Copper is key today, watch JJC 45.36. The broad indexes will move higher if JJC moves above 45.36. Markets remain weak if JJC remains under 45.36. Copper is flat this morning oscillating on both the positive and negative sides so JJC 45.36 will provide plenty of drama today. The 200 EMA on the 60-minute chart is 1419 which would lock in a move to the low 1400's and perhaps down thru 1400 if it fails. The 1419 is also strong support so the importance of this level cannot be understated. In addition, GTX 4975 and RTH 43.65 are important, both are creating market negativity. Also, SOX 377.50 and XLF 15.85, both are creating market bullishness. Any change to these parameters will send the broad indexes in that respective direction.
For the SPX today starting at 1419, the bulls need to touch 1429.50 to create an upside acceleration. The bears need to see 1416.50 to create a downside acceleration. If the SPX starts drifting under 1419, the breach of 1416.50 would be very likely. A move thru 1417-1429 is sideways action. The euro remains buoyant at 1.3277. The 10-year yield is 1.77%. New Home Sales and Consumer Confidence are released at 10 AM and will create a market pivot point. Oil Inventories are at 11 AM, delayed one day due to the Christmas holiday. The politicians are back in town so hang on to your hat, and wallet. The fiscal cliff Kabuki Theatre begins anew. Traders continue to expect a deal.
Note Added 12/27/12 at 10:34 AM: The SPX is dropping like a stone after the very weak Consumer Confidence number and Harry 'Happy Talk' and 'the republicans are holding America hostage' Reid saying that "it looks like that is where we are headed." (over the fiscal cliff) The critical 1419 collapsed. The SPX drops under the 200 EMA on the 60-minute chart signaling bearish markets for the hours, days, perhaps a couple or few weeks ahead. Bad things will happen to markets now. The bulls must find a way to immediately push the SPX back above 1420, otherwise, the bulls will fold like a cheap suit. Keystone's SPX:VIX Ratio is 69.36 nearing the 68 bull-bear line that will firmly lock in strong market bearishness moving forward. The bulls must prevent SPX:VIX from failing under 68. The VIX is now over 20 at 20.36. The SPX may want to back kiss 1419 at some point forward. The euro is dropping to 1.3228. The 10-year yield drops to 1.74%, check that, now 1.72%. See how yield moves lower as the equities markets move lower. AAPL is down four bucks to 508. TRIN is 1.56 showing very orderly selling today, no panic at all, the type of selling that can continue indefinitely. The uber low -1200 TICK identifies today's low at 10:20 AM with a 1408 handle on the SPX. Watch copper, JJC 45.36.
Note Added 12/27/12 at 10:55 AM: The SPX sits between 1409 support and 1413 resistance. Keystone added more BBY; it will be interesting to see if 11.20 holds, or not.
Note Added 12/27/12 at 12:44 PM: The SPX fell thru 1409, 1406 and 1403 support, printing a LOD at 1401.80. Keystone's SPX:VIX Ratio Indicator fell thru 68 signaling market bearishness ahead, also a triple digit down day for the Dow which is currently occurring, and the markets are on notice that a crash can potentially occur. Watch to see if the ratio remains under 68 thru the close. The VIX is 20.85 approaching 21. The euro is 1.3207 on the verge of failing the important 1.32 psychological level. The semiconductors, SOX, broke down, the SOX fell thru 377.50 which now creates further market bearishness. Copper is resilient, the JJC is trying to hang on to 45.36, if this fails, and price collapses, the markets will take another leg lower, the SPX will fall thru the 1400 psychological level. The Dow Industrials dropped under 13K. The 10-year is 1.71%.
Note Added 12/27/12 at 1:03 PM: The SPX:VIX Ratio Indicator jumps back above 68 nullifying the bearish signals described in the previous paragraph; the bulls are back in biz. Keep watching the SPX:VIX 68 level. The SPX is at 1407 between 1406 support and 1409 resistance. The 50-day MA is 1412.60. The 10-month MA is 1394.04. The 200-day MA is 1390.13. The 12-month MA is 1384.88 which is the cliff edge, or waterfall, confirming a cyclical bear market ahead. The 50-week MA is 1384.12.
Note Added 12/27/12 at 1:19 PM: The SPX:VIX ratio is up over 70. JJC is at 45.40. Semiconductors are staging a comeback but will help maintain market weakness if SOX remains under 377.50. The SPX is now testing 1409 S/R. The bulls need to keep the SPX:VIX above 68 and JJC above 45.36. The bears need to push the SPX:VIX under 68 and JJC under 45.36. This is the current stalemate, any movement with these parameters will dictate market direction.
Note Added 12/27/12 at 2:31 PM: Here she is, the SPX:VIX ratio, gliding in for another landing at 68, now printing 68.17. JJC is 45.34, copper may be rolling over. The 10-year yield is down to 1.70%. Hang on to your hat. SPX:VIX is now 68.09..... 68.04 .......
