Keystone's Midday Market Action 6/28/13

Consumer Confidence is on par with last month but the Chicago PMI was much weaker than expected. The Fed heads continue to pump the markets with happy QE talk but the comments are not helping so far today. The broad indexes are starting to recover off the lows so traders may be taking the bad PMI as good news since it will cause the Fed to supply more crack cocaine. Keybot the Quant remains long and is tracking UTIL 480.81, XLF 19.20 and RTH 51.48. These three parameters are all bullish and will continue to support markets and not allow any significant drop in equities. UTIL came down to test the 480.81 threatening a break down but now catapults higher to 484.16. XLF is 19.36 and RTH is 52.09 so bulls are not worried.

The 8 MA is curling downwards towards the 34 MA on the SPX 30-minute chart so this a key indicator to watch today.  The confluence of resistance at 1618-1623 created by the 20-day MA at 1618.71, the 50-day MA at 1621.69, the lower channel rail on the daily chart and the 200 EMA on the 60-minute at 1619.06, remains important moving into next week. Key S/R is 1598-1600, 1609, 1614, 1618, 1623 and 1626-1627. The 1623 level is interesting since this is the 50% Fib retracement for the move down from the 1687 top to the 1560 bottom. All these technicals place major emphasis on the 1618-1623 resistance zone. The 10-year yield is 2.52%. UTIL, XLF and RTH all indicate that the bulls have no worries and a move higher to the 1619-1620 gauntlet is likely coming. If the negative 8/34 cross occurs today, that would sour the market move and point to lower equities ahead. UTIL is now up over 485 far from danger.

Note Added 10:38 AM:  The SPX is now testing 1609 R so this serves as an important first test today, bounce or die. The LOD is 1601.06 so the 1600 support held. Whoa, big bounce and punch up through the 1609 R to over 1610.  The 1609 now becomes support.  The UTIL, XLF and RTH hint that the SPX should recover. TRIN is 1.13, however, favoring market bears today. Now the question is does price run up to play at the 1618-1623 resistance gauntlet right away, or, move sideways?

Note Added 10:49 AM:  Bulls are having trouble holding 1609 S now dropping back under. The VIX is dead flat so its movement higher, or lower, will move equities in the opposite direction.  With the SPX down, the VIX should be up, so this is a feather in the bull's cap. Bears must push volatility higher or they got nothing. UTIL 487.

Note Added 11:26 AM:  The SPX continues higher, as the VIX drops, overtaking the 1614 R but now falling back below. If the bulls can take out 1614 and turn it into support, the trek higher to attack the 1618-1623 resistance gauntlet comes next. TRIN is 1.10, bearish, and the VIX is trying to recover off the lows. UTIL 487.28. XLF 19.49. RTH 52.26. All three parameters remain strongly bullish which points towards a pending fight at SPX 1618-1623.

Note Added 12:44 PM:  It's a lazy hazy day of summer. TRIN is 1.22 and VIX floats slowly higher so the SPX drifts lower losing the 1614 support, testing 1609 support again, and bouncing, so the move is through the 1609-1614 range currently. UTIL, XLF and RTH remain bullish so the broad indexes will remain elevated. The 8 MA is nearing the 34 MA for a negative cross on the 30-minute chart which will provide the all-clear signal for the downside. Within the hour, the bulls must spike the markets strongly higher, straight up into the 1618-1623 gauntlet, to prevent market negativity from occurring. Otherwise, as the minutes move along, the bears will become stronger and will receive further strength if the 8/34 MA cross occurs. The beat goes on.

Note Added 2:01 PM:  The broad indexes develop lift over the last hour and note the stick save on the SPX 30-minute chart where the 8 MA has pulled a U turn and is now curling higher again avoiding the negative 8/34 MA cross by a hair and signaling bullish markets for the hours ahead as long as the 8 MA stays above the 34 MA. The bulls have stopped the downside with the UTIL, XLF and RTH remaining bullish today. TRIN 1.12. SPX is back above the 1614 S/R using it as support right now. Poking around looking for opportunities but markets have a sideways vibe ongoing so it is difficult to commit to any scalp trades. There are many interesting stocks worth watching like DBA as a long right here at 25 and lower, PBR here at 13.50 and lower for a long, CLF as a long at the 15.75 gap (gap is on the 30-minute or 1-hour chart), SSG long at the 26.70 gap, MYL short at 31.30 and higher, DNDN long  at the 50-day support at 4.16-ish (DNDN popped strongly today as the positive divergence continues to create buoyancy), JO as a long buying it all day long under 25, TLAB as a long under 1.9, FRO right here as a long under 1.80 and X as a long at the 17.10 gap. For now, simply watching the sideways struggle today.

