Storms are moving thru the scenic Laurel Highlands of Pennsylvania, knocking out power. For now the lights are on, although flickering. Keystone is missing the bearish fun today. VIX jumped above 18.68 at the open so the fix was in and the bears would be rewarded. RTH was fighting to hold 41.90, when the mighty hemlock fell over the electrical lines a couple miles up the road cutting power to half the town today. The chart shows RTH bouncing from 41.90 at 10:30 AM so the bulls must have thought they had dodged a bullet, but at noon, the RTH collapsed thru 41.90 providing additional bear fuel. The SPX is now testing the 50-day MA at 1332.70. Keystone's SPX:VIX ratio is 67.83, under 68 (failure occurred at noon time), albeit by a smidge, but under nonetheless indicating that a triple digit down move should occur for the Dow Industrials. The 200 EMA on the 60-minute chart folded like a cheap suit after the opening bell. NYAD and TRIN are very well behaved today, bearish, but representing steady-eddy selling, which could easily continue along. Keystone took profits on the SPXS overnight trade, will look to reenter.
Note Added 7/24/12 at 2:22 PM: Another power outage rolls thru with another storm, good ole Pennsylvania is getting hit today. Here's another test of the SPX 50-day at 1332.69. Failure will usher in further market bearishness. Bounce or die.
Note Added 7/24/12 at 2:39 PM: The SPX fell thru the 50-day MA, now it is back up for the back test....now printing 1332.29, here we go again, it is bounce or die from here. Today's entire action is perfectly bookmarked by the 20-day MA as resistance above, and the 50-day MA as support below. The price move out of this bracket is important and telling. Right now, we see what the bears got, SPX will bounce, or collapse.......
Note Added 7/24/12 at 2:44 PM: VIX is over 20, bearish. SPX:VIX ratio is 65.97, bearish. AAPL sits at 600, down a couple bucks, as the tension mounts ahead of the earnings release in about one hour, directly after today's close. The bull-bear fight at the 50-day MA right now is intense, both sides know the ramifications, which side wins?
Note Added 7/24/12 at 3:10 PM: Looks like the SPX is slipping on a banana peel, now has a 1229 handle, the 1229-1331 zone is very strong support. Keystone bot IVN opening up a new long position. The positive divergence for the IVN charts appears attractive.
Note Added 7/24/12 at 3:19 PM: SPX on the underside of the 50-day MA but hanging on to the 1329 support. If 1329 is lost, 1326 is next, also, the 10-month MA at 1324.47 is important. Keystone bot INVE, a speculative, thinly-traded penny stock, opening a new long position. The charts show attractive positive divergence.
Note Added 7/24/12 at 3:25 PM: Keystone bot TBT opening up a new long position. TBT is an ultra short of bond price, thus, TBT is moving up if the bond prices are moving down. Lower bond prices=higher yields. This is entered as a quickie trade. The same ends can be achieved by shorting TLT. The TBT is showing positive divergence wanting to bounce while the TLT is showing negative divergence ready for a potential spank down. This action would be viewed as a countertrend move since lower yields are expected in the weeks ahead.
Note Added 7/24/12 at 3:33 PM: The bulls are putting up a fight, SPX now at 1335. Keystone looking for a +1000 TICK to perhaps reenter SPXS.
Note Added 7/24/12 at 3:43 PM: Keystone bot SPXS on the +1000 TICK that just occurred opening up a new long position.
Note Added 7/24/12 at 3:57 PM: VIX is at 20.31, up 10% today, up 25% this week. No wonder the SPX did not lose the 50-day MA since the Fed announces news that QE is on the table. What a casino! Stocks are moving up into the close. Add crack cocaine and markets go up, take the crack away and markets go down. Fundamentals, shmundamentals. And the Fed announces the news before the market closes, why not after the closing bell?
Note Added 7/24/12 at 3:59 PM: The big AAPL show is minutes away. Consensus is looking for 10.37 per share earnings. Last quarter was 12.30. The whisper number is 11.02, this is the number that matters. Traders will be disappointed if AAPL comes in under 11.02. Also watching for 30 million iPhones adn 16 millioin iPads.
