The bears needed to drop under SPX 1398 today to accelerate the downside and that occurred at the open. The LOD thus far is only 1396 so that does not show a lot of downside oomph as yet. Tech (COMPQ) and the broad market (SPX) are down about the same percentage so tech is not leading the downside which stalls the downside oomph. The 8 MA dropped under the 34 MA on the SPX 30-minute chart signaling bear action forward but, as seen from yesterdays action, this is a knock-down dragout bull-bear struggle, so simply allow things to play out in the minutes and hours ahead. Keystone took profits on ERY exiting the trade, it remains attractive, will look to reenter.
Note Added 8/10/12 at 12:39 PM: The markets languish another day but note, the 8 MA remains under the 34 MA on the SPX 30-minute chart ever since the opening bell, which says the bears are favored moving forward. The bulls will need a sharp spike higher in the broad indexes to negate this move. The 8 MA is starting to place some distance from the 34 MA as well which increases the chances that the bears are running and that this 8/34 MA cross will resolve with the 8 under the 34. VIX is at lows of the day. Keystone added more UVXY. Also added more SPXS.
Note Added 8/10/12 at 12:59 PM: Copper is negative. The COMPQ is down almost 0.3% while the SPX is down 0.2%, thus, tech is leading the broad indexes lower today, isn't that a sight for sore eyes? The market rally was led by tech leading to the upside each day so this development is a feather in the bears cap.
Note Added 8/10/12 at 1:06 PM: VIX is 15.09 remaining at today's lows, the tension mounts. Utes are red by a hair. UTIL is at 483.63; watch the 50-day MA at 481.28 support. Remember, UTIL 470-ish signals major market turmoil.
Note Added 8/10/12 at 1:44 PM: Here's the spike higher by the bulls trying to make a run upwards to save the day. See if they fall on their sword, or not. Tech continues to lead the downside favoring bears. VIX is 15.10; LOD is 15.06 so keep an eye on that. RIMM is feeling love from IBM today, perhaps it will jump lots higher early next week. RIMM daily chart shows that an island reversal will occur if price jumps from here, 8.17, to 9-ish. Keystone's SPX:VIX Ratio Indicator is at 93 well above the 68 danger level that verifies extended bearishness, however, the 93 and higher level is an excellent signal for bringing on market shorts; the last time at these levels marked the March market top. The RUT (small caps) is at the psychological 800 level so check that at the end of the day to see which side it favors.
Note Added 8/10/12 at 3:22 PM: The bulls are pushing higher to push the 8 MA (1401.12) back above the 34 MA (1401.78) on the 30-minute chart but the bears maintain control. Tech continues to lead the broad indexes on the downside so this remains bear favorable. The VIX is 14.92, a 14 handle, absolutely no fear is in the markets at all now, traders fully expect the markets to go up without any worries or fear. Keystone's 80/20 rule says 2's lead to 8's, so the break of VIX 15.2 may lead to 14.8; this would target this 14.75-14.92 area as the potential launch pad for volatilty.
Note Added 8/10/12 at 3:46 PM: The bulls are trying for a photo finish today and they may succeed. The SPX is punching ever higher. VIX is at 15.84. TICK just printed +800. Keystone added more UVXY.
Note Added 8/10/12 at 4:06 PM: The SPX attacks the strong 1306 R we have watched all week long, but does not punch thru. SPX closes at the highs. SPX:VIX ratio is 95 a very attractive place to short the markets from. VIX finishes at the lows at 14.8-ish verifying the uber complacency now in the markets. The CPC put/call number will be interesting. Tech led the downside the entire day which was a change in the recent trend and favors bears. For the SPX 30-minute chart drama, the 8 MA (1401.74) finishes fifteen cents under the 34 MA (1401.89) so the bears win and can wear that large feather in their caps all weekend long. The SPX moved thru a sideways trading range of 1395-1405 this week ending at the top end of the range. TRIN finishes at a remarkable 0.72, remaining uber bullish. The TRIN needs to snap back to above one, with a closing print or two, to remedy this uber bullishness, which would correspond to market selling. The bears have the advantage albeit a small one.
Any idea what's causing these wild 4-point SPX swings? We shot up from 1397 earlier (talk that the Euro was being bought, pushing down the dollar and raising stocks?). But then we gave it all back in an instant - and I mean an instant - at 11:06 eastern time.
ReplyDeleteWeaver,
ReplyDeleteI'm thinking maybe this is distribution?
8 MA below the 34 and diverging.
ReplyDeleteThere is very light volume in the markets as the big shots continue their vacations in the Hamptons, they're probably drinkin' coffee, and smokin' big cigars. So the volume will not return until after Labor Day, thus, the jello can be pushed around the plate very wildly at times. Europe is on vacation in August as well so the news is a bit quieter after all the central banker stuff lately. It is an intense bull-bear struggle ongoing, neither side can establish the direction, but it should break soon, and the 30-minute with the 8 under the 34 MA tells you the bears are pushing and winning, the two MA's are divergeing like Anon said so this improves the bears chances with each passing minute. The 8 is 1400.40 and the 34 is 1401.62, so there is a full point gap now. It would take a heck of an upside market spike now to nullify this move.
