XLF Financials Daily Chart Sideways Symmetrical Triangle Tight Standard Deviation Bands

The daily charts of the SPX, INDU, COMPQ and XLF above, as well as many others display the tight standard deviation bands that are squeezing in for a big market move now at the door step. Markets are going to commit to direction over the coming days which will bestow one side or the other with a big win. The vertical side of the blue triangle is about one to 1-1/2 point. Thus, if the bulls win and break out above 22.0, the target above is 23.0-23.5. If the bears win and price collapses under 21.7, the target below is 20.2-20.7. The 200-day MA is 21.08 and multi-month support is in place at 21-ish so the downside target would be 20.2-21.10.

Price is under the 20-day MA at 21.89 and under the 50-day MA at 21.97. The 20 is under the 50 which is a bearish market signal. Tell this to the banks which continue to find a way to remain buoyant. The thick red line is the XLF 21.83 level currently identified by the Keybot the Quant algorithm as the bull-bear line in the sand and the algo identifies financials as the most influential parameter effecting broad market direction right now. The fate of both bulls and bears is decided by XLF 21.83. Price is 21.87, four pennies above, in the bull camp, creating market bullishness and a higher stock market. Bears need to push XLF under 21.83 as soon as possible, otherwise, they got nothing.

Price is coiled for the big move but as the triangles show, the theatrics may continue into next week since there is about another 5 to 7 days available in the apex of the triangle before price has to decide which way to run. So by the end of the month, next Friday, 5/30/14, the winner will be clearly obvious. By then, either bulls are running to the SPX 1920's or bears have begun a new down leg setting sights on SPX 1848 support. XLF 21.83 tells the broad market directional story today and the path forward. Markets are typically bullish moving into a three-day holiday weekend so the bulls have a seasonality advantage. 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 5/20/14; HD, SPLS, DKS; DRYS, CRM

Keybot the Quant remains short but the algo is in position to go long. If the SPX prints above 1886 and remains above, Keybot will likely flip long. S&P futures are flat to lower shortly before the opening bell. For the SPX starting at 1885, the bulls will accelerate higher with the move above 1886. The bears need to push under 1873 to accelerate the downside. A move through 1874-1885 is sideways action for today.

The key market directional drivers currently are financials and retail. Retail is taking the pipe this morning with weak earnings from HD, SPLS, DKS and TJX. Watch XLF 21.83. Yesterday's drama will continue. If XLF remains above 21.83 (now at 21.85 creating bullishness), the markets move higher and bulls win. If the XLF drops under 21.83, the bears win and markets will sell off today. XLF is trading at 21.84-21.85 pre-market so despite the weaker futures, the bulls have come to play today and are already fighting to stay above XLF 21.83 since it holds the key.

Note Added 9:51 AM: The XLF collapses through 21.83 creating market negativity. SPX 1879. So the bears beat back the bulls to begin the day. The 1878 level is strong support (scroll back to study S/R) so the bears will mean business if they push under but if the 1878 holds, the bulls can easily mount a comeback. The 20-day MA is 1879.70 so pay attention to this number to see who is winning. Keep watching XLF 21.83. Bears are fine as long as the XLF remains under 21.83. TRIN is 1.06 providing the bears a slight advantage. The beat goes on. The bulls need to send XLF back above 21.83 and the SPX above 1886 to place Keybot in position to want to go long.

GTX Commodities 2-Minute Chart Flash Crash and Recovery

The GTX Goldman Sachs Commodity Index performs a flash crash and quick recovery yesterday. Main stream media and traders ignore the event since these flash events are becoming more and more common. At 1:34 PM EST, the GTX flash crashes from 5039 to 4718, 321 points, -6.4%, then flat lines sideways for one-half hour, then flash spikes higher back to 5039 at 2:06 PM, moving sideways into the commodities close. 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 Midday Market Action 5/19/14

The fight today is at the 20-day MA at 1879.48. Price is printing 1880.16. The HOD is 1881.66 held in check by the overhead resistance at 1882. The stronger resistance is 1884 also the May starting month number. The bulls win big above the 20-day MA and 1884 resistance since this lights the way to 1891 and higher. The 2-hour and 1-hour SPX charts hint that price wants to remain elevated into this afternoon. The SPX is above the 200 EMA on the 60-minute at 1874 signaling bullish markets for the hours and days ahead (reference previous chart). The 8 MA pierces above the 34 MA today signaling bullish markets for the hours ahead.

