There is a lot to look at today, it is quite a morning so far. In fairness to President Obama, the strong downward slide started at 7 AM EST-ish on the Draghi news about Germany's weak economy. The euro dropped like a stone, dollar up, and you know the rest. We see this asset relationship; euro down = dollar up = copper down = commodities down = oil down = equities down = Treasuries price up yield down. The semiconductors, SOX, dropped under 378.60 to join the bear camp. If you are bullish, you need the SOX to recover above 378.60 asap.
RTH is holding up, however, now printing 44.50. Use the 44.40 as the new bull-bear line, Keystone's algo is constantly recalculating these numbers in real time. Of more import is financials today. They are tanking. Watch XLF 15.73, whoa, price is now at 15.74. Bad things will happen if the XLF 15.73 fails. VIX is 18.17. The SPX is now at 1400 breaking thru the critical 1403 support level. The 8 MA is about to fall thru the 34 MA on the 30-minute chart as highlighted this morning. There goes 1400....... XLF 15.73, here it is, bulls must bounce it or failure occurs........ AAPL is down 3%......
Note Added 11/7/12 at 11:11 AM: Tech is leading the downside, bearish. XLF and RTH both failed. Markets are in serious trouble right now. Video of Greece turmoil and people in the street is not helping markets. Continuing to play catch-up right now..... SPX is printing 1397, check that, now a 1396 handle......
Note Added 11/7/12 at 11:17 AM: Dow Industrials now down over 300. The 8 MA stabbed down thru the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours and days ahead. Watch the NYA now printing 8138. Keystone's cyclical signal is the NYA 40-week MA which is at 8003, only 135 points lower. If this fails, it will indicate a cyclical bear market moving forward verifying the UPS indicator. Keystone's SPX 150-Day MA Slope Indicator will likely also trigger back into a Cyclical Bear this evening. With today's market drop, now do you understand why Keystone made a big deal about the UTIL losing the 50-week MA, the trap-door? Those hinges were rusty and the WD-40 Keystone sprayed yesterday finally opened the door creating the market free fall today, a delayed reaction.
Note Added 11/7/12 at 11:32 AM: Crash and burn, baby, crash and burn. SPX is under 1390 now, it is so close that the SPX will likely want to test the 200-day MA at 1380.37 moving forward. The 30-minute, 1-hour and 2-hour chart indicators want to see lower lows in price, or at least to test the LOD thus far at 1388.14, so the market weakness should continue into the afternoon. There is serious technical damage occurring. AAPL is over 20% off its top which indicates a shift into a bear market pattern for this beloved gadget producer.
Note Added 11/7/12 at 11:52 AM: VIX hits 19. Watch XLF 15.73 and RTH 44.40 to see if the markets can recover. NYA is 8131 only 128 points above triggering another serious bear signal. The Nasdaq is down -2.4%. NYSE volume is above average with a run rate of about 120% of a day's average volume, this should settle down as the day proceeds.
Note Added 11/7/12 at 1:44 PM: Note the RTH 44.40 and XLF 15.73 action, price flittering on each side. Both moved above their bull-bear levels which created the market buoyancy this afternoon. XLF drops back under, however, now at 15.71. Thus, bears want the RTH to drop under 44.40 as well to reignite the downward selling. The bulls want the XLF to move above 15.73 so a recovery move can ocur. Keep an eye on the bull-bear level for SOX at 378.60. The beat goes on today. The bears are growling. The SPX is at 1400. SPX S/R is 1413, 1409, 1406, 1404, 1403, 1399, 1397, 1394, 1391, 1389, 1388.33 (10-month MA), 1385, 1384.93 (150-day MA), 1380.43 (200-day MA), 1378, 1375, 1371.11 (Keystone's SPX 12-Month MA Indicator a major Cyclical Bear Market Signal), 1370.58 and 1370. The LOD today is 1388.14, do you think the 10-month MA is important? The old timer's that trade the large blocks on Wall Street use the 10-month MA as a fave indicator to monitor. Obviously, you want to pay a lot of attention to the 10-month MA moving forward. The first test resulted in a bounce.
wow - this has nothing to to with our figure head selection...
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=$SPX&p=60&yr=0&mn=3&dy=0&id=p64726824150&a=280214481&listNum=2
1390 is toast - a reflection of the mythological alchemies we are more and more relying on in this superstitious technocracy...can proto fascism be far behind?
DeleteYour pattern for the drop worked out well Scott, you were looking for that ahead of time.
ReplyDeleteThis is what the bears were waiting for, the coming days will be interesting.
!!! once the unlimited QE was announced it was clear that unraveling was in the offing.
