WTIC oil prints a golden cross with the 50-day MA rising above the 200-day MA; a bullish chart pattern. As Keystone often says, however, typically a pull back occurs in price when a golden cross occurs and typically a rally when the death cross occurs. This is due to many weeks of trending price action that needs to take a rest once the golden or death crosses occur. If the golden cross remains in play then prices will be higher in the weeks ahead after a short term pullback.
The energy sector, XLE, prints a golden cross last week. Brent oil will likely print its golden cross in a couple days. OIS printed the golden cross three weeks ago. XOM printed the golden cross in early March and CVX printed the golden cross in March as well.
The red rising wedge is a bearish pattern. The red lines show negative divergence in place so oil prices would be expected to roll over in this daily time frame and target the lower trend line of the rising wedge. The green lines show the falling wedge, oversold conditions and possie d that launched price off the February bottom.
The weekly chart would like to see higher highs in oil price after the negativity in the daily time frame plays out say over the coming days or week or three. The monthly chart is also open to higher highs in price on the monthly basis. Thus, on the daily chart above, a pull back in oil to say 44 is on the table but about 3 or 4 weeks from now, say early June, oil prices will likely be back up to current levels at 46-47. Oil price may tease 48-52 for the coming few months which may hold as the high for the year. Keystone has no position in oil currently. 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.
Amazon prints above 700. Bernstein targets a $1000 price. CEO Jeff Bezos is carried around the lobby on the shoulders of happy employees watching the stock price grow to the sky.
The negative divergence across all indicators on the AMZN weekly chart was highlighted at the end of last year with a spankdown predicted, which occurred. However, Amazon was expected to come back up since the monthly chart had long and strong profiles for the indicators into the doji top in December (green lines). Price has come back up after the spankdown from the weak weekly chart.
AMZN appears to be printing a significant multi-year top moving forward. The red price candlesticks show the smack down from December to February corresponding to the neggie d on the weekly chart. That played out and price now came back up for higher highs. Note the indicators are all neggie d (red lines) on the monthly chart above except for the MACD line that wants to see another matching or higher high in price after a pull back occurs in this monthly time frame. With price now above the December highs, the negative divergence with the RSI, histogram, stochastics and money flow is ominous.
So two potential paths are forecasted both call for a significant multi-year top to occur in Amazon say between now and August. The blue line in the margin represents a sharp drop, similar to the drop from December, which would occur due to the neggie d. The blue line then recovers for THE top in June-August when the MACD line will negatively diverge representing the peak for AMZN. The purple line shows a path for price to make a quickie pull back, say during the rest of May into early June, then price comes back up to satisfy the MACD positivity in a quicker time frame. So the higher high in price occurs, say in June printing the multi-year top with the MACD turning neggie d.
It is never wise to short a hot momo stock. But the most speculative and risk-taking traders could consider a short play on Amazon. Simply be aware that the monthly MACD line wants price to come back up again after any pull back in the monthly time frame. Keystone does not hold a short position in AMZN currently. If you enjoyed the ride up in Amazon on the long side, it would be prudent to scale out of the position, say in three or four exits between now and July. Keystone will likely wait for the MACD line to turn neggie d, probably in June or July, and consider a short on AMZN at that time.
The Amazon party is peaking out over the coming weeks. By the end of this year, Amazon employees will ignore Bezos and talk negatively behind his back as the stock price continues sideways to sideways lower. Note how price likes to back kiss the 20-week MA, now at 499 and rising. Thus, 500-550 is a downside target and with all the bounces off the 20 over the last few years, AMZN is due for a failure that could get quite ugly. Do not enter AMZN on the long side. 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.
One of Keystone's key short term market signals is the 200 EMA cross on the 60-minute chart. The SPX is under the 200 EMA at 2061 signaling bearish markets for the hours and days ahead, however, price is only 4 points on the bear side so the bulls may try to push the SPX above this critical moving average. Pay attention to the SPX 2061 level. Bulls win for the hours and days ahead above 2061 while bears win under 2061.
The red rising wedge, overbot conditions and neggie d are textbook charting identifying the top at 2111. The green falling wedge, oversold conditions and positive divergence are textbook charting identifying the bottom at 2039. The indicators are long and strong in this 1-hour time frame so higher highs in the SPX should be expected for a couple-few hours ahead.
Note how price is dancing to and fro along the 200 EMA. This is testimony to the importance of this key level. Price has not back kissed the 200 EMA after the failure 21 candlesticks (hours) ago, so the SPX may simply climb up to perform the back test of the 2061 level where a bounce or die decision will occur. Watch 2061 on Monday since it tells you a lot about which side will win 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 Added 9:15 AM EST Before the Tuesday Opening Bell, 5/10/16: The SPX fights at the 2061 decision line all day Monday and ends with the bears in the lead with the SPX down to 2058, however, S&P futures are up +8 this morning. The 200 EMA on the 60-minute is 2060.93. The fight at 2061 continues for Tuesday. Bulls win big above 2061. Bears win big below 2061.