The bears need to push under the 20-day MA, under 1878 and mainly under 1874. If the 200 EMA on the 60-minute at 1874 fails, markets are in deep trouble. As the new week begins the bulls are floating markets higher. The VIX is higher as well today so either the SPX is wrong or the VIX is wrong. The retail sector, semiconductors and financials are the three key market directional movers today according to Keybot the Quant algorithm. Semi's jump higher providing the lift to markets. Retail is flat. Watch the XLF 21.83-21.85 bull-bear line in the sand. XLF is now printing 21.76 nine pennies on the bear side causing market bearishness. Equities can float higher all they want but if XLF remains under 21.83-21.85, the bulls got nothing and the upside will fade. If XLF moves above 21.83-21.85, the bulls are going to have a big upside party catapulting back to the SPX 1900 highs.

TRIN is 1.35 favoring the bears today representing a steady-eddy selling mood. The dollar/yen is 101.20. Whichever way the dollar/yen goes, so goes markets. Whichever way the financials go, so goes markets.

Note Added 11:08 AM:  HOD 1881.80 and price is coming up for another look. Bulls are pushing...boom, another high for today at 1882.02. Price is testing this 1882 resistance. It appears likely the test at the important 1884 is on tap.

Note Added 11:11 AM:  That did not take long. The SPX is testing the important 1884 resistance. Bears must hold the line or they will fold like a cheap suit. A back kiss of the 20-day MA at 1879.68 should occur in the time ahead today. Bingo, the bulls thrust higher above 1884; see if it can hold for a few minutes, or not. XLF is 21.84. Whoa, the bulls are starting a big party. Keybot's XLF number is now 21.83 so the financials turn bullish and this says the equity upside has street cred. Bears need to push SPX under 1884 and the XLF under 21.83 right away or they will fold like a cheap suit. The bears only have a few minutes to try and reverse this bullish thrust.....

Note Added 11:17 AM: XLF 21.83 sitting exactly on the bull-bear line in the sand. This is more important than the broad indexes since it will determine if the broad indexes go up or down today. Who will win? Whichever way XLF pivots from 21.83 tells you the winner today, bull or bear.

Note Added 11:19 AM:  XLF 21.82. Bears wipe the beads of sweat from their forehead. They are fighting back. This drama will likely continue today.

Note Added 6:48 AM on 5/20/14: The bulls win yesterday. The XLF closes at 21.86 three pennies on the bull side creating market bullishness. Continue watching this XLF 21.83 pivot point, identified by Keybot, since it will dictate market direction for Tuesday. The bulls close price above the 20-day MA at 1879.73 so this is a big win for bulls. Bears need to push price back under the 20-day today, otherwise, up is the direction forward. The tight standard deviation bands on the SPX daily chart are squeezing out a huge move for the days ahead probably 20 or 30 SPX handles or more. The initial direction of the squeeze appeared to be moving lower but the bulls reverse the course on Friday late-day and yesterday to create a squeeze move to the upside, but, this morning the S&P futures are -2 showing that the decision on direction is not yet firm. The tight standard deviation bands are keeping everyone guessing; the direction of the big move should expose itself today or tomorrow as price commits strongly one way or the other. If XLF is above 21.83, markets are going higher and bulls win. If XLF loses 21.83 and moves lower, markets are going to sell off and the squeeze move will be down.

SPX 60-Minute Chart 200 EMA Cross

The bears were disappointed again last week when the SPX recovered back above the critical 200 EMA at 1873.55. The SPX is above the 200 EMA forecasting bullish markets for the hours and days ahead. Bears need to drive price under 1874 or they got nothing. The green circles show the recent successful support tests by the bulls. The bears receive a negative signal on 4/28/14 but that immediately recovered smacking the bears in the teeth. Then on 5/7/14 another failure only to recover again with another smack to the bear's face. Then on Thursday last week another failure. Bears were feeling good until late day Friday when, yes, they got smacked in the teeth again, and today the bulls are running higher.

The indicators show long and strong behavior ahead sans the RSI so higher highs would be expected this morning into and perhaps through lunch time into the afternoon. The top about a week ago was cheesy since RSI still showed strength. The bottom was cheesy as well with the MACD wanting more lows but the bounce occurs anyway. This hints at potential sideways movement through the 1867-1897 range. The brown lines show key S/R at 1902, 1897, 1891, 1884, 1878, 1874, 1867-1868, 1859 and 1849. Price is inching higher this Monday morning to test the May starting number and strong resistance at 1884. The interplay at 1891, 1884, 1878 and 1874 is key. Bulls win with 1884 and 1891 and higher. Bears win with 1878, 1874 and lower. Watch the 20-day MA at 1879.46 with price fighting for this level now printing 1879.63.