Note Added 3:03 PM:  On the SPX 30-minute chart, the SPX, 8 MA and 34 MA are all on top of each other between 1610.40 and 1612.34, less than two points, so the move above 1612, or below 1610 is important. Keystone took profits on DRYS exiting the position and will look to reenter. Also bot SPXU opening a new long trade which is short S&P.

Note Added 3:13 PM: Sideways fight at 1610-1612 continues. Keystone took profits on part of the GDXJ long trade but continue to hold it and will likely add. Also took profits on the GLD trade but continue to hold it and will likely add. Also took profits on part of MUX long trade but continue to hold it and will likely add.

Note Added 3:18 PM:  SPX is sneaking above 1612. Keystone bot DNDN opening a new long position as it has come back to test the 50-day MA; it may drift lower in the coming days but it remains an attractive play moving forward.

Note Added 3:35 PM:  SPX punches above 1612 and up through 1614 R now above 1615 so the bulls are running with utilities, retail and financials continuing to help and semi's receiving a strong push higher now. Russell rebalancing may create some wild action to end the wild week.

Note Added 3:34 PM:  SPX testing 1614 support again. Bounce or die.

Note Added 4:00 PM:  It died. The broad indexes puke into the close due to the buying and selling with the Russell rebalancing. The SPX finally logs a negative month after the last seven.  SPX finishes at 1606 with prices settling out. The 8/34 MA cross drama will continue at Monday's opening bell. UTIL, XLF and RTH remain elevated so the bears need at least one of these three to move to the bear camp come Monday, otherwise, the move up to the SPX 1618-1623 resistance gauntlet will resume. Keystone took profits on SLV into the close exiting the position and will look to reenter next week.

SPX 30-Minute Chart 8 and 34 MA Cross Potential Tweezer Top

The 30-minute chart with 8/34 MA cross is the sister signal to the 60-minute with 200 EMA cross and it shows the 8 MA above the 34 MA signaling bullish markets for the hours ahead. These two signals must agree and when they do that will dictate the market direction forward. Either the SPX jumps above the 200 EMA on the 60-minute signaling the all-clear for market upside, or, the 8 stabs down through the 34 MA on the 30-minute signaling the all-clear for bears.

The indicators clearly show the negative divergence spank down and price also exhibits a tweezer top candlestick pattern just like the 60-minute chart. The 1619-1620 level is key since it is the confluence of moving averages as Keystone continues to harp on this morning. Key resistance above is 1614, 1618, 1623 and 1626-1627. The 8 MA is 1614.67 so as long as the SPX prints below this number it will curl the 8 MA to the downside and set up a potential negative 8/34 cross today.  More drama is on tap in this circus-like stock market with the central bankers as the ring masters. Watch for the potential negative 8/34 cross since it will signal that the bears are in firm control of markets. The bulls rule if the 8 stays above the 34 and this will occur if the SPX can stay above 1615 and head 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.

SPX 60-Minute Chart 200 EMA Cross Potential Tweezer Top

The SPX is below the 200 EMA signaling bearish markets for the hours and days ahead, however, as evidenced by yesterday's action, price is back testing currently and pondering a decision to leap higher into the bull camp. Price was rejected yesterday with a tweezer top candlestick pattern occurring with the two taps on the 200 EMA. A tweezer top hints that the top is in but today's action will dictate the answer. Important resistance is 1614, 1618, 1623 and 1626-1627.

As highlighted in the daily chart, the 20-day MA, 50-day MA and the 200 EMA above at 1619.37 form a confluence of resistance at 1619-1620.  This level is for all the marbles. Bulls win above 1620. Bears win below 1619.  If the bulls run higher, watch the 1626-1627 resistance since this would be the last ditch effort to hold back the upside by bears. If 1627 gives way, the strong resistance at 1636, 1649-1650 and perhaps new highs are all on the table. The indicators created yesterday's negative divergence spank down (red lines). The 2-hour chart shows the MACD line sloping upwards so there may be another attempt at the 1619-1620 gauntlet today where the market story will be told. There is a lot on the line for bulls and bears at this 1619-1620 level, the importance cannot be understated. Watch the 200 EMA since bears remain in firm control of markets under 1619.37 but bulls take over above 1619.37. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

SPX Daily Chart Channels Showdown at the 20 and 50 MA's

Major market drama plays out today and early next week. The pink circle shows the confluence of the 20-day MA at 1620.00, 50-day MA at 1620.42, lower rail of the blue channel and strong resistance levels at 1614, 1618, 1623 and 1626-1627. In addition, Keystone's SPX 60-Minute Chart market turn signal that uses the SPX cross with the 200 EMA shows this critical moving average at the 1619-1620 level as well. The stakes cannot be higher. The markets have to make a decision at 1619-1620 either today or early next week and the move above or below will likely send the SPX from 20 to 30 handles in that preferred direction.

