Short and sweet today. Watch VIX 15.79, XLF 15.77 and RTH 44.35. The VIX is contributing bearishly to markets, the XLF and RTH are contributing bullishly. Thus, the bulls need to move the VIX under 15.79 so they can regain mojo. The bears need to push either the XLF under 15.77 or the RTH under 44.35 to accelerate the market selling and likely push down thru the 200 EMA at 1411 on the 60-minute chart as discussed this morning in the prior post. Also watch the 50-day MA at 1415.73.
For the SPX starting at 1419, the bulls need to punch up thru 1431 to accelerate the upside. The bears need to push under the strong 1416 support to accelerate the downside. A move thru 1417-1430 is sideways action. CPI data hits in a few minutes. The fiscal cliff drama continues today. If the XLF or RTH fails as described above, and the SPX is under 1416 and dropping, Keybot the Quant will flip short. If the XLF and RTH remain in the bull camp all day long, then Keybot will likely remain long.
Note Added 12/14/12 at 12:03 PM: The 1416 support held all morning long, giving way a short time ago to print the 1413.44 LOD but now the price runs higher again back kissing the 1416 that perhaps becomes resistance now. The SPX is attacking the 50-day MA at 1415.14. The VIX remains in the bear camp and RTH and XLF in the bull camp so this promotes the sideways malaise in the markets. The TRIN is 0.90, under 1.00 favoring the bulls even though the indexes are negative. AAPL drops towards the 505 low after UBS cuts its rating. Remember the AAPL weekly chart with the long-term H&S pattern and 520 neckline. Apple is in trouble right now and has to start moving up fast or it will lose its grasp with the 470's on their way. AAPL LOD is 507.66. The Apple LOD on 11/16/12 is 505.75 so this is where the real drama would begin in the markets today should the bears decide to poke down thru 505.75. Apple dropped like a stone today and created an island at 516 and lower, so obviously 516 is important resistance now.
Note Added 12/14/12 at 12:37 PM: The SPX regains 1416 and uses it as support. Some Friday market buoyancy may creep in as the afternoon moves along. The euro is 1.3170 testing the high from September right now, this is very important. The upper BB is 1.3183 also adding to the drama. Very simply, the market bulls win big if the euro moves higher thru 1.3190 and onward to 1.32. If the euro runs out of gas here and reverses, dropping down thru 1.3160 and lower, the bears win big since down euro = down equities. This will likely need to play out thru Monday. AAPL is keeping its head above water right now but it still has a long way to swim to shore today.
Note Added 12/14/12 at 3:08 PM: The SPX finally receives the downside acceleration under 1416, now printing 1412, under the 50-day MA and attacking the 200 EMA on the 60-minute chart at 1411.41. The euro fell under 1.3160 so this helps the bears. The VIX is over 17. XLF and RTH remain elevated, however. SPX 1412.06, 1411.88, ..... well, bears, do you got what it takes? A drop thru the 200 EMA changes things and creates much stronger bearishness moving forward. Apple just tested 506 punching out a lower low today at 506.40 only 65 cents away from the low in November. The tension mounts. Looks like some drama into the close after a long sleepy day.
Note Added 12/14/12 at 3:38 PM: The SPX bounced off the 200 EMA. The XLF and RTH remain elevated so the bears do not have the juice today. The fight into the close should revolve around the 50-day MA at 1415.12. The SPX is now printing 1415.07.
Note Added 12/14/12 at 3:47 PM: Keystone took profits on the DRYS long trade exiting the position. Will look to reenter but that kind of jump could not be passed up to lock in profits. Also bot EUO opening a new long position which is short the euro. Also selling EWG opening up a new short position which shorts Germany.
Note Added 12/14/12 at 3:56 PM: Apple held on. The SPX is under the 50-day MA but above the 200 EMA reflecting the ongoing indecision and mixed signals. The 10-year yield moved lower to 1.70%. VIX at or over 17. SPX 1413 support is important. Euro is 1.3155. Keystone bot more EUO. Traders finish up the weekend only to run home to practice their coin-flipping to prepare for next week. Speaker Boehner is in Ohio with his feet up on the ottoman next to the Christmas tree. The president is busy planning activities for the Hawaii vacation only days away. What fiscal cliff? They do not appear worried. Don't worry, be happy is the trader mentality, complacency rules.
Apple is poised to open near or below your $520 "all-Hades-breaks-loose" target. That would lead to 480 under your 20-80 rule. We'll see if it sticks, but shouldn't there be some Friday afternoon buoyancy as the shorts cover before the weekend? Just in case something miraculous happens in D.C.?
ReplyDeleteAll you say is correct and right on target. The AAPL low in November was 505.75 so that would be key, if that is lost, the wheels in Apple and the market may collapse. If 505.75 holds, both sides will call a truce and move into the weekend.
DeleteHY KS,
ReplyDeletehow's the CPC right now?
Thanks,
V.
Same old stuff, 0.84, drifting lower thru the 0.8's, liking the complacency side of things. The majority of traders fully expect a happy ending very soon with the fiscal cliff, that is what the sentiment says. They see no reason to buy downside protection and are not concerned about a big sell off.
