The red circle on the weekly chart shows the 50-week MA failure today, this is a big deal but the markets reacted with a yawn. The prior red circles show previous ruptures of the 50-week MA. Summer 2010 the failure forced Chairman Bernanke to announce QE2 to stop the deflationary spiral occurring. The August 2011 waterfall crash resulted in the Fed pumping more Operation Twist talk and the ECB announcing the LTRO1 and 2 quantitative easing programs that saved the markets this time. The broad indexes topped in April this year. We watched the top form and roll over as Keystone described the progress during March-May. But the drop in the broad indexes took place without the utilities sector rolling over. Look at how earlier this year traders flocked to dividend stocks and kept pumping utes higher. Keystone highlighted this at the time and forecasted the markets to return to their highs moving forward since the utilities did not lead lower. Lo and behold, the broad indexes recovered with the SPX printing the 1476 intraday high.
Interesingly, the utes topped as August began. Keystone has pointed this out every step of the way. Since utilities rolled over first, three months ago, and have led the way down, this is extremely ominous for the broad indexes typically forecasting a large drop for the markets ahead. Here we are now with the UTIL charts above in horrible shape and an H&S pattern in progress. Keystone looks back 15-weeks ago to compare that close to the current weekly close. As long as the trend is up, the market bulls are happy. Keystone highlighted how this trend changed over the last month and the weekly trend is now down. This is bearish but a second part to the equation is if the 50-week MA fails. This firmly locks in serious market bearishness. Thus, Keystone was excited to see some wild downside action, but alas, the trap-door was stuck. This is the back drop of the ongoing action. Projection is lower prices for UTIL ultimately moving thru the 410-440 sideways channel in the weeks and months ahead. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
KS, saw an article on Yahoo! Finance to go long on emerging markets. What do you think of EEM? Are the daily and weekly charts long and strong or weak and bleak? Could this also be a case of pump and dump? Thanks.
ReplyDeleteWell, as always, you have to make that decision yourself about EEM. As a rule, every article and comment you will see in the media is someone talking their own book. On weekly chart look at the sideways symmetrical triangle over the last 18 months. Pric broke thru the top side but is only able to move sideways. So this looks like sideways action ahead on a weekly basis. Daily is moving sideways thru the 40.75-42.3 channel, use the 20-day MA at 41.55 as a guide for bullishness versus bearishness. So price is now 41.80 which would be on the bullish side. It is not inspiring. The article may be referencing EEM since China's new Premier starts to take the reins on Thursday and there may be anticipation that they will pump to start out strongly. FXI is negatively diverged,a potential short. FXP is positively diverged a potential long. FXP probably will bounce but then back down for lower low then perhaps longer term up.
ReplyDeleteks, what do you mean with trap door? that bagholders bought today and will wake up to a big red candle tomorrow? do you think qe3 is holding things up? given that ups is going to where the brown things end up... and util is falling off a cliff this market is ripe for the picking. seems like election polls are a tie... dunno if i wanna be long now (hence i am short...hehehehe)
ReplyDeleteStudy the UTIL weekly chart above closely, very bad things happen to markets once UTIL loses the 50-week MA, and utes have also led the broad markets lower for the last three months, very ominous. The election is the wild card so markets are on egg shells.
Deleteps: forgot to mention, but today's bounce was over the lower rising wedge line that connects the 2011 oct low with the 2012 june low. currently it is at 1408... the upper wedge line connects the 2011 may high with the 2012 april high and the 2012 sept, oct highs did a small overthrow. so currently prise have been hanging around at the lower rising wedge... if it breaks through lower than -per definition - price will go back to where the wedge started: ~1075... that's for starters... i think this wedge line may have caused the spx to stay afloat...
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