Spain bailout hopes juice the markets overnight. Rajoy (Spain) and Monti (Italy) are meeting today so listen for some important news from that meeting. An Italian official says bailouts by Spain and Italy will not be requested unless bond yields blow out again but this news is being ignored. Likewise, the negative news from Athens is ignored by markets. Any positive Spain bailout news will send markets higher, negative news concerning the bailout will send markets lower.
Since the SPX closed only a point from the high yesterday, the bulls are in good shape to drive higher, and the futures show that to be the path. A test of 1464-1465 will occur at the open. Watch the strong resistance at 1468. The semiconductor weakness yesterday created negative market bias. Watch to see if the SOX stays under 395.50, or not. Under and markets have a downward bias, above and markets have an upward bias. Utilities remain important as well. As long as UTIL stays under 478.48 today, this is favorable to the bears and should keep a lid on any upside move, even if the 1475 is retested. Watch the 8 MA and 34 MA cross on the SPX 30-minute chart that starts the day favoring bears. See if the thrust higher at the open pushes the 8 back above the 34, or not.
Note Added 9/21/12 at 11:55 AM: The SPX is drifting along sideways after the intial bounce higher at the bell. The SOX jumped up over 395.50 so the broad indexes remain buoyant. The 8 MA moved above the 34 MA on the SPX 30-minute chart after the opening bell placing the bulls back in the drivers seat for the coming hours. The waiting game continues for Spain. The Troika says that the Spain bailout may be delayed. This places a lid on the markets today but surprisingly does not take the air out of the markets. The impact is apparent on gold, however, you can see GLD at 10:30 AM falling off the cliff. The money pumping potential of the Spain bailout had the PM"s whipped into a frenzy as today began. The SPX broke up thru the trend line identified in this morning's chart so a back kiss to the trend line at 1460-1461 should occur. The close on 9/14/12 at 1465.77, the closing high for the year thus far, was violated intraday today. Trannies and utilities remain weak. VIX is at 14. TRIN is 1.02 exactly on top of the bull-bear line not favoring either side today. The beat goes on. Watch SOX 395.50.
Note Added 9/21/12 at 2:25 PM: SOX is testing 395.50. Markets are leaking a bit. Selling will accelerate if SOX loses 395.50.
Note Added 9/21/12 at 2:29 PM: SOX bounced from 395.48. Drama is ongoing.....bulls have to keep SOX above 395.50 or the bears will step in.
Note Added 9/21/12 at 3:35 PM: Status quo. SOX keeps teasing along 395.50. AAPL iPhone5 hype today keeps tech leading the broad indexes higher all day long which helps the bulls maintain buoyancy. If SOX loses the 395.40-395.50 area, markets will sell off strongly into the close. If SOX stays above, markets will float sideways into the weekend.
Note Added 9/21/12 at 3:49 PM: It took all day but SOX finally gave up the ghost, it needs to hold under 395.40 a few more minutes, if so, the broad indexes should leak noticeably lower. Whoa, SOX 395.09... all systems go for bears.
Note Added 9/21/12 at 4:11 PM: The SPX went negative in the final minutes. Semiconductors soured into the close dragging the markets lower. The SOX under 395.50 is a feather in the bears cap. A red finish negates a string of eight up Friday's and a string of 8 years of up Friday's for September OpEx. Markets are trending on the bull side when Friday's and Monday's are bullish, and bearish when these bookend days are bearish. It has been a standoff with Monday's down and Friday's up during recent weeks so Monday will be interesting to see if it continues its negative trend. For OpeEx Friday, Monday morning tends to more opposite of today's action and even though the markets popped at the open, the direction was down all day. Thus, Monday morning may experience market buoyancy. The 8 MA is above the 34 MA on the 30-minute chart, bullish, but the 8 is curled down and may move down thru on Monday morning. The SPX pierced the closing high for the year intraday today, but closed well under. This sets up negative divergence on the SPX daily chart, but price can still run up to test the 1475 high, especially if Spain announces a bailout on the weekend. The utilities had another weak week, closing at UTIL 471 and must now overcome 483 next week to help create market positivity, otherwise, the utes will continue to create negativity. Semi's will be important on Monday. Next week a Bradley turn window opens for a market turn to occur anytime over the next couple weeks. Window dressing is anticipated next week as Q3 ends. Next Friday, 9/28/12 is EOM, EOQ3.
KS et al, Pretzel posted today the weekly CPC put/call ratio and it's at a 2nd lowest reading as of yesterday in a decade. Yes, in a decade... Today, if the action continues as it has, I am sure it will only drive that ratio lower... That's scary imho.
ReplyDeleteas for the market not drifting lower, imho it's uncle Ben's printing press at work... BTFD...
Spain is key, positive news moved the futures overnight higher but at 10:30 AM the Troika says the bailout may be delayed. Markets are moving flat, surprising that more air did not leak out since direction is paying a lot of attention to Spain, you can see gold fall out of bed when the bailout news hit. Thus, sideways. Semi's are key. Watch SOX 395.50, SOX now drifting lower printing lows of the day at 396.56 only one point away. If 395.50 is lost, the selling in the markets will pick up noticeably.