Just as the uber low put/calls (red circles) signaled the stock market top a couple weeks ago, traders are now experiencing a whiff of fear, worry, concern and slight panic (green circles) is in the air. The 1.20 level for the CPC and higher is a good rule of thumb for when a market bottom is at hand. The put/calls suggest that it is prudent to scale into longs for very short term (VST) trading. A market bottom can occur anytime any day forward probably early in the week. The bottom may have been placed on Friday at 2039.
When the red circles indicated complacency, when the wine was flowing like water and traders expected stocks to grow to the sky, the thinking was for a 30 to 100-handle pull back in the SPX. Price dropped from 2111 to 2039, a 72-handle pull back, thus far. Stocks may sell off further which will likely send the put/calls higher which further insures that a market bottom is at hand in the VST. A flush lower in stocks would be a very attractive place to go long. The near-term negative energy is playing out or played out. 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 algo, Keybot the Quant, flips back to the short side last week at SPX 2053. Weak copper and semiconductors cause the negativity. For the new week ahead, copper and retail stocks are the two key parameters most impacting market direction. Bulls win with higher copper; if JJC moves above 25.27. Bears win with lower retail stocks; if RTH drops under 75.94. Markets are choppy sideways for the last couple months.
More information is found at Keybot's site;
Keybot the Quant
Everybody hates Twitter. The management under CEO Jack Dorsey appears disjointed as the fledgling social internet company struggles. FB keeps stealing away the real-time event audience that Twitter always enjoyed a monopoly on. Investors have given up on the tweety bird; many analysts and traders say all is lost. When the sea of negativity is so thick you can cut it with a knife, that may be an interesting opportunity.
Twitter maintains a loyal following and it is going through growing pains. Many users would never want to deal with the Facebook drama and Twitter provides a clean and easy service. Tweets can be read by googling key words and no one has to be a member to read tweets. Twitter also remains a takeover possibility. Perhaps a white knight like AAPL, or GOOGL or other tech company with deep pockets will find a fit for Twitter within its own structure and plans. You never want to buy a stock based on a takeover possibility but with beaten-down TWTR it is a plus.
The red sideways triangle failed about one year ago. Remember how Keystone charted that triangle from late 2014 into 2015 and we were waiting for the resolution? Price collapsed out the bottom of the apex of the triangle at the 40 level. The vertical side of the triangle is 40 which targets zero for price but that should not happen. Using about a 30-handle target drop instead would target this 10-15 area which has been achieved. You can say the sideways triangle pattern has played out.
The green falling wedge is in play along with universal positive divergence across all indicators. Price should bounce in the weekly time frame. TWTR violated the lower band and then returned to the middle band, but dropped again so that lower band at 13.05 must be left open as a possibility. The expectation is for TWTR to bounce strongly over the coming weeks perhaps moving back up towards 20.
The trade is tricky, however, since the monthly chart remains weak and after a few weeks of happiness, Twitter will likely roll back over and come back down to the 13-15 area, say in June-July. Overall, however, it seems that much of the worst weakness is over and TWTR may base for the next few months. And that takeover possibility always lingers so Twitter is a stock that may be up +20% on any given morning if a takeover is announced. Of course catching falling knives may result in a bloody hand.
The ADX remans well above 30 so the downward trend in TWTR remains strong. When the ADX falls under 30 you will know that Twitter has firmly based and will likely move sideways to sideways higher going forward. Keystone just bot TWTR opening a new long position in the flailing tweety bird. The trade will be added to in this 13.0-14.5 range. Target would be say, 16-20 this month or early June. The trade will be exited if a half-decent gain appears due to the weakness in the monthly chart. Then a very long term position on Twitter is much more attractive say from the summer time 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.
The monthly charts receive a new data point on Friday with the end of April that ended positively. The dark green lines show the tight standard deviation bands squeezing in tight and price is about to either explode higher or collapse lower in the May-July time frame. The bands indicate that an epic market move is coming very soon. Tight bands do not predict direction only that the move will be big; it would be expected that the SPX may move 200-400 handles (in the same direction) over the next couple-three months maybe more. One side is going to be very happy and the other side very sad.
The purple circle shows the Tweezer Bottom and lower band violation that sent price back up to the middle band at 2037, which was achieved and price kept on running higher to 2111 (this year's top thus far). The upper band is 2154 and it has to be left in play going forward. If the central bankers keep pumping stocks and flapping dovish wings price may seek 2154.