DeleteThanks KS,
DeleteYou know what's funny?
Nobody's thinking that the administrative structure uses the people to live on and on as one thinker (Hayek) once said ... only apparently the state works for the people ...
..and the administrative structure might agree a higher level of taxes despite the media circus ... and nobody is thinking at that :) ...
V.
p.s. I appreciate a lot if you will post some warning next week when CPC will fall below the warning line (a remember that it was at 0,7 or at 0,6...)
thank you and i really appreciate your work and dedication :).
V.
It may not go in that direction. If the markets violently sell off, say Apple would now collapse under 505 and the markets turn ugly, the SPX drops under 1400, etc..., the CPC will head up. Thus, as the markets sell off the idea would be to wait until the CPC starts printing above 1.20 to bring on longs and pare back shorts. If the CPC heads down from here that would be with the markets drifting higher, SPX in the 1430's and 1440's, then the 0.7 and 0.8 would say there is too much complacency, where a market top would occur where shorts may be considered. So two paths are possible.
DeleteI've begun to notice some of the data issues that you were referring to KS. Certainly, a time to be Flash Crash wary.
ReplyDeleteIt's troubling really. It seems inevitable.
Shane,
Deletei think a new 1987 crash is right next to us
that's my opinion ... all the elements are starting to get into the scene one by one, piece by piece ...
V.
it's like all just freezed .... no news, no nothing ? have the markets died ? :D?
ReplyDeleteCongress is delaying their Holiday break, which suggest a little bit of a commitment to negotiating. Obama and Boehner's proposals are mirror opposites of each other. They need to draw a line down the middle, meet at the center, and call it 'done'. No one's going to get everything they want. Taxes are going up. We know that. Obama's going to need to agree to some spending cuts. Boehner needs to be specific about where the cuts are coming from. It'll be a patch at best, but it will do.
ReplyDeleteShane, what you say makes sense but the Demos may want to go over the cliff to press their perceived advantage i.e. "mandate." The Repubs may let them go over the cliff, hoping it backfires and the perceived mandate is over-rated.
ReplyDeleteSentiment is very bullish, meaning most players assume a deal will be reached. Since sentiment is already high, the upside of a deal may be less than expected. meanwhile, insiders are selling like no tomorrow.
"No deal" would align nicely with the 3 peaks and a dome pattern which presages a cascade decline from here. Also worth noting is how the last rally stopped at trendlines. AAPL is laying an egg in China, that $503 line in the sand may not hold....
I think you're correct Charles. While I see a deal as being reachable, I think Obama overestimates his hand. On the short term, Republicans will take more blame for going over the cliff, but that will be short-lived. In the long run, the President owns the economy. Obama thinks that Boehner's going to blink ---and he's not going to blink at nothing. Now, they just need to say "okay, what can we live with?" Find that, meet there, and then they can each go back to their people can complain to no end about they got cornered into such a raw deal.
ReplyDeleteVIX isn't budging. RTH isn't budging. AAPL stuck in a tight little range. EURO's just off its high. Obama isn't budging. Boehner isn't budging. We're all gonna set up camp here until something breaks.
ReplyDeleteIt does have the fell that all sides want to go home for the weekend and think things over but if Apple fails 505 and the SPX drops thru the 1411 (200 EMA on the 60-minute chart), things should get ugly fast and may drag XLF and RTH into the bear camp accelerating the ugly. It is an interesting finish today.
ReplyDeleteWe are 25 S&P pts down from the top with at least another 30 to go - deal or no deal.
ReplyDeleteThe Bot is officially long, but is anyone here really long ? , when the 8sma is below the 34 as of noon Thursday, seems the "BOT" is a little slow to change, incurring losses B4 and after he finally changes . Can adjustments be made to limit the loss during these transition days? Greatly enjoy your blog KS and humor!!!
DeletePlbro, you have to do some homework, Keybot the Quant is not programmed to catch the exact market tops and bottoms. Keybot remains ahead of the SPX Benchmark this year. It does not matter if the markets are gong a few handles in the opposite direction, a percent or two loss is of no consequence. RTH and XLF is what you want to watch in reference to Keybot. The 8 and 34 MA cross on the 30-minute is simply a short-term trading indicator, most useful for day traders or VST trades. When referencing long or short, time frames are always important since professional traders are constantly exposed to both sides targeting different time frames and maintaining diversification. If bullish, try to look at it as being 70% bullish and 30% bearish, if bearish, try to look at it as being 70% bearish and 30% bullish, constant exposure to both sides must be maintained, especially in these treacherous sideways markets the last few months.
Delete"....Traders finish up the weekend only to run home to practice their coin-flipping to prepare for next week. .."
ReplyDeleteOMG! ROFLOL!!! I am still laughing. Where do u come up with this shiz!! ok, I am still laughing....
thank you for the updates and the laughs.
Going to practice my coin flipping now....OMG...i can't even type that without laughing.....
practice coin flipping.....OH man! that is some funny!!
Keystone has a coin that has heads on both sides so he will bring that to the trading floor next week.
ReplyDelete