Happy New Year. The old adage is "Sell Rosh Hashanah and buy Yom Kippur (which is 9/26/12)," but it is right as much as it is wrong. There has been a long string of Monday's that are typically down days recently. OpEx Monday's are typically up days, however. Thus, lots of cross currents and mixed signals, a microcosm for the broad markets, torn between weak fundamentals and technicals, but buoyed by the central bankster bazooka's.
Utilities are important today. Watch UTIL 478.48. If the SPX drops under 1460 with UTIL under 478.48, then the markets will accelerate to the downside and Keybot's algo, Keybot the Quant, likely flipping short. If UTIL stays under 478.48, but the SPX cannot move under 1460, then markets float sideways all day long. If UTIL moves above 478.48 this week, the bulls are taking the SPX over 1500. A test of 1475-ish would be anticipated today. The bears would want to see a quickie test, then failure, the bulls obviously want to see 1475 hold so a possible close above 1480 may occur, which would lead the way to 1520. Watch the 8 MA and 34 MA cross on the SPX 30-minute chart, bullish to start the day. The opening bell occurs in a couple minutes.
Note Added 9/17/12 at 9:44 AM: UTIL bounces a point in the early going, now printing 472.86, well under 478.48, so bears can place a tiny feather in their caps. The SPX is maintaining above 1460, however, so markets seek a sideways posture. Tech is not leading the downside so the bears do not have the oomph thus far to push the SPX lower. SPX S/R is 1479, 1478 gap fill, 1476, 1474.51 Friday HOD, 1472, 1468, 1466, 1465, 1464, 1460 Friday LOD, 1457, 1455, 1453, 1448, and 1446. Well look at that. COMPQ has now overtaken SPX to the downside, tech is now leading lower.
Note Added 9/17/12 at 11:55 AM: UTIL now at 469 so bears take comfort in placing distance away from 478.48 which creates broad market weakness moving forward. SPX remains above 1460. LOD is 1461.73. COMPQ leading SPX to the downside which favors the bears today. The 8 MA remains above the 34 MA on the 30-minute chart, which is bullish, although the 8 continues leaking lower and the 34 keeps moving higher. DECK is getting decked on ug-ly Ugg sales--it was too hard to resist writing that head line. Time to pick some tomato's.
Note Added 9/17/12 at 1:17 PM: SPX continues to hold up despite the negative forces on it today. A break thru the low at 1461.73 will step up the excitement. The 8 MA is moving ever closer to the 34 MA to add to the drama.
Note Added 9/17/12 at 1:49 PM: SPX ruptures the LOD at 1461.73. See if this support holds or if it fails. If it fails, then it looks like today will provide a test of the 1460.
Note Added 9/17/12 at 2:52 PM: It appears that Sell Rosh Hashanah was true today since Keystone's algo, Keybot the Quant, flipped to the bear side a short time ago at SPX 1460. Stay alert for a whipsaw. Remember, a couple weeks ago Keybot whipsawed in only about two hours time, a sharp reversal move that has only happened three times since the algo came on line in 2008. The 8 MA drops very close to the 34 MA now on the 30-minute chart; watch to see if the 8 can pierce the 34 which would provide further downside direction verification. The bears are pushing against the Fed's bazooka, fighting the Fed, let's see what the bears got.
Note Added 9.17/12 at 3:10 PM: The SPX is down -0.39% while the COMPQ is down -0.38%, so they are moving in sinc hand and hand and tech is not showing which side it prefers. If bullish you want the COMPQ to outperform to the upside into the close, if bearish, you want to see the COMPQ deteriorate faster. The 8 MA and 34 MA drama continues....they are only 12 pennies away from each other.
Note Added 9/17/12 at 3:19 PM: The 8 and 34 MA's on the 30-minute chart are now only seven pennies from a cross. Keystone will need additional heart pills this week considering the drama is off to a fast start this week. Six pennies away.........
Note Added 9/17/12 at 3:25 PM: Two pennies away..........there she goes, the 8 MA stabbed down thru the 34 MA on the SPX 30-minute chart, the bears are in control for the hours and days ahead--if the 8 stays under the 34. Reference this morning's chart for more information. The cross is tentative so watch this into the closing bell. If market bears ever had to push it is now, they have it all on a silver platter.
Note Added 9/17/12 at 3:51 PM: Keystone added more TWM.
