The 8 MA is above the 34 MA onthe 30-minute chart signaling bullish markets for the hours ahead, however, the indicators are negatively diverged indicating a topping out of price in progress. Note that the positive 8/34 cross occurred at 1750 and a long play from there leads all the way up to 1830, 80 handles higher, +4.6%, if that signal was followed. The bear killer was on Tuesday. Chair Yellen was testifying before the House Finance Committee but she offered nothing new; same ole stuff as Chairman Bernanke. The key that day was the debt limit ceiling resolution in the House. This created the spike higher and when price took out the critical 1809-1810 resistance (where the 50-day MA resides at 1810.39), another 20 handles of upside results. Markets were all set to move lower on Tuesday as the negative divergence shows, however, the happy debt ceiling resolution created the upside launch instead. The chart has now absorbed this bullish catalyst.
The red lines show the overbot conditions, rising wedge and negative divergence that will create a spank down. Note how the money flow is squeezing out a long and strong vibe over the last 3 or 4 hours so it would like to see another matching or higher price high. Thus, the chart may need 1 to 4 more candlesticks to roll over, about 30 minutes to a couple hours of trading time. Perhaps price will drop in the early going to the lower red trend line, then recover, and that should create the roll over.
Key S/R is 1838-1843 (strong overhead resistance gauntlet that bulls must push through to create the path to 1880 and bears must prevent to send the SPX lower and create a multi-month top moving forward), 1832, 1828, 1824, 1818 and 1808-1810. Price sits between the 1832 R and 1824 S, thus, a move higher may test the 1832 in the early going today but the anticipation is that it will hold for the bears and that a negative cross should occur today. Bears got nothing until they create the negative 8/34 cross that will signal downside sledding ahead. Since the 8 MA is 1827.39, bears must push price under this number to curl the 8 MA downwards to create the negative cross. Thus, if you see price dropping under 1827, the bears are starting to flex their muscles. If price remains above 1827.39, the markets will remain elevated and the bulls would like nothing more than to maintain the positive cross into the weekend. 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.
We have been watching the 2-hour chart waiting for the roll over but that has been like waiting for Godot the last couple days. The game-changer was the debt ceiling limit resolution by Congress which created the bull fuel and upside orgy through the strong 1808-1810 resistance and sent price to the high 1820's. The SPX moves about 15 to 20 handles higher on the debt ceiling limit increase which is a somewhat typical move for the happy news.The debt ceiling limit resolution can now be checked off the bull catalyst list.
The chart now sets up with overbot conditions and negative divergence across all indicators (red lines). This should create the spank down and sideways to sideways lower move going forward. However, the market has more moves and gyrations than Beyonce, so if a positive news surprise occurs, or if the Fed and BOJ keep pumping, they may try to reverse the technicals above, but it would not be expected at this time. The bears should now receive a turn at bat. Watch the MACD line since a slight move higher there would help send price to 1832 but the expectation would be that would create firm neggie d and spank down albeit from a few handles higher. The dollar/yen is 102.22. VIX 14.05. If the chart plays out with the neggie d, the expectation would be for the dollar/yen to move back down towards 102 and the VIX to move above 14.15. Support below is 1828, 1824 and 1818. This information is or 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 4:22 PM: Dollar/yen 102.20. VIX 14.14 one single penny on the bull side of the 14.15 bull-bear line identified by Keybot the Quant algo. SPX finishes at 1829.83. The sneaky MACD line has a hair of a positive slope to it as mentioned above, so price may move to the 1832 resistance tomorrow and the expectation would be that the MACD line then creates negative divergence. Will have to watch it after the opening bell tomorrow. The expectation remains that the SPX should roll over to the downside going forward.
The Retail Sales data is weaker than expected. Most importantly, auto sales stall. Equity futures turn south since both key economic drivers, housing and automobiles, appear to be weakening. This action will create weakness in copper. The market negativity began overnight when the dollar/yen dropped under 102. At this writing about one-half hour before the opening bell, the dollar/yen is 101.90. S&P -10. Dow -85. Nasdaq -21.
