SPX S/R Week of 4/2/12

The SPX printed its highs for the year last week, fueled by Chairman Bernanke's 'accomodation' words last Monday which pumped the commodities and equities markets while beating the dollar. By mid-week, however, copper and commodities soured on lower growth projections for China, taking the steam out of the rally.  Friday's action closed out the quarter with buoyant markets due to window dressing. The 1419.15 is an important line in the sand where bulls will throw confetti if it is overtaken; a move to fill the gap at 1425 would then be on tap.  Bears will try with all their might to prevent the SPX from moving towards the 1416.51 and 1419.15 numbers.

The 1410 level served as strong S/R on Friday. Price was spanked back from 1410 after the opening bell but around 2 PM made a run up thru, only to fall back by late day. For Monday, starting at 1408.47, the market bulls need to touch the 1411 handle, less than three points higher, if so, the upside will accelerate and the SPX should move thru 1413 and 1414 R and challenge the 1416.51 closing high for the year thus far.

The market bears need to push under 1401 support to ignite accelerated selling. If the SPX moves lower and loses the 1406 level, and the 10-day MA, at a minimum a test of the 1401.00-1401.50 support should occur. Copper, commodities and utilities sectors are driving the broad indexes currently.

·         1440 (5/19/08 Intraday HOD for 2008: 1440.24)

·         1427 (5/19/08 Closing High for 2008: 1426.63)

·         1425 (Gap Fill from 2008)

·         1424

·         1422

·         1419 (3/27/12 Intraday HOD for 2012: 1419.15)

·         1417

·         (3/26/12 Closing High for 2012: 1416.51)

·         1414

·         1413

·         Friday HOD 1410.89

·         1410

·         Friday Close 1408.47

·         1408

·         1406 (5/29/08 HOD)

·         10-day MA 1405.44

·         1403

·         Friday LOD 1401.42

·         1401

·         1399

·         1394

·         1391

·         20-day MA 1390.98

·         1389

·         1386

·         1378

·         1372

·         1371

·         1370 (5/2/11 Intraday HOD for 2011: 1370.58)

·         1368

·         1366

·         1364 (4/29/11 Closing High for 2011: 1363.61)

·         1363

·         50-day MA 1362.91

·         1361

·         1358

·         1356

Keystone's Trading Week in Review and the Path Ahead 3/31/12

On 3/24/12, Saturday, Trichet, the former president of the ECB (Draghi has taken his place), said he is worried that controversial quantitative easing and other nontraditional steps that the central banks are taking may continue.  Trichet warns of ‘behavioral contagion’.  Nice of Trichet to say this now, but it does not fit his actions in the past years; he actually fueled the Euro problems raising rates when it was clear that Europe was slipping into recession, just like he raised rates at the exact wrong time at the peak of the commodities bubble in July 2008.

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On 3/26/12, Monday, the week begins with Monti (Italy) saying default fears are rising concerning Spain.  Futures are flat but at 8 AM EST, Chairman Bernanke says the job market remains weak despite the recent three months of stronger hiring data.  Bernanke says the Fed will be ‘accommodative’ with existing policies to boost growth. This is understood to be a full endorsement of QE3 coming so the futures sky rocket higher, the dollar tanks and turns red when it was up moments earlier, gold, silver, copper and commodities all explode higher.  Bernanke delivered a brand new bag of crack cocaine for bullish traders to start the week; a new mini-QE rally occurs. Hearings begin in the States over the constitutionality of President Obama’s Healthcare Program, now reaching its 2-year anniversary.  The markets enjoy a large up day. The SPX finishes up over 19 points, or 1.4%, regaining the 1400 level.

On 3/26/12, Keystone’s proprietary trading algorithm, Keybot the Quant, turns bullish flipping to the long side at 2:18 PM EST at SPX 1412.

On 3/27/12, Tuesday, the housing data continues to show weakness but LEN earnings encourage bulls with positive results.  Consumer Confidence disappoints and markets turn lower on the news. Markets drift sideways all day and then sell off into the close. Oil dropped in price on rumors that an SPR release will occur but regained the losses by day’s end. U.S. gas stations are all showing a $4 or near $4 gasoline price which hurts the American consumer. During the evening on the ABC Network, Chairman Bernanke says the U.S. economy is not out of the woods yet. This bumps the futures up overnight since traders sniff out more easy money talk by the Fed head.  Conversely, Monti (Italy) declares that the European debt crisis is over. Traders hold back the laughter and realize that he is simply trying to instill confidence in a sinking ship. France and U.K. GDP’s are revised lower. Keystone’s SPXA150R Indicator drops under 90 showing the market bears regaining control.

On 3/28/12, Wednesday, the Shanghai Index sells off 3% overnight, now down 7% off the recent highs.  California ports are showing a slowing in China exports. Durable Goods Orders disappoint. Oil Inventories see a huge build in inventories; American’s obviously parking the car in the driveway due to high gasoline prices.  Markets drop hard as the session begins. The SPX drops under 1400 during trading but markets recover by the end of the day finishing flat to lower with a negative vibe in the air today.

On 3/28/12, Keystone’s proprietary trading algorithm, Keybot the Quant, turns bearish flipping to the short side at 10:33 AM EST at SPX 1409. Copper and commodities are leading the market move lower.

On 3/29/12, Thursday, Spain general strike begins to protest the austerity measures that will be placed into the budget tomorrow.  Spain unemployment rate is 23% and is about 50% among the young people.  Greece will have to restructure again according to S&P rating agency.  China markets drift lower today after the earnings of about 500 companies in recent days show that growth is slowing in Asia.  Natty Inventories increase more than expected resulting in a further drop in natural gas price. Results of a labor study of the Foxconn facilities in China, which manufactures AAPL products, reports many violations including workers forced to work over 60 hour work weeks and seven days per week, to manufacture iPads and iPhones. AAPL stock weakens on the news.