ReplyDeletehey guys I am back from 2 weeks in da woods and have read all KS's GREAT updates. Seems like the market is major decision time, with negative divergences kreeping in all over the board? Tops take time, SPX has been around 1400 level all week (and literaly only gained 35 points since mid-June...) VIX is down to pre-historic levels, as if there is not a worry in the world. Starting to look real dangerous and toppy here IMHO
ReplyDeleteArnie you were in the woods but you would see more nature in the markets with the bulls, bears, and even occasional flying pigs. Tech is leading the downside today which is something the markets have not seen for several days.
ReplyDeleteThis market just refuses to die.
ReplyDeleteHi KS, your comments on SOX level? Currently @ 404.26 Should we watch this too? Thanks! kf
ReplyDeleteSOX remains strong, watch 385 and it is at 405 well above, so this is strongly in the bulls camp.
DeleteWhat is island reversal on RIMM means? Thanks! kf
ReplyDeleteYou will have to google it or go to stockcharts school and read about it. Price will gap up or gap down and then run relatively sideways creating an island from the price movement. The island reversal occurs when price gaps back in reverse thru the same gap, thus leaving all that recent price action behind, and that price action looks like a little island.
DeleteHold your nose boys, it stinks but they are pushing the mkt up. I think just past the pain point 1410ish on the ES we might get a small reversal.
ReplyDeleteGreat comments by all, some of it funny. This market is a stumbling zombie staggering sideways looking for a fix of crack cocaine stimulus. Keep watching the 30-minute chart 8 adn 34 MA cross. The bears have it in hand with twenty minutes of trading remaining.
ReplyDeleteWhen VIX @ 14.92, I thought UVXY will further decrease but it did not, it remains @ 5.35 instead, does anyone know why?
ReplyDeleteMay be index is not tracking properly?
Anon, do not look for any of the volatility products to track properly, these are wacky ETF's and ETN's, and dangerous plays. The VIX dropped 3.5% today which was greater than VXX or UVXY. Other traders are likely develping a buying interest in VXX adn UVXY keeping them more elevated, as these long volatility plays appear washed out and ready for a rocket launch.
DeleteBen's short selling ban is in effect :)
ReplyDeleteYep, Bernanke adn Draghi, crazy like foxes, but, the markets will not be patient too long and the time does run out on Friday 8/31/12 at Jackson Hole, then, or sooner. 15 trading days.
DeleteTA is just that, Tools for asses....what bearish crap...only roll over your gonna see fro the next month is your dogs belly to be rubbed.
ReplyDeleteWell, our mascot dog, Spotify, will appreciate that.
DeleteKS, did the sort of 'Federal intervention' with the stock market that is occurring now also happen in previous years? I was not exactly prepared for the Empire Strikes Back, yet . . . Holy Cow, Flying Pigs was putting it mildly.
ReplyDeleteNope, QE1 and QE2 occurred as more of a surprise so they had more bank for their buck. Markets will only remain patient for so long, so Bernanke and Draghi have to man up to back up their happy talk. A strong deadline would be 8/31 when Bernanke will provide comments from Jackson Hole.
DeleteYup, that was me, the wayward child - Ande
ReplyDeleteBought some UVXY at the close as well, looks very oversold IMHO! One higher high to finish wave 5 up and this rally is complete. It will only be marginally higher IMHO and by then everybody is a bull so wave 3 down can start finally. Note that 5th waves often fail so it might not even get above 1407...
ReplyDeleteKS, can you present a TA on UVXY? I am very curious to see what made you deside to buy it and how you view its chart. Thanks in advance!
Arnie, positive diverence setting up, the weekend posts have to be posted first, then some charts, so we can maybe take a look before tomorrow's bell.
DeleteWeaver at 11.06 at trader offed nearly 10,ooo ES contracts in a fraction of second it set of a wave and caught us all drawn down heavy... it was combat Friday and vix just kept getting falling away... great chatter sorry I missed it I full to the RIMM and was desperate flipping quarters on ES all day... UVXY defys TA buy a little bit and then buy more at the 4 print back the truck up and don't be afraid to sell some out the money calls or puts if you bought to much earlier a couple of 10 % moves a day will have you deep in money soon.
ReplyDeleteGreat comments all. It will be interesting to see if the Paul Ryan selection for veep impacts the futures tonight, or not. Since the SPX closed at the highs on Friday, even the slightet little green in the futures means the markets will run several handles higher at the opening bell. Bears need to see negative futures to prohibit that action from occurring. Watch the 8 and 34 MA cross on the 30-miniute chart, the saga continues. Also watch the $USD 50-dya MA at 82.6-ish, above is stronger dollar that will drag copper, commodiites and equities lower, below and the weaker dollar will keep the market bulls happy.
ReplyDelete