Monday, November 30, 2015

USD US Dollar Index Daily Chart Overbot Rising Wedge Negative Divergence XEU Euro Daily Chart Oversold Falling Wedge Positive Divergence




The pink boxes show that the trend higher in the dollar, and trend lower in the euro, are strong trends and continuing, however, a reversal is needed in the near term. In October, ECB President Draghi announced plans to provide more QE (quantitative easing) stimulus at the upcoming Thursday, 12/3/15, meeting. The euro drops and the dollar pops since their respective currency baskets are heavily weighted with each others currencies (they move inverse to each other).

The inverse relationship between the dollar, USD, and euro, XEU, is clearly evident on the charts. The five-week move, however, needs to pause. For the 
dollar, the overbot conditions, rising red wedge and negative divergence (red lines) are all bearish wanting to see a spankdown for the dollar in this daily time frame. For the euro, the oversold conditions, falling green wedge and positive divergence (green lines) are all bullish wanting to see a move higher for the euro

After the near-term pull back for USD and move higher for XEU, the expectation would be for a sideways move ahead for both currencies those expecting a dollar well above 100 will be disappointed and those expecting the euro to collapse to parity (1.00) in the short term will be disappointed.


Of course the ECB meeting on Thursday morning holds the key. It appears that much of the move expected from more ECB QE is priced-into the market. Over the last five weeks, the dollar is up from 94 to above 100 gaining over +6.4%. The euro drops from 1.15 to 1.06 over the last five weeks a drop of -7.8%. The expectation in the near term is for the dollar to pull back and the euro to rally, however, King Draghi holds the ultimate answer and will bring the tablets down from on high on Thursday morning and the central bank will tell global traders how to trade. 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: Google has a glitch in their font programming so if the text appears uneven or missing, try a different browser.]

Tuesday, November 24, 2015

SPX S&P 500 2-Hour Chart

Here is the SPX 2-hour rolling over as was forecasted from last Friday morning. Price prints matching highs for four candlesticks (red line) and indicators go neggie d so price is spanked lower. The indicators are weak and bleak and the negative MACD cross occurs so the chart would need at least 2 to 4 candlesticks to produce positive divergence to turn the ship higher again; this is about 4 to 8 hours trading time which is all day today into tomorrow.

Of course events can always send charts violently one way or the other at any time. This morning, Turkey shoots down a Russian jet over Syria which escalates the mess in the Middle East creating a sour mood in markets. For the rally move from 2020 up to 2096, the first Fibonacci retracement at 38% is 2067.

Reference the prior SPX S/R missive for price support levels. Price is at 2078. LOD 2076.55. November began at 2079.36 and determines whether the month ends negative or positive on Monday, 11/30/15. Resistance above is 2079-2081, 2084 and 2091-2093. Support below is 2075, 2071 and 2065-2067. The 20-day MA is 2080. The 200-day MA is 2065. The 50-week MA is 2063. The 2063-2067 area may serve as a magnet for price. 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.

VIX Volatility 10-Minute Chart Battle at the 200-Day MA

The VIX battles at the critical 200-day MA at 16.26 which serves as a bull-bear line in the sand. Bears win with higher volatility above the 200-day while bulls win below the 200-day with less volatility. This battle tells you market direction today. At 16.37, above the 16.26, the market bears are winning so far. The Keybot the Quant algorithm wants to see VIX above 18.20 before serious market selling would be locked on course. Watch VIX 16.26 like a hawk.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 10:20 AM EST: VIX is 16.79 so the market bears are smiling today. SPX is at 2077 under the important 20-day MA resistance at 2080 and November's starting number at 2079.

Note Added 9:00 PM EST: The VIX dropped under 16.26 before lunch time so you knew stocks would recover. VIX ends the day at 15.93. The bulls punch the bears in the face.

