The SPX drops to test 1505 support. The 20-day MA at 1510.56 failed so a back kiss would be in order for the bears to make sure they want to take things lower. VIX is 15 heading higher but not at 15.70, yet. GTX is collapsing to 4958 but not under 4930, yet. The bears are pushing. Keystone bot IAG, a gold miner that has been bludgeoned from 17 to 7. The charts are set up with positive divergence. NEM, GDX and GDXJ are also of interest moving forward but IAG appears to be a good entry for a starter long position.
Note Added 2/21/13 at 10:28 AM: The SPX fell through the 1505 support turning it into resistance and here is the back kiss of the 1505 resistance. Either price punches back up through and will set its sights on the 20-day MA back test, or, it fails. The VIX ran above 15.70 causing the bears to pop the champagne corks but minutes later, the level would not hold, so the bears were frantically attempting to push the corks back into the bottles. VIX pulled back now printing 15.19. GTX drops to 4956 but remains above 4930. The bulls are holding on today. Watch to see what happens at SPX 1505 S/R. The 200 EMA on the SPX 1-hour chart at 1498.28 is important and will signal big market trouble if it fails. The bulls will remain relaxed if they hold 1498.28. The H&S mentioned yesterday with head at 1531 and neckline at 1514 targets the 1497 level. The 1498 is long term historic support as well. Obviously, the 1497-1498 support level now takes on significant importance and is a critical bull-bear line in the sand for markets. Bulls are coolio above 1497-1498, the bears will rule under 1497-1498. The LOD is 1499.56, pay attention to the low prints today. Keybot the Quant remains long and will likely not flip short today unless the LOD at 1499.56 is taken out. The 10-year yield drops another tick to 1.97%, the lower yield moves, the better for equity market bears. The equity bulls need to see higher yields.
Note Added 2/21/13 at 11:15 AM: VIX is climbing again. SPX 1505 resistance appears to be holding for now. Keystone took profits in the IAG trade on its wildly enthusiastic positive divergence bounce this morning, for a couple-hour trade. Will likely reenter before the close today. Also bot to cover LL closing out that short trade taking profits. All the housing sector stocks are getting hit as has been discussed here in the charts over the last couple or three weeks. SRS should continue higher for the days and weeks ahead. APL looks like it will be a good long buy from 415-440. Apple may spike down quickly intraday to 420-ish in a heartbeat that may be the time to snag it, like fly-fishing, and then it should recover. GOOG receives 1000 price targets from analysts this morning, just like the kiss of death with AAPL's 1000 targets. As repeated almost daily, the GOOG weekly chart is nasty, firm negative divergence, and is likely an M top. Whoever buys or bot GOOG over the last month will likely have their head handed to them as the days and weeks play out. GOOG has a juicy gap at 705-735 which serves as a landing area perhaps as the Easter Bunny comes to town.
Note Added 2/21/13 at 11:36 AM: The SPX is 1502. VIX 15.52. GTX 4963. Tech (COMPQ) and small caps (RUT) continue to lead the broad indexes (SPX and INDU) lower, a bearish indication. NYSE volume is ruining above average again today thus far. TRIN is 1.52 firmly favoring the bears with steady-eddy selling. The SPX 1497-1498 is the line in the sand; Heaven above, Hades below. WTIC oil lost the 93 level now tagging the projection on the charts a week or so ago once the 95.50 gave way. According to Keystone's 80/20 rule, if oil loses 92, the 88 level may be on the way.
Note Added 2/21/13 at 1:07 PM: VIX moves above 15.74 emboldening the bears. VIX 15.74 will dictate market direction today; now at 15.76 helping bears by a couple pennies. The SPX comes down to tease the 1499 handle, testing the 10 AM low, but bounces. The LOD is 1499.28. Keybot the Quant wants to flip short but is being held back by internal programming rules; if the SPX drops under 1499.50 and stays under for about five minutes, Keybot will likely flip short. Of course VIX must stay above 15.74 as well. The SPX 1-hour and 2-hour chart indicators indicate a preference to see lower lows in price so this may create weakness well through this afternoon. Trouble will begin if the LOD gives way.
Note Added 2/21/13 at 1:33 PM: VIX back kissed the 15.74-15.76 area and bounced, now printing 15.88. The bears are not fooling around today. SPX is 1501. TRIN 1.56. The 10-year is 1.96%. GTX 4958. UTIL 473.39. Euro 1.3182.
Note Added 2/21/13 at 3:25 PM: Keybot the Quant flipped to the short side at SPX 1498 at about 2 PM EST. Watch for a whipsaw, the SPX is mounting a recovery already. The VIX above 15.74 created the market weakness, now the volatility has dropped again. Keystone took profits on RTH, covering the shorts and exiting the position. Will look to reenter short in the days ahead.
Note Added 2/21/13 at 3:46 PM: Keystone bot PBR opening up a new long position. PBR is showing attractive positive divergence on weekly and daily charts and has been beaten from the 50's to 14 over the last three years, it appears that the beatings should now end.
Note Added 2/21/13 at 3:53 PM: Keystone bot NEM, the largest gold miner, opening a new long position. NEM is setting up with positive divergence and may bounce right away or need a little while to base. The position will be added to if it works lower.
Note Added 2/21/13 at 3:58 PM: Keystone added more PBR.
If we could just get some more push in the 20 p/e consumer staples sector, PG, CVS etc sure look like decent shorts.
ReplyDeleteThey are attractive shorts with a negative divergence vibe, however, if the markets sell off substantially, stocks like PG, CLX, tend to hold up better on the downside. This is because folks want a place to put money and as things start falling apart you know people need soap, toothpaste, toilet paper, all that stuff, no matter what, so companies like PG get beat up less. So perhaps other places for shorts would be best.
