Draghi says, "The ECB will do whatever it takes to preserve the euro and believe me it will be enough." The short-covering in the euro short position is epic as even Grandma Nellie was short the euro. At the open, the XLF jumps above 14.45, RTH above 41.90, and VIX flls under 18.70. Further buoancy is provided as the SOX, semiconductors, moved above 375.30 (Keystone's algo recalculated this number after the opening bell). The SPX:VIX is above 68, bullish for markets. The 8 MA ran up thru the 34 MA for the SPX 30-minute chart (reference this morning's chart a couple posts back), bullish moving forward. The SPX launched above the 200 EMA at 1346.50 on the 60-minute chart, bullish moving forward. Keystone's trading algo, Keybot the Quant, flipped to the long side at the opening bell at SPX 1349, but remain cautious for a whipsaw. The power of quantitative easing and stimulus talk is obvious. The bears were cruising without a care in the world only five hours ago.
The rally move is suspect; focus on XLF 14.45 and SOX 375.30 to gauge the market direction moving forward today. Whoopsies daisies; the XLF is printing 14.44 and the SOX is printing 375.23. Keystone needs his heart pills and Cousin Harriet has just moved the defibrillator closer to the computer. Keystone took profits on the TBT trade exiting the position.
Note Added 7/26/12 at 10:57 AM: Fast-moving markets today. XLF is under 14.45 and SOX under 375.30 and note the markets leaking lower. Use these two parameters as a guide as the dust continues to settle.
Note Added 7/26/12 at 11:16 AM: Note that XLF and SOX are back in the bear camp and markets leak lower. Next, watch RTH 41.90 and VIX 18.70 to further gauge todays action. If XLF or SOX recover, the markets move up, if RTH or VIX join the bears, the markets will take another move lower. Focus on the SPX 20-day MA at 1354.54, above is bull-friendly moving forward, below is bear-friendly.
Note Added 7/26/12 at 11:21 AM: Note that the semiconductors are attempting a recovery, SOX now sneaking back above 375.30 which would maintain market buoyancy if the bulls can keep it above.
Note Added 7/26/12 at 12:02 PM: XLF and SOX are back in the bear camp which is causing the markets to leak lower. Pay attention to RTH 41.90, now at 42.08. Also VIX 18.70, now at 18.44. If either of these two parameters turn bearish, Keystone's algorithm will likely whipsaw back to the short side. Quite a start to the day. Luckily, the chest palpatations are subsiding. RTH 41.90 and VIX 18.70 provides the answer for the remainder of the day.
Note Added 7/26/12 at 12:38 PM: XLF is testing 14.45 so the bulls are trying to push the markets higher. SOX remains bearish and RTH and VIX remain bullish. Financials, XLF 14.45, are the focus in the time ahead. Copper is flat today which is very telling; for a quantitative easing rally copper should be thru the roof. Also, DOW (the chemcial company), had weak earnings and if chemcials, resins and plastics, the building blocks of recoveries, are not in demand, something is wrong under the economic surface. The SPX is on the top side of the 20-day MA, by a smidge, keep watching.
Note Added 7/26/12 at 1:03 PM: XLF punches above 14.45, by a hair, but above nonetheless which enables the SPX to remain above the 20-day MA at 1354.65.
Note Added 7/26/12 at 1:28 PM: XLF above 14.45 creates market buoyancy. Watch the SPX 100-day MA at 1358.89 and the 20-week MA at 1358.58, both offering resistance to the price action currently. SPX 1358 is a strong resistance level as well so consider the 1358-1359 zone as a strong resistance gauntlet. Bulls can brag if they punch above 1358-1359. The SPX is now printing 1358.11. Let's see what the bulls got.
Note Added 7/26/12 at 2:57 PM: The SPX is attacking the 1358-1359 resistance gauntlet.
Note Added 7/26/12 at 3:32 PM: The fight continues. If 1358-1359 does give way, 1366 would be the next strong resistance target above. XLF is 14.48, three pennies above 14.45, so the bulls are able to maintain market buoyancy. There's the SOX punching thru 375.30, if that holds for a few minutes, markets are headed higher into the close.
Note Added 7/26/12 at 3:53 PM: Watching SOX 375.30, if it drops under, markets will weaken. Above and the bulls finish the day strong.
Note Added 7/26/12 at 8:21 PM: Markets gained strength into the close. Note how the NYA punched up thru the 40-week MA at 7756.53 but then could not hold it in the final minute closing at 7754.51. Watch it tomorrow. Also XLF 14.45 and SOX 375.30. All three will dictate market direction. FB failed to impress. Tech did not lead the markets up today. Copper did not join the party. SPX is between strong support at 1358 and strong resistance at 1366. Keystone's APKT trade will be beat tomorrow since they disappointed with earnings.
Has anyone noticed how KS likes to pad the performance results of his Keybot Quant?
ReplyDeleteFor example, today he says that he got long at 1349, but that was the opening price of the S&P without all the stocks open. The ES futures opened at 1352.75, which implies a S&P cash price of 1358!! That is a lot higher long entry price than the hypothetical "1349" Keybot entry price!
Anon, has anyone ever noticed you're a douche?
DeleteAnon, SPX 1349.25; for the actual trading returns for the robot focus on the 'actual' number, which is the cast and stone result for the algo, the actual physical trade, which lost 3.4% on the last trade, does that make you feel better?
ReplyDeleteKS et al, checking back in from a short vacation and noticing the markets have become almost untradedable... 3 days red, 2 days green. Down big, up big. Neither bears nor bulls are making any money unless you shoot before you pull the trigger. Crazy. Crazy crazy.