ReplyDeleteKS, I never really understood the triple-witching thing. what is it's really and what is it importance?
ReplyDeleteI have a question. Lets say if 5, 10, 15 minutes charts show negative divergence and hourly charts on the other hand positive divergence, how would you trade this?
ReplyDeleteOne more, say Money Flow + RSI + MACD all positively diverged and only Stochastics negatively diverged or flat, appreciate some thoughts.
THanks
Dear KS,
ReplyDeleteAre bulls still in control?
Thx.
It seems likely window-dressing next week will push markets higher or holding steady. Look at how markets stayed flat for most of August. Many indicators are at extremes but low-volume zombie markets can continue....
ReplyDeleteCharles, something I read elsewhere this week... "Trading activity during the week to follow September expiration is known to have a negative bias with 16 of the last 21 periods showing a negative outcome for the Dow Jones Industrial Average."
ReplyDeleteHeavy, heavy volume today. And now we're dropping. Could this get real interesting the rest of the afternoon?
Good point, weaver--we might yet get a surprise next week....
ReplyDeleteToday was soley based on keeping APPLE at $700. Alot of options. And that where it ended almost on the penny. You could look at everything else and it didn't matter really even. One thing is for sure: NO DRAMATICS in store, it seems before election, there will be many more of these almost break even days. romney bots gain nothing by trashing market, it's clear by now with QE3 they mine as well stick to the war trump card. Big flow into dividend stocks so don't look for a crash anytime soon in the dividend bubble wont happen KS.
ReplyDeleteslowly somebody let the air out... It's hard to get a count on this. the run up from yday's 1450 (which is exactly the upper trendline of the mega-rising wedge that has established it self from the 2011 high through the 2012 high as the upper trendline and the 2011 Oct low connecting the 2012 June low as the lower trendline) is VERY tuff to count as an impulse wave, looks more corrective then anything else (C wave likely) suggesting lower lows to come. Also, the SPX (and other markets) have now put in an overthrow of that mega-rising wedge, IF it plays out the markets need to stab through it sooner than later. It's been 2-yrs in the making, so give the market 1-2 weeks. If it doesn't than higher multi year highs are surely in the cards IMHO
ReplyDeleteArnie the third Friday's are options expiration day, usually a triple witching but in Sept its quadruple witching with the singls stock futures, this occurs in Dec, March and June too. Nothing to really pay much attention to, the action for the week is earlier and mid week, and during the Tuesday to Wednesday period where you typically see a bullish move like we saw this week.
ReplyDeleteSerenay, great question, it is easy to see you are becoming very familiar with divergences. If minute charts are negatively diverged and hourly are positive, that means the price move in the shorter term minute time frames will continut to be weak, leaking lower, but the effects of the hourly charts will enter and bring price up to satisfy the hourly chart demands. It is useflu, say if you are thinking to go short that ticker or index, you can then wait a while where you will see price come back up to satisfy the hourly charts and when they roll over that will be a nice place to possible enter short. On the indicators, the mixed look will occur as price is rolling over. Study the price peaks as a stock makes a nice long upward swing. You will see long and strong profiles from price peak to price peak until the mixed situation occurs, that causes price to roll over, then when price comes back up to satisfy the one or two indicators that were still long and strong, those indicators will likely join the entire negative divergence club and price will then roll over completely. You are getting the hang of it, good job.
Anon, for bulls in control, or not, it depends on the metric. Since Keybot the Quant is in charge of the bulk of the trading, and it is bearish, then the answer for the short to intermedicate term say the coming days, weeks, perhaps a month or two is bearish on the markets, but, as you see with Keybot today, markets are on a bull-bear inflaection point. There will likely be a big break next week one way or the other. Watch the other metrics mentioned here and the more that line up bearishly, the better the bear case, but if Keybot flips back to the bull side, up will be the direction.
For September Seasonality, type that into the search box above and read what Keystone posted at the beginning of the month. The period from OpEx to mid-October tends to be weak. "The week after OpEx in September has been down about 80% of th etime so keep this in mind for the week of 9/19." The date should be week of 9/24, Keysotne must've been slieepin' when he wrote that looking at the wrong calendar. So, yes, next week is typically weak.
Yep, the Dividend Bubble is on a milk carton. It has been a weird year since the Fed broke trend and did not wait for deflation to institute QE they simply pumped when markets were already high, and we still do not know the actual outcome yet.
It is important that the SPX punched thru the closing high for the year today but pulled back, the daily chart is now set up with negative divergence although as always, price may try to sneak a bit higher first.
KS, please check if you received my donation. I thought some financial gratitude was in place for all your hard work, insights and sometimes hilarious updates! keep up the good work.
ReplyDeleteDanke Arnie. Many thanks to all the loyal readership from around the world, especially thanks to all our followers from the U.S., Canada, U.K., Singapore, Switzerland, Australia, Netherlands, Germany, Austria, Greece, Turkey, Italy and others.
ReplyDelete