UTIL drops at the open so bears are favored moving forward. SPX:VIX ratio gapped down to a 64 handle at the open and has flat-lined ever since forecasting a large down day on tap today. The monthly print tomorrow is very important since the SPX closing above 1283 signals a switch into secular bull markets moving forward. If the SPX drops under 1283, only 20 handles lower now, by tomorrow's close, substantial bearishness will appear in the markets.
Watch the NYA 7650 level as well since a drop under this level, now printing 7785, would usher in stronger bearishness. The SPX is down -0.97% while the Nasdaq is down -0.92%. This is why you see a flat malaise in markets now. The utilities and the SPX:VIX ratio are favoring the bears and further weakness, but, since the Nasdaq is not leading the down side, the move south is limited.
Note Added 1/30/12 at 10:49 AM: SPX failed the 1307-1308 after the bell rang, thus, a back kiss of this critical level would be in order to help the indexes decide what level of weakness is in store today. A back kiss resulting in collapse will move the SPX down into the 1290's towards the 1295 support. If SPX punches back up thru 1307-1308, the move down will only be a blip on the radar. Bears need tech to develop more weakness. Bulls need to regain the SPX:VIX 68 level and also breathe bullish life back into the utes.
Note Added 1/30/12 at 11:05 AM: SPX is coming up for the 1307-1308 back kiss now.
Note Added 1/30/12 at 2:31 PM: SPX regained the 1307-1308 support/resistance which is a feather in the bulls cap. Price continued up further and overtook Friday's LOD at 1311.72 which is another feather. A large gap was left behind at 1309.34 so that would be a target before the day ends. The Nasdaq simply did not lead the downside so the bearish move stalled and the bulls recovered, similar to Friday's action when tech would not lead down. UTIL has a 446 handle well under the critical 453 level for this week so this is a feather in the bears cap and will limit the upside for the market bulls. Interestingly, Keystone's SPX:VIX ratio has recovered, and keeps knocking on the 68 door from the underside, but has not yet punched up thru. Thus, despite the bullish recovery today, the market bears remain firmly in the game with the weak utes and SPX:VIX under 68. For the SPX watch 1311.72 and also the huge gap at 1309.34. The bulls win if the SPX:VIX regains 68. If the SPX:VIX ratio stays under 68, and if the markets do not experience the large sell off expected today, then the broad indexes should sell off large tomorrow, as long as the ratio stays under 68. CRB has a 313 handle inching closer to the 310.50 level which will usher in serious market selling, but, for now, the bulls continue to run.
Note Added 1/30/12 at 2:55 PM: SPX is flirting around with the 1311.72. SPX:VIX is now printing 67.58. Look at that.....SPX 1311.72........markets are deciding........
Note Added 1/30/12 at 2:59 PM: SPX 1312.40, the bulls bounced it. See if it comes down again for another look at 1311.72.
Note Added 1/30/12 at 3:01 PM: Fast markets. SPX now testing 1311.72 support again.
Note Added 1/30/12 at 3:03 PM: Failure at 1311.72. The weak utes and SPX:VIX ratio under 68 are two strong feathers in the bears cap moving forward.
Note Added 1/30/12 at 3:14 PM: The bulls recover again, up and over 1311.72. This is light volume erratic market action.
Note Added 1/30/12 at 3:58 PM: Low volume erratic action continues into the bell. The market bears remain in the game as UTIL stays under 453 and the SPX:VIX stays under 68. This sets up a wild Tuesday. As the old Wall Street adage says, today was a waste of a clean shirt and cab fare.
what do you think about a report on cnbc regarding the "Golden Cross Could Signal Market Uptrend" on s&p
ReplyDeletelink
http://www.cnbc.com/id/46193314
Hello Anonymous, sure is a lot of folks named Anonymous around here. Golden Cross, cross, schmoss. No, you do not want to use that for trading at all, it is a lagging indicator typically touted by bush-league technicians or wannabe chartists.