ReplyDeleteFrom an EWT perspective, the move down earlier this week is likely wave 1 down, yesterday and today wave 2 up (given SPX retraced a perfect 62.8% of wave 1 down, and 60-62.8% is a classic wave 2 retrace level. So let's see if wave 3 down commences. If not, something way more bullish is on the table.
I meant 50-62.8%...
DeleteKeep an eye on XLE and XLF and their ratios with SPX, seems like they are about to break down and could be early warning of a market top...
Watch XLF 14.45 as the line in the sand for bulls-bears.
DeleteKS,
ReplyDeleteInstead of using a symbol that one cannot actually trade,
how about using the e-Mini (ES) or the SPY to track the Keybot Quant trades?
Those are real trading symbol that track the S&P 500. Since you already post a lot of your etf trades, I think the SPY would be a good symbol to use for the Keybot Quant trades.
Anon, reference the Keybot site and read the page "How Keybot Works", that will bring you up to speed. The program triggers the trade and Keybot cycles thru many different ETF's for the actual trading, typically 2x ETF's but if a whipsaw occurs the quant drops down into a lower risk mode for 45 days and only uses the single ETF's. The ETF played is constantly referenced on this site, and also referenced on Keybot's site, so you can follow the exact ETF that Keybot is in on a 24/7 basis. Keybot is in SSO now, taking the loss on the last trade in DXD.
DeleteIt looks like the dow is completing an X wave at 13000. This would be the 5th and finale wave to complete the pattern. Then the bears would take over finally...as long as the FED does not come in again. I for one am fed up with all the manipulation that has been going on the last few years. Thanks, dale.
ReplyDeleteOperation pig drop coincides with twitter outage. Interesting. -Ande
ReplyDeleteI see a very clear 4-point topping pattern now--a double top around 1380 with a left and right shoulder around 1360 on the SPX. Today's action created the right shoulder--perfect alignment with the left shoulder in mid-June. I'm annoyed I didn't anticipate this....
ReplyDeleteKeep watching XLF 14.45; it is key today, above and markets float up, below and markets leak lower. Charlie, Keystone tries to avoid using head and shoulders patterns for short term up movements, they are more reliable after long term moves. Likewise, if a stock drops, the inverted H&S is considered, but only after a long drop. The action this year is very much a sideways push, frustrating bulls and bears, moving thru 1300-1400 all year long thus far. Agree on the double top currently. The H&S you reference can very well work out, it would be a double head at 1380, neck at 1310, so target of 1240, should 1310 give way.
ReplyDeleteReference the Fibonacci retracement for the up move that ran from the 1270 bottom in early June to the top at 1380 in July, that was about 110 points. The 38% Fib is 1337-ish, exactly where price bounced today. That is worthy of a chart since price has honored the 38%, 50% and 62% Fibs with all the action over the last two months. Keystone will try to post a chart this evening after things settle down.
How do you arrive at the 14.45 level for xlf?
ReplyDeletegold is about to get jiggy with it...
ReplyDeleteThanks, KS, look forward to the Fibo chart.
ReplyDeleteAnon, the sectors or other items of interest, with their respective levels, that are called out, are all continuously calculated by Keystone's algo. These items, currently RTH, XLF, SOX and VIX, are the most influential to the broad market action at this point in time. The algorithm identifies the sectors and areas of interest and provides the price levels, it is all part of the programming for the quant.
ReplyDeleteThat is one of the great aspects of Keybot, it highlights the items to watch that are most greatly impacting market direction in real time. There is no way that you could develop or track them independently. They are only offered up as long as Keystone posts them on this and Keybot's blog, and will always remain proprietary. The Keybot algorithm took around ten years to develop so obviously the secret sauce will always remain under lock and key. In real time now, watch XLF 14.45, SOX 375.30, RTH 41.90 and VIX 18.70.
Anon, one item that you can track yourself would be the NYA 40-week MA cross. Keystone updates it typically each day on the Cyclical Signal page on this site. The 40-wk MA is at 7750-ish now so the markets should be deemed to be bearish if under, or bullish if over. NYA put on a show this morning coming straight up and bumping its head on this critical moving average, then stumbling lower. The exact number as this message is typed is 7756.08, and the NYA is at 7736 now, which is indicating market bearishness. This is particularly useful if you are an intermediate or longer term trader since it tells you the current overall market direction in the weeks/months time frame. Since it is bearish now, who knows, maybe it will turn bullish at any time, but currently it is bearish and it means that the rally today is only a battle that was won by bulls but the overall war, as reflected by the NYA 40-wk MA cross, the bears are still winning.
DeleteThanks.
DeleteI'm learning so much, and I love this blog!
Isn't that something about the NYA discussion above, the NYA did come up to punch up thru the 7756 (40-wk MA) in the final minutes of trading but then in the final minute fell under closing at 7754. Watch this closely tomorrow, it is very important which side wins, bulls win above 7756, bears win below.
DeleteEither you believe the Elliot wave guys who say we are going to 1500, which means Benny must pull the trigger next week, or the chartists which says we will roll and head back down to 1290.
ReplyDeleteI'm taking the latter...can Benny really pump it at the top? Does that make sense? But I'm keeping my eyes wide open lol....
Zig, many EWT-ers have the market actually project at -at least- 1120... This may be wave ii up (it retraced the drop from 1380 to 1330 (wave i down) from earlier this week almost to the cent... Hence, wave iii may start anytime
DeleteNote that we've crossed the 1360 level now 6 times since June... (7 since May). This market is pretty much directionless (even better illustrated when you look at the weekly candles on the spx...)
Very true Arnie, the Keybot turns chart is posted this evening, the sideways, directionless, markets are clearly evident.
Delete