Keystone's SPX:VIX Ratio Indicator dropped under 68 at the open signaling a large down day on tap. The broad markets will stay weak as long as the ratio stays under 68. If the ratio pops back above, that tells you that the bears ran out of steam and the bulls are regaining control. If the ratio stays under 68 and heads lower the broad markets will steadily drop lower. Last print for $SPX:$VIX is 64.92, firmly under 68. Watch the ratio all day today.
Note Added 3/6/12 at 5:30 PM: The SPX:VIX ratio stayed under 68 and closed at 64.37 so the market bears are in full control now, as long as the ratio stays under 68.
Well, that big fat down day, which you've been calling for a while, has finally come and taken everybody by surprise: Both the complacent bull and the complacent bear (the bear who thought the last 2 trading last were the bread-'n-butter 0.5% pull backs we've experienced over the last 2 months). Complacency leads to being a pig. I am very surprised to see keybot still long. Given the 1356 level it went long, the market (SPX) is now 12 points lower. I know that's less than 1%, but still. I also understand there's more than just SPX points fed into keybot. Honestly, I think we'll slowly drift into thursday and then friday the February jobs report will be stellar and boom!!!
ReplyDeleteKS, are you closing out all your short positions today (tza, zsl, etc.)?
ReplyDeleteSteve
Hello Arnie, yes, a down move occurs today but it looks like many remain unconvinced. The markets are very tricky these days. Keybot the Quant algo gave back a percent on the trade over the last three weeks, no problem there, the actual trading remains up over 7% on the year.
ReplyDeleteRemember, Keybot the Quant is operating more in a short to intermediate term time frame so it does not strive to catch exact tops or bottoms, it simply charts the best path thru the trading year oscillating from bull to bear and back to bull again. Stay on guard, however, it may whipsaw this afternoon or tomorrow.
For the day trading or shorter term trading, we see the AAPL spank down as the negtive divergence wanted, same-o with SPX. The short term inverse ETF's such as ERY and ZSL worked out well with their positive divergence as pointed out over the last few days.
Hello Steve, you typed that message as the other response was typed. I read your mind.
ReplyDeleteZSL and ERY were closed out for profits. Still holding TZA. Still like natty long, BOIL adn UNG.
Started a position in MNKD today but this is highly speculative and dangerous. It is a highly shorted stock but the weekly and daily charts are very attractively positively diverged opening up the possiblity that not only will it be a launch, but a high-pwoered rocket ship if the huge amount of short cover. MNKD not moving down much today which may show it does not want to go down. All that is needed is for the shorts to cover, lighting the fuse. Of course, MNKD is highly speculative and lots of money can be lost if the charts do not do as forecast. Do not enter unless willing to lose money.
KS, thanks for the tip on MNKD. It's market cap is only 283M. Is there a danger of it getting delisted if it continues to free-fall? I'm still holding TZA as well. Hoping there's some more room to run for that. What is your near-term and intermediate term price target for TZA? I'm hoping it runs back up to at least $22. Thanks again for all your great insights. Congrats on locking in profits on ZSL and ERY. I was too chicken to take those positions. Take care now.
ReplyDeleteSteve
Thank you KS for the detailed information as always!
ReplyDeleteJimmy
Hello Steve, you have to study the charts. Looking at TZA daily, see how price is coming up to test the 50-day MA at 21.53? Printing 21.26 means this is the battle on tap. HOD is 21.35 so TZA did not have the juice to attack the 50 MA, yet, but there should be drama here. Of course, the result is either a spank down for price to regroup, or a punch up thru to try a run at 21.80 and 22.20.
ReplyDeleteStudy the candlesticks on the charts and draw lines across the levels that touch the most opens, closes, highs and lows, this shows that traders favored these areas thus they serve as strong support and resistance. 21.8 and 22.2 may be potiential targets to exit. The chart is healthy, however, so even with a pull back it may be worth holding for the next move up, even though it is a dangerous crack ho ETF that should only be held for a very short time frame.
Hello Jimmy, bitte schon. (your welcome)