Note Added 12/27/12 at 2:48 PM: SPX:VIX dipped under 68 for a few minutes but is now at 69.46 staying bullish. JJC is at 45.39 creating bullishness. News that the House will reconvene on Sunday at 6:30 PM EST is boosting the markets. Traders obviously think a deal is coming together for Sunday evening or Monday, the last day of the year. The SPX just launched from 1404 to 1412 in a few minutes time. The 50-day MA is 1412.69 so look for drama around this level.
KS, thanks for all your updates during the low-volume holiday season. Although I can't post charts here, I wanted to make readers aware that the bulls last line in the sand, 1411, got whiped out; and now I am getting pretty bearish!
ReplyDeleteAlso, SPX 1406ish is at the perfect FIB extension of 1.618x Wave 1+3 (1448-1422 = 16; 16 x 1.618 = 26. 1448-26-16=1406) where 5th waves normally bottom. That's in this case ~1407-1406. This level also coincides with S2 support for today. Now that the FIBs, etc start to line up again, I feel less ambiguity in the EW counts and this looks like a clean 5er down to me.
The bulls didn't get a stocking full of coal, but a boat load. If this satisfies wave 1 down than wave 2 up should ideally retrace to the high 1420s - low 1430s.
I also wanted to point out that although the week hasn't ended yet, I don't think Friday will change much on this picture, so take a look at the weekly chart of the SPX with the 5, 13, and 21, 1 SSTOs plotted. This shows that every time each of the SSTOs peaked and declined simultaneously the market would continue to decline the weeks to sometimes months after, NO EXCEPTION.
The smallest loss was ~100 points, the biggest loss was ~250 points.
The MACD on the weekly time-scale currently has failed to cross the signal line from below; which would be a LT buy signal. Instead, the failure to cross is rather a sell signal... The same goes for the Wm%R, which has failed to reach above -20. Finally, the bollinger bands on the weekly have narrowed, suggesting a violent move; the current TIs suggest that move to be to the downside....
''If this satisfies wave 1 down than wave 2 up should ideally retrace to the high 1420s - low 1430s.''
DeleteHy Arnie, Hy KS!
Arnie, one question for you. Wave 2 might develop up to high 1420s - low 1430s but during what period ? Until January 3-5-8 ?
Can you please explain a little more your idea?
Thanks,
V.
high anon, i never really think about time frames, i only trade price really. but a quick and fast wave 2 retrace is likely; and i'd say rather january 8 than january 3! but please don't pin me down on it. price is final arbiter, not time.
DeleteThanks Arnie,
DeleteV.
5, 13, and 21, 1 SSTOs
ReplyDeleteslow stoch oscillators?
1= unsmoothed?
thx
yes, in stockcharts.com for example, click on slow stochastics and enter 5,1 and/or 13,1 and/or 21,1
Deletelooks like wave 5 will extend to ~1398ish imho, which makes sense since wave 3 was not 1.618x wave 1 and then 5th waves are often extended. Extended 5th waves are often followed by a fast and furious recovery, so that wave 2 might come faster than you 'd think. hence that's why price is more important than time
ReplyDeleteKeystone crash warning ratio SPX:VIX breached 68 today
ReplyDeleteYep, the bears are growling today. Also semiconductors are breaking down (SOX), this is hurting tech along with Apple. Financial's are running out of gas also. If the SPX:VIX ratio stays under 68 today, tomorrow, and into Monday, the bears can put their feet up on the desk and light a cigar, since markets have no where to go except down moving forward. Copper is pesky and the big bull hope. JJC is 45.37 a penny above 45.36, the bulls are clinging to copper since they are clinging for life, and this is the remaining thread to hang on. If they push JJC higher, the bulls will recover. If the bulls lose grasp of JJC 45.36, it will be like a Hitchcock movie, with the bulls plummeting lower with arms flailing.
ReplyDelete1401.80, LOD so far; close enough to the 2.0x wave 1+3 extension for an extended wave 5 which targeted 1398.
ReplyDeleteThat pesky copper, JJC 45.37, continues to hold and not break down. This gives the bulls just enough strength to now send the SPX:VIX ratio back above 68, so all bets are off for the uber downside, for now, unless 68 fails again. JJC 45.36 and SPX:VIX 68 are two important tools to watch moving forward. Bears need both below, bulls need both above.
ReplyDeleteSeems like the markets are pressing the politicians to work it out .... The invisible hand of the markets ... :))) seems like this theory isn't so outdated anyway, isn't it? :D? ...
Deleteconsider also the fact that this "invisible hand" is chewing socialists aka Obama ''food stamps'':))) ...ahahahaaa :))))
V.
I dunno about the copper signal, makes no sense at all. JJC is a serious indicator, than all bears are really running on "doubts" of cliff and nothing more. OR...JJC effects the market after the fact, a rearview mirror signal.