Note Added 7/24/12 at 4:04 PM: The Fed news simply references a move to perhaps occur at the 8/1/12 meeting or the September meeting--exactly what everyone already knows. Step up to to the Wall Street casino and put your money down, you win if you are long for the Bernanke put (the Fed will always save the markets with quantitative easing), you lose otherwise. These are not your Grandfather's markets.
Note Added 7/24/12 at 4:09 PM: NFLX lays an egg.
Note Added 7/24/12 at 4:31 PM: Holy schmolies. AAPL misses big. The results show 35 billion in revenue, a miss. The earnings are 9.32, a huge miss, unprecedented for Apple. Wow. Keystone needs to sit down. AAPL laid an ostrich egg. iPhones are 26 million short of estimates, looks like folks are probably buying Samsung and Droids. iPads are 17 million which is in line and at least one somewhat positive aspect of the release. AAPL is trading down nearly 6% in the AH's. This debacle will have serious ramifications for the tech sector, and the broad markets, come tomorrow. Asia will react tonight. AAPL falls thru the 20-day MA at 599, the 50-day MA at 580....
Good lord, KS. I didn't even have a position open when the 'news' release came out but I'm still outraged. This is the most blatant market manipulation I've ever seen; a WSJ news release with no new information but stoking the QE crackheads just before the close. I hope Hilsenrath is at least making some trades based on his own bullspit, someone might as well make out as the market integrity gets sold.
ReplyDeleteI tried scalping them both and lost LOL I got work to do tomorrow.
ReplyDeleteSP futures dropped 10 points on Apples miss up slightly now but if / QE comes why not now why wait until 1275 and then release it - strike while they still have momo... Its all a mind trip so are we getting our 3 or not this month what you guys think?
ReplyDeleteThe Fed news does not seem like news, more like WSJ embellishment, but Hilsenrath appears to be a Fed mouthpiece. There is probably no real change to the Fed status, perhaps an extension of low rates into 2015 announced on 8/1/12, and then perhaps QE3 in September.
ReplyDeleteBut, to pound the same idea, QE3 will occur when the CRB drops under 270, probably in the 250-260 range will be Bernanke's trigger point. This wil lindicate rampant deflation with a deflationary spiral sucking the economy south a la the Great Depression or Japan.
So, QE3 occurs when the CRB drops under 270, if that occurs this week, so does QE3, if it occurs in October, QE3 will be in October, if the CRB never drops under 270, highly unlikely, but if it does not, we do not see QE3 since a deflationary threat would be avoided. Deflation is Bernanke's fear. Keystone's indicator shows us in deflation for the last two to three months. This indication must agree with the Fed's data since the news occurred today, Bernanke obviously losing some sleep each night from the deflation gremlin.
Bernanke's real nightmare is unleashing QE3 and finding the market sells off anyway a week later.... the crack addict has built up so much resistance the Fed coke may not work like it did the first two times. Playing around with yield curves (Operation Twist) will be recognized as a non-starter in terms of moving the market.
ReplyDeleteBernanke must suspect that if Obama loses, he will be asked to resign....
KS, I thought you were awfully brave buying SPXS before the close. (Options were predicting a $30 Apple move in one direction or the other.) Now you just look even smarter. What will you watch for before bringing on any index longs tomorrow?
ReplyDeleteAll that is true Charlie, based on QE1 and QE2 and decreasing oomph, QE3 should supply a rally between 2 and 6 months, most probably 3 or 4 months.
ReplyDeleteWeaver, even a blind squirrel finds a nut now and then. Keystone simply stays hedged with longs and shorts so something is typically working. Remember to always use the TICK to your advantage. When entering any long trade, try to enter at a -1000 TICK, while if entereing a short position try to enter at a +1000 TICK.
The markets were looking odd in the final minutes. Acutally, the SPXS trade was being nixed in favor of adding to the TECL which is the 3x ETF long technology, but that started to take on a funky feel as well. At the time, Keystone did not know the Fed was up to its late day shenanigans. But once a couple +1000 TICKs were printing, as well as knowing that Keybot is short, SPXS looked good for another go.
For Wednesday, watch RTH 41.90, if price stays under that keeps market bearishness in place, the bulls will recover above 41.90. Watch CRB 293. If CRB falls under 293 the markets will take another leg lower. SPX 1329 is key as well, so a drop of nine points is needed to accelerate the market downside tomorrow so watch the futures tonight to see if they are in excess of nine red points.