If the 200 EMA at 1873-1874 fails, bad things will happen to markets. Bulls are going to have a party if they move above 1884. Watch the financials. Keybot the Quant algoirthm identifies XLF 21.85 as a major bull-bear line in the sand so as long as this is not taken out (now under at 21.78), bears are fine and the market upside should fade. If XLF 21.85 is exceeded, the SPX is likely headed back up to 1900 plus. 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 Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 5/19/14

SPX support, resistance (S/R), moving averages and other important levels are provided for trading the week of 5/19/14. Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and extremely important S/R levels. The SPX prints new all-time highs piercing the 1900 level for the first time in history.

Today, the SPX pokes up through Friday's high at 1878 so price pops immediately to 1881 thus far. The 1882 level offers mild resistance with the strong overhead resistance level at 1884. There are nine trading days including today remaining in May and May began at 1884. A move up through 1884 will then target 1891.

The bears need to push under the strong 1878 support level to set up a test of the important 1874 support gauntlet. Bad things will happen to equities if the SPX loses 1874. The 200 EMA on the 60-minute chart at 1873.54 (in real-time as this is typed) is a critical bull-bear level that will usher in lasting negativity if it fails.

The 20-day MA is 1879.38 and 50-day MA is 1867.88 as the new week of trading is underway. Immediately you realize that the fight today is at the 20-day. Bulls win above 1879-1880. Bears win below 1879-1880. Bulls win big above 1884. Bears win big below 1874. Use the 20-day and 50-day MA bracket as an upper and lower range as well to gauge market direction moving forward; 1879 on top and 1868 on the bottom. The SPX is currently printing 1878.77 with price banging and testing the ceiling door at 1879.38; will it open, or not? The VIX and the SPX are both up today so one of them is wrong.

1902 (5/13/14 All-Time Intraday High: 1902.17) (4/4/14 Intraday High for 2014: 1902.17)

1902.17 Previous Week’s High

1897 (5/13/14 All-Time Closing High: 1897.45) (5/13/14 Closing High for 2014: 1897.45) (4/4/14 Intraday Top: 1897.28)

1894

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)

1883.95 May Begins Here

1882

1880

1879.19 (20-day MA)

1879

1878.28 Friday HOD

1878 (3/7/14 Closing High: 1878.04)

1877.86 Friday Close – Monday Starts Here

1877

1874

1873.51 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)

1872

1871

1868

1867.80 (50-day MA)

1867

1865

1864.82 Friday LOD

1862.36 Previous Week’s Low

1862

1859

1855

1853

1852

1851 (1/15/14 Intraday Top: 1850.84)

1849 (12/31/13 Intraday High Top for 2013: 1849.44)

1848.36 Trading for 2014 Begins Here

1848 (1/15/14 Closing High: 1848.38) (12/31/13 Closing High for 2013: 1848.36)

1847.61 (20-week MA)

1847.38 (100-day MA)

1846

1845

1843

1842

1841

1840

1839

1838

1837

1835

1832

1831

1828

1827

1824

1823.90 (150-day MA; the Slope is a Keystone Cyclical Signal)

1820

1816

1814 (11/29/13 Intraday Top: 1813.55)

1812 (12/9/13 Intraday Top: 1811.52)

1810

1809 (12/9/13 Closing Top: 1808.37)

1808

1807 (11/27/13 Closing Top: 1807.23)

1806

1803

1801

1800.40 (10-month MA; a major market warning signal)

1800

1799 (11/18/13 Intraday Top: 1798.82)

1798 (11/15/13 Closing Top: 1798.18)

1796

1793

1791

1788

1787.53 (200-day MA; not tested for 1 year extremely odd behavior)

1785

1783

1782

1781

1777

1775 (10/30/13 Intraday Top: 1775.22)

1774.67 (12-month MA; a Keystone Cyclical Signal) (the cliff)

1772 (10/29/13 Closing Top: 1771.95)

1770

1769.64 (50-week MA)

1768

1763

1762

1759

Note Added 10:39 AM: The SPX HOD is 1881.66 so the mild 1882 resistance is holding thus far. The important and strong 1884 R is so close that the presumption is that price has to at least take a look and touch today to see if it has the juice to move up through, or not. The SPX is printing 1879.97 with the 20-day MA at 1879.48; the fight at the 20-day MA continues.

