VIX teased the 15.79 level twice so far but at 15.84, the bears have a one nickel advantage. RTH is over 45 remaining firmly bullish. Ditto XLF. The SPX placed a LOD at 1425.96 but this only lasted a few minutes before recovering. The bears need to keep the SPX under 1427 for at least ten or more minutes to create a downside acceleration. The TRIN is 0.69, uber bullish, so this favors some market buoyancy in the minutes ahead. The 8 MA is curling down and converging on the 34 MA on the 30-minute chart but remains bullish for now. Thus, status quo sideways action so far. The Business Inventories were in line at 10 AM so the data turned out to be a yawner with the SPX drifting higher after the release.
Keystone took profits on the BBY long trade, exiting the position on this morning's hype about a buyout. Also tried to short RTH but no shares were available. Also bot more FAZ adding to this long trade.
Note Added 12/13/12 at 11:32 AM: Speaker Boehner is speaking now, laying an egg, and the markets are drifting lower. Boehner is stressing the need for spending cuts. Boehner utters a classic and hilarious line, "Ifs, and ands, and buts are like candy and nuts, if that were the case everyday would be Christmas." The Nasdaq experienced technical problems again today causing trades to be cancelled. This behavior in the exchanges continues to ratchet up the worries and belief that another flash crash will occur, it is only a matter of when. The VIX jumps up and over 16, now at 16.21, so the bears are flexing their muscles over this move. The 8 MA stabbed down thru the 34 MA on the SPX 30-minute chart so market bearishness is forecasted for the hours and days ahead. The SPX 1427 failed, as described this morning, so a downside acceleration to 1423 occurs thus far. SPX S/R is 1429, 1426.63, 1424, 1422, 1419.69 (20-week MA), 1419, 1416, 1415.83 (50-day MA), 1413, and 1409. Note the strong confluence of support at 1419. RTH and XLF sectors remain elevated, TRIN is strongly bullish at 0.75, and the Nasdaq is moving coincidentally down with the SPX (tech is not leading to the downside, or upside, it is moving with the SPX) so the bears do not have a lot of downside oomph. AAPL is negative. Tonight is the new moon and markets are typically weak in front of the new moon.
Note Added 12/13/12 at 12:06 PM: Leader Reid steps up to the plate to refute Speaker Boehner's remarks but the video feed is bad and his words are lost, however, everyone already knows he would have said everything is the republican's fault. The SPX moves sideways at the lows today. Pay attention to the LOD at 1423.30. The beat goes on.
Note Added 12/13/12 at 12:46 PM: The LOD folded like a cheap suit and the SPX is now testing the 1419 support. COMPQ is down -0.78% and the SPX is down -0.60%, so tech is now leading the downside which encourages the bears. TRIN is now back to neutral at 1.00. Volatility climbs higher. XLF is 16.07 remaining above the 15.77 bull-bear line. RTH is 44.80 remaining above the 44.35 bull-bear line, although well off the highs. No wonder they would not give good ole Keystone the shares to short. The bulls must keep the XLF and RTH in their camp or the SPX will be headed far lower. S&P rating agency lowers the U.K. rating to a negative outlook from stable.
Note Added 12/13/12 at 2:15 PM: The SPX lost 1419 support, the 20-week MA failed, price now attacks the sturdy 1416 support. RTH is 44.78 and XLF is 16.01. Both of these characters may set up for dramatic moves as today finishes and tomorrow plays out.
Note Added 12/13/12 at 2:58 PM: The SPX bounced directly off of support at 1416.00, thus the floor is 1416 and the ceiling is 1419 for the last hour and one-half. Bulls win above 1419, bears win below 1416. The 50-day MA is 1415.71 and price was within 29 cents, close enough to call it a back test. Thus, it is important to see whether price bounces higher off the 50-day springboard, or, if price collapses down thru to lead to more bearish days ahead. The fight at the 50-day MA can easily continue thru tomorrow. The bulls cannot make any progress higher since the VIX is above 15.79. The bears cannot make any progress lower since the RTH is above 44.35 and the XLF is above 15.77. One of these will flinch. If the XLF and RTH remain bullish thru the close that would hint at a positive day tomorrow, perhaps allowing price to move higher again for a reset. The -1000 TICK at 2 PM identifies today's low for the markets. Tech leads to the downside today. The 10-year yield is 1.73%.
