out. Monthly chart indicators point to a higher high after any pull back on the monthly basis. The momentum is strong so the longer term top in FB is most likely in the August-November time frame.

BPSPX Bullish Percent Index Daily Chart

The six percentage-point reversals issue market buy and sell signals. The BPSPX is a confirmation signal for a current trend. In early February the six point reversal from 60 to 66 issued a buy signal. That remained in place until late April early May with the double-whammy sell signal. The 70% level is critical and carries clout as a buy/sell signal as well so the drop under creates a six percentage-point reversal off the top and a failure of the 70 level. The bears remain on the double-whammy sell signal but the bulls are fighting back.

The BPSPX hit 54 last week so bulls need to print 60 and higher to receive a market buy signal. This would confirm a continuing upside stock market rally ahead. The market bears will be okay going forward as long as they keep the BPSPX under 60. 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 Sunday, 7/19/15: BPSPX ends the week at 56.20. The bulls still have work to do to receive a market buy signal.

Wednesday, July 15, 2015

Fed Chair Yellen Begins Two-Day Congressional Testimony

The Federal Reserve must testify before Congress semi-annually (twice per year), typically in late February and also in July. The two-day stints (one at the House and the other at the Senate) in testimony typically result in bullish days for the markets, especially the last few years with former Chairman Bernanke and now current Fed Chair Yellen promising to drop money from helicopters indefinitely.

For short-term day-trading, the idea is to enter the market long the day before the first day of testimony and then exit the long trade the day after the second day of testimony. This results in an 80% success rate. The period from the day before the testimony to the second day of testimony is typically up strongly as well, and also the two-day testimony itself typically results in an up move from the first day to the second day, but the period that bookends the overall testimony from the day before, to the day after is the highest percentage move.

Note that the incorrect July 2007 number occurred just before the October 2007 market top, and the incorrect read in February 2008 is when the financial sector bubble popped so the markets were not in a good mood back then. The incorrect read March 2012 was exactly as the markets were topping and rolling over. February's testimony in 2013 resulted in another up move for the markets. Chairman Bernanke had the magic touch; he was a rich uncle coming to town each time he testifies pumping the easy money joy.

The February 2014 testimony receives a rare split of the two days due to a snowstorm in Washington, DC, so the individual dates are used to assess the indicator and each testimony results in up days for stocks as Yellen flaps her dovish wings. Last July, one year ago, the same pattern occurs with a nice up move in stocks into the second day, a 12-point gain, but the day after the meetings ended, 7/17/14, the SPX fell from 1982 to 1955, a 27-point dump.

In February of this year, stocks float higher as Yellen promises more easy money at her testimony. Will stocks float higher over the next couple days as Yellen, Queen of the Doves, talks dovishly, or, will she become more hawkish promising a rate hike sooner rather than later throwing a wrench into the works?

7/15/15 – 7/16/15; 2100-2109/2127; Markets are Up; Correct
2/24/15 – 2/25/15; 2109/2114; Markets are Up; Correct
7/15/14 – 7/16/14; 1970/1958 (but up 1970/1982 for two days; the day after the meeting was a huge selloff); Markets are Down; Incorrect
2/27/14 (snowstorm rescheduled); 1844/1860; Markets are Up; Correct
2/11/14; 1796/1820; Markets are Up; Correct
7/17/13 -- 7/18/13; 1671/1684; Markets are Up; Correct
2/26/13 -- 2/27/13; 1488/1515; Markets are Up; Correct
7/17/12 -- 7/18/12; 1354/1377; Markets are Up; Correct
2/29/12 -- 3/1/12; 1372/1370; Markets are Down; Incorrect
7/13/11 -- 7/14/11; 1314/1316; Markets are Up; Correct
3/1/11 -- 3/2/11; 1327/1331; Markets are up; Correct
7/21/10 -- 7/22/10; 1083/1103; Markets are Up; Correct
2/24/10 -- 2/25/10; 1095/1104; Markets are Up; Correct
7/21/09 -- 7/22/09; 951/976; Markets are Up; Correct
2/24/09 -- 2/25/09; 743/753; Markets are Up; Correct
7/15/08 -- 7/16/08; 1228/1260; Markets are Up; Correct
2/27/08 -- 2/28/08; 1381/331; Markets are Down; Incorrect
7/18/07 -- 7/19/07; 1549/1534; Markets are Down; Incorrect
2/14/07 -- 2/15/07; 1444/1456; Markets are Up; Correct

Note Added Sunday, 7/19/15: As always, the stock market rallies through the Fed testimony.