On 3/30/12, Friday, EOM, EOQ1. Hungary 10-year bond yields cross up over 9%. Violence in Spain continues.  Eurozone finance ministers agree to temporarily boost the lending capacity of the bailout funds to 700 billion euro’s ($934 billion U.S. dollars). Markets remain concerned that the measures will fall short in stopping contagion fears from spreading to Spain and Italy. During the Eurozone meeting, Austrian finance minister Maria Fekter announced the new firewall measures to the press. Protocol should allow Juncker, the chairman, to announce the firewall news to the press.  Juncker was upset and saw no reason for a press announcement saying, “the Austrian finance minister already announced it while the meeting was going on, so there’s no point in the press conference.” Markets are flat to up all day long as end of quarter window dressing helps paint the tape. AAPL finishes the day down ten dollars and under 600.  For the first quarter, the SPX is up about 12% logging the best first-quarter results since 1998, over a decade ago. The Nasdaq is up 19% for the first quarter, AAPL’s stellar earnings in mid-January serving as rocket fuel. Tech and financials outperformed as utilities, last year’s darling, stumbled all quarter.

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On 4/2/12, Monday, first day of Q2. ISM Manufacturing Index. Lots of Fed heads speak again during this holiday-shortened trading week.

On 4/3/12, Tuesday, FOMC Minutes.

On 4/6/12, Good Friday holiday, U.S. markets are closed. Oddly, the Jobs Report is released today but U.S. traders will not be able to react until Monday, 4/9/12.

Keystone's Midday Market Action 3/3012

JJC remains above 48.83 but leaking lower as the session proceeds.  CRB has a 307 handle well under the critical bull-bear line at 312 so the market bears are very comfortable, as long as the CRB stays under 312. The China PMI data is key tonight since it will affect copper and commodities.  UTIL has a 457 handle so the bulls have their work cut out for them today since they have to be above 463 within the next five and one-half hours, otherwise, Monday will be set up for another bear leg down for the markets.

Consumer Sentiment data climbed again which is shocking since the gasoline prices are so high. Sentiment typically moves in sync with gasoline prices; folks are happy when gasoline cost is low since it provides more discretionary income that can be spent on fun. The SPX popped at the open as the futures hinted. SPX HOD is 1409.61 so the 1410 resistance is holding for now, keep an eye on this as well.  Tech did not assume a leadership role today even in the futures markets earlier.  The Nasdaq is now negative, AAPL is off a few bucks, and leading the broader market (SPX) lower, this is market bearish. Simply watch JJC 48.83, CRB 312 and UTIL 463 today since they tell you everything you need to know.

Note Added 3/30/12 at 11:00 AM: Big pop in CRB trying to acquire 309. The bulls know they need to regain CRB 312, otherwise the market bears will continue to grow stronger.  JJC 49.09 continues to dribble down towards the bears at 48.83. TRIN at 1.36 favors sellers today.  NYAD printed near +1900 remedying the near -1900 reading the day before thus no advantage here for bull or bear.  SPXA150R is 88.60 so the market bears are favored moving forward--unless this indicator moves back above 90, check it this evening. VIX is moving up today so that is encouraging the bears. UTIL at 458 remaining five points under the 463. The 8 MA is just now crossing above the 34 MA on the SPX 30-minute chart which favors market bulls. Five hours remain in today's trading so the 30-minute chart will receive ten more candles today and the 8 and 34 MA cross can be further monitored.

Note Added 3/30/12 at 12:15 PM:  JJC is printing 49.17, holding 34 cents above danger, helping the bull case.  CRB is around 309 firmly under 312 helping the bear case.  UTIL is printing 458.16 well under the 463 needed in less than four hours, which will help the bear case.  VIX is up, bearish.  Tech continues to lead the downside today, bearish. TRIN is 1.28, bearish, despite the markets on the green side.  Today would have been expected to be up at the start, then drift lower all day long, then in the final hour run up into the close.  We got the up at the open, then the down, now the up already and markets meander sideways.  Perhaps the bulls are sniffing out that the CRB will stay under 312 and UTIL will stay under 463 so the markets may drift lower into the close.  SVU is down a few pennies today as the CNBC television channel keeps showing the dogs for the year and Supervalu is listed, helping the large number of shorts to press, but the action simply provides better entries for this knife catch.

Note Added 3/30/12 at 12:45 PM:  SPX back up to test the 1409.61 HOD from the open. See how UTIL is testing the HOD as well. Bulls are trying to goose UTIL towards that 463 while creating market buoyancy. This is a critical test for today right now. CRB is at 309.50 remaining under 312.  SPX 1410 is R, if price pokes up thru, then next R is 1413.

Note Added 3/30/12 at 1:07 PM:  Resistance held at SPX 1410 and a spank down occurred. JJC continues to leak lower now printing 49.08. CRB is at 309.50.  UTIL is at 458 receiving a spank down coincidental with the SPX. This action is a big plus for bears. If JJC loses 48.83, markets will crumble lower. Have to wait and see if the bulls mount another charge this afternoon. Markets bears are in charge today despite the higher indexes.

Note Added 3/30/12 at 2:25 PM:  JJC is at 49.03, the bulls trying to keep it above 49. CRB is at 309.20 running out of gas.  UTIL is at 458 running out of time today with the bulls still needing five more points higher. Tech is not leading the upside which makes the buoyancy in markets surprising and can probably be chalked up to window dressing. The 8 MA is above the 34 MA for the SPX 30-minute chart which favors bulls. If price at 1409.60 can move down thru the 8 MA at 1408.86 it will curl the 8 MA back down to bring it in line with the other bearish indications. Markets may idle until the last half-hour of trading; it may be a wild finish today.

Note Added 3/30/12 at 3:50 PM: Keystone took a smidge profit on KGC exiting the trade.  This is a good one that should launch but with the CRB and UTIL looking bearish and JJC lifeless today, it was a good time to exit a long.  A position was opened on TWM (also in TZA currently).

Note Added 3/30/12 at 3:56 PM:  Look at the push in UTIL, now at 458.75 the HOD, gunning for 463, at least close enough to try for a gap up on Monday. UTIL 458.81..........

