Friday the 13th plays trick or treat on markets. The JPM earnings provided a little of this, a little of that, lots of mirrors and smoke bombs, misdirection, and analysts continue to parse thru the information. JPM appeared to have a healthy beat, the S&P's jumped higher, but minutes later the balloon deflated when the earnings number actually looks light. WFC beat by a penny but missed on the top line. The best gauge is to simply watch the S&P's, and the current read is a market headed for a two or three point pop with the SPX. The XLF is at 14.38 pre-market only three pennies under the 14.41 level affecting markets negatively.
Today's skinny; watch XLF 14.41, JJC 44.15, VIX 18.75, RTH 41.65, SPX 1341 (bulls win) and SPX 1325 (bears win). The 20-day MA is 1343.98; the 50-day MA is 1334.55; the 200 EMA on the 60-minute is 1339.25; the 10-month MA is 1324.96. SPX S/R is 1348, 1344, 1343, 1341, 1338, 1337, 1333, 1331, 1329, 1326, 1324, 1321. Watch for the 9:55 AM pivot. XLF 14.41 is the key today.
Note Added 7/13/12 at 10:13 AM: XLF and JJC popped at the opening bell, the bank earnings and China GDP, respectively, providing the bull fuel. The SPX moved up and over 1341 so the fix was in. Keystone's algorithm, Keybot the Quant, flipped to the long side at SPX 1342. Watch to see if the NYA moves above 7738, if so, another leg higher for the broad indexes will occur. The tone is set for today. The bulls are popping the corks on the wine bottles and searching for lamp shades to wear on their heads later on today. The day should maintain the market upside with the joyous financials and copper. Use XLF 14.41, JJC 44.15 and NYA 7738 as a guide for market direction. Consumer Sentiment came in weak but the rose-colored glasses are glossing over the negative news. Today will be a lazy, hazy day of summer; the garden, music and some hammock time will likely be a better way to spend time. The NYA is at 7727. If NYA 7738 is prevented, it shows you that the bears are at least placing a ceiling on the market rally and the upside will be limited to the current levels.
Note Added 7/14/12 at 6:15 AM: The bulls were running yesterday. Note that the NYA moved above 7738 before lunch time which created another five handle move higher for the SPX. The SPX was up from start to finish in the Friday session. SPX closed at 1357, unable to poke thru the strong resistance at 1358. The 100-day MA is 1359.74 and the 20-week MA is 1359.56, thus a resistance gauntlet is formed at 1358-1360. If the bulls want to push up thru SPX 1358-1360, they need the CRB to jump a point or two come Monday morning. If the CRB stays under 295 (now at 294), the market rally will be capped at these levels and the 1358-1360 resistance will likely hold. Interestingly, JPM was up 6% in Friday's session. The trading debacle loss was projected to be about 4 billion as the earnings were released pre-market. In the afternoon, JPM said the loss may grow to 5.8 billion, then, Dimon (CEO of JPM) says that the loss may grow to 7.5 billion as time move along. Very twisted market action especially when considering the pop in copper due to perceived China stimulus as well. China's self-imposed level of concern is a GDP of 7.5%; the GDP number was 7.6%, and this year's aveage thus far is nearly 7.9%. Very odd that the market became gun-ho on China stimulus when on the surface this would not be the logical conclusion. Once the shorts covered on Friday, this provided the fuel to continue the bullish party into the weekend. The rally has all the earmarks of a short-lived event. The CRB action will be important on Monday.
The silence tells me perhaps its time to bullish!
ReplyDeleteoh why buy 10 contracts at 1334 when you buy them 4 handles higher for a 1 handle scalp and not a good trade ooohhhh must be nimble fear will kill you every time even when your right...
ReplyDeleteHello Sun and MCAP; yep, Keybot flipped, the XLF above 14.41 at the opening bell then the SPX over 1341 provided the answer. Use NYA 7738 as a guide for further market upside, or the rally stalls if NYA 7738 cannot be achieved.
ReplyDeleteKS, thanks for all your updates and hard work. I am impressed by all the charts (e.g. the AAPL, dividend etc etc). That's a lot of work. As for now, the markets are very, very confusing IMHO. All that tells me it's correcting and may seek one new (higher?) high before rolling over. There is waaaay to much overlap for this to be a sustained bull run. Rolling over takes time, so best to go with the flow.
ReplyDeleteKS, are you bringing on more shorts? I believe this is a sucker's rally. The dollar will continue to strengthen in the coming days and weeks. Why? No QE3 yet. Simple as that IMHO. Look for more selling next week. I believe Keybot will whipsaw as early as Monday. Have to check the volume at day's end to see if the buying conviction is there.
ReplyDeleteSteve
NYA above 7738, hit 7745. Now dropping back to 7740. SPX up almost 20 for the day, thanks to KS's signals I went long in the first half-hour, have exited for the day, looks like most of the move is in, will leave whatever is left to latecomers. Looks like a good weekend to stay out of the market....
