Financials, XLF, fell under 15.10 and the VIX leaped above 19, printing over 20 after the open, now remaining elevated at 19.74. This ushered in the bearish move. Keystone's SPX:VIX Ratio Indicator droppd under 68 which verifies a large down day on tap and continued bearishness, but, recovered back above, now printing 69.01. The bears need to see the ratio under 68 and bulls need it above 68. The Nasdaq accelerated lower after the bell so tech leading the down side is a feather in the bear's cap. The semiconductors, SOX, dropped under 400, bearish.
SPX took out 1377, 1375, 1372, 1370, 1368, 1366 and 1363 support, like a hot knife thru butter, before the 1361 support held. SPX is moving sideways thru 1359-1363 ever since. SPX S/R is 1366, 1363.61, 1363, 1361, 1358, 1356, 1354 and 1351. The market bulls must prevent a failure of RTH 41.00 to stop the downward slide. If bears push the RTH under 41.00, the markets will explore considerably more downside. RTH now printing 41.10....the lows of the day.....
Note Added 4/23/12 at 11:50 AM: XLF is under 15.10, bearish. VIX is over 18.50, bearish. RTH above 41.00, by pennies, bullish. SPX:VIX ratio above 68, by only one point, bullish. TRIN 1.48 favoring sellers; a spike to 5 today would hint that a market bounce back move will be needed to relieve the negativity. NYAD tagged -2100 today so that also hints at a recovery move needed this afternoon or tomorrow to relieve downside pressure. SPX may become rangebound thru 1358-1363 until either the RTH falls under 41, where markets will tumble lower, or the XLF regains 15.10, which will help the bulls recover.
Note Added 4/23/12 at 1:06 PM: XLF is under 15.10, bearish. RTH is above 14.00, bullish. The fight continues but neither side wants to lock in a move so the SPX moves sideways thru the 1361-1366 S/R. Natty gas is over 2.00 again as the Northeast deals with chilly wet weather; snow this morning in Keystone's neck of the woods in Pennsylvania. SPX:VIX ratio has a 70 handle so the stubborn bulls will not relinquish complete control of the markets, yet. If you see RTH lose 41.00 and the SPX:VIX lose 68 the broad markets will tumble far lower and the down move will be sustainable.
Note Added 4/23/12 at 2:27 PM: XLF is under 15.10 but making a run higher. RTH started moving up and away from 14.00, now printing 41.26. Keystone covered the RTH short taking profits and bot more MNKD. Now that the bulls boosted the RTH up and away from 14, watch XLF 15.10 since the sideways range continues, now thru SPX 1361-1368, unless the bulls can boost the XLF over 15.10 which will send markets higher. See if that XLF 15.10 holds as resistance, or not.
Note Added 4/23/12 at 2:36 PM: Note the SPX testing 1368 R and the XLF punching upwards to 15.08, but both the SPX and XLF pull back down. The bulls should try another run. Texan (TXN) earnings are scheduled for 4:30 PM EST today which will greatly impact the tech sector tomorrow ahead of AAPL's earnings after the bell tomorrow; a roller coaster ride ahead.
Note Added 4/23/12 at 2:43 PM: Here's the next test...SPX 1368 R....XLF 15.07..... high drama, bulls need to push up thru to keep the upside going, otherwise markets will drift lower again.
Note Added 4/23/12 at 9:27 PM: The bears prevented the XLF from moving over 15.10, but the 15.08 close is only two pennies away. If XLF moves above 15.10 tomorrow, the broad indexes will recover. VIX closed at 18.97, watch 18.50, so the volatility remains in the bear camp as well, unless the VIX drops under 18.50 tomorrow. The RTH did not fall under 41.00 today so that was a win for the market bulls. Keystone's SPX:VIX Ratio indicator is at 72 above the critical 68 level also favoring the bulls. These metrics will continue to steer the trading ship tomorrow. NFLX earnings disappointed this evening so the stock took the pipe. TXN was in line. T reports earnings in the morning and the results will provide some hints and color ahead of AAPL's earnings after the bell tomorrow. CPC Put/Call prints a remarkable 0.82 this evening showing that uber complacency remains in the markets. The VIX also popped above 20 today only to close under 19 showing that the majority of traders remain very bullish on the markets. Despite the media pundits and analysts professing their worry over markets, they are not trading that way, they are remaining bullish and looking for strong continued upside moving forward with little fear of any significant downside. They are typically wrong.
well how do rationalize VIX 18.98? why aren't we going up to the up side?