USD US Dollar Index Tags 100

The US dollar index tags 100 on Monday, 11/23/15. The move was very quick to 100.07 before lunch time and then price immediately drops back to the 99-handle. The USD briefly touched one hundo in early March this year but that was short-lived. The last time the dollar was firmly above 100 was from 1997 through 2003 about 12 years ago. 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, November 23, 2015

SPX S&P 500 and COMPQ Nasdaq Composite Daily Charts 150-Day MA Slopes Signal Cyclical Bear Markets but Battle Continues


The slope of the 150-day MA can be used to determine whether any stock or index is in a cyclical bull or cyclical bear market. The S&P 500, SPX, enjoyed the multi-year cyclical bull until mid-August when the 150-day MA slope rolled over ushering in a cyclical bear market. If you are bullish the markets you want to see the 150-day MA curl higher and resume the uptrend. This would likely set up all new all-time highs for the major indexes. If the 150-day MA continues drifting downward, the stock market remains in a cyclical bear market pattern and stocks will weaken.

The Dow Industrials, INDU, is in a cyclical bear market just like the SPX chart above. The Russell 2000 small caps, RUT, has rolled over the strongest and firmly in a cyclical bear. Tech stocks, the Nasdaq Composite, COMPQ, has flattened; you can give a slight edge to the bears for a cyclical bear market ahead but watch this closely. If the broad markets want to go higher it will first show up with the Nasdaq 150-day MA curling higher and resuming a new uptrend. The market bears would be toast.

If the Nasdaq 150-day MA continues to roll over and slope to the downside the market bulls are toast as all four major indexes would be in a firm cyclical bear market pattern for weeks and months to come. 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 Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 11/23/15

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SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for trading the week of 10/19/15. 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 intraday low for this year is 1867.01 on 8/24/15. The closing low for this year is 1867.61 on 8/25/15.

For Monday, 11/23/15, today, as the holiday-shortened week of trading begins, with the SPX starting at 2089, the bulls need to push above 2097 to create an upside acceleration into the resistance levels highlighted below. The bears need to push under 2083 to accelerate the downside. A move through 2084-2096 is sideways action for Monday.

The bulls need to push up through the strong 2091-2093 resistance, that will lead to a test of the 2097 strong resistance where last week’s price move stalled. A move through here will test the 2099-2100 resistance gauntlet. You can lump this whole area together and call the 2097-2103 level as a serious resistance zone. Bulls win big above 2103 since 2109-2110 will occur in a heart beat and then higher from there. Bears remain in the game under 2097.

The bears need to push down through the 2083-2084 support, this will immediately test November’s starting level at 2079. There are only five trading days remaining in the month and 2079 determines a positive versus negative November. EOM is Monday, 11/30/15. The 2079 also serves as a back kiss of the 20-day MA, so price would bounce or die from this level. If price collapses, 2075 support is next then 2071.

Looking at the big picture the strongest S/R is 2121-2123, 2114, 2109-2110, 2102-2103, 2099-2100, 2097, 2093, 2091, 2084, 2081, 2079, 2075, 2071, 2067, 2061, 2056, 2046, 2040, 2032, 2019, 2011, 2002, 1985-1988, 1978, 1973, 1965, 961, 1951, 1942, 1924, 1897, 1884, 1878, 1874, 1872, 1848, 1841, 1808 and 1803. Note the air pockets between 1872 and 1848 and between 1841 and 1808. There is a tiny gap fill remaining up top at 2119-ish.

The full moon peaks on Wednesday at 5:44 PM EST and markets are typically bullish through the full moon. Markets tend to be bullish in front of a holiday and the Friday shortened session is typically always bullish although the track record is mixed in recent years. Therefore, seasonality-wise, the bulls have an advantage say from Tuesday afternoon into the weekend. Markets are closed on Thursday for Thanksgiving Day. The stock market closes early at 1 PM EST on Friday.

Consumer Confidence on Tuesday at 10 AM EST and Consumer Sentiment on Wednesday at 10 AM EST are key data points this week.

