The utilities climbed higher yesterday but fell a hair short of the UTIL 466.77 level (50-week MA). This is key as described in this morning's chart. Copper and commodities, JJC 45.75 and GTX 4930, respectively, are key levels to watch, as identified by Keystone's algo, and prices are comfortably above creating market bullishness. The Dow Industrials punched thru their October 2012 intraday high yesterday so this officially places the Dow on the list of five-year highs with the RUT, Trannies and mid-caps, and also hinted at more bull fun for the day ahead yesterday. Tech lagged the broad market but GOOG and IBM earnings beat last evening so this will start the Nasdaq off in a better mood today. Yesterday was another Tepper Rally day. David Tepper, a Pittsburgh-boy, from this neck of the woods, Appaloosa Management, is credited for cheer-leading the QE2 rally in late 2010. Traders were hesitant back then but when Tepper appeared on television and said do not fight the Fed and buy with both hands, the QE2 rally took off in force and was dubbed the Tepper Rally. Tepper appeared on Bloomberg yesterday and was a raging bull which supplied further bull market fuel.
It is all going the bulls way. Any negative news is ignored and important technical levels are breached as price moves higher. PKG slipped 3% yesterday and was down over 4% intraday. This is a key cardboard, packaging and shipping indicator for the economy. The SPX is chasing higher to the upper BB's on the daily and weekly charts now targeting 1500-1505. The 1496 is strong resistance and also the last remaining gap fill on the top side. All the other action when the 2007 market top rolled over is sealed properly on the way down and 1496 would complete the need for price to move higher based on gap theory alone. Keystone's SPXA150R Indicator moves to 87, between the 85 and 90 zone, which provides a strongly bearish signal. These are heights where markets typically reverse. If SPXA150R moves up thru 90 that verifies further bullishness but would also signal an uber bearish signal forward. If SPXA150R moves back below the 85 level today and tomorrow, that will signal further market selling ahead.
The BPSPX shoots higher to 79.40 at September 2012 market highs and at overbot conditions. Another indication of a market peaking but the Energizer Bunny pays no attention and motors higher. The NYMO is 51 back up to the levels of the September top, late November top, and this years top the first few days of the year. Indicators are lagging on the way up setting up negative divergence if the NYMO only squeezes out a couple more points, and says a market pull back is on tap but the bulls laugh and pour another glass of booze as the buying algo's continue clicking in. The CPC put/call ratio jumps yesterday to 0.94 which is comical since the bears simply cannot get any breaks these days. An upward spike of the CPC shows some worry entering the markets and this occurs as the broad indexes sell off, but instead, the CPC moves higher and the markets move higher as well. Today and tomorrow is a key time for markets. The VIX is flat yesterday remaining under 13. The bullish sentiment appears to be waning. The sellers are sitting on the sidelines sick of the daily beatings and the bulls may be starting to look for the red exit signs since the buying poll is becoming thin.
The daily 10-11 AM pump occurred on schedule yesterday and this sent the TRIN lower, under 0.90, to verify the market bullishness, and finished at the low at 0.78. Markets may simply idle along sideways today waiting for the all-important AAPL earnings. Analysts want to see 47.8 million iPhones so that is a key number for this afternoon. The U.K.'s Cameron surprised everyone, upstaging the high-brow crowd in Davos, by announcing the intent to offer a referendum vote on whether or not to stay in the EU. Cameron says he wants to stay in the EU but is in favor of the referendum vote to occur. More drama and confusion, which resulted in lower futures overnight, and the euro dropping under 1.33, but that was short-lived, and the bulls rallied the troops again. Futures are flat currently. For the SPX today, the bulls only need a smidge of green in the futures and an upside acceleration will occur to test the 1496 resistance and fill the last remaining gap from 2007. The bears need to push under 1481 to create a downside acceleration to 1476 in quick order. A move thru 1482-1492 is sideways action. In a nutshell, watch UTIL 466.77 and SPX S/R at 1468, 1472, 1473, 1474.51, 1476, 1481, 1485, 1486, 1489, 1496 (gap fill), 1499, 1500, 1505 and 1511. The House is scheduled to vote on extending the debt ceiling deadline which will kick the can down the road. COH missed on earnings this morning so this may impact the retail sector. MCD beats on earnings, not a blow-out, but a healthy beat, and is up one-half percent pre-market. The 10-year yield is 1.83%. Oil is flat but remains elevated. Copper is flat. The euro is 1.3345.
Hy KS,
ReplyDeleteOne question: if you were in my shoes would you take now longs on spx 500 for a targeted 1520-1525 or would you stay flat on cash and load shorts from 1520-1525 and lower?
I know that this is a malitious question but I'm just curious what's your opinion (based on your risk-reward ratio in your trading activity).
