Recovery bounce in progress today. NYAD already bounced up to +2300 now exhibiting too much upside energy that will require a market pull back either this afternoon or tomorrow. TRIN is favoring sellers today, above one, now printing 1.10 and has been trailing lower towards favoring bulls if it moves under 1.0. Lots of traders are in a 'sell the rally' mode which means it may not happen. The SPX came directly up after the open to back kiss the 50-day MA, now at 1373.37, so keep an eye on this. A second kiss just occurred. A push thru the 50-day MA will give the bulls some juice into the afternoon.
VIX turned back to the bull camp at the opening print. XLF and RTH also back on the bull side so this gives the recovery move some further credibilty. Keystone took profits on JRCC, still likes it, will look to reenter.
Note Added 4/11/12 at 10:52 AM: The 8 MA remains under the 34 MA for the 30-minute SPX chart since last Tuesday favoring the bears. The 8 MA, however, is curling upwards and requires watching over the next couple hours to see if it crosses above the 34 MA, if so, it would signal more market upside ahead. VIX now back over 19 after dropping under at the bell. Watch VIX 19.40 since if volatilty pops back above, the bears will start to growl again. The SPX poked up thru the 50-day MA so that supplied some buoyancy over the last half hour but it has already faded. Use VIX 19.40 (now bullish at 19.07), XLF 15.10 (now bullish at 15.22) and RTH 40.65 (now bullish at 41.07) as your guide for broad market direction today. The market buoyancy remains as long as these three remain bullish, if one cracks, and the VIX or XLF would be the nearest candidates, that will signal that the bears are regaining control. TRIN is under one at 0.94 now favoring the bull move today. Markets are stumbling sideways currently.
Note Added 4/11/12 at 11:42 AM: VIX came up for a look at the 19.40 but trailed lower again. The broad indexes will weaken if VIX moves up over 19.40. The 10-Year note Auction is at 1 PM and the Beige Book 2 PM. A market pivot point should occur at 2 PM.
Note Added 4/11/12 at 12:00 PM: VIX popped above 19.40 at 11:49 AM, note the pull back in the broad indexes, albeit slightly, bears are wrestling back control. However, tech is leading the upside so this gives the bulls something to hang their hat on. Keystone bot XCO, another natty gas play.
Note Added 4/11/12 at 1:25 PM: VIX remains elevated favoring bears but tech continues to lead the upside favoring bulls. AAPL lawsuit is announced but price remains higher today which allows the Nasdaq to lead the markets higher; Apple is the markets. Markets will likely drift along until the Beige Book and pivot point at 2 PM.
Note Added 4/11/12 at 2:10 PM: Beige Book is a yawner, more of the same, Fed talking out of both sides of the mouth stating the upside but then quickly warning of the downside...on the one hand, then on the other hand. As Harry Truman quipped decades ago, "Give me a one-handed economist!" There is no immediate reaction to the release although VIX is drifting upwards. Interestingly, the Nasdaq has now reversed and is no longer leading the SPX to the upside, so although the indexes are moving sideways the undercurrents after the release slightly favor the bears. Keystone took profits on CDXS, still likes it and will look to reenter. Added more XCO.
Note Added 4/11/12 at 2:38 PM: VIX printing highs of the day. Dr. Copper has a terminal illness, a very bad harbinger for markets moving forward. Keystone sold EGO for a tiny profit, perhaps he will buy a hotdog and a coke with the proceeds, still likes it, will look to reenter. Bot more MNKD.
Note Added 4/11/12 at 3:14 PM: VIX now printing 19.93 on its way over 20. AAPL is printing the lows of the day now so the Nasdaq is lagging the SPX which places a couple feathers in the bears cap; and the SPX drifts lower. There she is, VIX 20.01.
maybe that pivot point is the 1363-1365 level, since SPX needs to close above that for the bulls to remain in control IMHO. However, I see today more of a bounce day to release some of the (not quite) over-sold levels before further selling can occur. Just my 2cents.
ReplyDeleteHello Arnie, with VIX just popping back above 19.40, that should hold back any significant market upside. The Beige Book at 2 PM is important.
ReplyDeleteKS
ReplyDeleteWhats the advantage of buying XCO as oppose to Boil? Boil has higher beta ? Do you think Nat gas has bottom? and why? I plan to buy nat gas but not sure it has bottom until summer kicks in.
William
Hello William, UNG and BOIL are sour trades for Keystone currently, a thorn among the roses. Keystone will likely do a large add in these this week so they remain active trades. XCO and perhaps other new natty trades as the week moves along simply takes advantage of the anticipatory pop coming and allows more movement in and out, as long as the bounce does come. Since the charts remain favorable for upside coming in natty (but Waiting for Godot), newer trades would result in profits while, if natty does not recover by the time the summer heat is here, BOIL and UNG will have to be booked as losses. It's simply diversification in a sector that Keystone continues to like despite natty continually drifting lower.
ReplyDeleteWhat is the spx 500 level at which you will go long?
ReplyDeleteIn otherwords, how much downside is there?
thanks,
Uma
Hello Uma, follow Keybot the Quant that is currently short since 3/28/12. Keybot is an algorithm and uses many different parameters, proprietary indicators, sector analysis, economic data, old tricks of the trade, etc..., therefore, there is no level that can be identified ahead of time. Keybot will flip long when the algorithm decides to flip long.
ReplyDeleteSimply follow along by watching the left margin on this site where Keybot's current call is identified. To receive more detailed input and provide a feel for what the robot is watching, to perhaps receive a heads up about an imminent market turn, reference Keybot the Quant's website each day. http://www.keybotthequant.blogspot.com
KS, when is Keybot going to short the indexes with 2x or 3x funds? Also, why is NOK so beat down today? RSI is below 25 now. Has it reached positive divergence yet?
ReplyDeleteSteve
Hello Steve, Keybot dropped into a lower risk mode since the whipsaw action occurred in late March. The algo will probably not return to playing the 2x ETF's until early May. NOK was a very attractive and constructive chart taking the intial positive divergence bounce in December. It was on its way to continued upside. Charts have all information built-in up to the minute, that is the beauty of technical analysis (TA), but, news can always come out of left field to gum up the works, and apparently that happened to NOK when they lowered guidance this morning. It should be able to right the ship but it will probably take a couple months.
DeleteKS,
ReplyDeleteSince Key bot Quant Algorithm scans CRB, do you go long or short on gold, silver and miners at any time?
Or you go long or short the markets only?
I am new to your site, so i haven't seen your past trades.
Thanks,
Uma
Hello Uma, read the Positions and Picks page to see the breakdown. Keybot trades the broad market, either bullish or bearish, seeking the smoothest line possible thru the year. Think of it as the big ocean liner sailing thru the sea making longer swinging turns.
DeleteAll other trades highlighted on this site are shorter term speculative trades based on ta, charts, divergences, and so forth, and more in line with day trading and taking advantage of chart set ups and entering and exiting quickly if possible.
So if you prefer more gentle, lower risk trading, that requires less trading, Keybot is the ticket. If you seek dangerous speculative high-risk trading, the trades presented on this Keystone Speculator site would be of more interest to you.