Note Added 12/13/12 at 3:41 PM: Big spike higher in the markets due to news that President Obama and Speaker Boehner will talk at the Whitehouse at 5 PM EST. The SPX jumps up and out of the 1416-1419 range, now printing 1422. The TICK machine hits +1100. Big shots must have needed a pop in the markets to exit long positions. Keystone bot DRYS opening a new long position.
New moon was at 3:30 EST this morning http://eclipse.gsfc.nasa.gov/phase/phase2001est.html. I usually give a couple days for a turn which adds to my probabilities of going short at Fri close.
ReplyDeleteso far the market doesn't like QE-3D (D for double, since OT will expire and QE3 bumped up from $40 to $85b... that's $1,020,000,000 per year my friends and it won't create a single job, only an inflated market...) comes with glasses and popcorn!
ReplyDeleteAnyway, either this is a 4th wave of a larger C wave that targets 1450s, with this current wave targeting 1415-1420. Or this is a wave ii of larger III wave. The retrace will then be deeper; probably to 1400-1405. Bulls have to defend 1400 (1398 to be exact at any cost). A close below will be very bearish. But until then the bears have nothing, but setting up the market for another rally.
There was heavy neg. div. on the RSI (5) AND (14) as well as MACD and SSTOs on the 30min and 60min time frames, hence the current drop. But there is no neg. div. on the daily yet. Not until that occurs will this uptrend change direction.
ps: I forgot to mention that ever since the Nov. 16 low on the 30min chart price has either bounced of the 150min sma or the 200min sma. Currently they are at 1415 and 1410, right in the target zone for the wave 4 or wave ii scenario.
ReplyDeleteYep Marlowe, 3:42 AM EST, so the weak market affects were reflected in yesterday's afternoon selloff. The other interesting thing about the new moons, since it is the darkest time of the month, there is heightened event risk for military actions to occur, since the side with the superior infrared technology would take advantage of the extreme darkness. So this would be on the table for the next few hours.
ReplyDeletesomething hot!
ReplyDeletehttp://www.fxstreet.com/news/forex-news/article.aspx?storyid=d47a4ee6-f299-43e1-bfda-6fdc2b4b6650
KS how's that affecting the stock markets ? i'm sure that must be a relation according to the bond- stock market relation ...
V.
With the Fed and all this fiscal cliff drama, things need to play out. But note the 10-year how it ran over 1.70% yesterday and today a few ticks higher. So higher yields mean lower bond prices. Thus, money is moving out of bonds on all the bubble talk, but interestingly, the money is not flowing into stocks as is the typical ebb and flow. Keystone maintains a deflationary leaning moving forward, definitely in the minority on Wall Street, so the note and bond yields will likely be flat for a few more months and years, before the inflation and hyper inflation hits, maybe in 2015-2018. So, perhaps as the equity markets sell off in the days and weeks time frame ahead, money will flow back into bonds, which will send yields lower again, that would be the current call despite the jump in yields seen this week.
DeleteDid keybot short?
ReplyDeleteNope Alex, the quant likely needs to see RTH 44.35 or XLF 15.77, either one would do, so keep an eye on them.
Deleteanother HFT hick up: http://www.businessweek.com/news/2012-12-13/nasdaq-cancels-some-trades-in-nine-u-dot-s-dot-stocks-over-one-minute
ReplyDeleteNasdaq Cancels Some Trades in Goldman, Sprint After Error
Nasdaq Stock Market canceled some trades in nine U.S. stocks, such as Goldman Sachs Group Inc., Hewlett-Packard Co. (HPQ) and Sprint Nextel Corp. (S), that occurred more than 10 percent away from yesterday’s close.
The errors took place in the minute before the regular opening of trading, the Nasdaq OMX Group Inc. unit said on its website. Goldman Sachs fell as much as 20 percent to $94.01 and Hewlett-Packard plunged 79 percent to $3.06 before the trades were broken. Sprint touched $2.82, a 50 percent decline, prior to the Nasdaq’s decision to reverse those transactions.
“When I first saw they were canceling trades, my first reaction was: here we go again,” Larry Peruzzi, senior equity trader at Cabrera Capital Markets LLC in Boston, wrote in an e- mail. “I would not be happy if these erroneous trades triggered a stop-loss order if I had one on the books. My concern here is the frequency these errors are happening.”