2135 (5/20/15 All-Time Intraday High: 2134.72)
2133 (7/20/15 Intraday High 2132.82)
2131 (5/21/15 All-Time Closing High: 2130.82)
2130 (6/22/15 Intraday High 2129.87)
2129
2128 (7/20/15 Closing High 2128.28)
2126 (4/27/15 Intraday High: 2125.92)
2124 (6/23/15 closing High: 2124.20)
2123
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)
2114
2110
2109
2104
2103
2102
2100
2099
2097.06 Previous Week’s High
2097.06 Friday HOD
2097
2094 (12/29/14 Intraday High: 2093.55)
2093
2091 (12/29/14 Closing High: 2090.57)
2089.17 Friday Close – Monday Starts Here
2089
2086
2084
2082.82 Friday LOD
2081
2079.36 November Begins Here
2079 (12/5/14 Intraday High: 2079.47)
2078.67 (20-day MA)
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
2071 (11/21/14 Intraday High: 2071.46)
2069
2067
2065
2064.85 (200-day MA)
2063
2061.36 (50-week MA)
2061
2059.30 (10-month MA)
2058.90 Trading for 2015 Begins Here
2058
2057.61 (150-day MA; the Slope is a Keystone Cyclical Signal)
2057
2056.26 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2056 (11/18/14 Intraday High: 2056.08)
2053.91 (12-month MA; a Keystone Cyclical Signal) (the cliff)
2053
2050
2049
2046 (11/13/14 Intraday High: 2046.18)
2041
2040
2038
2034
2033.86 (100-day MA)
2032.63 (20-week MA)
2032
2030
2024
2023
2021
2020.33 (20-month MA)
2019.91 (50-day MA)
2019.39 Previous Week’s Low
2019 (9/19/14 Intraday High: 2019.26)
2018
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)
2002
2001
1999
1998
1997
1995
1993 (1/15/15 Closing Low: 1992.67)
1991.71 (100-week MA)
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)
1983
1982
1981 (2/2/15 Intraday Low: 1980.90)
1980
1979
1978
1976
1973
1970
1968 (6/24/14 Intraday Top: 1968.17)
1965
1964
1963 (6/20/14 Closing High: 1962.87)
1961
1958
1956 (6/9/14 Intraday Top: 1955.55)
1951 (6/9/14 Closing High: 1951.27)
1949
1948
1943
1942
1937
1936
1931
1929
1928
1924 (5/30/14 Intraday Top: 1924.03) (5/13/14 Closing High: 1923.57)
1920
1917
1912
1910
1906
1902 (5/13/14 Intraday Top: 1902.17)
1901
1897 (5/13/14 Closing High: 1897.45) (4/4/14 Intraday Top: 1897.28)
1891 (4/2/14 Closing High: 1890.90)
1889
1886
1885
1884 (3/21/14 Intraday Top: 1883.97) (3/7/14 Intraday Top: 1883.57)
1882
1880
1879
1878 (3/7/14 Closing High: 1878.04)
1877
1876.20 (150-week MA)
1874
1873
1872
1870
1868 (8/25/15 Closing Low for 2015: 1867.61)
1867 (8/24/15 Intraday Low for 2015: 1867.01)
1865
1862
1859
1855
1851 (1/15/14 Intraday Top: 1850.84)
1849 (12/31/13 Intraday High Top for 2013: 1849.44)
1848 (1/15/14 Closing High: 1848.38) (12/31/13 Closing High for 2013: 1848.36)
1846
1845
1843
1842
1841
1840
1839
1835
1831
1828
1827
1824
1820

Sunday, November 22, 2015

SPX S&P 500 Daily Chart Fibonacci Retracements

From the September-October bottom (treat them as the same low price level), to the November top, the stock market retraces down to its 38% Fib retracement at 2017-ish and bounces. The chart illustrates why you always want to keep an eye on the Fibonacci retracements for technical trading. If price would have fell a bit lower, the 50% Fib at 1988 would have been targeted. Instead, the 38% Fib held and the robots took over sending the stock market 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.

BPSPX S&P 500 Bullish Percent Index

The BPSPX maintains a double-whammy market sell signal on the stock market since price fell under the 70% level and also performed a six percentage-point reversal off the  top. The market sell signal remains in effect unless the bulls can push above 70. The bottom three days ago is 64.70 so a six point reversal is 70.7. Thus, lump this together with the 70 level as the line in the sand.

Market bears are okay as long as the BPSPX stays under 70 and heading lower. If the BPSPX climbs above 70-71, a strong rally is on tap with stocks heading to new all-time highs. 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.

GTX Commodities Weekly Chart Oversold Falling Wedge Positive Divegence

Commodities have been slapped silly over the last year. This same technical analysis can be used for the CRB an identical chart. Price popped from the positive divergence in August and did not have to come back down again chart-wise, however, the central bankers are the markets, and since the ECB crushed the euro with promises of more QE, the dollar ran higher sending commodities lower. The possie d, oversold conditions and falling wedge are all bullish indicators so the expectation is for prices to recover going forward.