DeleteI agree, I think Ben wanted this QE not to pump up the markets to new highs, but to soften it's landing. I am sure he saw things we all saw. Now with the extra liquidity starting next week, he may be able to dampen the fall. That's always been my thinking.
Deletehttp://stockcharts.com/h-sc/ui?s=$NDX&p=D&yr=1&mn=2&dy=0&id=p70240122309&listNum=2&a=281497430
ReplyDeleteseems like a clean 5 wave down to me. I am out of all my shorts that I bought yday at SPX ~1430. (SDS: 54.75 -> 57.75) YEAH BABY!!! Easy peacy trade. May go longer next few days, but profit is profit for now. Can always re-enter. Taking it day by day. That said, 5 waves down, expecting a little bounce from here. While typing this SPX went up 7 points, so there it is. But could be all. This is a HEAVY days, the cards have been dealed, the table is set.
ReplyDeleteUgly, ugly, ugly...but so was that spike up last night. They picked the wrong prez for the markets ;-) The boys went right for the lower bollinger and it bounced, so now we'll see where we are.
ReplyDeleteThis comment has been removed by the author.
Deletehas nothing to do with figure head empty suits...
Deleteeverything to do with debt saturation the black hole fed balance sheet and the criminal enterprises that are now our institutions trying to monetized the markets at the expense of others - read Galbraith's chapter in The Great Crash: 1929 dealing with Goldman or about the creation of the FED in Rothbards Money and Banking in the US.
What you will see is that the modern markets were set up as monetazation schemes for the Robber Barons who had grown fat off of government protection (they actually captured the government after the Civil War.
anyway, Americans dont know what they dont know and seem happy NOT to know!
Gee thanks bud, I'm well aware of the history of the Fed and how it works. But you can't trade history nor the story. Just the numbers. And I wanted a push higher before the crash lol.
DeleteKeystone, your UTIL trapdoor finally opened. It took 2 days for those rusty hinges to work, but boy did they... or what. The writing was on the wall, but complacent as they were they all fell for it like sheeps brought to the slaughter house. Thanks for alerting us to it. It convinced me to short the up trend, not long it. Paid off very well today!!!
ReplyDeleteI echo Arnie's comments... thanks KS. Also to Arnie and Zig et. al. - keep posting. I'm always very interested in reading your thoughts. It's just too bad we all have to wait for Arnie to get out of bed out there in Cal. (Can't you get up at 3 your time?). I also took profits on shorts this morning, added some longs at 1388-90 and am about to cash those in. I'll buy shorts again, but am just trying to figure out where we are back-kissing too. Any ideas?
Deletethanks weaver!! I am sorry for being such a slacker... lol... with kids, school etc you now, it's hard to get to the markets until 8:30am PT... But, I don't really feel like I am missing out on much though.
DeleteYou were ballsy going long at 1390. I thought about it, but figured 10-points weren't worth it, and I had to help out for an hour in my son's class room. Just came back and see my little bounce prediction is working like a champ. 1400ish is a nice place to re-enter shorts again IMHO. NOT TRADING ADVICE!!!
Watch XLF 15.73 and RTH 44.40 those two will tell you everything you need to know today. If bulls recover either of these levels the markets will recover. If not, lots more downside ahead for the broad indexes.
ReplyDeleteXLF is now at 15.66 causing bearishness, ditto RTH at 44.34. Lots of drama today. Germany down the tubes. Greece turmoil in the streets. Obama victory-watch your wallet.
Just in case there is anyone left that is not convinced I am completely crazy, I'm going to go ahead and call a bottom at 1388.14 for B of another expanded flat, looking for an impulsive move up from here for a C to complete the nested 2 at around the 1440 area before we fall off the cliff towards 1000.
ReplyDeletewe break the big wedgie and the drop will be more extreme and the bounce muted...
Deletehttp://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=2&mn=0&dy=0&id=p88570449328&a=275363833
Sid at ew predictions says you may be right but less so with the technical damage that has been done so far...
Deletehttp://elliottwavepredictions.com/http:/elliottwavepredictions.com/sp500/elliott-wave-analysis-sp500-spx-sid-elliottwavepredictionscom-33/
The mid bollinger band for a bounce seems doable.
Deletescott, that is the wedge I am talking about that will take the market towards 1000, but we bounce first for the nested 2. The wave count you linked doesn't work if you look at ES, the very last pink 2 on that chart made a higher high in ES, invalidating that interpretation. That was what I was looking for, but the price forced a change, this is now an expanded flat and we need C of the last leg of the combination for the nested 2. Since 1442 would be the .618 retrace (based on cash), that general area is what I am targeting. Then we finally collapse in a nested 3rd for some serious downside.