The red rising wedge pattern is ominous since the collapses from rising wedges can be quite dramatic; it would be nothing to envision the S&P 500 down to 1100 or even lower in the future as a result of the rising wedge pattern. The central bankers are powerful and keep floating the stock markets sideways preventing any significant collapse.
If you look at the shadow on the right inside that purple circle, that low price print occurs with the indicators remaining weak moving lower. This hints that a solid bottom has not been placed in mid-February and price may want to come back down again until solid positive divergence forms. The SPX price and indicators are trending lower with lower lows and lower highs.
Note the heavy selling volume during December, January and February at levels not seen for five years. The last two positive months of March and April come with lower volume. The bulls are not as excited as the bears.
The ADX was above the 30 level in late 2008 and early 2009 as the financial crisis hit and markets were collapsing. March 2009 is when Federal Reserve Chairman Bernanke turned his back on capitalism and free markets and instead started pumping stocks by printing money. Bernanke also stepped in to save companies. Free markets were destroyed in early 2009. The current Wall Street system is a pseudo-free market style system where only the good side of capitalism is enjoyed (stocks go up) and the necessary down side of capitalism where companies wash out and some go bankrupt (stocks go down) is never allowed to happen again.
The ADX slips under 30 as 2010 began showing that the strong downtrend in the stock market was over. Bernanke had saved the day with his obscene Keynesian easy money that only serves to make the wealthy wealthier (since they own large stock portfolios). The ADX was back above 30 in 2014 signaling that the upside move in the stock market was indeed a very strong uptrend. In early 2015, however, the ADX drops under 30 and is now down to 21 indicating that the strong uptrend in stocks the last few years is over. Long-term bulls would need the ADX to move above 30 again.
The 10-month MA is 2020 and the 12-month MA is 2031 two very important levels to watch. It is negative for the 10 to be under the 12. If price falls under the 12-mth MA at 2031, very bad things will happen to the stock market.
Something very historic and epic is about to happen in the stock market over the next couple months. The expectation would be a sharp and extended move lower, however, the central bankers are the wild card; they can pump stocks at anytime. Price is squeezing upwards over the last two months so May and into June will tell if that is the direction of the huge move, or not. Sometimes price starts to move a certain direction then reverses quickly and the true move is in the opposite direction. The volume, chart indicators, ominous rising wedge and loss of trend as per the ADX are conspiring to say down is the way ahead but the price action will simply have to be monitored here on out each day. 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.
The 60-minute chart is useful for VST (very short term) trading. The 200 EMA cross is a useful signal for the hours and days ahead. The SPX is above the 200 EMA at 2063 fore casting higher prices for the hours and days ahead. Note, however, that price failed at the 200 EMA last Friday but recovered with the rally into the closing bell. This drama will likely continue early this week. Monitor the 2062-2063 pivot closely as it will tell you a lot about market direction ahead. Bulls win big above 2063. Bears win big under 2062.
The red lines show a head and shoulders (H&S) pattern. The head is 2111, the top for this year thus far, and we will call the neckline at 2079 since this is strong price support (reference the SPX S/R missive). The rupture at 2079 opens the door to the strong 2046-2047 support. Price bounced due to the positive divergence shown by the green lines but the MACD line and money flow had continued to show some weakness after the low in price printed which hints that price may have to come back down which may target that H&S level at 2046-2047. The year began at 2044 so price may want to back kiss this level.
Keep things simple. Watch 2062-2063 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.
The 30-minute chart is useful for day traders. The 8/34 MA cross is a useful signal for the hours ahead. The 8 MA is under the 34 MA forecasting lower prices for the hours ahead. Note, however, that price is above the 8 MA which will curl the 8 MA higher for a potential positive 8/34 MA cross early this week. For now, the bears are in charge. The green lines show the positive divergence, falling wedge pattern and oversold conditions that set up the launch pad for price to rocket higher (green arrow), in this 30-minute time frame.
There is a lot of sideways slop in that chart with price stumbling through 2083-2100 for the last 7 days. This year's top is the purple circle at 2111. Watch the 8/34 MA cross for an early indication that the bulls are fighting back, or not. 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.
The BPSPX remains on the double-whammy buy signal. The BPSPX had reversed six percentage-points off the bottom providing a market buy signal and once price moved above 70 a double-whammy buy signal is in play since early March. The peak is 79.50 one month ago. Thus, a six percentage-point reversal is 73.50 where a market sell signal would occur. Price is at 75.60. A double-whammy sell signal would occur if the 70 level fails. If market bulls keep the BPSPX above 73.50, they will remain on easy street with stocks floating along sideways to sideways higher. Trouble begins if 73.50 fails. 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.
