The conspiracy theorists are out in full force responding to the 7.8% unemployment rate today. Former GE chairman Jack Walsh jumps on the conspiracy bandwagon tweeting, "Unbelievable jobs numbers..these Chicago guys will do anything..can't debate so change numbers." Avoiding the politics and sticking to the markets and the technicals, the futures are now up seven.
The bulls need to punch thru and hold SPX 1463 to ignite the move to test the strong resistance at 1468; then the next strong R is 1472. Bears need to spank price down from 1463. When the month starts with all up days, a couple down days would be expected now. Also of interest is that the SPX market top occurred on 10/11/07 at 1576 and the market closing top occurred on 10/9/07 at 1565. These five-year anniversaries occur next week. Bulls will bounce markets at the open. See if they have oomph by watching the COMPQ versus SPX relationship. Remember, watch UTIL 481.36 today.
In all the excitment this morning, Keystone forgot to mention the Nifty Index (India) was halted for 15 minutes after it plummeted 16% in a heartbeat in a mini Flash Crash overnight. Considering the KFT trading problems this week, these flash crash incidents are now occurring globally and with frequency. Watch your wallet.
Note Added 10/5/12 at 9:38 AM: SPX immediately tags 1468-1469 fulfilling the ascending triangle pattern discussed late day yesterday. VIX is under 14. UTIL is 481.87. The SPX and COMPQ are up the same percentage so tech is not driving the upside, but it is not significantly lagging either. AAPL is down a couple bucks. SPX 1472 is the next strong resistance above. SPX S/R in this area is 1476, 1474.51 (intraday HOD for 2012), 1472, 1468, 1465.77 (closing high for 2012), and 1465. The bulls are off and running today. Note that the SPX will print a new closing high today if it stays above 1465.77. Look for some action around this number today. TRIN is 0.45-0.66 today, uber low which will want to see a snap back market selling move either today or Monday to relieve this uber positivity.
Note Added 10/5/12 at 9:56 AM: VIX 14.02. TWM is looking attractive, now at 26. There are two +800 TICK's so far but no uber +1000's or higher. Perhaps an entry into TWM at 25.78 may prove attractive when/if the SPX would test 1472 and the TICK machine would print +1000. Keystone will let a limit order sit in place at TWM 25.78 while the carpet of oak leaves receive Fall clean-up attention.
Note Added 10/5/12 at 11:31 AM: The euro is 1.3048 well above 1.30, bullish. UTIL is 482.25. VIX is 14.33. SPX HOD is 1470.96 not yet testing the strong R at 1472 but price remains above the closing high for the year. SPX continues to play around at the strong 1468 support/resistance level. Oil printing near lows; WTIC 89.62 and Brent 111.23. TRIN coming up to 0.9 working up towards the neutral 1.0 as a few more sellers come into the markets. Tech is lagging the broad markets on this upside move so that hints that the move does not have oomph. The market maker came down to snag Keystone's TWM 25.78 so now there is a new long position open with TWM which is a short small caps ETF. The TICK machine printed a high at +941 at 10:20 AM-ish, which was not suprisingly, the high in the SPX today at 1471. The bulls are continuing to dance on the table tops. UTIL is above 481.36 so this is a large feather in the bulls cap but there is lots of trading remaining today.
Note Added 10/5/12 at 11:51 AM: SPX comes down to back test the closing high for the year at 1465.77. Price bounces so this support held on the first test. AAPL is down 11 bucks.
Note Added 10/5/12 at 2:11 PM: The oak leaves are winning the battle today. Just as the birds fly overhead of a washed car, the wind always increases when the Autumn leaf-blowing is attempted. Nothing that a pumpkin pie recharge can't cure. UTIL is negative now printing 480.58. This is under the important 481.36 that will become applicable for all next week. Bears salivate at the development in this utilities sector since it will cause market bearishness but there is still lots of trading time remaining in today's session. The SPX fell thru the 1465.77 and 1465 support. The next support is 1461 and then back to the very strong support at 1460. The Nasdaq turns negative. VIX 14.24. TICK just printed a -800 so Keystone exited the ZSL trade taking profits, also exited the TWM trade that was entered today taking profits using it as a day trade. Will look to reenter both by the close.