The blue channel shows the recovery rally as a simple back kiss of the lower rail where a bounce or die decision is required. A successful back test will result in a price collapse from here and the bears singing a happy tune as the market downside returns in force. The bulls are trying to pump price higher to return the SPX back up into the safety of the upward-sloping channel so the upside party can continue to 1636 R, 1649-1650 R and perhaps new all-time highs again.

The 20 MA fell through the 50 MA which is a bearish signal moving forward. The slope of the 50 MA is flattening another bearish signal. The red dots show lower lows and lower highs consistent with a bear move while the green dots show higher lows and higher highs consistent with a bull move. The central bankers saved the markets this week with China's pumping, followed by the ECB, then the Fed heads pumping QE talk all week long, and now the BOJ sending the dollar/yen above 99 overnight to pump the Nikkei and U.S. futures. The money flow indicator was positively diverged creating the SPX bounce, along with oversold stochastics, but the bounce is mainly due to central bankers and not the technicals. Watch the 50% bull-bear levels for RSI, stochastics and money flow, as well as the zero line for the MACD, since this will provide hints on direction.

Markets are at a watershed decision. Volume may be on the light side today so some wild and erratic action may be on tap and the first couple days of next week will likely need to play out as well to firmly determine the SPX decision at this critical 1619-1620. If price punches up through 1620 to create happy bulls watch the strong 1626-1627 level since the move may be a one or two day upside fake-out, however, if the 1626-1627 resistance gives way to the upside, the bulls are in firm control of markets moving forward. For now, the edge is given to the bears. Watch the showdown today at 1619-1620. 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.

Keystone's Morning Wake-Up and Midday Market Action 6/27/13

The markets stage a strong come back off the low at SPX 1560 on Monday.  It is a shame that free markets are faux markets since the central banker trifecta saved the day once again enabling the three-day, now perhaps four-day, rally. China stepped in to help their seizing banks on Tuesday morning (after their close on Tuesday) thus taking the Lehman-style event scenario temporarily off the table. This goosed equity markets into yesterday when ECB's Draghi waved the banner of easy money firing off his money bazooka with happy QE talk. Then, to complete the central banker trifecta, the Q1 GDP came in at a paltry 1.8%, sick weak growth, which means the Fed will continue printing easy money and the Fed talk this week is all pro QE. The market junkie receives more crack cocaine so equities move higher. The central bankers are the markets. The Fed talk continues today and tomorrow so the markets will be reacting to all snippets, dovish or hawkish.

Moving to the technicals, watch the Nasdaq and RUT since they underperformed the broad market yesterday. Yesterday's volume was the lightest over the last week. The importance of the 200 EMA on the SPX 60-minute chart at 1619.65 cannot be understated. The bears rule the markets with the SPX under the 200 EMA. The rally this week will roll over to the downside as long as the SPX stays under 1619. If the SPX takes out the 1619.65 to the upside, the story changes and the bulls will likely move up to test the 1636 R and perhaps 1649-1650 R. Thus, the decision around the 200 EMA, at 1618-1620, if price can make it upwards for the test, is a bounce or die juncture, likely resulting in from 20 to 40 SPX handles of oomph in the same direction that price commits. Watch the 8 and 34 MA cross on the SPX 30-minute chart now with the 8 above the 34 signaling bullish markets for the hours ahead. The 30-minute and 60-minute charts' turn signals are in disagreement and whichever side they jointly move to will dictate market direction.

The drama continues with UTIL 480.81, XLF 19.20 and RTH 51.48. All three are in the bull camp creating the up move in equities. If the bullish prices increase, then the broad indexes will continue higher. If any of the three lose the levels shown, the markets will weaken and begin drifting lower again. Keybot the Quant is long but if two of the three parameters turn bearish and the SPX drops under 1592, the algo will likely whipsaw back to the short side today. For the SPX today starting at 1603, and not yet able to test the 1609 R yesterday, the bulls need to touch 1607 and 1609 will give way with price moving towards 1614 R. The bears need to push under the 1592-1593 support level today and a downward market acceleration will occur. A move through 1593-1606 is sideways action but the S&P futures are now running higher at +11 so it looks like the test of 1614 R may come quickly today. And this action may set up the big test of the 200 EMA described above where a showdown of bulls and bears will occur.