Note Added 3/30/12 at 4:07 PM: The numbers are finishing up; JJC prints 49.09 a dime off the LOD; CRB prints 308.50; UTIL prints 458.80.  Thus, commodities and utes will contribute negatively to the broad markets and encourage selling. UTIL closed at the highs today, the bulls were pushing hard needing the 463 but fell four bucks short.  Copper is on the bull side but JJC is only pennies above 48.83 that will ignite market selling. Thus, the bears have two of the three sectors above in their camp and the third almost there. The China PMI may be the savior for the bulls tonight.  The number will impact JJC and CRB. A lot is at stake for the bears as well, they are in shape to send markets lower next week but a bullish China PMI will bounce JJC and CRB strongly and perhaps throw the bear train off the tracks.  With UTIL under 463 to start next week, however, this is another sector now helping to drag the broad indexes lower and provide the bears some street cred. AAPL lost ten bucks today and finished under 600.

Keystone's Morning Wake Up 3/30/12

Today ends the week, the month, the quarter, EOM, EOQ1. Today also supplies the final prints for the monthly charts. A major market mover, commodities, measured by the CRB, fell 2% yesterday to close down 3% on the week thus far.  CRB 312 is a very important level, which helps create broad market buoyancy if it is above, but creates market negativity below.  Yesterday the CRB closed with a 305 handle. This move lower for CRB represents the first key piece of evidence that the markets are rolling over.  The market negativity this week was initiated by copper falling.  JJC fell below 48.83 to usher in the market selling.  In the final half-hour of trading yesterday, JJC popped above 48.83 and closed at 48.87, four pennies on the bull side. The recovery in the markets late day reflect this late day copper buoyancy. As long as the CRB remains under 312, the broad indexes will move sideways to sideways lower.

China PMI tonight will greatly affect copper, commodities and equities prices.  If the numbers disappoint, then copper will get hit and the broad indexes will drop come Monday.  If the numbers are better than expected, equities markets will favor the bulls next week.  Speaking of Monday trading, the utilities, UTIL, must close above 463 today, otherwise, the broad indexes will sell off further next week.  UTIL begins today at 456 seven points lower.  Watch this closely today. The market bears will have an all clear signal if UTIL does not print higher than 463 at 4 PM EST today, if the print is higher, the bulls will be celebrating all weekend.

Natty gas got whipped again yesterday closing at a 10-year low.  The charts remain favorable, however, so the drubbing should be coming to an end now, although the last month is like waiting for Godot.   NATGAS, UNG and BOIL charts are all positively diverged across both the weekly and daily charts so these current levels should serve as a base. Keystone is beat up in this one, taking a calculated risk ahead of yesterday's inventory data, which were larger builds (supply) resulting in price dropping.  The capitulation volume on UNG and BOIL charts is stunning. With the constant barage by media in recent days at how natty will plummet to a dollar or lower at anytime has caused traders to capitulate.  Once the inventory numbers hit yesterday and the build was seen, holders of UNG and BOIL were screaming, "Get me the H*ll out! I do not care what price! Get me the H*ll out!" This emotion reinforces the thought that a basing is now at hand for natty. Check out the uber strong capitulation volume on the UNG and BOIL charts for yesterday; the natty bulls threw in the towel and gave up.  This behavior creates bottoms. Also, air conditioning season is getting underway, growing season as well, and natty is a major ingredient in fetilizer production, also aluminum production consumes huge amounts of natty due to power consumption, and AA news may be on tap today. Hurricane season is at the doorstep which creates high drama for the oil and gas industries as the Gulf is targeted all summer long.

The real negative for natty yesterday, however, which went unnoticed by many, just as the CRB collapse this week is unnoticed by folks, is when President Obama speaks directly after the natty inventory data and does not mention natty. That is akin to kicking over someone in a wheel chair. All hope by natty bulls was lost, their shoulders slumped and heads hung low. How such a smart man as the President could be so naive about economics and what could save the country (natty) is astonishing. Instead of pushing electric golf carts, er, cars, solar, algae, and tilting at windmills, the President needs to focus on creating a friendly back drop to encourage natty vehicles, that do not require any new technology, natty vehicles are used for decades around the globe, and a buildout of natty infrastructure. Perhaps the private industries themselves can overcome the burden of clueless government and provide a path forward.

The labor assessment of Foxconn, AAPL's worker bees, was released yesterday and highlights violations and especially the long work hours where workers were forced to work over 60 hour work weeks as well as seven days per week.  No wonder many of the workers snapped and committed suicide, all over a material object, how sad is that? At least there appears that no child labor laws were violated although the information is still becoming available.  The child labor is what prompts people to action.  But, since everyone loves their smart phones, human's appear content in not caring about the Foxconn or other manufactuing facitlities practices. Interestingly, China has committed to improving the situation by summer of 2013, do you think that timing perhaps coincides with when the manufacturing needs due to sales projections will have already settled down?

Back to the technicals, for the SPX today, starting at 1403.28, the bulls only need to move up and over 1405 to accelerate the upside and this appears on tap according to the futures as this missive is written, perhaps some late week window dressing to close out the quarter. Overhead resistance is 1406, 1410, 1413, 1414 and 1419. The market bears need to push the SPX under 1392 today to reignite the market negativity.  A move thru 1393-1404 is sideways action. The dollar is weaker so this should help create buoyancy in copper, commodites and equities.  Tech and the broad markets are up about equal amounts in the futures markets so without tech leadership to the upside (RIMM and Foxconn may dampen tech spirits today), the move up due to the buoyant futures should be limited.  To keep it all simple and succinct, watch JJC 48.83, CRB 312, UTIL 463, SPX 1405 and 1392 to determine market direction today, and into next week. Univeristy of Michigan Consumer Sentiment is released at 10 AM which will create a market pivot point.