ReplyDeleteHi KS, I am confused with this market?!? When market down 15 or more points, started last Friday, it always draw back to end with 2 to 3 points down at the closing bell to release some pressure; however, when it spikes up, it shoots more than 20 points higher and remains there, like 6/29/12, there no draw back at the end of day. Can you please comments on this. Thanks!
ReplyDeletehttp://scharts.co/Mmkdwl
ReplyDeleteWow parabolic RIP up... forced to cover long gold pre-market open, forced to cover short whipsaw city... And then bingo everything pops...
Both the Euro and British Pound should resume their wave 3 downward thrust next week. According to one Elliotician, the eventual target for the Euro is 0.93 (below parity vs the dollar) and for the Pound to be 1.26 vs the dollar. KS, is this a short-covering rally?
ReplyDeleteSteve
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ReplyDeleteAnon, that flatlining is IMHO distribution of the big boys to the bag holders... at those levels you sell your longs, not a buy.
ReplyDeleteWant an example? JPM, WFC both done yesterday... everybody selling (cause the realists know their results are not OK), but the big boys are buying... (the big boys are not realists, they are money makers, don't give a rats ass about fundamentals as long as they buy low and sell high). So today the big boys are selling all the shares they bought yesterday at a higher price today... (JPM, WFC are up 3,4,5% today...). That's how the game works. Always has, always will.
Hi Arnie, thanks much for your explanation!
DeleteAnyone else tempted to short this into the close just for grins?
ReplyDeleteam already short :-)
ReplyDeleteBut Arnie, more earnings in next week, IBM,Intel,Google,etc., those are big guns, you don't want to wait and see..
DeleteThe market is going wild..it only take one day to recover six days of losses. I am a poor bear! Hope I will recover on Monday, what a Friday the 13th!
ReplyDeleteArnie, what's your trigger(s) if you don't mind sharing. I am looking at NYAD and the tendency for Monday to open down after a big friday.
ReplyDelete$TRIN getting extreme too at 0.66 or less. I got nailed being short this morning, and sold, but may buy again at 3:55 if we close near a high. KS, any advice on using stop losses on ETFs?
ReplyDeletecharles, what trigger do you mean? to buy shorts or when to sell shorts? I sold my longs for 1.5% gain today (SSO), and entered SDS at 3:15pm ET. My trigger to go short is that the 30min SSTO was completely maxed out and had flatlined all day. Also, per KS' metrics. The 8MA and 34MA on the 30min timeframe aren't diverging anymore, but starting to converge. IMHO there's therefor not much wiggle room for going much more up, but only down. How much down? I am sure enough for a quick scalp.
ReplyDeleteAs for the big guns' earnings. That's all fine and dandy; this is not a long-term trade IMHO.
However, still in limbo if this is wave ii up, with wave iii down to come, or if this is finally the start of bigger wave C up that will get SPX to 1390s??? Hard to tell. Right now the retrace is a perfect 62.8%, which fits nice with a wave ii...
This was a rig by JP, they want everyone to know that what they did was no big deal. This rally today was a coordinated rally as smoke and mirrors to go along with their announcements. Everything is just peachy.
ReplyDeletehow did all u guys find out about this site?
ReplyDeleteHello all, good ole Keystone was snoozin' on the hammock under the oak trees yesterday afternoon. Days like that are best suited to be watched and let play out. The NYA moving above the 40-week MA at 7738 is very important, and the bulls closed with that in place, thus, this is a very bullish indication. Bears need to see this reversed asap.
ReplyDeleteYep, it was a short-covering rally. Two key events occurred, first, traders assume China stimulus is coming due to a 7.6% GDP number, which is odd logic, but that was the idea, it bounced copper, Dr. Copper, which sent the markets higher. Second, the JPM magician show, that bounced the financials, so copper and finanial fuel did the trick, once the SPX was over 1341, the shorts started jumping ship and then the rally spiked. CRB 295 and NYA 7738 are perhaps the two most important things to watch on Monday.
As mentioned above, all of you are more sharp than Keystone is, the NYAD printed +2051 closing at that uber high level, so a snap-back selling move is required to relieve the uber bullishness, this may simply be an intraday pull back on Monday. TRIN at uber bullish 0.61 begs for a snap-back selling move as well. Interestingly, most of the recent Monday's ahve been lower for markets.
For stop losses, on ETF's or any index or individual stock, mental stops are okay to use if you are a disciplined trader. You can assign a certain percentage loss, such as 2%, so if the trade goes against you and the loss is exceeding 2%, jump ship and move on. You can also use a dollar amount, say $200, $500, whatever you select, that if that trade is losing that much, jump ship. There is no steadfast answer since it depends on the amount of capital you are employing in trading, what time frames you are operating in and what risk tolerance you have. Do not forget to also use the technicals as a guide. Before entering a position you should identify what your price goal is, and what the trade is based on, and what your exit price would be if the trade goes the wrong way. For a stop loss, the 2% is a good general number to consider.