-- Technical Problems Off and On Today Due to the Winter Weather --
Volatility provides drama yesterday. The battle at the VIX 200-day MA at 14.58 continues today. Bulls win below 14.58. Bears win above 14.58. Scroll back to the VIX chart from a day or two ago to study the VIX in more detail. Keybot the Quant remains long. The bears need to push XLF under 21.37 to lock in some downside action. Bulls need to push VIX under 14.15. Bears need to create negativity in financials, utilities and commodities to make a stronger run lower. UTIL 504.65 remains a key bull-bear level. For now, the markets appear to be churning, perhaps into the weekend.
The SPX H&S patterns are highlighted in this morning's chart. Bulls must push the SPX back to the all-time highs at 1851 and higher to negate the bearish H&S patterns. The 1824 and 1828 are important overhead resistance levels that the bears must hold. Support below is 1818, 1808-1809, 1809.82 (50-day MA), 1806, 1803, 1801.18 (200 EMA on the 60-minute), 1801.17 (20-day MA), 1796, 1791, 1788, 1783 and 1772 (uber strong support). Markets will pivot at 10 AM on Business Inventories. Natty Gas Inventories 10:30 AM. 30-Year Bond Auction 1 PM.
Note Added 9:33 AM: XLF 21.34 under the 21.37 so this will be key to watch today. Financials quickly recover to XLF 21.40. VIX 15.20. UTIL 509.62 above the 504.65. No great shakes today despite the strong move lower for equities. The beat goes on.
Note Added 10:21 AM: Business Inventories rise slightly so this will help GDP but people will need to show up to buy the products on the well-stocked shelves. XLF continues higher to 21.46. VIX continues lower and drops back under the 200-day MA so this creates a bullish push higher. Dollar/yen is back above 102. Banzai! Bears were all bluster today. Nasdaq turns positive and SPX is flat. Bears need to push the VIX back above its 200-day MA and/or the XLF below 21.37 or they got nothing. The SPX dropped at the bell and bounced directly off the 50-day MA at 1809-1810. Price is respecting the S/R listed above with the SPX moving up to test the 1818 R. Use 1828, 1824, 1818 and 1810 as S/R today. Failure at 1818 sends price back down to the 50-day MA at 1810. A push up through 1818 sends price higher to test 1824 R. Use VIX 200-day MA at 14.59 as the main bull-bear guide today; below is happy bulls (now at 14.47), above is happy bears. Also the dollar/yen now at 102.02; above 102 is happy bulls, below 102 is happy bears.
Note Added 3:08 PM: Another market up thrust occurs today. You could see it when XLF moved higher instead of lower. XLF 21.56. Then the dollar/yen moved to 102.20 as Kuroda woke up and started printing yen again to pump the stock market. The BOJ and Fed are colluding in a tag team approach to keep equities elevated. As the dollar/yen oscillates at 102.10-102.25, the Fed goes in and crushes the VIX to create further upside. VIX fell through Keybot's target of 14.15 and this created the acceleration through 1818 resistance, then 1824, then 1828. Next resistance is 1832. The HOD is 1830.25. Above 1832 is the strong resistance gauntlet at 1838-1843; punch through here and new all-time highs are guaranteed. Reference this weekend's SPX S/R missive by scrolling a couple pages back or type 'SPX S/R' into the search box at the right to bring that article up showing support and resistance levels. VIX 14.15 is key. The bears must move VIX above 14.15 asap, otherwise, they will end up in the emergency room. VIX is now at 14.08 and SPX is 1829. Bulls need to punch up through 1832 R and bears need to drop under 1828 S. Note the tame and calm 10-year Treasury note yield sitting at 2.74% all day long shaking its head at all the stock market antics. WTIC crude oil is back above 100.
Note Added 3:41 PM: Dollar/yen 102.22 remaining elevated. VIX 14.05 remaining under 14.15. SPX 1829 unable to decide if it wants to make the bulls happy by moving above 1832 or the bears happy with sub 1828, or go home neutral staying between 1828-1832.