European Bond Yield Summary 3/30/12

Today is hte EOM and EOQ1, the last trading day of March and of the first quarter for 2012. Greece 10-year yield is at the highest levels at 21% since their latest bailout that was supposed to remedy the situation. Portugal is up another 10 basis points since yesterday to print 11.33% but about 100 bips under Monday's high at 12.50-ish; the ECB ovbviously intervening to keep the lid from blowing off the boiling pot.  Portugal yield curve remains inverted form the 5's thru the 30's.

Spain protests against austerity are turning violent. Spain 10-year yield is now approaching 5.5%, remember it was only 18 days ago that the yield was at 5% or less and eveyone was patting each other on the back telling one another how smart they all were.  Italy is up five bips in the last 24 hours to 5.15%, this was under 5% a week ago. Hungary is now over 9%, please ring a bell, or, since no one pays any attention to this nation in trouble, how about sounding a foghorn instead now that 9% is hit?

10-Year Yields:
Greece 20.91%
Portugal 11.33%
Hungary 9.01%
Spain 5.42%
Italy 5.15%
Belgium 3.42%
France 2.93%
Netherlands 2.38%
U.K. 2.17%
U.S. 2.15%
Germany 1.80%

France remains under 3% trying to stay with the cool kids in the perceived safer haven group. Germany now teasing another drop under 1.80% as money flocks to this strong economic nation for safety, moving prices up and yields down. This tells you that all is not well in Euroland.

Europe needs to boost firewalls to fight back the worries of contagion.  So far the temporary EFSF fund has provided about 200 billion euro's and the ESM about 500 billion euro's for a total of 700 billion. Discussions over the coming days will decide what to do with 140 billion euro's that are unused in the temporary EFSF since that fund should be phased out over time. If the EFSF is rolled into the ESM that would provide 940 bilion euro's that Europe can use at any time, there would no longer be a time limit of 2013 which applies to the funds from the EFSF.  The problem is, that even with 940 billion euro's, a failure of Italy and Sapin would require 1.2 trillion euro's or more, not to mention the ongoing needs of the existing nations in trouble; Greece, Portugal, Ireland.  The Euro woes are heating up again so use the blowout in yields as a gauge of ongoing contagion.

China PMI is released tonight and this number will have a huge impact on global markets as Q2 begins on Monday.   The data will impact copper and commodities markets which will ripple thru the U.S. equity markets come Monday morning.

Keystone's Midday Market Action 3/29/12

At the open it is all about copper which was lower in the overnight session but is green as this is written minutes before the opening bell. Watch JJC 48.82 since broad market direction should follow copper.  Tech is not leading the downside in the premarket futures so even though the S&P's are showing a drop of five handles on tap the downside may be muted. If JJC moves under 48.82, the broad markets selling will gain strength to the downside.  CRB 312.10 is another key level to watch and commodities appear willing to stay underneath this level and thus will maintain a bearish bias on the broad markets.  The dollar is up today so copper should be expected to weaken.

For the SPX starting at 1405.54, the bulls need to push eight points higher to set off an accelerated upside and the bears need to push eight points lower to set off an accelerated downside. Thus, watch SPX 1413.50 above, and 1397 below. Even with the futures at 6 or 7 spooo handles lower, this still does not threaten the 1397 that bears need to drop under to start an orgy of selling.  A move thru 1398-1404 is sideways action.

The Natty Inventories are very important at 10:30 AM. If there is a huge build in gas inventories, two of you will need to grab the stretcher behind the door so you can carry good ole Keystone out.  BOIL (see previous chart projecting upside off the positive divergence) and UNG will pivot wildly on the news.  Keystone anticipates remaining in the natty long positions for a while either way.  In a nutshell, JJC 48.82, CRB 312.10, UTIL 446.15 and SPX 1413.50 (to make bulls happy) or SPX 1397 (to make bears happy) dictate broad market direction today. JJC printing 48.75 before the open, bear friendly by seven pennies. Also, Nasdaq futures down -0.51% with S&P's down -0.49% so tech is leading to the downside providing bear street cred, albeit only by a couple bips. AAPL down over five bucks pre-market no doubt affecting the Nasdaq. Bears have a chance in the early going but will have to drive the SPX under 1397, otherwise, they got nothing.

Note Added 3/29/12 at 10:41 AM: JJC is printing 48.37 well under 48.82 and CRB is now under 310 well under the critical 312.10 level. The dollar is stronger so all this action keeps the market bears in control.  Watch the utilities since UTIL had a 449 handle a few minutes ago. If UTIL loses 446.15, now only four bucks lower, the broad indexes will make a large move down.  Also, UTIL has to be above 463 by tomorrow's close, otherwise, the bears will maintain control to start the Monday session.  AAPL is weak but hanging on. Now that copper and commodities are firmly in the bear camp creating market bearishness, a fall in Apple will seal the deal for the bears and create strong downward pressure.  Tech is not leading the downside since Apple is holding on, thus, the bulls are muting the downside not allowing it to release lower.  AAPL is exhibiting a lot of influence on the markets now so watch it for clues.  Natty inventories jumped a little more than forecasted so the natty beating continues. Danke to the two of you that carried good ole Keystone out, he is now coming back around from the 75 cent beating in BOIL. BOIL and natty charts remain attractive for upside, however. With CRB in the low 309's and JJC now down to 48.32, at the lows, 50 cents under 48.82, the market bears have stayinig power.  AAPL is the key for bulls and bears.  Bulls look to it as a savior for today. Bears look at it as the last thing to push over the hill to start the serious market selling.

Note Added 3/29/12 at 10:50 AM: CRB now under 309 and in free fall, now low 308's, this is very market bearish. Oil is breaking down, WTIC now down over two bucks to the low 103's looking for a 102 handle. A 102 print should lead to 98.

Note Added 3/29/12 at 12:40 PM:  CRB has a 307 handle, JJC remains under 48.82 but it is trying to mount a comeback.  Tech is leading the downside with the AAPL weakness so the bears continue to press.  Keystone covered the AAPL short for about a percent and a half profit will look to reenter short. NYAD is down to -1900, not quite -2000 but it is a very bearish number that will want to see a snap back in the near term. TRIN is flat at 1.07 not favoring bulls or bears despite the SPX down 11 handles. Watch COMPQ versus SPX pecentages today to see if tech continues to lead down, or not. CRB now has a 306 handle, complete collapse of commodities today, the story that no one is noticing; this is very bearish for markets and reflects a move towards disinflation. Bot more SVU.