Note Added 9/17/12 at 4:05 PM: SPX closes at 1461. The market bears are driving the bus now. Tomorow we see if they drive the bus from Pennsylvania to Florida, or if they stall out and have a flat tire before they can get out of the driveway. The banks back peddled today. My screen does not show AAPL reaching 700 today but it appears to have hit in the AH's, probably some jack*ss that simply wanted to be the first to trade the whole number. UTIL closed at 469 well under 478 which will keep the market bears in business all week long. China property price data hits tomorrow. FDX is mucho importante and it should hit in the morning, setting the tone for trading. VIX was flat today, a smidge higher.
I think we are 'toppy' here but I don't see a drop below 1430s as this QE craziness seems to keep the buyers ready to buy the dips.
ReplyDeleteYou have apoint Chris, don't fight the Fed is the mantra these days. The SPX catapulted 40 handles in a half day last week so dropping thru 1430 would not take much effort. The 20-day MA is 1423 so pay very close attention to that moving average, there will be drama there. So the 1420's would put up a fight, then the 1390's. A break of the 1420's would likely lead to the 1380's. On the bull side, markets may stay elevated but to move sideways and head upwards the bulls need UTIL 478.48. If UTIL does not move above 478 this week, the bulls will have a difficult week. If UTIL drops under the 50-week MA at 462.23, The 1390's are on the way. Utes are key this week.
DeleteHi Keystone
ReplyDeleteRegarding to your notes on stochastics over 80 , RSI over 70 overbot territory, do we apply this to daily chart or 30 minutes chart. Can we apply that to the minutes charts for day trading? Thank you
Yes, for other indicators as well such as money flow over 80 is overbot territory. It works on all time frames for all charts. So when price goes into overbot territory you have to prepare for a pull back. But remember, stocks can stay overbot a long time sometimes. Use the indicators from peak to peak to see if the upward direction remains long and strong, or, if negative divergence appears, which would indicate that a spank down in price is imminent.
DeleteSame in reverse on the bottom side, under 30 for RSi, or under 20 for stochastics, or under 20 for money flow, are all oversold, same idea, you have to prepare for a pop in price coming, but price can stay oversold a long time as well. If positive divergence is in place, along with the oversold conditions, that ticker is good to go to the upside, if a falling wedge pattern is in there as well, that is gravy on the mashed potato's for a strong bounce on tap.
All technical analysis in general, the same patterns, techniques, using trend lines, all the methods available hold for any time frame chart and any ticker, bond, yield, commodity, any thing you look at. Pay close attention to the daily and weekly charts when starting out trading, then you can get a feel how a stock can be say bearish in the daily time frame but remain bullish in the weekly time frame. Then, as you become more experienced you can put together a tapestry for a ticker or index using monthly, weekly, daily and minute charts, covering the day trading time frame thru the long term investor time frame.
what number should be looking for to be consider overbot regarding MACD? Thx!
DeleteKS, you have emphasized that the Utilities index is a key watch and that if it slide more, the markets would sell off. My question is, isn't the falling utes index reflective of the fact that money will now move out of cash flowing, dividend paying and defesive stocks and move into financials, materials and more risky stocks?
ReplyDeletethx.
Yes, Anon, there are lots of cross currents in markets now, especially with the Fed firing money cannons. Bond yields typically move up as stocks move up. So in a recovery type move with good times ahead it becomes more and more expensive for utilities to fund their huge projects they undertake to keep up with electricity demand and service the ongoing infrastructure. In bad times, traders seek utes for safety. What youi say is correct, but the relationship is fuzzy these days. Last week traders were continuing to run to the dividend stocks while tech underperformed which is the opposite of what you would think with Bernanke's bazooka. Thus, just sit that all that stuff on the edge of the table for future thought.
DeleteFor the utes, the old timers follow a 15-week lookback technique to tell if the utilities are in a weeekly uptrend or not. When major equity market sell offs occur, the substantial extended type sell offs, the utes typically lead down from a week or two to a couple months or so in advance, it is a very ominous signal. So instead of a fundamental reason, the utes is simply a TA tool that has been used by traders for decades. Once the 15-week lookback rolls over, that forecasts a down market in the weeks ahead. The utes rolled over two months ago. The second part is that once further weakness develops, when the utes lose the 50-week MA, that opens a trap door in the markets, so at UTIL 462-ish, the markets would be in a heap of trouble. If UTIL moves above 478.48 this week, which is the weekly close 15 weeks ago, then the bulls are whistling dixie once again on their way to 1500+. Use Yahoo Finance, the DJU historical data, you can click weekly and count down 15 each week to know what number to watch, these are all programmed into Keystone's algo as well, as many other algorithm's on Wall Street use the exact technique just described.