Note Added 4:13 PM: Dollar/yen 102.20. VIX 14.14 closing at the 14.15 bull-bear line in the sand. Volatility continues to settle out and printed 14.16, on the bear side, but the market makers took off two pennies to push it under to 14.14 and keep it on the bull side overnight tonight. Isn't it amazing how Keybot the Quant algorithm can identify these numbers before they occur? Whichever way the VIX pivots from the 14.14-14.15 at the opening bell tomorrow, the broad indexes will pivot in the opposite direction. Volatility is the key market direction metric for Friday trading. SPX parks at 1829.83 overnight.
The 'V' bottom a few days ago is somewhat cheesy since the MACD line, stochastics and money flow remain weak and bleak. The 150-day MA support, violation of the lower standard deviation band and BOJ money printing, however, create the near-term bottom a few days ago. The SPX launches like a rocket but note the weak volume participation. During January, the volume steadily increased as markets sold off, and the small brown circles clearly identify the distribution days, where the smart money is dumping stock to Ma and Pa Kettle, and Joe Sixpack, who always serve as the sucka's and bag holders. Even with the multi-day rally, note how the volume is lackluster, not exactly a ringing endorsement for the upside.
The double tops were easily identifiable from the negative divergence and overbot conditions (red lines). The mid-January top finished with a rising wedge and the hanging man and doji candlesticks also signaled the top. The tight standard deviation bands squeezed out the strong downside move (yellow oval). The tiny blue circles identify the previous tweezer bottom and tweezer top and potential tweezer top now. The Dow is also displaying a tweezer top for the last two days.
The potential head and shoulders (H&S) pattern is receiving lots of attention these days especially since notable technicians such as Tom DeMark are calling for a market down move ahead. The neon pink H&S targets 1693. The neon blue H&S targets 1639. Price fell through the pink 1772 neck line and came up for the back kiss five days ago where the bulls punched above and this happiness lit the fire for further upside. If 1772 fails, the strongest support in this entire 1720-1850 range, the 1693 is in play. If the 1745 neon blue neck line fails, 1639 is in play. To negate the H&S and begin happy upside markets again, the bulls must take out the prior highs at 1851. The top standard deviation line is 1866.52 and dropping so the door is open for a test of the all-time highs since price may seek that upper band.
There's a gap at 1828-ish, also very strong resistance. The bears must hold 1824 and 1828 resistance to create the right shoulder for the H&S and smack the markets lower, perhaps 50 to 100 handles or more, lower. The bulls must push up through 1828 and that would likely set the course for a test of the prior highs at 1851. The projection is that the January price highs should hold, even if price comes up for a test of the all-time highs, with lower prices forecasted for the days and weeks ahead.
This morning the dollar/yen fell under 102 sending futures lower, S&P -10, but over the last hour the dollar/yen regains the 102 level so the futures moderate higher to S&P -7. The BOJ and Fed continue colluding to control the stock market. This information is or 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 5:05 PM: Another rally day occurs and the tweezer top is negated with a higher solid candlestick.
The BPSPX remains on a market sell signal. For this tool, a move of six percentage points to the upside creates a market buy signal and a move above the 70% level verifies the upside and a continued bull market. Conversely, a drop of six percentage points creates a market sell signal and a move below 70% locks in the strong negativity and forecasts bearish markets ahead.
The market bears received the sell signal mid-January and then the confirmation sell signal as the BPSPX fell under 70 in late January. The bears were drinking champagne. Then the 'V' bottom occurs as the BOJ yells Banzai! and starts printing yen like madmen, destroying their currency, sending the dollar/yen higher, and sending equities higher creating the near-term bottom. For such a strong multi-day rally in stocks it is surprising that the BPSPX remains limp. The bulls need a six percentage point reversal to receive a market buy signal. This is the 68 target (62+6=68). The market bears remain in control unless the bulls can move the BPSPX above 68. If price moves above 68, and then above the critical 70% level, a strong market rally will be firmly in place. Under 68, the bulls got nothing. Check the chart each evening as it develops. This information is or 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 4:30 PM: Markets rally today. BPSPX inches up further to 65.60, remaining 2.40 under the 68 goal the bulls need.