DeleteYou may be right - I'll ride your bus to beartown if it ends up in the same place! lol
DeleteKid - this chart more clearly shows my thoughts but as I said I'll get on another bus if mine gets a flat!
Deletehttp://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=9&dy=0&id=p36033715901&a=282034257&listNum=2
scott: The length that this correction has dragged on for certainly could have caused me to miss something and we could continue down from here, I certainly thought we would crash directly all the way up until yesterday, but the count I am seeing very surprisingly requires a 5 wave rally. It all got messed up because of that tiny little slight new high. The key to see whether it is playing out is to watch today's low. If 1388.14 is taken out, my interpretation will need to be re-evaluated. The power of this decline certainly hurts my confidence in a rally, but I have to go with the form I am seeing until it transforms into something else. I wouldn't be very surprised to be wrong here, just gotta go with the highest probability and accept you can't win 'em all.
Deletethe count is surely tricky because of that high the other day.
DeleteI did go to cash just now with 80% of my stuff.
It feels like a bounce - reassess the waves tomorrow!
Thanks for the input. Very helpful to be able to bounce ideas around here and have KS as a resource.
http://stockcharts.com/h-sc/ui?s=$NYA&p=D&yr=2&mn=5&dy=0&id=p23738077133&a=274945755
ReplyDeleteI'm pretty convinced that we got a wave 4 bounce intraday and that wave 5 of 1 will finish down into next week.
ReplyDeleteI have a cycle date of the 14th that matches a bunch of stuff including the release of the first round of MBS results...
I think wave 2 bounce then. we shall see!
AAPL now trading below (all important) S1-level ($560.54). Next stop is its 250d SMA @ $ 550 and below that S2 at $528... AAPL has only broken through its 200d SMA once over the past (at least) 3 years and then bounced of it's 250d SMA; so watch that level carefully....
ReplyDeletegold bugs are nutty! GDX
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=0&mn=8&dy=0&id=p74772337798&listNum=1&a=275428000
Keystone, $UTIL has now totally fallen off a cliff; testing April's lows. How does that bode for the markets? seems like rth is the only one holding it all together with SOX and XLF also down
ReplyDeletenever mind, all are below their key bull-levels as you identified. I expect more selling to come... short again from SPX 1400. Seems like a great risk:reward level.
DeleteFunny APPL is getting the blame, and the doomsday warning, meanwhile RIMM is down 9 % , google down, nokia as well. Watch the RSI on the weekly one year we are in the 30's.
ReplyDeleteGreat comments all. Lots of wild action it is hard to keep upwith all the theatrics. The 1388 is an important area with the 10-month MA but it may not be the short term bottom. The indicators on the 30-minute, 1-hour and 2-hour charts hint that the test of 1388 is required again, at that time price will decide to either bounce or die. If we get that test that may provide 1388 as the bounce point.
ReplyDeleteRTH 44.38 and XLF 15.73 will tell you the answer. ECB rate decision is within one hour as well, this message is typed on Thursday morning 6:40 EST, bulls need to move XLF above 15.73 and that will tell you the rally is here. The bears need the RTH under 44.38 and that will tell you plenty more market downside is ahead. There fore, watch the JWM, KSS, and to some extent DIS, earnings since they will move the RTH and tell you a lot about today's (Thursday) direction.
Profits and losses are all part of trading. Each trade is only a battle. The large war lasts all year long. Keystone can tell you stories all day long about his losing trades and even many of the current shorts held are underwater due to early entries. The battles occur every day and week over time, some you win some you lose, the war is what you want to win. Never get too excited about great profits, and never get too downbeat over bad losses, they are only trades, battles, some are up some are down, emotion is a killer in trading, always best to seek the zen in the middle, and focus on the overall war (moving the entire diversified investment portfolio up over time).
On Apple, it is important since it accounts for 20% of the Nasdaq and about 4 orr 5% of the S&P 500. That is big-time. Ther is likely no more-owned stock by traders in the universe. Every fund owns it. Thus, when it is going up during 2012, the wine is flowing like water, everyone is singing a happy tune, as it recoils, and the products are not as revolutionary, they are developing into size or color changes rather than anything that knocks your socks off, the path down is painful. Funds have restrictions on how much of a certain stock can be owned, all kinds of stuff will come into play when price drops. We watched the top form in Apple this year, Keystone described it all as it occurred, even played the short side, the negative divergence is always the key.
ReplyDeleteBut be careful with AAPL. It will bounce but that is probably an opportunity to short not go long. 520-ish is very doable and the 400's are probably in store moving foward. There are lots of fish in the sea, take some of those juicy profits, at lower cap gains rates before these taxes go up, and branch out with a couple different plays to diversify. Apple was fun but nothing lasts forever.