By the time all that wind bag description was typed, UTIL dropped under 470, now has a 469 handle.
DeleteFurther comments on utes. UTIL rolled over 'from the peak price' two months ago, but the breach of 478.48 this morning, is the first nail in the coffin that now places price under the price it was 15 weeks ago, verifying the move off the top and officially placing UTIL in an extended weekly downtrend. That is why the bulls need UTIL 478.48 this week, if they do not get it, they will know what it is like to be slapped around this week.
DeleteHi KS,
ReplyDeleteThanks for wonderfull blog! Uncle buck have taken alot of beating in short time thanks to all this cb intervention. Is it not time for uncle buck to bounce?
Andy
Andy, the USD and XEU, dollar and euro, charts will have to be posted again to take a closer look. The dollar will need to base across the current levels. Indicators are all oversold, in the cellar, and chart indicators are weak and bleak. Bernanke wants the dollar devalued just as the Fed has destroyed over 97% of the dollar's value since the Federal Reserve formed in 1913. It may actually be best to look at it from the euro perspective and know the dollar will move inversely to the euro. Euro will want to see another high after a pull back. Currencies are very tricky these days with all the cross currents.
ReplyDeleteKS, is it time to go short? SPX under 1460, Utes under 469.
ReplyDeleteAlthough I must say even if Keybot goes short, it would probably reverse soon.
Anon, you are in charge of the mouse so only you can make those decisions. Keybot the Quant flipped short at SPX 1460 at 2:11 PM EST, about 50 minutes ago. You are correct, it may whipsaw, but then again, it may not.
ReplyDeleteThe 8 MA piercing down thru the 34 MA on the 30-minute chart would provide bear verification.
The Plunge Protection Team must be reading Keystone's blog, they pushed SPX above 1460 again.
ReplyDeleteWe could a double whipsaw, with the decline being reversed and then that BTFD surge peters out. Why would Mr. market reward the majority here with more upside, when he can do what he does best, i.e. punish the majority, with a steep loss?
Pretty ridiculous market action in the last half hour. No wonder retail investors stay away. If they watched the numbers all the time as we do, they'd really be horrified. Who'd want to put their hard-earned money in something so flighty? And what arrogance is there in we traders that makes us think we can "beat" this market.
ReplyDeleteMarkets creep up to the VWAP only for high sell volume to come in at the close. Typical algo driven behaviour.
ReplyDeleteThe downside looks to be favored now. Even if the SPX moves back above 1460 and higher (now printing 1461), that is of no real consequence. Right now, the algo would be more interested in the reversal triggers which would be UTIL moving up above 478.48, which is a ways away, or a 1%, such as immediate launch to 1475, but both of those do not currently appear in play, so the bears may have a good chance here. FDX and Housing Starts are important this week.
ReplyDeleteWeaver, that is interesting about 'beating' the market. Keystone remembered a video that captures the essence of trading, that very few attain, but all aspire to;
ReplyDeletehttp://www.youtube.com/watch?v=MwKYjZ_8EcE
Well if that was a down stab at 3:25, what was the close? Maybe keybot wants to flip to the long? Or does the bot wait till the screen turns green
ReplyDeleteYour all pissed cause this the biggest bear sell offs your going to get. This was a huge selloff in new terms. People want into the market and they want some qe3 and infinity, today was a crash compared to what where going to see on the bull side. Bears get little nibbles and crumbs and then better run for cover.
ReplyDeleteAnon, Keybot does its own thing, but if UTIL stays under 478.48, and it is well under that, the algo will probably stay short moving forward. If the SPX experienced a wild spike to 1475 that would likely trigger it long again as well, but, barring those two, what appear to be, unlikely items, the quant should stay short. Time will tell. FDX numbers are big tomorrow.
ReplyDeleteKS, the selling today has very low volume. I wonder when will the market get that institutional selling to make it more intense. The gap ups have been of higher volume so that speaks volume to the bulls (no pun intended). Take care.
ReplyDelete