Note Added 3/29/12 at 2:34 PM:  Note that JJC is sitting directly on top of 48.82, it came up for a look and has brought the markets back up with it.  This is exactly where the drama began today.  A move above 48.82 shows that the bulls are wrestling back control on the markets.  A move below shows failure and the broad indexes should move back down towards the earlier lows.  CRB gave up the ghost today, now with a 305 handle, so bears are favored. Tech continues to lead the broad markets down today so that favors bears as well.  Bulls have pushed the SPX back above this morning's critical 1397 level, but price gapped up on the one-minute chart at about 2:15 PM creating an island. If JJC receives a spank down from the test of 48.82, then watch to see if SPX collapses back thru 1397 creating an island reversal on the one-minute chart.  JJC is now deciding who wins today, bulls or bears.

Note Added 3/29/12 at 2:47 PM:  JJC at 48.82.....48.81.......48.79....48.80.... high drama. The 8 MA remains below the 34 MA on the SPX 30-minute chart which is bearish but the 8 MA is curling up.  JJC 48.81 ..... bulls not giving up they are fighting for their life right now at JJC 48.82, either bulls jump up and over and head higher with the markets recovering, or, the 48.82 R holds and the markets fold like a cheap suit.

Note Added 3/29/12 at 3:38 PM:  JJC moved up thru 48.82 and the broad indexes followed along with the SPX punching back upp thru the psychological 1400 level. Bulls won this battle but there is still 20 minutes before the closing bell.  Tech still leads to the downside. CRB weakness today places commodities firmly in the bear camp.

Note Added 3/29/12 at 4:02 PM:  JJC appears to be settling a couple pennies on the bull side.  CRB is cooked, however.  UTIL recovered. Best to let the smoke clear. Mixed markets, goofy day, indexes are flat to down all day but volatilty flat, but the market bears have a firm toehold with the CRB collapse today.

FCX Freeport McMoran Weekly Chart H&S

Price tumbling again to continue along with the H&S (head and shoulders) projection down to 28-30. Price is under the 20 MA under the 50 MA, bearish. Watch the behavior at the 200 MA support; failure here will seal the lower targets in stone. We have watched this H&S develop and play out for months now. This is a sick chart and the H&S pattern should play out as copper drops on lower China growth.

The H&S hit its target in October but then recovered back up to the neckline area now rolling over again. The red circles show that the indicators printed lower lows, therefore, price needs to come back down again to test the October lows and decide if it wants to show positive divergence to build a constructive path forward.  Projection is lower numbers to the 28-30 area. Overall FCX is in store for sideways action for the weeks and months ahead.This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

SVU Supervalu Daily Chart Falling Wedges Positive Divergence

SVU shows a blue falling wedge and red falling wedge with positive divergence (green lines) which is a recipe for a launch in price. SVU is a heavily shorted stock making this an extremely dangerous play. The idea is that the positive divergence and falling wedges will launch price, then as the massive short positions have to run for cover, this will provide additional rocket fuel. It all sounds good, but we will see in a few days time. Keystone's 80/20 rule says price typically moves from 8's to 2's or 2's to 8's. Thus, once 6.2 was lost, the 5.8's are in play. Keystone started buying yesterday. Projection is a bounce from these levels; 5.75-5.95. Very high risk trade. Is Supervalu a super value, or, super failure? This information is for educational and entertainment purposes only. Do not trade based on this information. Consult your financial advisor before making any investment decision.

KGC Kinross Gold Miner Daily Chart Oversold Falling Wedge Positive Divergence

Daily and weekly KGC charts are set up with positive divergence as the green lines show. The blue lines show a falling wedge vibe. Oversold stochastics also point to a strong bounce coming at any time. Of course with knife-catching price may fall further but KGC should not cut too badly before a launch occurs. Initial targets are the gaps shown with the neon green circles. Keystone started buying at 9.70. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

European Bond Yield Summary 3/29/12

10-Year Yields:
Greece 20.29%
Portugal 11.23%
Hungary 8.93%
Spain 5.35%
Italy 5.10%
Belgium 3.42%
France 2.95
Netherlands 2.41%
U.S. 2.22%
U.K. 2.20%
Germany 1.84%

Spain general strike begins with workers protesting austerity measures. The Spain unemployment rate is 23% and about 50% for the young people. Greece will have to restructure again according to S&P rating agency.  China earnings disappoint and dampen Asian markets; growth is clearly slowing.  Europe is China's number one customer. Italy bond auction is going off right now. Italy yield is flat to up over the last day.  Spain yield jumped five basis points since yesterday now at 5.35%.  Hungary continues to blow out towards 9%. France is managing to stay under 3%.

Note that the U.S. yield has popped above the U.K. yield so traders are actually preferring U.K. debt as compared to U.S. debt.  Germany is well under 1.84% indicating that money continues to flow into this perceived safe haven country, the strongest economy in Europe.

BOIL Ultra Long Natty Gas Daily Chart Oversold Falling Wedge Positive Divergence

Keystone has been riding natty down but the blue lines show universal positive divegence, the falling wedge appears as a textbook wedge, and the oversold stochastics all say a base is in and BOIL needs a healthy bounce right now. The weekly chart is positively diverged as well.

The negativity for natty gas reaches a fevers pitch today, if natty could be made into an effigy then it surely would have been burned today. The sentiment is fully loaded negative with traders calling for one dollar natty and professing from the rooftops that natty is in a coffin and all that is required is the lid closing. Keystone was buying heavily into today's close. Projection is a nice launch bounce now with intial target the 20-day MA and resistance cluster at 9.80-ish.This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

Keystone's SPXA150R Drops Under 90 Favoring Bears

Keystone's SPXA150R fell under 90 today indicating market selling ahead unless the price moves back above 90. The green circles show the bulls in favor as the 85 level and 90 levels are taken out to the upside. The red circles show market selling beginning and continuing if the 85 or 90 level is lost. The bulls managed to recover on Friday but today dropped back under 90. The red lines show the negative divergence that is causing the move lower.