In my opinion there are 2 levels uber-important : 1520/1525 and 1575-1585. It's questionable that 1575-1585 will be reached now (until mid Feb) and not in May/June '13 , but 1520-1530 sure is a dead target to be reached in my opinion until mid-Feb.
Thank you in advance,
V.
V, you and your financial advisor are the only two people that can answer that. For one, Keystone does not give any advice to anyone and two, only you and your advisor know your financial situation, your risk tolerance, age, family factors, etc.., and many other factors. Good luck to you.
ReplyDeleteThe key level is 1496 which Keystone has been harping about the last few days, the last gap remaining from 2007. In a way, bears would be best off for price to jump up and tag 1496 today then roll over since that would supply a strongly bearish signal for markets. Another scenario is down now, from 1493, the S&P futures are down 3 now, then it is a matter of where the bounce comes and the 1496 gap fill would remain on the plate.
Going thru 1496 leads to 1505, and this number would satisfy the upper BB touches, if price plans on touching them, it is not mandatory. Above 1505 and the 1520's are on target. The 1480's targe the 1520's due to Keystone's 80/20 rule, but this may occur over a longer time period than most think.
The guess now would be a down move for a day or few that chooses a support level to bounce from say 1481, 1476, 1472, 1468, 1460, perhaps lower, then back up to the 1496 gap fill, then 1505, perhaps 1525, then roll over, this high perhaps the high that may hold for many weeks and months, perhaps a year or two. The other path may be 1496 and 1505 now, then down to the support levels then back up and roll over. The last scenario would be down from here and price drops more than most think before recovering.
Ok, KS,
DeleteThank you.
V.
I quoted from yesterday's blog
ReplyDelete"With all due respect. Negative Divergence is nothhing more than a mathematic expression of the decay rate of a moving average. For example: When price idles there will be negative divergence. Most notable on Exp and Wilders (really exp) moving averages.
As has been noted in his tomb on RSI, you will find many negative divergences during uptrends and the converse for DTs. It is really a reflection of the time constant of the filter.
Indicators help those of us that are visually challenged interpret price. "
Keystone SpeculatorJanuary 23, 2013 at 8:56 AM
"Anon, always remember the old adage, 'divergences are divergences, until they aren't'. All tools are only reflective of a market that is a moving symphony, constantly changing and evolving."
and my question is can divergences appear and disappear without having any affect on price at all and what is the probability of such thing?
thanks.
Serenay, nope, in the case of negative divergence that say is universal across RSI, MACD line and histo, stochastics and money flow, for say, a daily chart, will result in a spank down for the daily time frame. As seen on some charts, note how maybe the stochastics, money flow and histo may be negatively diverged, but MACD line and RSI long and strong still yet, therefore, price will be spanked down, but then will come back up for a matching and higher high to satisfy the RSI and MACD line, then, typically, universal negative divergence will likely be in place for a longer lasting spank down. This is also only pertinent to the daily time frame in this example. So as the overall variables you would have say monthly, weekly, daily, 2-hour, 1-hour, 30-min, 15-min and 10-minute charts, with the indicators mentioned above, so five times eight charts, so there are forty overall indicators each having a say as you weave together the time tapestry for any index or ticker.
DeleteTo answer your question better, if a ticker is say negatively diverged but price continues to be goosed higher say by happy news or some other external factor (that is not yet priced into the chart), the price jump higher can nullify the negative divergence. But typically, the same set up is in place and price will roll over simply from a higher level. This is important since if the stock is shorted, the consideration must be made as to whether add to the shorts, averaging in now that the trade is going the wrong way, or cut bait and run. This depends on your risk tolerance and how confident you are in the chart set ups.
Put it this way, in all of Keystone's years of technical analysis, and many technicians will disagree and have other favorite tools, there is nothing more important in trading than divergences. Nothing. As a trader, you should be able to look at any chart and immediately dictate whether it is positively diverged, negatively diverged, or neither, or to what extent of each. It is more important than anything else in trading and what is interesting, the word 'divergence' is never often stated on television or in print. If you pay attention to divergences and study them for all your trades you will immediately be a better trader overnight. Look at all the stocks lately, as shown on the Picks page that are short plays, but pundits tell everyone to chase and buy them, if they are negatively diverged they kill the poor folks, but simply knowing what negative divergence is would make you immediately never consider the stock as a long.
Just to clarify I didn't say above paragraph in quotation, I pasted it, but needed some clarification that's all. thanks again
ReplyDeleteRighto.
DeleteI noticed last few times during Bradley Turn Window tends to be quite bullish...just something to think about. Today is the last day for that, we either have been up or flat during this time frame.
ReplyDeleteIs Zig still around?
Yep, Bradley was Sunday so the overall window is open thru Friday, the turns typically occur tighter to the actual date, so that placed yesterday and today as prime candidates, and with Apple earnings now only two hours away, we are at ground zero, something is going to happen over the next day.
Delete