The Fed and BOJ collude to keep the stock market elevated. The BOJ bludgeoned the yen last year to create the strong rallies in Japan and US stocks, as well as European stock and bond markets. The end of year stock market rally is plain to see from the chart as the yen was crushed from the October high to the low to begin the year. The weaker yen (higher dollar/yen currency pair) supplies the bull fuel. For this year, 95% plus of the Wall Street analysts and traders said continued weakness ahead for the yen (sub 95) so they remain long the Japan and US stock markets and short the yen. How's that working out so far? At least this 95% receives a happy reprieve the last few days.
As Keystone forecasted at the end of the year, the falling green wedge, oversold conditions and positive divergence said a launch higher should occur for the yen, opposite of what the group-think was, and it occurred as expected. The yen strength through January into February creates the market selling. The brown circle shows a tweezer top (two long shadows on the candlesticks that resemble a pair of tweezers) that printed to begin February. This is where the BOJ steps in to beat the yen lower to create the seeds for the recovery rally. If the BOJ prints yen the XJY chart above is moving lower (weaker yen and higher dollar/yen) and the stock market moves higher. If the BOJ refrains from money printing, the yen strengthens, the dollar/yen drops, and stocks drop.
The red lines show negative divergence creating the spank down from the tweezer top. Price also violated the upper standard deviation band (pink lines) so a move back to the middle band (20-day MA at 97.20) needs to occur at a minimum and potentially a move back to the lower band. Note the tight bands that squeezed out the strong upside move in mid-January. The MACD line is not agreeable to a top and wants to see higher highs for yen price. In addition, compare the indicators for the price high in October versus the high in February. The neon green lines show long and strong indicators but price only made it to 99 instead of back up to 103. This hints that there is underlying strength in the yen moving forward that would like to see the yen maintain upward buoyancy.
The Fibonacci retracements show that price has now touched the 32% Fib at 97.46, exactly on the dot. Thus, today is a bounce or die day. US stock futures are flatish at this writing less than one hour before the opening bell with dollar/yen at 102.30-ish; so this can be used as a pivot reference. Market bulls win today if dollar/yen moves above 102.30 and higher. Bears win at 102.30 and lower. Watch to see if the RSI and/or stochastics dip under 50% into bearish territory, or not (bearish for yen means bullish for the stock market). The 20 and 50-day MA's need back tested so some further softness in the yen is not unreasonable, however, stock prices may want to moderate lower today after the strong 4-day rally and that would be in concert with yen bouncing higher off the 32% Fib.
The negative slope of the 200-day MA is softening, perhaps flattening, indicating that the longer-term yen-weakening move is finishing. Overall, climbing out of the weeds and minutia of this price action, a sideways path forward through the year is a reasonable expectation. Note that the bottom rail of the channel coincides with the back tests of the moving averages and should provide a firm floor. A gap fill at 96 cannot be ruled out; if this happens the SPX will be at the 1850-ish all-time highs. There is also a gap fill at 97-ish that would be satisfied with a back kiss of the moving averages and test of the lower channel line. Simplifying all this mumbo jumbo, the yen may stutter step for a couple weeks, with a downward bias. This would keep the stock market stumbling sideways with an upward bias. The expectation is for the yen to then place a bottom again and continue sideways to sideways higher through the upward-sloping channel which would introduce further selling pressure on equities. Simply watch the dollar/yen as explained above since the BOJ and Fed control the markets. (Note: Yen chart is not updated for today's print as yet; it is always one day behind until this afternoon when the chart is updated). This information is or 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 6:03 AM on 2/13/14: XJY bounces off the 32% Fib to 97.55. At 4 AM, two hours ago, the dollar/yen slips under 102 to 101.93. Asian and European markets are weak overnight. S&P futures -9. Dow -70. Nasdaq -17. As usual, the falling dollar/yen (stronger yen) sends equities lower. BOJ's Kuroda must be sleeping. He will need to start beating the yen lower again with money printing to raise the dollar/yen and keep the stock market elevated.