Note Added 10/5/12 at 3:00 PM: Note the -1200 TICK. Keystone bot TNA opening up a new long trade, this is a leveraged long small caps ETF. Perhaps the low TICK may identify a bottom in the very short term minute time frame. TRIN is at 1.29 favoring the sellers and bouncing back from the uber low reading late day yesterday and early today. The SPX is fighting for the strong 1460 S/R. UTIL is 480.10.
Note Added 10/5/12 at 3:12 PM: Note the -1200 TICK spike lower. Keystone bot more TNA at that that spike. This is a countertrend trade trying to take advantage of the -1200 TICK's (-1200 signals an uber bearish sentiment). The trade also helps balance against all the ongoing short trades.
Note Added 10/5/12 at 3:35 PM: A -1000 TICK occurs a few minutes ago. TICK is printing -900 as this is typed. The bears are pushing hard late day. UTIL is 479 now setting up very bear market favorable action come Monday.
Note Added 10/5/12 at 3:59 PM: Keystone took the smidge of profits on the TNA exiting and using it as a day trade (on the +1000 TICK a couple minutes ago). Also bot TWM reopening that long trade. Also bot DNDN opening a new long trade. UTIL finishes under 480 which is very bearish for markets come Monday.
Note Added 10/6/12 at 6:43 AM: The SPX punched thru the closing high at 1465.77 intraday but could not close above. The bulls ran out of gas. The ascending triangle on the 5-minute chart worked out in textbook fashion tagging the 1468-1469 level as highlighted Thursday evening. The weakness in the utilities sector is very important. If you recall last Friday, the opposite occurred. Markets were weak all week long since UTIL was under its level of interest at 483 but at the close last Friday UTIL closed above 472, which was the number of interest, identified by Keystone's algo, for this past week. The bulls were in clover from Monday on since UTIL remained above 472. For the new week ahead, UTIL 481.36 is the number to watch all week long. Write it on a sticky note and place it next to the computer. As the utes faded Friday, the market bears are happy to see UTIL close under 481.36. The market bears will be in the driver's seat come Monday morning, as long as UTIL stays under 481.36. If the bulls move UTIL above 481.36 after the opening bell on Monday, the fix is in, and the market bulls will remain firmly in charge. If UTIL stays under 481.36 and the SPX drops under 1457, only three points lower, Keybot the Quant, Keystone's algo, will likely flip to the short side.
Big funds just waiting for SPX 1475 to close neg diverg and rip ma and pa bagholder
ReplyDeleteThis rally feels like a continuation of the "most hated rally in history"--everybody knows this thing is stretched but every attempt to short it gets pounded by another advance. NYMO, CPC, stochastics, none are really toppy, and MACD is crossing bullishly. Maybe we get KS's 5-year anniversary top next week. The utes are riding the upper Bollinger, could top out, but maybe not today. A lot of TA types have targets around 1477-1480, a short-covering blow-off top could go to 1520. I doubt we go down until the retail shorts are exhausted.
ReplyDeleteYep, it is a real coin toss these days. Even Keybot sits with only one tick separating a move from bullish to bearish. The markets appear to be pricing in the joyousness but none of the negativity. The Spain news today should have caused some weakness, even a little bit, and the Nifty Flash Crash today is simply being ignored by everyone. Oil is down 2.6% now, stocks should move with oil. UTIL is above the important 481.36 still yet. If this fails, the bears could take the markets down from here. If UTIL stays above 481.36, the bulls do have some additional legs with a move to test the intraday high at 1474.51. The close in relation to the closing high at 1465.77 is important today. UTIL is very important.