If commodities rise, the US dollar index must be stabilizing and even expected to drift lower rather than higher as the universal consensus expects. The pink box shows that the downward trend does remain in play. A relief rally is anticipated but commodities will likely head more sideways for months to come. Long plays such as DBA or ANDE can be considered going forward. No rush to enter long now simply place them on your long play watch list. 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 Note Yield Weekly Chart Sideways Symmetrical Triangle

The markets are writing an epic story now and into 2016. After nearly seven years of obscene Keynesian money printing, the Federal Reserve's grand experiment, initiated by former Fed Chairman Bernanke and continued by Fed Chair Yellen, will emerge as a success or a devastating failure. The chart above hints at a date-certain when the historic market story's final chapter will be written.

If you extend the sideways symmetrical triangle out the apex occurs around April 2016 five months away. So a huge global economic decision is coming say as the new year begins. Those that worship at the Federal Reserve's feet and believe in a stronger economy ahead and higher inflation will be rewarded if yields break above 2.30% and heading higher. The vertical side of the triangle is 80 basis points so the upside target would be 3.10%.

If the Federal Reserve's grand experiment is exposed as a seven-year failure and the global economy falls into a complete deflationary collapse, which would likely rhyme with the Great Depression, the yield will collapse from the triangle at 2.05%-ish so the downside target would be 1.25%.

The pink boxes show that the upside move in yields in 2013 was a strong trend but it petered out as 2014 began. The downside move in yields was a strong trend as 2014 ended but that trend petered out earlier this year. The ADX remains very low verifying that there is no trend occurring with the 10-year yield now only sideways behavior. Ditto the moving averages that are lining out sideways. Yield is setting up for the epic move that will occur between now and springtime.

Getting out in the weeds for some of you more advanced technical traders, many times a sideways triangle pattern will initially breakout or breakdown, about one-half to two-thirds of the way through the pattern (like where the above chart is), however, this move is typically a fake-out and the yield will return into the triangle pattern and then commit to the other side. Thus, as the central bankers play their reindeer games, the 10-year may poke above 2.30%, 2.40%, 2.50% but remain skeptical. Above 2.50% and the bond bears (lower prices higher yields) are likely correct and the move is the right move higher and yields will move on to higher highs. But if yields roll over, and then reenter the triangle, they will likely begin dropping like a stone falling through the triangle and out the bottom side and destined for a one-handle.

There will be lots of drama ahead over the next few months. Considering the deflationary collapse in commodities, China and other economies slowing, weak copper, the sick Baltic Dry Index, and other factors, Keystone currently  favors the deflationary outcome ahead. The 18-year stock market cycle is the most reliable cycle and the secular bear ends 2018 followed by a secular bull 2018-2036. It is common to see big cyclical stock market rallies in a secular bear. Thus, with only about three years remaining in the stock cycle, it would not be surprising to see the stock market print  say 2 or 3 losing years over the next 4 years. A sick stock market would be in concert with the deflationary outcome for the 10-year yield chart above with a one-handle on the way. We will not have to wait long; the final chapter is currently being written for bond and stock markets from now into February-April. 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.

UST2Y 2-Year Treasury Note Yield Daily Chart

The 2-year yield has exploded higher (lower note prices higher yields) from 0.57% to 0.93% during the last month; a huge 36 basis points! After ECB President Draghi announced plans to fire a bigger QE money bazooka on 12/3/15 one month ago, the euro has dropped, which is Draghi's main goal, US dollar has popped, and the 2-year yield has ran higher. The Fed rate hike planned for 12/16/15 is pricing in.

The red lines show neggie d except for the MACD line so yield should roll back over to the downside beginning in the first half of this week. The weekly chart remains long and strong so the pull back in yield will then result in yields moving higher again in December. Keystone's 80/20 rule says 8's typically lead to 2's so the breach above 0.80 places the 1.20-ish area in play. The ADX sneaks above 25-ish so the trend higher in yields (lower note prices) is a strong trend so the 2-year yield would be expected to continue higher going forward. The following three dates will be key pivot areas for note and bond yields. The ECB QE announcement is on 12/3/15. The US Monthly Jobs Report is on 12/4/15. The Federal Reserve is expected to hike rates on 12/16/15. 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.