Banzai! The dollar/yen moving from under 102.20 today to above 102.70 provides bull fuel for markets courtesy of the BOJ. Chair Yellen's debut performance in front of Congress was far overshadowed by the debt ceiling vote. The stock market boost was due in far greater proportion to the solution to the debt ceiling rather than Yellen. A short time ago, the House passed the debt ceiling limit vote as a clean bill and the Senate will rubber stamp it no problemmo so the debt ceiling will not be an issue for another year. Typically, the drama would have continued until an 11th hour vote on 2/27/14 where it would have been resolved ending in a huge upside rally. Instead, the debt ceiling resolution rally occurred today. It is surprising that something so obvious went over most everyone's heads.
Retracing the saga, Yellen's written testimony was available at 8:30 AM. The testimony was not as dovish as many traders wanted to see. Yellen is simply continuing ex Chairman Bernanke's path. In fact, if you shaved Bernanke's beard and placed a white wig on his head you would not have been able to tell the difference. There was nothing new from the Fed and S&P futures sold off nearly to the flat line after being up +9 in the early morning. The dollar/yen plummeted back down to 102.20. Traders realized the rally was too far extended based on Yellen dovishness since she toed the line and really offered nothing new. Sure, everyone wanted to hear her speak to see if she made any mistakes, but she had everyone eating out of her hand during the testimony.
When the opening bell rang, the markets had immediate lift and as the minutes continued became more and more robust to the upside. Funny thing, however, was that the Congressional hearing did not begin until 10 AM, and that is with the hot air introductory statements, so Yellen did not begin speaking until the hearing was moving towards 10:30 AM. Now some credit can and must be given to Yellen since she was on her maiden voyage and there was a bump higher but the real move was due to the happy debt ceiling limit resolution. The rumors about the clean debt ceiling bill occurred minutes before the opening bell. A few minutes after the opening bell most traders were aware that the debt ceiling limit appeared to be resolved. This is why the markets ignored the weak futures and equities started moving higher from the get-go. Yellen was still in the ladies room practicing her lines in front of the mirror.
The politicians made a bunch of dough today. They are the only ones allowed to legally trade on insider information so they bot calls and went long stocks, including the staff and underlings, knowing that the announcement on the debt ceiling would pump the stock market higher. Voila, instant money. The politico's are all eating steak dinners this evening. This is how politicians come to Washington as citizens of average means but leave as millionaires. It is easy to win the bet when you always know the outcome.
The SPX jumps above both the 20-day and 50-day MA's a very bullish signal. The VIX drops under the 200-day MA (only by pennies) another bullish signal. The put/call ratios drop today confirming the bullish euphoria and a return to rampant trader complacency. The volume was the lightest over the last couple weeks. Tech and small caps are lagging the broad indexes and this is starting to become more of a trending pattern; the opposite of what you want to see for a bullish market. The 10-year yield remained relatively flat at 2.72% all day long.
UTIL leaped higher. XLF jumped above 21.37. The VIX dropped. These parameters create the bull fuel. For Wednesday, the bears need to push XLF under 21.37 to stop the market upside. The bulls need VIX under 14.15 and the SPX is likely headed to the all-time highs. The SPX pushed through the important 1808-1809 resistance, now support, and price set its sights on the 1820's. Reference the SPX S/R missive on the weekend and you can see how the 1824 resistance created a ceiling. The 1828 is far stronger resistance. The 1824 is also a 76.4% Fibonacci retracement of the move down from 1851 to 1737.
Since the charts were hit with a double whammy of joy (debt ceiling limit is raised and Yellen), a little bit of time is needed for the charts to absorb this action. The SPX 2-hour chart is in nearly the same technical shape as this morning so the same analysis holds. The SPX should top out and roll over tomorrow or Thursday. Resistance above is 1824, 1828, 1832 and 1838-1843. The 1838-1843 is a strong resistance gauntlet. If price moves up through, then 1880 may be next. Bears will have to hold the line at 1838-1843. It would not be surprising to see price top out at 1824 or 1828 tomorrow. From the bear perspective, the debt limit ceiling rally is off the table now and the bulls cashed in two chips from their bag of tricks today.