ReplyDeletemorning guys, flashcrashes, HFT f-ups, AAPL down almost 1.5% in an otherwise "green" day... SPX and DOW just a few points away from new highs 52w (closing!) highs, but tech (NDX, COMPQ) are lagging 50 points.... 9thanks AAPL ;-) ), seems like we're starting to see cracks in the bull wall? It ain't crumbling yet and I think it's aiming for the high 1400s, low 1500s. But we all know that before a collapse, cracks need to occur. What I also follow is XLE and XLF. While XLE has dropped through it's ascending trendline off the june 4 lows, XLF hasn't (yet). Once XLF does too, a more significant top is approaching. Stay safe!
ReplyDeleteps: as for the jobs/unemployment numbers. those are ALWAYS revised downwards in the next month's update...
ReplyDeleteKS, Nice nab on the TWN. You called that perfectly at 25.78. Wish I caught it. Not nimble enough.
ReplyDeleteKS, what's your take on tech going forward, specifically AMD and HPQ, which have been completely beaten up. Could they buck a downtrend and pop higher? Or will they follow AAPL, which is rolling over. Thanks for taking the question--
ReplyDeleteA blind squirrel even finds a nut now and then. Keystone is blind in one eye and cannot see out of the other. Note the utilities. 480.78 under the important 481.36 for next week. This is very market bearish if it holds into the close. It could cause Keybot to flip short on Monday morning.
ReplyDeleteCharlie, the AMD trade just started, it has the beautiful positive divergence on daily and weekly charts. Keystone was considering today to add more but the position is getting large already. HPQ is a great buy as well too, when there is blood in the streets, they are chasing poor Meg with pitchforks and torches. And there is not reason to, they are lucky to have her as a manager. HPQ probably cannot go wrong to buy it now but Keystone is waiting for a potential 14.15-14.50 entry. So both AMD and HPQ are a couple of longs in a market that looks very shaky. Both are very speculative plays so, like all trades, they are not for the faint of heart. That is why Keystone keeps his defibrillator close to the computer. AMD should bounce big.
ReplyDeleteUTIL moving towards the days lows.
ReplyDeletewowsers, this market is psycho. one half it's long the other half of the day it's short. never seen so many day's with a morning pop and rest-of-day fade in a row. Signs of a market loosing strength? Glad I kept my small short position ;-), 1454 is must hold for the bears per EWT count, otherwise a nasty decline to 1400s could be in the cards...
ReplyDeleteThe market pops early in the day followed by late day weakness hints that distribution is taking place. The first hour of trading is nicknamed 'Amateur Hour' since the retail investor, Ma and Pa, the office professional guy or gal, etc..., they all tend to run in and buy the market when it opens. The professionals tend to let the first hour go by and let the markets settle in before adjusting positions. Thus, the market behavior would be consistent with a market top since the institutions are passing stocks along to the bagholders.
DeleteKS, could I please request you have a look at the chart for SPX:VIX this weekend, along with your regular perusals. Is it not also telling us that something significant is at hand? Thanks for the week that was.
ReplyDeleteThe chart is not too exciting to post Weaver but a few things can be highlighted. We will post the chart more once it drops under 70 and starts dancing with the 68 level again, which will signal a large market down day. The SPX:VIX ratio definitely identifies the market tops. It peaked in the 90's in April 2011 when the markets rolled over. Negative divergence began the spank down. In April of this year, same-o set-up, the ratio peaked at 97-ish, then rolled over. Now the ratio is at obscene levels over 100. The three recent peaks are met with negative divergence so it is primed and ready to drop large. However, as can be seen over the last couple months, as well as spring time, sometimes the market tops take a little time to form and roll over. If the VIX pops over 16, which is easily doable even as early as Monday, the SPX:VIX ratio will be moving under 90 in a heartbeat. The VIX is the key and it typically moves very strongly when it decides to pop.
DeleteThe most important aspect is the utilities. UTIL is under 481.36 so the bears should come to play at the Monday opening bell. In fact, if UTIL stays under 481.36, and the SPX drops only three points, and prints under 1457, it is extremely likely that Keybot the Quant will flip short on Monday.