Note Added 9:36 AM:  The bulls jump higher at the open with the SPX HOD at 1613.78 hitting its head on the 1614 resistance. Treat the 1614 R as the first ceiling, then 1618 R, but considering the importance of the 200 EMA on the 60-minute at 1619.60, the 1618-1620 zone is a resistance gauntlet, where good thing happen to bulls above, and good things for bears if price stays below.  XLF, RTH and UTIL are all running higher reinforcing the bull case. TRIN is 1.01 refusing to commit to a side today. Keystone took profits on the long SPXL trade exiting the position.

Note Added 9:41 AM:  SPX takes out 1614 R so this sets the stage for the battle at 1618-1620, a cage match, where two sides enter, but only one will exit from this critical S/R level. Fed's Dudley is on tap, wiping jelly stains from his neck tie as he prepares to make a statement. Markets await all QE snippets since the Fed's dovishness or hawkishness dictates market direction. TRIN 1.00 dead neutral.

Note Added 10:05 AM:  Fed's Dudley parrots the other Fed heads this week promising QE as far as the eye can see, but it now sounds like more of the same-o, same-o. The SPX drops a couple handles to back kiss the 1614 support. XLF, UTIL and RTH remains bull friendly. TRIN 1.29 favoring bears today. The mixed signals continue.

Note Added 10:35 AM:  Here it is for all the marbles. 200 EMA is 1619.62. SPX is 1619.29. HOD 1619.64. The battle is on. Bounce or die.

Note Added 12:58 PM:  Die, at least so far. The 50-day MA is 1620.47. The 20-day MA is 1620.10 just now starting to stab down through the 50 which is a bearish market signal. The 200 EMA on the 60-minute is 1619.48. So this confluence at 1619-1621 is far more important than even this morning's hype provided. Three major moving averages are being tested simultaneously. The first try by the bulls this morning was rejected. The SPX hour charts may want to take one more run up to test the critical 1619-1621 resistance today. The 8 MA remains above the 34 MA on the 30-minute chart signaling bullishness ahead, however, the 8 MA is 1616.05, so if price moves under 1616 and lower, this will curl the 8 MA to the downside. Current print is 1616.32. HOD is 1620.07. TRIN 1.09 favoring bears but only by a smidge. Watch for more drama at 1619-1621 where the fate of markets over the short term is being decided. Whichever side that price closes on today, above or below the 1619-1621 gauntlet, will likely point the SPX in a 20 or 30-handle move in that direction. Bears want to hold 1619 and lower. Bulls need 1621 and higher. XLF, UTIL and RTH continue to remain bullish favoring the bull rally move higher. The tension mounts.

Note Added 1:54 PM:  Stauts quo. SPX stretches its legs to 1618 continuing to tease the 1619-1621 resistance gauntlet. TRIN is 1.20 so the bears are holding their own today despite the financials, retail and ute sectors pushing higher to help the bulls. Gold is at 1203, about to break the psychological 1200 level, not seen since summer of 2010, three years ago.  Both gold and silver ran out of gas today. GLD collapses to 116.63. Keystone bot GLD opening a new long position. The GLD minute, hourly, daily and weekly charts are favorable with positive divergence so this beaten down ETF should at least receive a dead-cat bounce moving forward. Also bot more MUX adding to this small cap speculative miner long position.

Note Added 2:15 PM:  SPX receives another spank down from the 1618-1621 resistance gauntlet now moving sideways at 1614.  Gold and silver receiving lots of negative attention again today. Gold loses the 1200 level. Keystone bot more SLV adding to this ongoing long position.

Note Added 2:26 PM:  SPX 1614 is strong support after it gave way to the upside as resistance this morning so price is moving between the 1614 S and the 1618-1621 resistance gauntlet. The TRIN and VIX creep slightly upwards over the last one-half hour which causes the drop in the SPX from 1618 to 1614. The drama continues.

Note Added 3:40 PM:  UTIL is 482.42 drifting towards the 480.82 danger level. SPX is 1614.49 sitting on 1614 support.