BDI Baltic Dry Index Daily Chart

The global deflationary commodity collapse continues. The Baltic Dry Index is at all-time record lows collapsing for 20 consecutive days. Iron ore, coal, cement, powders, and other dry bulk materials are not moving across the ocean seas like years past. This behavior directly verifies the slowdown in the Chinese economy that was a major user of commodities.

The BDI was one big party into the October 2007 stock market top and then the 2008-2009 financial crisis, but the disinflationary and deflationary recoil has been in play ever since and the BDI deteriorates to a record low. Tried and true indicators such as the Baltic and Dr Copper are ignored nowadays since the global central bankers overpower market forces with their Keynesian money printing schemes. The Fed and other central bankers have destroyed price discovery across all markets. No one truly knows what anything is actually worth anymore. The stock market party continues, as the global economy weakens, as long as investors believe in the power of the central bankers. 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 Weekly Chart Oversold Positive Divergence


Gold is at six-year lows. The COT information typically lags by a few days but note the consistent agreement between the COT chart and the candlestick chart over the last year. The green lines show gold rallies and red lines show the selloffs. The green circles are bottoms. The COT bars have pulled in tight towards the center line again so gold price should be basing in the days and week or two ahead. This agrees with the positive divergence shown on the weekly candlestick chart.

The RSI has a smidge of downside juice available over the coming days or week or two. The MACD cross is negative and bearish for price as well; gold bulls will need the cross to turn positive to prove a sustainable rally is ahead. The gold daily chart is setting up with positive divergence and agreeable to a relief rally at least a sideways to sideways higher move. Over the coming weeks, say as the year draws to a close, gold price would be expected to recover. This hints that the US dollar index will likely retreat from the 100-ish level. This creates an interesting dynamic into year end since the ECB plans to provide more QE on 12/3/15 only 10 days away and the euro should weaken and US dollar strengthen. If the dollar stabilizes and drifts lower in concert with gold rising, the additional ECB QE may be priced into the market.

The Federal Reserve is expected to raise rates for the first time in one decade on 12/16/15. Gold may recover in the near-term but then receive a spankdown again when the Fed hikes since the dollar may move higher, however, that move may be similar to the August to September jog move off the bottom with gold bouncing for three weeks, then retreating for 3 or 4 weeks, then rallying about seven weeks. Gold would be expected to stabilize going forward. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

NOTE: The gold COT chart is courtesy of COT Price charts, a very useful site to monitor commodity and other Commitments of Futures Traders charts. The chart is annotated by Keystone.

Friday, November 20, 2015

SPX S&P 500 2-Hour Chart Negative Divergence Developing

The stock market rally continues. ECB President Draghi speaks this morning promising more QE easy money on 12/2/15 only one week away. Price makes new highs but the histogram, stochastics and money flow are negatively diverging. Stoch's are overbot. The RSI is flat over the last price move over the last 10 hours of trading time (5 candlesticks) and the MACD line is long and strong wanting to see another price high after any pullback.

Thus, the histogram, stoch's and money flow should create a pullback but higher prices are expected due to the positive RSI and MACD line. Stocks will not top until the MACD line rolls over with neggie d and this may take another 2 to 5 candlesticks which takes trading into Monday (4 to 10 hours).

The VIX falls under the 200-day MA at 16.29 stabbing the bears in the heart. The lower volatility and loss of the 200-day creates today's equity rally. Market bears need the VIX above 16.29 or they got nothing. Bulls have their feet up on the desk smoking fat cigars toasting the central bankers.

As this is typed shortly after the opening bell, the SPX jumps to 2095. The 2091-2093 is very strong price resistance and the SPX took a few minutes to chomp through but jumps higher once the resistance fails. The 2091-2093 is now support. The next strong resistance levels are 2099, 2100, 2102-2103, 2110 and 2118-2119. To match the chart above, price may top out at the 2099-2103 resistance gauntlet either this afternoon or on Monday. Watch VIX 16.29. 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 10:04 AM:  VIX 16.16. SPX 2093.50.

