The beat goes on. The SPX is testing the upper levels of today's range right now. The 20-day MA is 1511.20. Today's HOD is 1511.24 so the initial back test occurs resulting in failure. Right now bulls are making another run at the 20-day. The VIX drops today but is trying to regain 15, nonetheless, below the 15.74 the market bears need to push markets lower. GTX, RTH and SOX all remain in the bull camp. Copper is negative again today and JJC remains in the bear camp. The 10-year yield is 1.96% which says that money is moving into both stocks and bonds today, how do you like that? Volume is light today compared to the larger volume sell days on Wednesday and Thursday. The euro remains under 1.32 leaking lower today. This should keep a lid on the SPX but the broad indexes float higher anyway. Crude oil is 92.94 remaining under 93. The 92 would lead to 88 so traders are thinking things over in this 92-93 range.
The 8 MA has reversed and is heading higher towards the 34 MA on the SPX 30-minute chart so that requires watching for a potential cross today. The 8/34 MA cross remains bearish for now. The bears need to push the markets down hard from here, right now, or they are going to lose control if the 1511-1513 level gives way. TRIN is 0.87 so the bulls are happy campers today. Bears need to push the TRIN towards 1.00 as soon as possible, otherwise the broad indexes are going to move higher into the close. Today is the sideways move through 1498-1511, so far. The Italy elections are on tap Sunday and Monday.
Note Added 2/22/13 at 1:41 PM: SPX punches out a new high for today at 1513.58. TRIN is 1.00, isn't that something? Keybot the Quant should flip back to the long side this afternoon if the bullishness continues. Keybot likely needs the 1513-1514 area now to flip back to the bull side. VIX is 14.39 helping the bulls today.
Note Added 2/22/13 at 2:38 PM: The 8 MA pierces up through the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours and days ahead, however, see if it holds through the closing bell. The bears need a sharp move down. The SPX continues along at 1512. The 20-day MA is 1511.27. VIX is 14.50, up a smidge. TRIN 0.94.
If SPX manages to stay above 1511 for a while, do you think that the Bot will swing back to long?
ReplyDeleteAl, Keybot probably needs to see the 1513.50-1514.00 area for two or three minutes time to flip back to the bull side. Today is likely a dead cat bounce. If Keybot flips back to the long side it is probably likely again for it to whipsaw short again after that. Next few days may prove interesting.
ReplyDeleteIn Elliott Wave parlance, it looks like we have had an impulsive wave 1/A down from the apparent S&P 500 peak, followed by a corrective wave 2/B up, which could even finish today or Monday. If so, shorting from this level could be very profitable.
Deletewe got it... what a day...
ReplyDeleteKS, why did Keybot not whipsaw at the close today? What was holding it back?
ReplyDeleteKeybot runs through a sequence that requires higher highs to occur and lock in within two to three minute time frames. Price slowly ratcheted higher but would not latch properly. It would probably be best if Keybot would have flipped long at say, 1513, but the quant will probably flip long at Monday's open and take its lumps. Very interesting action, the algo in general is dancing directly on top of a bull-bear line in the overall markets so the new week will be interesting. Copper and commodities are the key and the China PMI will dictate their direction.
DeleteThe VIX and NYMO wanted a rally, as both issued "buy" signals, but I tend to think KS will be right about this being a dead-cat bounce. SPX 1515 is close to a 50% retrace of the decline. Oversold conditions have been worked off, UK is downgraded and Italian wildcard is in play. What's weird is how the big move up in the VIX corresponded to a tiny decline in the SPX.
ReplyDeleteThat 50% Fib retracement is interesting, we will post some charts this weekend and that can be shown. Bullard was the one that supplied the crack cocaine. As soon as he started talking dovishly, it was a huge surprise, perhaps that is why the futures were not moving they were flat at about up four S&P's, then about ten or fifteen minutes later it sunk in. Many traders probably took it as a given, like Keystone, that Bullard would either be center or hawkish, touting the concerns of inflation and such, but instead he turned into a dove. Each day gets stranger. Yep, the -45-ish NYMO looks like it was enough for a bounce. CPC back down to 0.90, that reflects Bullards easy money talk. Traders have zero care, the Fed is pumping so no one is worried at all. These markets are very special.
Deletewave 5 up has begun. Time to get LONG now and ride this wave to 1550+...
ReplyDelete@ Anon:
Deletenot so sure Anon.
it's an ABC more ... first we saw the down A move, than the B friday correction (that's why keybot kept the short side) and we will see a C that will end on Thursday or Friday next week ... than , again, relentless and calm up-move until April-May (1550-1615 ...somewhere in this area as maximum point).
V.
We will have to check the charts but that may be the result, a wild spike higher. The China PMI is very important since copper and commodities were the major cause of the selling last week. If China pumps a strong PMI then copper and commmodities will fly higher and the SPX will very likely head back up for a test of 1531, however, weak China data and that will likely be all that is required to take markets lower for an extended period. So, lots riding on China over next couple days.
