Merkel (Germany) and Hollande (France) discussed can-kicking techniques over dinner last evening. Yesterday was a very important day in the utility sector (reference the previous post that discusses UTIL in detail). Watch 472 today and at the closing bell, watch 464. If UTIL stays under 472 today, the broad market weakness will remain in place and fester. If UTIL moves above 472 at the opening bell, that immeditely tells you that markets will move sideways to sideways up into the weekend. Keystone's algorithm, Keybot the Quant, is following three other sectors which also are causing the most influence on broad market movement today; copper, semi's and the NYA Index.
Watch JJC 43.61, now at 44.03 favoring market bulls and creating market buoyancy. If JJC 43.61 fails, and UTIL is under 472, Keybot the Quant will likely flip to the short side. At this writing four hours ahead of the open, copper is down about one-half percent placing JJC in the 43.70's vicinity so pay close attention when the bell rings. Watch SOX 389, price is now above which causes market bullishness. Watch NYA 7808, price is now above which causes market bullishness. The 7808 number reflects the NYA 40-week MA, one of Keystone's key cyclical signals (see the Cyclical Signal page on this site).
For the SPX today, beginning at 1402, the bears have the easier ride, only needing one and one-half points lower, to push under 1400.50, and a downside acceleration will occur into the 1390's. The bulls need to see 1413 to regain their momo. A move thru 1402-1412 is sideways action today. Since Keystone may not be able to update the market action today until late day, use the above analysis to determine broad market direction today. UTIL 472 and higher means bulls are back in control into the weekend. If UTIL remains under 472 and JJC stays above 43.61, SOX above 389 and NYA above 7808, status quo, markets will float sideways into the weekend. If UTIL stays under 472 and any one of the three (JJC, SOX, NYA) fall under their number of interest, the selling in the markets will increase dramatically and this will likely trigger Keybot to go to the short side. Watch to see which way tech leads the broad markets (COMPQ versus SPX, respectively) since that will either confirm, or place into question, the market move in either direction today. And, in the final minutes, watch to see if any drama occurs at UTIL 464 since this result will impact the broad markets at Monday's opening bell.
Watch gold in relation to the descending triangle and 65-week MA shown yesterday (simply use the search box to find any previous chart or commentary; type in 'Gold' for yesterday's chart). Markets remain in a Bradley window currently, so a market trend change would be expected. Durable Goods Orders are released at 8:30 AM EST which will influence the futures (always reference the Key Events and Market Movers post each weekend that shows you what to watch all week long) but other than that, there is no other economic data today, and there are no significant earnings of interest. Therefore, traders will focus on European theatre today and the Merkel, Schauble, Draghi, Hollande, Samaras and Rajoy performers.
Note Added 8/25/12 at 6:30 AM: Friday Recap: Markets dropped at the open, the SPX fell thru 1401.50 and ran directly lower to test the 1399 support. Copper was weak overnight into the Friday opening bell and JJC dropped to 43.87, only 26 cents away from the 43.61 danger level identified by Keystone's algo. UTIL remained under 472. It was all systems go for the market bears. However, the bears would be slapped hard as the markets were stick-saved by a WSJ article written by Jon Hilsenrath, a perceived mouthpiece for the Fed. The article says nothing new, that does not matter. The suggestion of more crack cocaine from the Fed is plenty to get the non-free markets to jump higher. A Hilsenrath pump article typically provides ten S&P points and Friday was no different. Note the volume ramping up starting at the 10 AM low and at 11 AM a huge spike higher as the article hit and Friday's trading day was decided. Keystone's SPX 30-Minute Chart with 8 MA adn 34 MA Cross Indicator shows the 8 piercing up thru the 34 MA at 1:30 PM EST signaling the all-clear for bulls for the hours and days ahead. JJC, SOX and NYA all remain above the targeted levels so they continue to create market buoyancy. UTIL confirmed the market rally late day as it moved back above 472. The UTIL number of interest for all next week is 464, so clearly the bulls moved the utes back into their camp for now. Keep tracking JJC 43.61, SOX 389, NYA 7808 and UTIL 464 next week to determine broad market direction. All are bullish now contributing positivity to the markets. If one of the four fail, markets will be noticeably selling off. If two of the parameters fall, the markets will be well under SPX 1400 and dropping, and Keybot the Quant will likely turn bearish. Watch the 20-day MA at 1400.38 moving forward. The WSJ article that pumped the markets allows the Fed and ECB to limp into next week. Chairman Bernanke is on deck for Friday, 8/31/12, from Jackson Hole, then ECB's Draghi talks on Saturday. In less than one week, the markets will receive an answer; either the stimulus is delivered to verify the upside market orgy over the last month, or, Bernanke and Draghi do the ole soft shoe and try to continue along with smoke and mirrors. The broad indexes have been patient. If Bernanke and Draghi do not deliver the stimulus cake, with crack cocaine money-pumping sprinkles on top, the markets will sell off.