Check this chart tomorrow night to see if the bears can maintain control (under 90) or if they fold like a cheap suit and the bulls regain control during the Thursday session (above 90). Above 90 is typically a very good area to short the broad markets. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

SPX Daily Chart Shows Keybot the Quant Algorithm Turns

Current signal remains valid until a change occurs.
3/28/12: Keybot the Quant flipped to the short side at 10:33 AM EST at SPX 1409, whipsaw occurs; for the year thus far SPX Benchmark is up 12.0%; Keybot algo is up 3.6%; Keybot actual trading is up 5.2%. Stay on guard for a whipsaw.
3/26/12: Keybot the Quant flipped to the long side at 2:18 PM EST at SPX 1412; for the year thus far SPX Benchmark is up 12.2%; Keybot algo is up 3.8%; Keybot actual trading is up 5.5%.
3/22/12: Keybot the Quant flipped to the short side at 10:51 AM EST at SPX 1392; for the year thus far SPX Benchmark is up 10.7%; Keybot algo is up 5.2%; Keybot actual trading is up 6.8%.
3/8/12: Keybot the Quant flipped to the long side at 12:04 PM at SPX 1364; whipsaw occurs; for the year thus far SPX Benchmark is up 8.4%; Keybot algo is up 3.1%; Keybot actual trading is up 5.8%.
3/6/12: Keybot the Quant flipped to the short side at 12:18 PM at SPX 1343; for the year thus far SPX Benchmark is up 6.8%; Keybot algo is up 4.7%; Keybot actual trading is up 7.4%.
2/16/12: Keybot the Quant flipped to the long side at 1:10 PM at SPX 1356; whipsaw occurs; for the year thus far SPX Benchmark is up 7.8%; Keybot algo is up 5.7%; Keybot actual trading is up 8.2%.
2/14/12: Keybot the Quant flipped to the short side at 2:30 PM at SPX 1342; for the year thus far SPX Benchmark is up 6.7%; Keybot algo is up 6.7%; Keybot actual trading is up 10.2%.
1/1/12: The new year begins. For 2011, the SPX Benchmark is flat finishing up 0%; Keybot algo finished the year up 33%; Keybot actual trading ended the year up 37%. Keybot begins 2012 remaining long. The new year begins at SPX 1258.
12/20/11: Keybot the Quant flipped to the long side at 2:49 PM at SPX 1240; for the year thus far SPX Benchmark is down 1.4%; Keybot algo is up 31.2%; Keybot actual trading is up 35.5%.

Keybot the Quant Turns Bearish

Keystone's algorithm, Keybot the Quant, turns bearish at SPX 1409 about an hour ago. Copper, JJC, dropped under 48.83 and then the algo rules clicked into place to trigger the short side.  Note that the JJC is now printing 48.79 only favoring bears by four measley pennies.  Markets are unstable and on the fence but the algo is favoring the bears right now.

More information on Keybot's site;
http://www.keybotthequant.blogspot.com

Keystone's Midday Market Action 3/28/12

JJC failure occurred.  Watch JJC 48.83, Keystone's algo is recalculating after the opening bell. See if JJC holds under 48.83 for 7 to 10 minutes, or not.  Note the market weakness that occurred as copper failed. JJC now printing 48.79.

Note Added 3/28/12 at 11:40 AM:  Copper failure this morning ushered in the market downside but JJC is only favoring bears by four pennies, now at 48.79 under the critical 48.83 level.  Watch CRB teasing 312.30 since if that fails, markets will tumble much lower.  Keystone's algo flipped to the short side an hour ago but the move is tentative. The model is committed short but a CRB failure would supply the bears with much needed street cred to reinforce the market move lower. Keystone shorted more AAPL this morning above 620.

Note Added 3/28/12 at 1:25 PM:  Keystone took profits on PSQ and SSG (still like them and will probably reenter); bot KGC and SVU. KGC is a gold miner with positive divergence on both the daily and weekly charts across all indicators.  SVU is also positively diverged across the board with a very heavy short interest.  If the positive divergence ignites a launch, which it should, the short covering can be additional rocket fuel.  As always, this is highly dangerous and speculative trading.  CRB collapsed thru 312.30, this allows bears to breathe relief, the downside now has street cred.  SPX is trying to hold onto 1400 psychological level.......only six pennies now.....there she goes... 1399 handle.  AAPL is red.  Utilities, UTIL, are falling over five bucks, so not only does UTIL need to be up to 463 by the Friday close but has to maintain the 447 level for this week, otherwise the broad indexes will be under more pressure. The dollar is stronger which made JJC and CRB weaker and delivered the bears todays action.

Note Added 3/28/12 at 2:30 PM: Nasdaq is down 1.00% and SPX is down 0.99% so tech is leading the downside by a hair favoring market bears. AAPL is flat and this prevents the markets from completely releasing to the downside.  AAPL LOD is 610.31 so watch that level in the remaining time today. A rupture of this level would hurt the broad indexes.

Note Added 3/28/12 at 3:57 PM:  Added more AAPL shorts, also added more BOIL. Natty gas charts look nice for upside while eveyone is wringing their hands saying natty is doomed.

Keystone's Morning Wakeup 3/28/12

Durable Goods Orders laid an egg, futures are flatlining.  Last evening, Chairman Bernanke opines with ABC Network that the U.S. economy is not out of the woods yet.  Traders love this talk since it equates to an extra printing press coming on line so futures were strong overnight.  This morning markets are jumpy as a ping pong ball, futures dropping, then bouncing on positive FDO earnings, then dropping on Durable Goods. AAPL will offer refunds to Aussie buyers of the iPad3 due to the 4G claims.   The 4G is not compatible in Aussieland so some dough has to be returned to purchasers due to false advertising.