RUT Russell 2000 Small Caps Daily Chart 150-Day MA Cyclical Indicator

A key cyclical market indicator is the slope of the 150-day MA. As long as the slope of the line is up, like now, the bulls are in full control without any worries. If the 150-day line flattens, like now, then it is time for concern. If the 150-day MA rolls over to the downside the index or individual stock is in trouble and headed for multi-months of weakness. Small caps and tech have been weak lately while the broader market SPX and Dow reach new highs. Looking at the 150-day MA slopes of the COMPQ and RUT show that small caps are leading the markets lower, therefore, are the key index to monitor.

The pink box shows the 150-day MA at 1138.85. Each day forward monitor this critical moving average to see if it continues higher each day, or, if it starts to flatten and turn negative. Looking at the last few days, the 150-day MA prints are 1137.16, 1137.53, 1137.90, 1138.27, 1138.62 and Friday's 1138.85. Taking a look at the incremental daily moves are 37 cents, 37 cents, 37 cents, 35 cents and 23 cents. Note the increments are becoming tighter which means the slope is flattening which is obvious by looking at the blue line on the chart. So market bears want to see this incremental change become tighter and tighter and for the 150-day MA to turn negatively-sloped and actually start losing ground. If so, this signals a cyclical bear market for small caps here forward. For now, the cyclical bull market for small caps remains.

The downward-sloping black channel shows the path of lower lows and lower highs. The blue falling wedge is in play which would target a bottom at 1070-1080 in June. There are two gap fills needed above; one at 1120, the other 1140-1145 the same area as the 1138-1139 level, and rising, for the 150-day MA, so it is reasonable to think price will seek this area to test and close up loose ends. The bears have done a good job to take price lower off the top and not leave any gaps behind except for the two mentioned (price has no reason to ever move above 1145 again). If price rises to the 1138-1145 area, the 150-day MA will likely not turn negative for another week or so, if it does.

Note how the bears have taken price -10% lower off the top into a correction phase (at 1092-ish and lower) and price is testing the February lows. Price will likely remain active in this 1080-1150 zone for the next month. Pay attention to the slope of the 150-day MA since it tells you the cyclical direction. You can check all your current long positions with this tool. If RUT turns bearish, then the COMPQ (Nasdaq), SPX (S&P 500) and INDU (Dow) will be on watch next. Market bears got nothing until they roll the 150-day MA over to the downside which would create multi-month weakness ahead.

The RUT weekly chart indicators are weak and bleak so any bounce in the short term should give way to additional weakness and lower lows for price as the weeks play out. Price is currently testing the 50-week MA at 1099. This is the first test of the 50-week MA since November 2012 one and one-half year 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.

SPX Daily Chart Tight Standard Deviation Bands

The pink standard deviation bands are squeezing in tight squeezing price out to the downside. Sometimes these moves are fake-outs, however, so trading will need to play out into Monday and Tuesday to confirm that price wants to move sharply lower now. Yesterday's low print did not touch the lower pink band so a move to 1860 would be a reasonable expectation. The 20-day MA at 1878.42 is the ceiling and the 50-day MA at 1867.86 is the floor; whichever way price exits identifies the winner going forward. Price begins at 1871.

The red lines show the three recent negative divergence smack downs the last one starting two days ago. The RSI slips under 50% into bear territory. The volume was stronger than recent days but a hair short of the upside volume over one week ago when the bulls bot the market bottom. This indicates that the bears may not have much juice in the near-term unless today is a high-volume down day. Projection is continued sideways to sideways lower going forward. The tight bands should squeeze a continuing move lower perhaps to 1848 if the downside squeeze continues. If price drops under and remains under the 50-day MA, another ten or 20 handles of downside should be on the table. Bulls may create a reversal move and acceleration higher to all-time highs again if price overtakes the 20-day MA at 1878 and higher. S&P futures are -3 about 1-1/2 hour before the opening bell which would set the stage for a fight at the 50-day MA today. 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 2:13 PM: The SPX fell through the 50-day MA at 1867.70 but recovered back above today. The current print is 1868.63 so price is coming down for another look. Price will bounce, or die. Watch semi's. SOX is printing 572.62 remaining above the critical bull-bear line in the sand at SOX 569.90 identified by Keybot the Quant. This keeps the broad indexes buoyant today. If SOX remains above 569.90, markets will float out sideways into the weekend. If SOX fails 569.90, the SPX will slice down through the 50-day like it is not even there and markets will end the week very ugly. What say you semiconductors? VIX is under 13 providing bull juice. TRIN 1.17.