Note Added 4:06 PM: Today is a draw. SPX is 1613.20 losing the 1614 support, which now flips back to resistance again. The three moving averages hold the fort for the bears; the 20-day MA at 1620.00, the 50-day MA at 1620.42 and the 200 EMA on the 60-minute at 1619.37. The 20 MA stabs down through the 50 MA which is a bearish market signal moving forward. The 8 MA remains above the 34 MA on the 30-minute chart signaling bullish markets for the hours ahead. The SPX 2-hour chart is rolling over but the MACD line hints that price may want to attack the 1618-1620 (1618 is strong resistance along with the three moving averages listed) resistance gauntlet again tomorrow. So the market story for the next 20 or 30 SPX handles will be told tomorrow depending on whether the SPX closes under 1618 or over 1620. If UTIL loses 480.82 tomorrow, the broad indexes will be selling off and heading lower but if UTIL stays above 480.82 that will give the market bulls the nod and a chance to take out the 1620. Remember, the SPX began June at 1631. The SPX is up for 7 months in a row. The bulls only need 18 points and they can print another positive month. If not, the bears will finally log the first negative month in the last eight. Tomorrow is EOM, EOQ2 and EOH1.

SPX 60-Minute Chart 200 EMA Cross C&H Inverted H&S

The SPX remains below the 200 EMA at 1619.65 signaling bearish markets for the hours and days ahead while the other sister market turn signal, the 8/34 MA cross on the SPX 30-minute chart shows the 8 above the 34 signaling bullish markets for the hours ahead. Even these two indicators cannot agree on the current market direction just like many other indicators, signals and asset relationships these days. Markets are indecisive. There are 7 crosses of the 200 EMA in recent days further illustrating the ongoing bull-bear tug-o-war. The 200 EMA is key since it either confirms the 8/34 cross for bullishness ahead, or not, and if not will end up creating a negative 8/34 cross on the 30-minute. After the gap-down failure through the 200 EMA on 6/19/13, price has never returned for a back kiss. Perhaps that will occur today. There is a lot riding on this potential back test at 1619-1620 since it will create a bounce or die scenario. If the SPX moves up through the 200 EMA the 1630's and 1640's should follow. If the 200 EMA holds, the markets will reverse and likely accelerate lower.

The blue lines show the C&H with break out line at 1588 which targets 1616. The brown lines show the inverted H&S with break out line at 1598-ish that targets 1636-ish. The H&S is in play now since the 1600 level gave way yesterday. This places pressure on today's action since another close above 1600 will hint at further upside buoyancy. The 1609, 1614 and 1618 are all strong resistance levels. The indicators are not particularly enthusiastic for the upside with negative divergence forming. The MACD line and money flow are long and strong wanting a higher price which is in keeping with the S&P futures now +9 but the indicators should line up with negative divergence across the board as a few hours play out. The RSI is not overbot either. Looks like a test of the 1609-1620 resistance zone will occur today. Watch the 200 EMA. 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 4:15 PM:  The SPX comes up to test the 200 EMA today at 1619-1620 and is rejected closing at 1613. The C&H pattern described above played out and price was sticky today at 1616. The inverted H&S remains in play with the 1636 target unless bears push the SPX down through 1598-1600.

Keybot the Quant Turns Bullish

Keystone's trading algo, Keybot the Quant, flips to the bull side unexpectedly after today's opening bell at SPX 1601. The upside targets for XLF, RTH and UTIL folded like a cheap suit. As always, stay alert for a whipsaw back to the short side either today or tomorrow, especially in these volatile markets. Watch XLF 19.20, UTIL 480.83 and RTH 51.48 which would show any intial signs of weakness. UTIL is on the fence right now. More information is found on Keybot's site,

Keybot the Quant

Keystone's Morning Wake-Up 6/26/13; GDP

GDP is a paltry 1.8% below expectations showing very weak growth. Futures remain elevated with S&P's +8 as ECB's Draghi pumped the QE talk this morning. The bears need to push SOX under 457.20 to gain downside mojo. This does not appear on tap. The bulls need to push the XLF above 19.19 to signal a leg up in the broad indexes and the pre-market shows 19.23. Additional upside fuel will occur with RTH above 51.48 and/or UTIL above 481. The strength of the market upside is determined by how XLF, RTH and UTIL move today.

The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. The SPX begins at 1588. The bulls need to touch the 1594 handle and a jump to test the 1597-1600 resistance zone should follow directly. The 1593 level is strong resistance so if that gives way, then 1594 probably will as well, lighting the path higher. The bears need to push under 1577 to accelerate the selling. A move through 1578-1593 is sideways action today.