ReplyDeleteCopper is a leader up or down for markets, that is why it is called Dr. Copper. 40 pounds of copper are used in a car, far more in a house. So weak copper says the two major economic drivers, cars and houses, are weak, which says the economy is weak. And visa versa, if copper moves up on demand, the equities markets rock higher. The JJC 45.36 is a level identified by Keystone's algo. JJC is 45.35 as this is typed, the bears need to push this lower, if so, the SPX will drop under 1400.
Deletewell the market is moving lower and MR.Cooper is rubbing his shiny handle. Makes no sense at all. Copper is an indicator of nothing more than availability.
ReplyDeletethe bull-bear fight is fought over all markets, indices and tickers. it's like a war with different fronts, some are lost, some are won. simple as that.
DeleteMister Copper. LOL. He has a Ph. D., he is Dr. Copper. LOL
DeleteHe has no such doctorate, he's an old man without meaning
Deleteyep, 45.37 here we go weaker.
ReplyDeletemy screen says 45.35 /45.37, and the market is lower. come on dude it means nothing.
ReplyDeletePatients, sonny. Using JJC 45.36 as the bull-bear line in the sand, the current print is 45.35, so a hair on the bear side. You want to see it commit, so if 45.34, 45.33 and lower occurs, the markets are going to sell off into the closing bell. If JJC jumps higher again at 45.37 and moves higher, then the markets will recover into the close.
DeleteKS, it's a rear view mirror signal Copper.The news moved it higher. JJC is not a sign of a weak market anymore. Sorry, if your theory was correct we would have seen a lower JJC all day.
DeleteSPX:VIX at 69.18. JJC now 45.39. Markets floating upwards.
ReplyDeletedid somebody in D.C just fart? 'cause the market got some gas back in the tank... LOL..
ReplyDeleteHonestly. We can count clean and clear 5 wave up from the 1401.80 LOD, to the 1409 intra day high (wave 1 up); then a clear 3 wave retrace to the 61.8% retrace level; a classic for a wave 2, and now a "big" spike up for wave 3.
Note that the 20 SMA on the daily and weekly charts both reside at 1421-1422, which may be a logical target for the retrace, with probably some overshoot to low 1430s.
House reconvening on Sunday evening so traders think a deal is coming in the nick of time; the last day of the year is Monday. Big jump to SPX 1412, then recoil, now 1410. JJC 45.39 so the bulls can maintain market buoyancy.
ReplyDeleteWhat's the put/call ratio doing?
ReplyDeletewowsers, markets may end even green for today; if that's the case then we're back to taking a serious look at the alternative count, which suggests that wave 1 topped at 1438 on the 12th, then an a wave down to 1412 on the 14th, b wave up to 1448 on the 18th and this was a c wave down to 1402. The FIB of c = 1.764x a is 1401.67; which almost exactly today's LOD of 1401.80.
ReplyDeleteI am just throwing it out there, because we ALWAYS have to stay vigilant my friends, because the market never wants anybody to follow it on the way up, but always wants to catch everybody on the way down!!!
I laugh. It really is a circus that traders would see the mere fact that the house is convening as a sign of optimism. They have been unable to make any headway since November 4. What makes everyone so certain that they're just going to swoop into town one day and resolve it on a moment's notice. If that actually plays out, then we'll know the game is rigged for sure.
ReplyDeleteBecause the amount of money and spending being argued over is not that big of a deal. It's just all ego and postering by republicans, tea baggers, democrats, and skunks to see who elbows there way into the ego saddle. The whole thing is an illusion. If Democrats have 4 more years republicans will make sure that they hold some sort of power. Do yourself a favor and don't hold your breath that it WONT be resolved. I can tell you must have had a hard time covering.
ReplyDeleteObama is meeting with congress tomorrow at 3pm. This should cause some upside. I called it but I was off by two days. There was time for some shorting before today if one was nimble enough. I went long today before the close and will short again around 3pm.
ReplyDelete"bagholderDecember 25, 2012 10:33 PM
Everyone betting on the cliff needs to get the timing down. I predict wall street will squeeze a few shorts tomorrow dispite futures going down. There will be an annoucement of Obama and Boehner continueing talks and VIX will drop 1%. The annoucement will be the time to short but not before an annoucement of some kind between the white house and congess."
I think all will be short until Monday. No Bounces today like yesterday.
ReplyDeleteThis is playing with fire. There's no way of knowing with any kind of certainty what's going to happen with this Congress. I used to think that there were people on the inside who knew, but clearly they don't. We go over the cliff markets continue to decline, but crazier things have happened. They can just as easily walk to the microphone on Monday and say "we have a deal". And the markets go the other way in a hurry. Grant it, it's the least likely scenario, but still can't be excluded. It's a gamble at this point and I'm not much of a gambler, save for the ponies.
ReplyDelete