Concern about mistakes in electronic trading has grown this year after a software error on Aug. 1 caused Knight Capital Group Inc. (KCG) to lose $457 million, almost bankrupting one of the largest U.S. market makers. Nasdaq accidentally halted the start of trading in Whitehorse Finance Inc. (WHF) last week and flubbed Facebook Inc.’s initial public offering in May when its auction to set the first traded price for the shares failed.
Wayne Lee, a spokesman for Nasdaq OMX, declined to comment beyond the status updates on the company’s website. Shares of the New York-based company slipped 0.3 percent to $24.23 as of 12:23 p.m. in New York.
‘Clearly Erroneous’
The trades were canceled under Nasdaq’s “clearly erroneous transaction” rule, which covers prints that are “substantially inconsistent with the market price at the time of execution,” according to its statement.
For Goldman Sachs (GS), there were 12 trades totaling 1,200 shares at $94.01 as well as one trade for 100 shares at $94.31 and a 100-share trade at $97.36, according to data compiled by Bloomberg. All occurred in the second before the 9:30 a.m. open of exchanges in New York and were broken. Trades occurring during the same second as low as $109.87, 7 percent below yesterday’s close, were not canceled.
‘Big Deal’
Transactions in Citigroup Inc. (C) at or below $33.77, Hewlett- Packard from $13.07, AT&T Inc. (T) from $31.04, Western Union Co. from $11.90, Wells Fargo & Co. (WFC) from $30.15, Kroger Co. (KR) from $23.93, Goldman Sachs from $106.28 and Sprint from $5.09 and in Ventas Inc. (VTR) at or above $71.58, were voided, the Nasdaq OMX unit said on its website.
“When something like this happens, it can be a big deal for traders in that if they were on the other side of these trades and traded out of those positions, they would be exposed to risk they had not foreseen,” Mark Turner, head of U.S. sales trading at New York-based Instinet Inc., wrote in an e-mail. “In these challenging times, consistency in regulation and governance is paramount.”
The start of trading in Whitehorse’s IPO was delayed last week after Nasdaq OMX mistakenly halted the collection of orders prior to the open, a person familiar with the situation said. The error came after a Nasdaq OMX employee, intending to push back the start time of quoting in the company’s stock, inadvertently halted it, according to the person.
The U.S. Securities and Exchange Commission is reviewing Nasdaq’s plan to pay brokers $62 million for losses related to the Facebook IPO in May. The exchange’s so-called opening cross, which sets the first traded price for Facebook, failed to operate properly on May 18. The failure to disseminate confirmations about orders submitted into that opening cross for more than two hours led to investor and brokerage confusion about transactions and prevented them from taking actions to reduce their risks.
....
The markets appear to have some wobbly knees holding up a lot of weight overhead. When will the knees buckle and give way? The 'glitches' are occurring in exchanges all around the world, no one exchange is immune, they all have had problems, so now they are all painted with the same brush and all sitting in the same boat, not knowing if there is a waterfall up ahead, or not. As Tiny Tim says in this festive holiday season, "God bless us everyone."
DeleteYup, the day of reconning will come, just not yet IMHO.
DeleteKS, I am long HPQ since $14. I know you've been eyeing it too and not sure if you're long HPQ too, but I'd love to see your take on it. It's been on a steady up since Nov 20, and I wish I'd paid better attention to that enormous Volume spike that day, indicating smart money was loading up the boat IMHO!
The current plays are always listed on the Positions and Picks page, the page needs updated which will likely occur this evening. You may have missed when HPQ was highlighted with its positive divergence, it was played long and exited after the move higher started. Probably will not enter it again.
DeleteIt has had a heck of a move. Maybe will come back to the 50-day MA at 13.74, the 20-day is angling up to there as well. Look a the big drop in October, price is at an important inflection now. If profitable, probably best to take the money and git outta Dodge. It should continue higher on an intermediate and longer term basis so it depends on time frame. Probably back down to 13.5-ish, but likely up to 16-17 by springtime, perhaps early 2013. As always, it always depends on time frames and many variables.
Thanks for your insights KS! This is a really long-term investment idea. Think many months to a year or so. I am in the green now and may add some on a dip.