DeleteKS, in the interests of staying one or two steps ahead... we may get CPC and NYMO prints tonight favoring going long. Perhaps there will be a little Friday buoyancy before the weekend and the full moon. But isn't going long a dangerous game since the Italian election is currently leaning towards a hung parliament or even a Berlusconi win? (And all of a sudden the market seems to be paying attention to the headlines.)
ReplyDeleteYep, CPC is up to 1.14 but it may spike quite a ways above 1.20, so it can only be taken one step at a time. The VIX will help to gauge this as well. The 1.2 is time to nibble long but look on a CPC weekly chart, the May 2012 sell off saw CPC 1.45 to signal the market bottom, in the August waterfall crash the CPC was 1.50 to mark the bottom for stocks. The full moon buoyancy would only be expected say from a low on Friday to a high on Monday so this is not a real big deal overall, or should not be at least. In this type of action, taking profits in various positions and leaving this dough in a cash position may be prudent. Remember, cash is a position, and sometimes a smart one, so powder can be kept dry to jump on a market collapse sub 1497, or recovery move above the 20-day MA at 1510.
Delete(August 2011 waterfall crash which resulted after the downgrade of U.S. debt, and solar flare)
DeleteKS, What is your view on the DAX, you think we go down then up from here?
DeleteHave a few underwater positions and not sure to hold or cut and take a loss?
Keystone is short EWG, it is flat to slightly profitable, it is short Germany. It would depend if you are long or short. EWG chart hints at additional lower lows needed, even after a bounce occurs. EWG weekly may want to test the 20-wk MA at 24. DAX chart not updated as yet since it took a big tumble today so would have to check it out this evening. You are probably long if underwater after the big drop today? DAX daily shows an H&S so study that pattern, head at 7880-ish, neckline at 7550, so target would be 7220, there's a gap fill needed down there. Looks like short is the place to be but you may need to give it a days or a few weeks. Long side not looking good, there are no upside gaps that need filled either so price would have no reason to go up. Lots of sideways action may be ahead so you may have time to decide your strategy forward.
DeleteDAX closed at 7583 smack-dab on the H&S neckline. Germany bulls need a bounce right away. Germany shorts want to see a collapse here which would put that H&S in play.
DeleteI took profits on SHW puts and SDS. It feels like bulls will defend 1498-1500 as per KS's line in the sand, and KS your call for a test of 1510 sounds right. Bulls are unlikely to let a 31-point decline go untested. 1510 would offer a nice re-entry for shorts/puts....
ReplyDeleteAnyone else following natty gas/BOIL? It looks sorta like JO....
You're right so far Charlie, but the 1-hour and 2-hour charts for SPX hint at lower low coming so perhaps the 1499.50 and 1497 will break today after all? The afternoon will likely be interesting. JO is like UNG and BOIL were last April 2012. Natty enjoyed its positive divergence bounce and push higher all last summer but it peaked in November and is petering away a bit. UNG and BOIL may see a bunch of sideways stuff moving forward.
DeleteWhat symbol do you use for the ten year at stockcharts.com for your Inflation Indicator?
ReplyDeleteI cannot find one that matches up to yours.
Thanks!
That was asked yesterday Anon. 100.359 with a 1.97% yield. You can pull it straight off the business television channel off the streamer. Also, try bloomberg.com/markets/ You need the Makret Overview page, World Markets, Bonds, and they show the price on that chart. Let's see, CRB is 296.59 so 296.6/100.36 = 2.955, drifting ever so slowly south further into disinflation heading towards deflation. The commodity, oil, copper, weakness is a serious situation.
Deletehttp://www.dailyfinance.com/quote/treasury/10-year-us-treasury-note/(tc10y
DeleteIf anyone uses TOS Charts do you know the symbol there for 10 y notes?
DeleteDanke for that link Chrys.
DeleteHy KS.
ReplyDeleteI guess , starting from now the market will rise again for the moment.
One question, please: if the maximum point of a possible rise trend (on 60 min spx chart) doesn't overcome the previous higher high at 1531 this is a rock solid confirmation that we are in a correction, in a down trend isn't it so?
Cause , for the moment all I see is a trend that's sporting lower and fight with the support at 1497-1499...
So: a reversal of the trend would be confirmed ONLY by a lower high as compared with the previous high at 1531?
Thank you,
V.
You are on the right track but do not get too hung up with all that, simply treat it as any trend on any chart for any time frame. If there are higher highs and higher lows, the bulls rule, lower lows and lower highs, the bears rule. So on the 1-hour, February shows a series of higher highs and higher lows up to the 1531, then collapse, a lower low at 1522, then bounce to 1525, then drop to 1502, a lower low, then bounce to 1506 a lower high, then down to 1500 now, so the trend is lower. So, in keeping with the intent of your question a high today above 1506 and moving higher, 1507, 1508 creates a higher high and that would hint at a recovery move.
DeleteThe 200 ema on the hourly is also pretty close to the weekly S3 support pivot at 1497.20.
ReplyDeleteThat would appear to be a good cluster of support.
VIX over 16, SPX is falling thru support, this may be it?
ReplyDeleteKeystone,
ReplyDeleteCan I ask a personal question? How old are you? I love your analysis and wishing you years of good health as you provide incredible insight.
Thanks,
Mike
Mike, good ole Keystone is old enough to know better, but young enough to not care.
ReplyDeleteKS, my Dax positions are both long and short, but shorts averge which is underwater is 7000.SO if 7220 is expected i will cut there for a small loss. I took a few longs to hedge my shorts, but these are also underwater but not as bad as the shorts.
ReplyDeleteWhen u get a chance to check out the dax chart, please let me know.
Thanks