Note Added 10:24 AM: Another wild day with the markets blowing up through the above XLF, RTH and UTIL targets like a hot knife through butter. Keybot the Quant flips to the long side at SPX 1601. Watch XLF 19.20, RTH 51.48 and UTIL 480.83. All three are creating market bullishness right now. UTIL is a bit shaky stumbling across its bull-bear line right now teasing the underside of 480.83.

Note Added 11:08 AM:  UTIL gives up the ghost now at 479.64. Pay attention to XLF 19.19-19.20 this will tell a lot about market direction. XLF is 19.23. Bounce or die.

Note Added 12:11 PM:  UTIL 481.46 back in the bull camp but it is a crap shoot. XLF at 19.26 continuing to help the bulls so far today. All the drama centers around XLF 19.20 and UTIL 480.83. SPX HOD is 1603.58. Resistance above is 1609. From this morning's 15-minute chart, the C&H targets 1616 and if price can close above 1600 today, the inverted H&S targets 1640. If XLF, UTIL and RTH continue along in the bull camp, then the broad indexes will float higher.

Note Added 3:10 PM:  Status quo today. Utes, financials and retail send stocks higher. SPX HOD 1606.83 two points shy of testing the 1609 resistance. The SPX 30-minute, 1-hour and 2-hour charts are becoming extended with negative divergence appearing across the indicators hinting at a price roll over coming soon but the 2-hour chart may squeeze out a candlestick or more of juice which would keep markets elevated perhaps into tomorrow morning. SPX should test 1609 R. A close above 1600 is a big feather in the bull's cap. Volume is feather light at a run rate of only about two-thirds of a days average expected volume. AAPL is negative.

Note Added 3:50 PM: Bulls keep pushing. TRIN is 1.11 on the bear side today despite the rally. The HOD remains at 1606.83. Keystone added more GDXJ to this ongoing long trade.

BDI Baltic Dry Index Weekly Chart Sideways Symmetrical Triangle

The Baltic Dry Index (BDI) is a key global bellwether of economic activity. Ships transfer coal, coke, iron ore, steel, grains and many other cargo's that grease the wheels of the global economy. If the global outlook shows encouragement moving forward, the Baltic is one of the first places to look for recovery. Once the raw materials are moving across the ocean waves, good times are ahead. The Baltic peaked in late 2009 and 2010 and is in the doldrums ever since. There are many new ships coming on line so that has to be factored into some of the weakness in the BDI.  Anglo-American news this morning slams commodities further. The sideways symmetrical triangle, however, shows a break out to the upside. The upside target is 1450-1550. 

The Baltic is in the cellar for so long that up appears the only path forward but in these markets anything can happen. China and Asia is slowing down. Europe remains in recession and depression. Everyone touts the U.S. economy but 25 million remain unemployed or underemployed with little hope of finding a job. Despite all the negativity, the chart shows the triangle break out to the upside so the shipping sector is a place to consider for long plays moving 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.

TNX 10-Year Treasury Note Yield Weekly Chart Inverted H&S

The big story for the last two weeks is the big up in yields after Chairman Bernanke said QE will taper off this year and likely end by mid next year. That is a rocket of a move from 1.60% to over 2.60%, 100 bips, in less than nine weeks, over 10 bips per week. The indicators continue to show long and strong strength ever since the mid-2012 bottom but the stochatics are overbot forecasting the first pull back for yield. The inverted Head and Shoulders (H&S) pattern shows head at 1.40% and neck line at 2.30% which targets 3.20% which is important horizontal resistance as well. An alternate inverted H&S is neck line at 2.40%, the 2.39%-ish level is important from 2011 and 2012, so this targets 3.40%.

The inverted H&S is a long-term and important pattern in play so yield would want to come back for a back test to show it respect so a move back to 2.30%-2.40% is on the table. At this juncture, yield would either bounce or die. The indicators have more juice so a bit more up would be anticipated. The 2.80% level is important resistance from mid-2011. Even though the inverted H&S points to 3.20%-3.40%, the indicators hint at perhaps 2.80% over the next month then lots of sideways action through 2.30%-2.80% moving forward for the months ahead. The banks need about 3% and higher to take advantage of the 2-10 spread on the yield curve. Until then, the rise in rates are not particularly helping the banks. Placing the positive yield trade thought aside, banks will be challenged on the housing side with the higher 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.