Thursday, November 19, 2015

VIX Volatilty Daily Chart

The market bears have been beaten with Fed Chair Yellen's baseball bat over the last few days especially yesterday. The VIX fell under VIX 18.30 a key bull-bear level identified by the Keybot the Quant algorithm yesterday and that ignited a huge upside stock rally. However, the market bears are not throwing in the towel just yet. The VIX 200-day MA is another key important bul-bear line you can use to gauge if the stock market is in a near-term bull pattern or bear pattern.

The VIX is at 16.88 above the 200-day MA at 16.29 so the bears are happy and trying to send volatility higher especially above 18.30 which would create extensive market selling. The market bulls only need a few pennies lower, to push under 16.29 and goblets of Fed wine and ECB champagne will be raised in honor of the central banker market makers that will be sending stocks far higher.

The fight continues at VIX 16.29; this tells you everything you need to know about market direction today. Watch it like a  hawk. 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 10:54 AM: VIX 17.07. The beaten-up bears smile.


Note Added 9:50 AM EST on Friday Morning, 11/20/15: The bears are punched in the face as the VIX plummets to 16.10 after the opening bell. The VIX falls under the 200-day MA at 16.29 stabbing the bears in the heart. The lower volatility and loss of the 200-day creates today's equity rally. Market bears need the VIX above 16.29 or they got nothing. Bulls toast the central bankers with Fed wine and ECB champagne, the goblets are filled to the brim.

ZIRP to TWIRP; Federal Reserve Prepares for Rate Hike on 12/16/15

The stock market rallies strongly after the FOMC Minutes were released at 2 PM EST on Wednesday, 11/18/15. The Fed will likely hike on 12/16/15 unless a big negative event happens over the next three weeks (such as a terrorist attack) or if the 12/4/15 Monthly Jobs Report is disappointing. Dovish Fed members do not want to hike since an economic slowdown would require the central bank to immediately reverse course and provide additional monetary accommodation. Hawks say the hike is long overdue.

The most important takeaway from the minutes is that the Federal Reserve is in absolutely no rush to announce a second hike in fact the second hike may not occur until months down the road deep into 2016. Thus, the Fed's ZIRP (Zero Interest Rate Policy) morph's into TWIRP (Twenty-Five Basis Points Interest Rate Policy). Nothing really changes. The acronym similarity to 'twerp' is most definitely intended. The base rate will simply remain at 25 bips, or some other low percentage, instead of the zero bound. No biggie. Worries a few weeks ago were due to the expectation of a standard rate rise cycle; this is not in play.

Stock markets rally strongly since the easy money Keynesian good times will continue for months ahead. Fed Chair Yellen is leaning towards a 'one and done' philosophy on interest rates. The potential rate hike coming on 12/16/15 does not start a rate hike cycle like all prior decades. Instead, the 25 basis point bump, it may be a touch lower or higher, will remain in place indefinitely at least until the cows come home or cousin Godot arrives. This is why long traders are content and short-sellers are running for their lives.

If the Fed does not hike on 12/16/15, stocks will be happy that central banker easy money continues. If the Fed does hike on 12/16/15, as about 70% of market participants expect, the second hike may not occur until December 2016 so easy money conditions will continue indefinitely, the TWIRP policy described above, the Fed will remain accomodative. Long traders celebrate as the easy money Fed policies will likely continue well through next year.

Humorously, the ZIRP policy of zero interest rates forever will be replaced with TWIRP forever, a new Federal Reserve policy of ‘twenty-five basis point rates that continues indefinitely’. Fed easy money policies will continue as far as the eye can see. The wealthy light fat cigars as they watch their huge stock portfolios become bigger. The elite class, politicians, corporate executives and the Federal Reserve are in bed together; it is an incestuous bunch performing obscene (monetary) acts that would make Caligula blush. Fed members are cozy with the elite class in America since they will be rewarded with lucrative speaking engagements once they retire; a quid pro quo for their loyalty in serving the investment banks during their tenure at the Eccles Building. The wealthy become more filthy rich from central banker money printing while the middle class and poor suffer.

The Fed stresses a very gradual path of rate hikes will occur once the first rate hike is announced. Therefore, very simply, the Fed’s current ZIRP (zero interest rate policy) will likely be replaced with TWIRP (twenty-five basis points interest rate policy). Nothing changes after the potential December hike occurs. Easy money conditions will continue through 2016 with a base of 25 bips, or other small amount, rather than the zero bound. Stocks rally and the wealthy, that own large stock portfolios, become richer. Central banker easy money policies will continue for many more months.