DeleteMost seem to be ignoring copper's 6% drop this week. Copper typically syncs with China market and leads US by a few days to a week or so. Drop in commodities also signalling deflation and likely tapering/ending of QE for some time. The alternative would be a path of inflation and unemployment that would take years to recover from. I think the Fed knows this and is going the safe route, painful at first for the markets, but glad you did it 12-18 months from now.
ReplyDeleteToday's ramp was on extremely low vapor volume, and finished right up underneath the lower trend line of the rising futures channel. I think SPX 1381 comes very soon, perhaps 1350. Possible higher high towards May, but as usual, the market takes a few months to roll over.
Sorry folks, meant SPX 1481, 1450.
ReplyDeleteThat was a good summary to think about.
DeleteKS, today's up move looks quite strong for a dead cat bounce. But then again Keybot stayed short somehow someway. I'm confused on the wave counts. For the EW traders, how can you tell it's an ABC (B today) move versus wave 5 up? I was thinking along the lines of Anon above. Wave 1: 1343-1448, Wave 2: 1448 to 1398, Wave 3: 1398 to 1531, Wave 4: 1531 to 1497, Wave 5: 1497 - 1550+. What's wrong with this wave count? Thanks for your great blog KS, Wonder if Keybot will go long at the open on Monday (which would confirm the wave 5 up count)...
ReplyDelete@ Anon:
DeleteI'm just curious how this market might simply go up in wave 5 (1497-1550+) with italian elections results first published on Monday, 15.00 gmt, and with sequestration on March 1.
The Friday move doesn't look impulsive to me ...it looks more like drawing a higher low as per the peak at 1531... there would have been more question marks around my head if Friday move would have finished at 1529-1535 (a double-top, or something)... but the steady-eddie move up to 1516 or so doesn't look impulsive to me.
But more action on Monday will bring more light ...
The Moody's afterhours downgrade of UK from AAA is bulish, ha?
The italian elections with that comedian being so popular or with Berlusconi ramping polls - that's bullish, ha? Or maybe an uber-bullish argument: the sequestration discussions and negotiation compressed in only 1 (one) week? Or 4 days ...until late Thursday , next week?
Very, very bullish, indeed!
V.
p.s. it's not all about EW counts it's the ability and talent of merging technical analysis with fundamental analysis ... they have to be merged like in nature ... that's why you have a left hand and a right hand - to work in harmony with both!
@ Anon:
Deleteyour wave 5 will start at 1467-1474 on ES .... up to 1576-1615 (somewhere in that area, somewhere between 20 April - 25 May 2013, as price and time action).
V.
Bullard was the big game changer. Friday morning futures were up about four and Bullard pumped them 3 or 4 more and it grew from there. So the dead cat bounce was on tap, but Bullard supplied the gasoline.
ReplyDeleteLots of interesting stuff occurring in the days ahead. Italy election probably most important about the vote count. If there are two or three with the same amount of votes, that will mean indecision and a mess, and likely trouble for markets. If one guy gets the most votes by a respectable margin, it may be easier to form the coalition and calm things down.
China Flash PMI will likely dictate the market direction for the early week. Looks like it will be known 9 PM Sunday evening.
Politicians are back which is always a market negative. Full moon Monday is a positive. SPX likely wants to poke up into the 1520's Monday morning to see what is cooking and at that point decide up or down. When a month is strong all month it tends to finish weaker.
@ KS:
DeleteYour right with that:
''SPX likely wants to poke up into the 1520's Monday morning to see what is cooking and at that point decide up or down.''
I just want to pin-point 2 very special levels on spx:
1518.05 - 61.8% retracement fibo of 1530.93 - 1497.21 movement
and
(very important) - 1523.71 - 78.6% retracement fibo of 1530.93 - 1497.21 movement.
I'm watching a special H&S on spx under construction (head - 1530.93/left sh - 1518-1520/ neck - 1497 / right sh - under construction) = target = 1473.40
OR
a potential double-top at 1530 area (if the chinese release good PMI numbers on Sunday).
Next week promises to be very interesting.
What is certain is that this week signaled that bears aren't dead at all ... they're alive and might kick ... if they're reduced to silence for the moment and we see new highs over 1530.93 their growls will be really killing in the 1550-1600 area.
it will be a great spring - mostly the second part of spring ... you know? Spring is the time when the bears finish their hibernation period and start descending from the mountains to the beautiful plains where the bull party is rolling. :)
V.
p.s. I guess , after those FOMC notes, at least 1-2 FOMC members (that still have their rational sound and working) calculate the cost/profit of beautiful QE measures considering the late GDP .... a 'great' cost/profit ratio, so to speak...
@ KS:
Deletesorry...me=fat fingers :)
"you're right with that" ...
V.