This is best short term investing blog on the web.
ReplyDeleteJXXD
Finding this site was a blessing. A necessary compliment to FA as well as CA. Things here move more quickly than I do. KS your work gives me a look at the smoke before the fire (probabilities based on TA). Thanks!
ReplyDeleteYes, this is a great blog!
ReplyDeleteStarted a long position 1396 on the ES. We shall see.
Did you hedge?
DeleteHedges? Hedges? I don't need no stinking hedges... ;-)
DeleteI do think we have to wait for a couple days to see directional change though...
Hmmmm...Ziggy seems to have gotten it in pretty good there. Looking for 1434.
DeleteGood call! 1434 seems like a stretch, but good luck.
DeleteThat spike up was kind of ugly. I have sold and am flat for the weekend.
DeleteThank you for sharing your labor.
ReplyDelete8MA pierced the 34MA on the upside on the 30 minute; UTIL recaptured 472; JJC above 44; NMA above 8042; and SOX up to 398.43. I am so glad I loaded SSO yesterday. All systems go.
ReplyDeleteGreat comments all. Everyone appears to have a firm handle on things. Good eye Freddie, the 30-minute chart locked in the bullish day at 1:30 PM, UTIL went above 472 in the final hour. Lots more drama is ahead. The Fed needed a little help to limp into next week (Bernanke is Friday and Draghi is Saturday), so the Hilsenrath was just the ticket, it is always good for about a ten point pop, which occurred. These continued pumps, however, which is only repeating what everyone already knows, will fade. Like a child that jumps and yells "hooray!" when you provide candy. You can get the child to easily jump more times by simply suggesting that candy is coming, but, after you do that several times, the child becomes suspicious and will not partake on the hype anymore, until the candy is delivered. This is the markets, the Fed and ECB have played all their cards, now relying on Hilsenrath to provide the final buoyancy to stumble into next week where the story will be written. We find out what the plan is next week, it will be interesting. It is a real mystery since with the CRB over 300, there is no way Bernanke will supply even a smidge of easing. There are limited bullets remaining and it seems that he would not want to waste them now, but who knows? China appears to want to create stimulus more locally rather than thru interest rate cuts. This leaves the ECB in this triad of coordinated global easing. So, perhaps Bernanke provides song and dance, which will disappoint markets, but Draghi will provide the sugar candy. The affect on the euro is another mystery. Germany must power the continent of Europe to pull them out of the mess so a weaker euro will benefit this goal. To add on even more theatre, the U.S. markets will close come from Friday afternoon to Tuesday morning for the Labor Day holiday weekend and traders will not be able to react to Jackson Hole until then. Remain strapped in, with helmets on, keep all hands inside the vehicle, exercise extreme caution.
ReplyDeleteKS, I like your last sentences! the 2 coming weeks will indeed tell us everything we need to know for the foreseeable future. Will the CB show now be in its final act? everybody is getting really bored by it by now.
Deleteback to EWT. As i mentioned earlier this week; either the market went through an ABC correction (higher degree 4th wave, with 5th wave to 1440-60s to come) or it was indeed the beginning of a much bigger down leg. The market hit the target I projected (1396, and SPX got to 1398). Question now is if the 15 point jump is the start of a new wave (5) up, or simply a correction. Counts are hard and not clear cut.
Personally I am leaning towards the 1440-1460 target and that this was a 4th wave. Kind of has the feel and look to it. Also since the retrace was into the wave iv of wave 3 area, which is kinda typical.
However, upside is now only very limited, with max 45 points to gain, probably only 25... so i remain biased to the short side.
ps: if the markets open up marginally and hit 1416is and then go down, and down hard to the 1400 area again, friday has likely been only a wave ii of a higher degree wave down. IF the markets only drop to say 1407 area and then strongly revers back up, wave 5 is IMHO in the making. so our daily candle will tell us a lot.
DeleteSPX 1440 may come Arnie but watch the 1419 level as the key. A close above 1419 makes 1440 + likely, without a close above 1419, the bears are favored.
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