What is the end game? As long as investors maintain confidence in the Fed the central banker Ponzi scheme continues. Markets are in trouble if the Federal Reserve loses credibility. If the Fed balks at raising rates on 12/16/15 that will destroy credibility. If the Fed hikes on 12/16/15 but into the first of the year has to immediately reverse course due to a slowing economy, that  will destroy credibility. Choose your poison. Monitor these developments closely.

The beauty about the Federal Reserve's money schemes are that they will never be blamed for creating bubbles and causing bad behavior in markets. The economy was already sluggish and weak when the 9-11 terrorist attacks occurred but the history books place terrorism as the sole reason for that entire market selloff into 2002. Similarly, in the present day, the Fed will never be blamed for a potential stock market downturn of -20% to -50% or more. Instead, a major war will begin, or a devastating terrorism event will occur, or perhaps a pandemic or other major catastrophe will take place and be blamed for the likely stock market pull back coming over the next few months and years. The Fed's obscene Keynesian money printing monetary policy will never be blamed.

Comically, the Federal Reserve will actually be praised in future years on how they prevented the second Great Depression but that nasty event (insert the event that occurs probably anytime now through Q1 2016) came along and derailed the great market and economy the Fed created. It is ridiculous but this is how the Wall Street game is played. Considering the Baltic Dry Index crashing to record lows and deflation rampant around the world with an ongoing currency war in play, the chances are high that a major negative event will occur in the weeks ahead. The event, whatever it turns out to be, will let the Fed off the hook for its 6-1/2 years of obscene Keyneisan spending that only served to make the wealthy filthy rich.This is the way the game is played. Here comes TWIRP.

Wednesday, November 18, 2015

Keybot the Quant Turns Bullish

Keystone's proprietary trading algorithm, Keybot the Quant, flips to the long side before lunch time at SPX 2063. The SPX ran above the critical 12-month MA at 2051 which was a serious blow to the market bears and a signal that markets are in a cyclical bull pattern. Retail stocks made big gains sending stocks higher and then volatility, the VIX, dropped under 18.36, a key bull-bear level calculated by the algo, and it was curtains for the bears. The bulls are driving the bus. More information is found at Keybot's site;

Keybot the Quant

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

The NYA 40-week MA is a key Keystone Cyclical Market Indicator and after the long cyclical bull market into this year the NYA lost the 40-week creating a cyclical bear market starting in the summer time, as keystone highlighted back then. If you had payed attention to this indicator you would have protected yourself from the big August-September selloff. The global central bankers colluded to create a recovery rally but price continues to struggle at regaining the 40-week MA so the market bears are happy with a cyclical bear market remaining on the table for weeks and months to come (unless the NYA moves above the 40-week MA).

Two other key cyclical signals are in play. The SPX 12-month MA cross at 2050.68 is forecasting a cyclical bear market ahead but it can change today at the opening bell. The UPS 20/50-week MA cross signals a cyclical bull market ahead. When these three signals agree on direction that firmly tells you the path for the stock market for the weeks and months ahead. Watch all three indicators closely. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 8 PM EST: The bulls create a huge stock market rally today. Three key cyclical market signals are updated. The SPX catapults to 2083 clearly up through the 12-month MA at 2051 signaling a cyclical bull market for the weeks and months ahead. Bears need to drop the SPX back under 2051 or they got nothing.

The NYA 40-week MA cross shows the NYA remaining well under signaling a cyclical bear market.

The UPS 20/50-week MA cross turns positive by a smidge over the last two days but nonetheless this signals a cyclical bull market ahead for stocks for the weeks and months to come. Thus, two signals are bullish and one bearish. Either the NYA needs to cross above the 40-week MA to join the bulls and guarnatee a multi-month stock market rally ahead, or, the SPX will retreat and slip back under 2051, and the UPS 20/50-week MA cross will reverse to a negative cross again, which would forecast weak and sick markets going forward through 2016. Continue to monitor these three key signals until you see all three agree which tells you the answer to market direction through 2016.