Copper is hit overnight, remember copper and commodities are the two key sectors that Keystone's algorithm is tracking currently.  Jiangxi Copper drops 6% overnight. China growth is weakening, even U.K. and France lowered growth forecasts this morning.  Watch JJC 49 level which will indicate broad market trouble and selling on tap.  This has a good chance of failing at the bell.  Also watch the CRB now only about a point from failing the important 312.30 level which will indicate market trouble ahead.

For the SPX today, starting at 1412.52, the bulls need to touch the 1419 handle and the markets will accelerate higher. The bears need to see price drop under 1412, that will signal the all clear for an accelerated down move.  A move thru 1413-1418 is sideways action. If either JJC loses 49, or CRB loses 312.30, and the SPX drops under 1412, Keybot the Quant, Keystone's algo shown in the left margin will probably move to the short side.  Oil Inventories are at 10:30 AM so the markets will pivot at that time and the 5-Year Note Auction is at 1 PM. RHT earnings are important today since it will affect the tech sector which has led the entire market rally. In a nutshell, JJC 49, CRB 312.30 and SPX 1412 will dictate market direction.

AAPL Apple Daily Chart Rising Wedge Overbot Negative Divergence

Dark blue lines created islands, now Apple is on an island of an island. The rising wedge, overbot conditions and negative divergence should spank her down now probably to that gap for the island at 580 and higher. A drop in price back down thru the gap from 580 directly down to 570 would be an island reversal pattern. Note the previous rising wedge we watched in February. It created the expected spank down but note how the MACD line was long and strong (red circle) and wanted to see higher highs in price one more time. Price came back up to satisfy the MACD line and the indicator printed another higher high wanting to see another price high. All this drama ended today, now all indicators are satisfied with negative divergence so it is time for the smack down. The weekly chart wants to see another matching high after a spank down so a move shown by the black line is projected, down to 570-590 then a bounce then roll over.

But first step is first. Keystone shorted Apple stock today. This daily chart serves as an example for the broad indexes and many other leading stocks. Most show the same negative divergence so weakness would be expected in the broad markets. Note how volume kept increasing into the creschendo two weeks ago but that high buying volume candle was not higher than the selling volume candle from February; a move down to 500 is probably in the cards in the weeks ahead. Apple is the markets.  Let's see if this intial spank down occurs first over the next few days. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

Keystone's Midday Market Action 3/27/12

Markets receive a next-day follow-thru bounce. IBM new highs.  LEN report beats which increases housing sector optimism after a one week stretch of all bad news. Copper, JJC, is lower today at 49.81 but remaining well above the danger level at 49 so this encourages the bulls. The dollar is flat to slightly positive causing the copper weakness. CRB, however, is up today.  VIX is flat to up, interesting considering markets are buoyant. The volatilty should be down.

Nasdaq is up 0.03% and SPX up 0.07%, call it flat with a slight bear advantage since tech is not leading the upside.  AAPL is up a couple bucks but the negative divergence now showing on the daily chart will spank her down which should give the Nasdaq some downward bias. Keystone sold the SSO long SPX overnight trade, added more SSG (short semi's), also bot PSQ (short technology, same as TYP or QID).  Consumer Confidence is very important in fifteen minutes, markets will pivot.

Note Added 3/27/12 at 10:09 AM:  The 10 AM pivot occurs with the broad markets pivoting downwards off the intraday highs. AAPL is being goosed now to bring the Nasdaq up into a leadership position in relation to the broad market to keep the bull party going.  Keystone is now shorting AAPL stock.

Note Added 3/27/12 at 1:53 PM:  The dollar is flat, the markets are flat.  The dollar is the catalyst that sends commodities, copper, gold and oil, and thus the markets, in one direction or the other. Today is a sideways rest from yesterday's pop.  The NYAD has moved down on today's flat to buoyant markets, helping relieve the uber bullishness from yesterday.  The TRIN is at 1.28 which favors sellers today also recovering from the uber bullish 0.49 yesterday, 1.0 is neutral, above one favors sellers and below one favors buyers.  JJC is at 48.9 with a LOD at 49.50 remaining above the critical bearish level at 49. The flat dollar is keeping things calm today. VIX is up toay and all signs point to higher volatilty moving forward but these markets keep you guessing.  UTIL is up again now with a 459 handle, remember, the 463 level is critical come the Friday close so the bulls are trying to boost it as the week motors along. AAPL now testing highs from 10:30 AM, now we see what it's got.  For the SPX the 8 MA remains above the 34 MA for the 30-minute chart but the 8 MA may be rolling over right now.

Note Added 3/27/12 at 3:25 PM:  AAPL spank down; 616 to 612 in four minutes, now a bounce. Watch for any affects in the tech sector if Apple weakens.

Note Added 3/27/12 at 3:35 PM: Apple stumbling sideways keeping the Nasdaq on the green side.  AAPL is the markets; when it stumbled minutes ago the affects across all broad indexes is obvious.  With the dollar flatish, the markets will move into the close whichever way AAPL moves.

European Bond Yields 3/26/12

10-Year Yields:
Greece 20.44%
Portugal 11.64%
Hungary 8.94%
Spain 5.35%
Italy 5.08%
Belgium 3.32%
France 2.94%
Netherlands 2.50%
U.K. 2.28%
U.S. 2.25%
Germany 1.92%

Hungary finally receiving the attention it deserves as it inches towards 9%. It needs an IMF loan but governmental politics appear to be playing a big role in the current drama. The Hungarian government has lowered its growth projections for this year and hopes to avoid recession. Perhaps we all will learn more about Hungary in the coming days and weeks.  The Portugal yield was knocked back down probably by ECB intervention, the other troubled nations are moving flat although Italy jumped 8 bips since yesterday after teasing the 5% level.