Note Added 2:58 PM:  Bounce. The SOX runs towards 375 so the SPX catapults higher running towards 1874 printing the highs of the day. VIX is at the low of the day crumbling to 12.56. TRIN drops to 0.99 now on the bull side today albeit by one single penny. The bulls are flexing their muscles into the closing bell. XLF is at 21.70, however, and bulls will need to push up through XLF 21.85 to develop any sustainable upside.

Note Added 4:18 PM: The bulls run markets higher into the closing bell and the SPX stalls at the strong 1878 resistance. Price could not close above the 20-day MA at 1879.07 so the 20-day ceiling and 50-day floor battle continues on Monday morning. Bulls will need XLF 21.85 to prove they will send equities higher and financials took the pipe this week. Bears need SOX 569.90 to prove they will send equities lower. These are key parameters for Monday's trade.

Market Chronology April 2014-04 Available on Amazon

Keystone the Scribe, one of Keybot's sister blog sites, releases the latest issue of the Daily Chronology of Global Markets and World Economics April 2014-04 available on Amazon's Kindle. A handy link is provided in the left margin. All the recent eBook links are provided in the margins.

If you are a seasoned professional trader or a novice wanting to learn how and why markets move in real-time, the daily chronology series are the books for you. The eBooks detail market reactions to the Monthly Jobs Reports, Fed meetings, economic data, earnings releases and geopolitical events. Business and economic teachers and students enjoy the chronologies since textbook theory comes to life. Read about how the IPO frenzy and global M&A orgy are affecting markets. Become educated on how Ukraine turmoil affects global markets and currencies.

As always, special thanks to the international support for the K E Stone Blog Series of Web Sites especially the strong following from major money centers in New York, Chicago, London, Frankfurt, Paris, Singapore, Hong Kong, Tokyo and Sydney and the loyal following from the US, Canada, Mexico, Australia, UK, Germany, France, Russia, China (yes, Russia and China) and Malaysia. The blog sites only continue with the ongoing support of the entire readership, all followers large and small, professional and novice. Keystone the Scribe is the respected world leader in providing historical context for global markets and world economics. Read the Daily Chronology of Global Markets and World Economics April 2014-04 issue today to gain a vital market edge.

RUT Russell 2000 Small Caps Daily Chart Price Enters Correction Territory

The RUT small caps fall into correction territory down -10% off the top. A market correction is a -10% drop and a bear market is a -20% drop. The RUT placed an intraday all-time top at 1212.82 and all-time closing high top at 1208.65 on 3/4/14. Yesterday's LOD is 1082.53 and closing print at 1095.99. A -10% drop from 1213 is a 121-point drop which is 1092-ish. So correction territory is pierced but the bulls managed to hang on by a fingernail. Watch to see if price can drop under and maintain below 1092 to lock in the correction phase going forward. Small caps and tech typically lead the broad indexes (SPX (S&P 500) and INDU (Dow)) so traders are concerned.

The RUT is under the 200-day MA at 1116. Price pierced the lower standard deviation band so a move back up to the middle band, the 20-day MA at 1124, is a reasonable expectation moving forward. That move would send price back to the top rail of the downward-sloping blue channel as well for a test so a cluster of resistance forms at 1116-1124. The green lines show a falling wedge pattern and the indicators are lined up with positive divergence so price may seek a bottom in the near-term perhaps today. The possie d should create a recovery bounce to the 1116-1124 zone.

The pink box shows that a strong down trend is in place. The weekly chart is weak. As price has fallen the ADX is in the mid to upper 20's and higher indicating the strong trend in place for lower prices. Therefore, after a relief bounce, further weakness would be expected. The RSI never reached oversold territory so there is plenty of space to move on the downside. Projection is for price to base perhaps today or Monday, and recover, but for the weeks ahead the downward trend in price should continue as long as the ADX remains in the mid 20's and higher. Note that the 50-day MA is dropping and 200-day MA is flat so if you project that out to the right of the chart, a potential death cross would occur at the end of May or early June. Watch the slope of the 150-day MA (not shown) since its flattening and rolling over to the downside is a very ominous signal that says a cyclical bear is in store for the small caps 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.