FOMC Minutes are delayed one day so they will occur tomorrow. The Construction Spending and ISM Mfg pivot point is on tap at 10 AM. SPX blew thru 1444. The resistance above is 1444, 1446, 1447, 1451, 1453, 1457, 1460, 1461, 1465, 1465.77 (closing high for 2012), 1468 and 1472. VIX plummets over 10% now printing 15.59 creating continued bullishness as long as it stays under 16.50. It's all going the bulls way to start the year. SPX now testing 1457 R and has pierced up thru the upper BB at 1451 (see this morning's chart). Keystone exited the AMD trade, will take a loss on that one to start the new year. Will look to reenter, AMD should hit 3.50 in the weeks ahead, a cup and handle pattern may form, with the handle forming during January.
Note Added 1/2/13 at 10:01 AM: Construction Spending and ISM are in line or better. No reaction in the markets. The SPX is up 30 handles to 1457. VIX is 15.47. UTIL 466 and GTX 4958 are two key sector levels as identifed by Keystone's algo. GTX is at 4958 now. If GTX moves higher, the equity markets will remain at these elevated levels and move higher. If bearish, you do not want the GTX to move above 4958. Same theme occurs for UTIL 466.
Note Added 1/2/13 at 12:07 PM: VIX is 15.84, under 16.50, contributing bullishly to markets. GTX is 4928, under 4958, contributing bearishly to markets. UTIL is 460, under 466, contributing bearishly to markets. So the market bulls need to go thru GTX and UTIL to head higher. The bears need to push the VIX above 16.50, otherwise, they got nothing. SPX is at 1450. TICK printed +1100 at 11:30 AM-ish, at the 1452 level. Huge recovery in the TRIN from under 0.25 up thru the neutral 1.00 now favoring sellers at 1.14. The NYAD pumps out an obscene +2660 print today, uber euphoric bullishness. You have to go back to the August 2011 waterfall crash and the November 2011 sell off to see the NYAD spike that high. With the low VIX, the market bullishness is off the charts today.
Note Added 1/2/13 at 1:31 PM: GTX is 4928, under 4958, causing bearishness. UTIL is under 466 causing bearishness. VIX is 15.68, under 16.50, causing bullishness. One of these will flinch, perhaps not until tomorrow, and the broad indexes will follow that direction. There are no changes to these three parameters since this morning so markets travel sideways. Surprisingly, the volume run rate on the NYSE is at about 90% of a day's average volume. For a first day triple digit up day bull party, higher volume would be expected, but, volume may increase at the close.
Note Added 1/2/13 at 3:46 PM: The SPX came back up to match the highs from this morning at 1457. The 2-hour, one-hour, 30-minute, 15-minute, 10-minute and 5-minute charts are all moving into negative divergence right now with the new price high. There is no change to UTIL, VIX or GTX.
Note Added 1/2/13 at 4:01 PM: Huge up day today. SPX finishes at the highs over 1462. NYAD hits +2660 and closes at +2539; you do not see this often, uber bullish euphoria. VIX drops under 15 to print 14.66. The Dow Industrials are up over 300 points so the total two-day rally was about 460 points. Euro is under 1.32. The 10-year is 1.84% jumping higher at the open and flat lining all day. The TICK prints a +1400 number at the close today at the SPX highs for the day, more uber bullishness. The NYMO and CPC charts will be interesting this evening. The SPX closes sitting on top the strong 1460-1461 support mentioned this morning so the bulls really brought their A game today. 1468 and 1472 are the next strong resistance levels, 1465.77 is the closing high for 2012, and 1474.51 is the intraday high for 2012.
Where did everyone go? Shane, KS? One day you will learn that the circus continues no matter what the threat. Can you believe with all the advancement in culture, PETA, animal rights, humanity, that we still have PT Barnum and Bailey running a circus. Point is stop listening to the noise, the threats, and realize the crack and coke is fresh in the dealers hands and they want to have their customers snorting all year long. So hopeful you covered your shorts.
ReplyDeleteIt is a circus. Shorts are still on, and getting beaten, the severely beaten trade are the long volatility trades. They will remain on for now. They also serve as a hedge since Keybot the Quant is long. If the upside continues will have to take losses to start the new year. It is a surprising move since the debt ceiling was not yet addressed, but, markets will constantly surprise. The two-day move is about 420 Dow points so far.
ReplyDeleteKS, If you think AMD will go to $3.50 in the coming weeks...why did you exit? What price will you be looking to buy back?
ReplyDeleteYep, it remains attractive and should do fine, lots of gaps were left underneath so it may want to step back to 2.00-2.25 before continuing up. It can easily head higher towards 2.72 in the very short term. Maybe down to 2.2 where it would mark the next low and then continue higher, weekly chart is very nice, it based and should be continued upside, look for the C&H to form. 1.8 bottom, breakout line for the C&H say 2.6 so that is 0.8 difference, that would target 4.4, note the cluster of S/R at 4.0-4.5.
DeleteMy math is off, the target for the C&H would be 2.6 + 0.8 = 3.4. This forms a confluence at both the strong S/R, and gap fill. So, 3.4-3.6 is the target area, perhaps by spring/summer. Thru that and the 4.0-4.5 would be next.
DeleteI wouldn't short too far with Tech Jan and with FDX like you said. The future is a week max of shorting till May of course. Be careful. I follow TZA and it is severely pulled down, RUT will go higher if the TEch and apple rally harder of course.
ReplyDeleteMarkets are very shaky and unpredictable these days with all the political shenanigans, end of year stuff, central banker intervention and on and on. It will probably come down to earnings moving forward. In Q4, the EPS bottom line met or beat by a penny as usual but the top line revenues missed. That says the companies canned workers to meet the EPS. If the top line sales continue to falter moving forward, which is what Keystone currently thinks, the EPS will suffer and earnings will trail lower all year long. Thi sis the opposite of what all major Wall Street analysts say which are all bullish. But fund houses have to be bullish since people tend to send money to the folks that talk the biggest bull story. It will be interesting. Q1 very well may create a high not seen for a couple years.
ReplyDeleteAnon, I'm back sort of, as of today. I took a little pause over the holidays and was positioned neutral with a few volatility spreads and long term positions. When risk outweighs reward, I operate under adage of "Don't be a hero." I'm not the kind of guy that feels he has to get in there and trade every single day, just to prove a point.
ReplyDelete