ReplyDeleteThe Golden Cross is when the 50-day MA crosses above the 200-day MA. The Death Cross is when the 50-day MA crosses down thru the 200-day MA. The signals are typically correct as a lagging look-back indicator but they are of no use for a technician. Let's look at the last few:
Death Cross; July 2010
Golden Cross; October 2010
Death Cross; August 2011
Golden Cross; Tomorrow
The summer 2010 swoon, where the equities markets were going over the falls requiring Chiarman Bernnake to step in with QE2, began with the April 2010 top. The short term bottom occurred July 2010--exactly when the Death Cross occurred. The SPX did not even print a lower value after that rendering the Death Cross not only worthless as a signal but you would have lost money following it.
The Golden Cross occurred in October 2010 after the SPX already bottomed August 2010 (upon the QE2 announcement) at 1020 and was already at 1200 when the Golden Cross occurred. So that resulted in another signal that was 200 handles late. Sure there was more bullishness ahead but that was simply due to the length of the bull market.
This past August, when the waterfall crash occurred, a Death Cross occurred exactly when the crash bottomed at 1100. If you would have went short based on the Death Cross, you would have had your face ripped off as markets move against you from 1100 up over 1200. The SPX did venture down for a lower low to 1075 in early October but timing that with the Death Cross is folly.
So that brings us to tomorrow when the Golden Cross will likely occur, the 50-day MA is 1256.28 and the 200-day MA is 1257.20 so only 92 cents difference exists. If anything, the Golden Cross is more in tune with where a market pull back will occur since lots of upside momo already occurred. The SPX has ran from 1075 to 1333, now at 1313, and the Golden Cross is about to occur. It already missed 225 spoo's! What kind of signal is that?
Therefore, the Death and Golden Crosses make for good tv and print media but they are of no use to a professional trader. Keystone's signals are far superior, all occurred before or coincidental with the very start of the August crash providing accurate forecasting.
Thus, it all sounds good, but ignore the hype. Think of the Death and Golden Crosses as more of a lagging confirmatin signal. That was a very good question that Keystone is asked all the time. Tomorrow the hype will be at its peak as the Golden Cross likely occurs, but stick to other more useful indicators such as trend lines, suppport and resistance levels, moving averages, channels, chart patterns and most of all, DIVERGENCES, instead.
As a side note, that writer for that article referenced the Hindenburg Cross which is funny. She should have studied technical analysis more instead of spending time on Facebook. The 'Hindenburg Omen' is a very useful signal that uses different parameters such as new lows and new highs. Keystone will write about it in the future, probably when it becomes applicable.
Comically, the article references the Hindenburg Cross which is actually a war medal. Wait until the boys here this, that will be great for a belly laugh.
Hello Keystone Speculator. I really enjoy reading your blog. Tom Demark says that the top was put in last week (1333 though he did say 1338-1342). And Granville believes the Dow will drop 4000 points this year. I don't know about that prediction but I was wondering if you think we topped out last week as well. I'm thinking about entering into some short etfs such as sds or twm. Thanks.
ReplyDeleteSteve
Thank you for your response. You are wealth of knowledge. I'm addicted to your website
ReplyDeleteHello Anonymous, on the inverse ETF's, you will have to make that decision yourself. If UTIL stays under 453 this week and SPX:VIX ratio under 68 the market bears should receive a reward moving forward.
ReplyDeleteThe charts, however, hint that after a pull back the indexes probably want to come up for one more matching high again, at that time, perhaps a roll over occurs. The CPC posted low 0.7 numbers days ago and typically a large market pull back occurs from one to three weeks from the low CPC's.
The futures are up now so the SPX:VIX ratio may pop back above the 68. The euro moves in the same direction as equites, thus, Europe is in recession and will have to weaken the euro, perhaps with another cut next Thursday, which should favor bears. In trading, all you can do is take it day to day, and in this environment, hour to hour. The tools on this site should indicate the sentiment moving foward.
Keystone's projection for the SPX this year is the low 1100's, so bearish, but perhaps not as much as Granville. Lots of choppy action is ahead.