DeletePrice hit "my" wave 4 target of 1415-1420 almost to the dollar. Note 1416 is also exactly the 150sma on the 30min chart, which has held price in check when it dropped to 1398 a week ago. Since it's most likely a wave 4, I am not surprised to see Keybot remaining long, as more upside is likely ahead (~ 30 to possibly 45 points...). I bought more SSO at $59.80
ReplyDelete@ KS, Arnie, Shane, all:
ReplyDeletei'v observed some technical thing and I want to ask your opinion on it:
1. on spx 60 min chart is it true that we have an evening star formed right during the Ben Bernanke press conf. - (12.dec.12-hours:12,13,14.00 eastern time) ? I think that was the case and now it's confirming.
2. if 1. is true, take a look at spx 1 day chart - 11/12/13 dec.12 ....what is forming there is also an evening star? If that's the case what's the time span that could this potential signal be effective? 2-3 days, 1 week, 1 month?
3. Another question: assuming that the most important discussion on fiscal cliff will be in the summer of 2013 and now a " kick the can on the road" solution will be applied around Christmas, how could the markets react ? Is it included in their actual price this kind of resolution (kick the can on Christmas time'2012 + the real stuff thrown in the summer of 2013) or not?
Thank you,
V.
@ all:
Deleteoh, and one more thing: on the daily chart an inverted head and shoulders is played right now - left shoulder (29/30 oct 2012) / head (15/15. nov.12) and right shoulder now under construction until 1398/1405 spx points.
What are the % chances of not being an IHS and the line that creates the leftpart of the right shoulder to be in fact a down wave that might reach and tresspass 1345 level and go further down to 12xx?
Thank you,
V.
V. I try to tune out the news these days as much as possible and just trade the price action based on trendlines, S/R, MAs etc. I am not too fond of HS, IHS patterns as trade setups, I find them to be invalid too often.
DeleteToday was a classic example, where EWT suggested a 1416.25 low for wave 4, we hit 1416... Beautiful. Price hit at that exact same level the 150min SMA on the 30min timescale, as well as the 50d SMA on the daily scale, as well as the lower trendline of the rising trendchannel that has held prices for almost a month now.
It all came together at that exact spot. The market, IMHO, doesn't trade just randomly, it moves (Very) purposefully. There are no coincidences (baring major external news such as wars, natural disasters etc), and this certainly wasn't either. It all comes together!
@ Arnie:
Deletei see...
so, your target is 1415-1420 + 30/45 points in a fifth wave... that would be 1445/1460 - 1450-1465 ....
V.
ideally yes. let me be more exact:
Deletewave a was from 1343 to 1409 (63 points)
wave b was from 1409 to 1385 (24 points)
wave c is either 0.618, 1.000, or 1.318x wave a. which would thus target:
1385 + 0.618x63 = 1424
1385 + 1.000x63 = 1448
1385 + 1.318x63 = 1468
Given that we've already passed 1424 (current top at 1438), that scenario isn't playing out; what's left is 1448 or 1468.
This is all under the premise that this is indeed an abc rally. The overlapping nature of the waves, suggest that possibility is the most likely. So this scenario is ST bullish, but LT bearish, since once this corrective abc pattern is complete we'll get another impulse down, probably to low 1300s high 1200s...
Alternatively we're currently in a ii down of III up. This ii down would target the low 1400s. That scenario is very bullish as it would target mid 1500s...
@ Arnie: Thank you,
DeleteTechnically straight to the point and accurate.
V.
V., the 3 peaks a a domed house pattern appears to be playing out near-perfectly, with this last pop up yesterday being point 27. If this pattern holds, we could see a waterfall down very shortly. No guarantees this pattern holds, but it's something to consider because it matches the ideal so closely.
ReplyDeleteThank you all for answers.
ReplyDeleteNow it's quite late (almost midnight, here where I live- south-eastern Europe) I will read all the replies tomorrow. It would be useful for us all to share more opinions and info.
Thanls,
V.
Arnie do you have a website ? I'm learning a lot from keystone whom I appreciate but would like to learn more from you too. Thank you
ReplyDeleteI think Arnie's scenario is accurate, but I'm not sure which way it will play out. The market wants to see 1468, but we could see some downside first. I've chosen to strangle the S&P and the Nasdaq. Both scenarios are likely to play out.
ReplyDelete