The yields for the safer haven countries are flat to up over the last day as some money moves out of bonds into the markets chasing the Chairman Bernanke End of Q1 Pump Rally.  Hungary, Italy, Portugal and Spain require watching, a HIPS acronym, so most male traders will not find it difficult to watch the hips. Instead of Hunger Games, the blockbuster cinema release, traders should focus on Hungary games.

SPX 30-Minute Chart Megaphone Rising Wedge Overbot Negative Divergence 8 MA and 34 MA Cross

Big launch yesterday with Chairman Bernanke throwing money from helicopters. Note how price is tapping at the top rail of the megaphone pattern again. Note the negative divergence over the last day except for RSI so a move down then back up to match these highs then roll over should be on tap. The smal rising green wedge now is bearish.  Negative divergence appearing over the one week time frame for RSI and stochastics, and over the two week timeframe or longer for all indicators which want to see price move down.

Pay attention to the 8 and 34 MA cross in real-time during trading hours; if bullish you want to see the 8 MA above the 34 MA, if bearish you want to see the 8 MA below the 34 MA. On Friday the 8 MA crossed above the 34 MA hinting at bullish fun ahead. For a megaphone pattern, the farther that price ventures skyward and extends the top rail, note that the bottom rail has to be extened as well providing even lower price targets should this pattern play out moving forward. This information is for educational and entertainment purposes only. Do not invest based on anything you read here.  Consult your financial advisor before making any investment decision.

Keystone's Evening Nightcap 3/26/12

Chairman Bernanke, in all his Barnum and Bailey bravado, steps in front of the cameras, flashbulbs popping as if a 1940's starlet was flashing a smile, at 8 AM EST this morning and ignites the fuse firing off a bullish rally cannon.  'Accomodation' is the new hip word. If you hear it, be sure to run out and buy a few shares and send Bernanke a thank you note.  The SPX was up 19 points; it is surprising it was not more.  Bernanke is a magician with many tricks up his sleeve; low rates until 2014, hybred housing plans, sterilized QE, and of course QE3 itself, as well as many other surprises. Each mention provides a market punch higher, exactly at the right time. Perhaps traders will come to realize he is more of a sly showman than astute central banker?

Volatility was up today while markets were rallying strongly although closed down after the late day push.  NYAD spiked up over +2000 so the markets need to pull back quickly to some extent to burn that energy off. TRIN is at 0.49 very uber bullish so the markets need to snap back to remedy that low reading. NYHL continues to diverge which is bearish; the NYA moving higher as the new highs decrease. Keystone's SPXA150R is back over 90 verifying the bullish move today so the bulls remain in control as long as SPXA150R stays above 90. When price drops under 90 that will signal selling ahead as long as it stays under 90. SPXA150R over 90 is an excellent place to short the broad markets.

Copper and commodities continue to be the first tell if/when the markets reverse so watch JJC 49 level, now at 50, and CRB 312.40 level, now at 315.  Bears got nothhing unless they can drive one of these two lower.  For the SPX starting at 1416.51, the market bulls closed at the highs so if the futures are only a hair green tomorrow morning there are several more spoo handles higher on tap.  The SPX is now close to the 1425 gap fill.  The market bears need to retrace the rally today, not impossible, but is improbable unless Bernanke changes his mind.  Thus, bears will focus on pushing the dollar higher so copper and commodities can retrace lower.

Case-Shiller at 9 AM will probably provide more gloomy housing news but the markets do not care since there is a big party going on with the Fed's booze overflowing the punchbowl.  Consumer Confidence at 10 AM is a very important number and one of Keystone's monthly faves so a market pivot point will occur at that time. Chairman Bernanke speaks after lunch tomorrow; what does he have in store this time? The 2-Year Note Auction goes off at 1 PM. LEN earnings are key as discussed on the weekend.  KBH disappointed so LEN either confirms all the dire housing news, or, instead, supplies a pint of Southern Comfort for that bullish punchbowl. Markets are very unstable and require close monitoring.

SPX Daily Chart Showing Keybot the Quant Algorithm Turns Bullish from 3/26/12

Current signal remains valid until a change occurs. Same pattern three times in a row this year, a selloff is triggered, then two days later the all-clear for bulls occurs again.
3/26/12: Keybot the Quant flipped to the long side at 2:18 PM EST at SPX 1412; for the year thus far SPX Benchmark is up 12.2%; Keybot algo is up 3.8%; Keybot actual trading is up 5.5%. Stay on guard for a whipsaw.
3/22/12: Keybot the Quant flipped to the short side at 10:51 AM EST at SPX 1392; for the year thus far SPX Benchmark is up 10.7%; Keybot algo is up 5.2%; Keybot actual trading is up 6.8%.
3/8/12: Keybot the Quant flipped to the long side at 12:04 PM at SPX 1364; whipsaw occurs; for the year thus far SPX Benchmark is up 8.4%; Keybot algo is up 3.1%; Keybot actual trading is up 5.8%.
3/6/12: Keybot the Quant flipped to the short side at 12:18 PM at SPX 1343; for the year thus far SPX Benchmark is up 6.8%; Keybot algo is up 4.7%; Keybot actual trading is up 7.4%.
2/16/12: Keybot the Quant flipped to the long side at 1:10 PM at SPX 1356; whipsaw occurs; for the year thus far SPX Benchmark is up 7.8%; Keybot algo is up 5.7%; Keybot actual trading is up 8.2%.
2/14/12: Keybot the Quant flipped to the short side at 2:30 PM at SPX 1342; for the year thus far SPX Benchmark is up 6.7%; Keybot algo is up 6.7%; Keybot actual trading is up 10.2%.
1/1/12: The new year begins. For 2011, the SPX Benchmark is flat finishing up 0%; Keybot algo finished the year up 33%; Keybot actual trading ended the year up 37%. Keybot begins 2012 remaining long. The new year begins at SPX 1258.
12/20/11: Keybot the Quant flipped to the long side at 2:49 PM at SPX 1240; for the year thus far SPX Benchmark is down 1.4%; Keybot algo is up 31.2%; Keybot actual trading is up 35.5%.