For Wednesday, watch XLF 21.37, VIX 14.15, and SPX 1824 and 1828 to determine market direction. Support below is 1818, 1812-1814, 1808-1809, 1806, 1803, 1801 and 1796. The bulls need to touch the 1824 handle to accelerate the upside into the 1830's. Asia will likely rally following the US. The dollar/yen is 102.51 continuing to leak lower off the highs today, hence the futures are slightly negative.
Keystone took profits on WLT; no use in passing up 6% off the bottom. Will look to reenter perhaps at 10.4-10.6. WLT may simply continue higher without pulling back but a reloading at 10.5-ish appears a prudent strategy. WLT should have more upside ahead and the launch off the positive divergence likely began today. Also bot more SJB which is the thinly traded ETF that is short high-yield. HYG came up for another higher high and the weekly chart looks sick with negative divergence. Other plays that appear attractive include long SMN (which is short materials), and short FB, MYL and XLV. FB was showing weakness until an analyst told everyone today to buy Facebook with both hands no doubt pumping his own position. FB ended higher on only one-fifth the average volume; vapor, the lightest volume since the July 4th holiday. FB has a lot of momo so it will likely need a couple weeks to burn off some energy before rolling over to the downside.
A useful signal tool is the VIX 200-day MA now at 14.58. Bulls are happy if volatility is under 14.58 since markets will run higher. Bears are happy if volatility is above 14.58 since markets will sell off. VIX closes at 14.51 only 7 pennies under this critical level, thus, the bulls are happy. Since VIX closed on top of the line, tomorrow will have to play out for the bulls to prove they want further upside by pushing the VIX lower to confirm the signal change today.
The signal above is useful since it can be easily followed. Keystone's trading algorithm, Keybot the Quant, however, calculates a much more fine tuned VIX market signal and it says 14.15 is the bull-bear line in the sand. The 200-day MA is extremely important to gauge markets but Keybot carries more clout. Interestingly, the bulls pushed vol under 14.15 this afternoon but they could not hold it. By staying under the 14.58 as described above the bulls most definitely have the upper hand but the firm confirmation of continued bullish fun will not occur unless the VIX drops under 14.15. The SPX will move another five to dozen handles higher and the upside is here to stay if VIX loses 14.15. If VIX does not drop under 14.15, then the market selling should resume moving forward. This information is or 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 8:47 AM on 2/13/14: The VIX drops under 14.15, but only for a few minutes. Then VIX moves above the 200-day MA, but only for a few minutes. VIX closes at 14.30 so the table is set the same way again. Stock futures are moving strongly lower to the downside with S&P's -12 so the VIX should regain the 200-day MA.
Banzai! The Fed and BOJ continue colluding to keep the stock market elevated. Barclays bank announce 10K to 12K firings today and are mired in legal problems (civil lawsuits are now increasing) as well as security headaches with the data breach. The news sent S&P futures immediately lower from +6 to +4. The dollar/yen was under 102.20. Since the central bankers cannot tolerate any stock market weakness, the BOJ bludgeons the yen sending the dollar/yen from 102.20 to 102.32 in quick order which catapults the S&P's 4 handles immediately to +8. Weakness is papered over by the central banker easy money policies.
The dollar/yen now leaps to 102.45 as this missive is typed four hours before the US opening bell. Banzai! This sends S&P futures to +9. The critical S/R levels are 1828, 1808-1809, 1802-1803, 1796, 1791, 1788, 1781 and 1772. The 50-day MA is 1809.30. The 20-day MA is 1802.13. The 200 EMA on the 60-minute chart is 1798.76 so with price at 1799.84, pennies above, the bulls are in the drivers seat for the hours and days ahead. Bears must send price under 1798.76 pronto, otherwise, they will fold like cheap suit.
Traders are optimistic about Chair Yellen taking control of the Fed since she is a dove among doves that worships Keynesian economics. With the weak jobs and other economic data, traders anticipate a possible tapering of the taper (Yellen may slow down the $10 billion per month taper rate) so equities are goosed higher anticipating more free money. If Yellen maintains the current stance (as expected) or potentially talks a bit hawkishly, which would be a big surprise, markets should weaken. If Yellen hints that a taper of the taper may be a possibility, the stock market will catapult higher with the SPX running up through 1808-1809 on its way to 1828. Yellen's statement will be released at 8:30 AM EST so pay attention to the futures to see if any adjustment occurs.