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

The market bears suffer a serious blow yesterday with the UPS 20-week MA crossing above the 50-week MA signaling a cyclical bull market ahead. The negative 20/50 MA cross occurs in May, as Keystone pointed out at the time, and was an excellent indicator of trouble to come; stocks fell down the rabbit hole in August-September. Is UPS signaling bullish fun for the year end and beyond? It will if the 20/50 cross remains positive.

UPS price is at 103.14 above the 20-week MA at 99.73 so this only serves to pull the 20 MA higher making for happy bulls. Market bears need to push UPS price under 99.73 pronto to cause the 20 to roll over to the downside and move back to a negative 20/50 cross. The chart hints at continued sideways action for weeks to come. That 93-ish support level is key; UPS will likely crash if that is lost.

FDX earnings are on tap this week and will directly impact UPS. Basically, if FDX reports great numbers, FedEx and United Parcel will both jump higher and the cyclical bull market call will be cast in stone. If FDX results are weak, the shipping stocks will drop, and the bears will flex their muscles and likely reverse the positive cross in the days and weeks ahead. Bears got nothing, however, unless they immediately pull price under the 20-week MA.

Watch the SPX 12-month MA cross as previously explained. This is another key cyclical market indicator and the SPX 12-month MA cross and UPS 20/50-week MA cross must come to an agreement and that tells you the cyclical (weeks and months) path ahead for 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.

Note Added 8:10 PM EST: The bulls create a huge stock market rally today. Three key cyclical market signals are updated. The SPX catapults to 2083 clearly up through the 12-month MA at 2051 signaling a cyclical bull market for the weeks and months ahead. Bears need to drop the SPX back under 2051 or they got nothing.

The NYA 40-week MA cross shows the NYA remaining well under signaling a cyclical bear market.

The UPS 20/50-week MA cross turns positive by a smidge over the last two days but nonetheless this signals a cyclical bull market ahead for stocks for the weeks and months to come. Thus, two signals are bullish and one bearish. Either the NYA needs to cross above the 40-week MA to join the bulls and guarnatee a multi-month stock market rally ahead, or, the SPX will retreat and slip back under 2051, and the UPS 20/50-week MA cross will reverse to a negative cross again, which would forecast weak and sick markets going forward through 2016. Continue to monitor these three key signals until you see all three agree which tells you the answer to market direction through 2016.

Tuesday, November 17, 2015

SPX S&P 500 Monthly Chart 12-Month MA Cross Determines Cyclical Bull Versus Cyclical Bear Market

Long time followers of Keystone remember that the SPX 12-month MA is one of the most important market indicators and a key Keystone Cyclical Market Indicator. The 12-month MA is called the cliff, since a cyclical bear market occurs under the 12-month MA; markets will trend lower for months to come. If the SPX is above the 12-month MA, the wine is flowing like water and the market bulls are in command with a cyclical bull market.

Equities fell into a cyclical bear market in August. The global central bankers then collude to create a strong recovery rally in October overtaking the 12-month MA. Now in November price is back below. Yesterday price was above the 12-month MA and today below as a fight continues. The 12-month MA is 2050.68 and price is at 2050.44 signaling a cyclical bear  market ahead. This is epic. A historic market pivot point will occur tomorrow. Bulls win big above 2050.68. Bears win big under 2050.68. The stock market will firmly commit to the direction that the pivot from SPX 2050.68 decides. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 8:12 PM EST on Wednesday evening, 11/18/15: The bulls create a huge stock market rally today. Three key cyclical market signals are updated. The SPX catapults to 2083 clearly up through the 12-month MA at 2051 signaling a cyclical bull market for the weeks and months ahead. Bears need to drop the SPX back under 2051 or they got nothing.

The NYA 40-week MA cross shows the NYA remaining well under signaling a cyclical bear market.

The UPS 20/50-week MA cross turns positive by a smidge over the last two days but nonetheless this signals a cyclical bull market ahead for stocks for the weeks and months to come. Thus, two signals are bullish and one bearish. Either the NYA needs to cross above the 40-week MA to join the bulls and guarnatee a multi-month stock market rally ahead, or, the SPX will retreat and slip back under 2051, and the UPS 20/50-week MA cross will reverse to a negative cross again, which would forecast weak and sick markets going forward through 2016. Continue to monitor these three key signals until you see all three agree which tells you the answer to market direction through 2016.