ReplyDeleteJIM
Hello Jim, Keystone asks do you really want to know? By using the word 'rationalize' it shows that your mind is locked in with a predisposed rigid market direction and position. In trading, you do not want to fixate on proving yourself right at all costs. Instead, since a trader should not care less whether markets go up or down, all that matters is that the trade is on the correct side; the metrics shown on this site serve as tools to continually assess market direction.
ReplyDeleteKeystone will likely post the levels of interest for the most important sectors influencing the broad indexes before the open tomorrow, and VIX remains a key focus.
On the VIX specifically, to answer your question, use 18.50 moving forward thru tomorrow. VIX closed at 18.97 forty-seven cents above thus favoring the market bears. The market bulls need to push the VIX under 18.50 to regain control. If the VIX remains elevated above 18.50, watch Keystone's SPX:VIX Ratio Indicator at the same time. If the ratio falls under 68 the bears are going to slap the markets hard with the 1350's next on tap.
If the VIX stays elevated but the SPX:VIX ratio stays above 68, the bull-bear struggle will continue with sideways markets. If the VIX drops under 18.50 and the SPX:VIX ratio stays above 68 the bulls will run the indexes higher to test the SPX 50-day MA resistance at 1379.80 and possibly move the markets higher.
Hello Keystone, thanks for the great blog!
ReplyDeleteI read with great interest your analysis on AAPL. Seems like the H&S pattern played out as forecasted. Yesterday's low was 556.62. So are this darling ready to bounce soon once 550 is hit?
Cheers, AJ
Hello A.J., yep, the negative divergence slapped her hard as it always does for any stock or index. Price is sitting on the 50-day MA at 571 and probably will not make a decision until the earnings hit after the bell today (Tuesday). It appears a 7% or more move may occur, and this can go either way so probably best to stay away from it until the smoke clears. It just filled an important large gap at this price as well.
DeleteThe charts want to see weaker prices for AAPl moving forward but perhaps a recovery bounce to the 20-day MA at 610 would be in order first. It is a broken stock now so the only real consideration would be to short the rallies, so perhaps a possibility is bringing on shorts at the 600-615 area, if she comes back up.
KS,
ReplyDeleteI thank you as well. Week's off to a good start thanks to me jumping the gun when Keybot got twitchy on Friday. We'll see what tomorrow brings. I still need to learn to not jump the gun though.
Will VXX reach 2009 levels, or have markets changed substantially so that will just not happen?
- Ande
Hello Ande, yep, that is never good to trade in a jumpy manner. It is best to develop a trading program that suits your personality. This sets up a structure to follow, such as X amount in various sectors or asset classes, and helps steer the ship and keeps a structured form to your trading. Keep developing your favorite tools and monitor them and use them as your guide. You always want to be able to give a reason for any position you are in, if you cannot, then that position is probably best closed out.
DeleteFor VXX, sure, it can move lots higher, but who knows in what time frame and these vehicles will chew you up over time. The 40 to 80 range would appear reasonable in the months ahead. Note that the intial spikes, whenever they if/would occur, will probably be most dramatic in the first one to three weeks, thus, if an exit startegy is plotted for VXX, the initial move up would provide that opportunity.
I should have said "can" VXX . . . , not "will" VXX . . . just so you don't think I believe you have a crystal ball. - Ande
ReplyDeletep.s.s. Well aware it's nowhere near enough, just to say thank you and maybe buy a burger and fries between hoeing rows for you and Harriet! Tomorrow's another day. Aren't you lucky there are more men than not on this blog! Thank you again.
ReplyDelete- Ande (the pyr, aka, my d..)