Market direction is determined by financials, utilities and volatility today. XLF 21.37 is the key bull-bear line in the sand. If the bulls push XLF above 21.37, the stock market will continue higher for several days forward. Bears must hold XLF 21.37 with all their might. The bulls can also generate market strength by pushing the VIX under 14.20. VIX begins at 15.26. The bears can create market negativity with UTIL 504.65. For the SPX, the bulls only need a smidge of green in the futures, which is obviously in place today, and an upside acceleration will occur, which is already indicated. For today, watch XLF 21.37 and SPX 1808-1809 resistance since these two parameters will provide the market direction answer for the days forward.
Note Added 5:47 AM: The dollar/yen drops slightly from its peak minutes ago to 102.40 so the S&P futures drop one handle to +8. You can directly correlate the stock market movement to the ongoing collusion by the BOJ and Fed.
Note Added 6:55 AM: Dollar/yen 102.36 leaking lower, thus, S&P +6.
The 1-hour chart highlighted yesterday morning is now negatively diverged across all indicators. Trying to line up the hourly and minute charts in one direction can be like herding kittens. The 2-hour chart is negatively diverged across the histogram, stochastics and money flow but the RSI and MACD line desire another price high after a pull back. The chart above is similar to where the 1-hour chart was yesterday at this time. One to three candlesticks are needed to top price out and roll it over to the downside; about 2 to 6 hours trading time. Thus, the bulls may be able to keep price elevated today but by this afternoon and into tomorrow, a more substantive pull back would be anticipated.
Chair Yellen speaks for the first time as the new Fed head. Her testimony will cause markets to juke and jive before lunch time and markets will form an assessment of Yellen by the afternoon. The blue lines show the critical S/R levels at 1828, 1808-1809, 1802-1803, 1796, 1791, 1788, 1781 and 1772. Since the RSI and MACD line are providing a bit more upside juice, and the S&P futures are +7, check that, now +9, at this writing about 4-1/2 hours before the opening bell, a test of the critical 1808-1809 resistance appears to be on tap. If bulls punch up through 1808-1809, then an upside orgy will occur with price seeking 1828 in the days ahead. The bears must hold the line at 1808-1809, otherwise, they will fold like a cheap suit, and shorts will cover supplying further upside bull fuel. When equities head lower again in the days or weeks ahead, the 1772 level is the strongest support level in the entire 1700-1850 range. If/when 1772 fails, all hope will be lost for bulls since price will drop quickly to 1745 and then 1722, then 1700. As long as the bulls stay above 1772, they can float along with minimal damage this year.
The chart hints that the 1808-1809 resistance should hold. Of course, it depends on Yellen. Her statement is released early at 8:30 AM EST so monitor the futures at that time to see if any adjustment occurs. Traders appear to be thinking that dovish Yellen may taper the taper moving forward, due to weak jobs and economic data, so equities are moving higher. If she reinforces the current view about continued tapering at a pace of $10 billion per month (expected), or if she speaks more hawkishly, the markets will weaken.
It is a shame that fundamentals no longer matter since the markets are controlled by the central bankers, especially the ongoing collusion by the Fed and BOJ. Perhaps the so-called 'free markets' were never truly free anyways. The projection is for the 1808-1809 resistance to hold and for price to weaken moving forward for the days ahead. It all depends if Yellen will be yellin' Banzai! (directing the BOJ to weaken the yen), or not. This information is or 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 6:32 AM on 2/12/14: The SPX catapults higher on news that a debt ceiling limit resolution is reached. The House passes a clean bill that the Senate will bless so this potential market problem goes away and overshadows Chair Yellen's debut appearance. Both positive events create a double whammy of joy sending the SPX 20 handles higher to 1820. The HOD is 1824, which is resistance, and note the 1828 strong R in the above chart is now in play. Technically, the chart has to absorb the new news, and is in the same shape today as yesterday, so a topping out would be expected today or tomorrow and the 1824 and 1828 resistance levels should hold.
