The markets are off to a circus of a start today. The SPX is churning through the 1497-1531 range. A large gap up move occurs this morning but the market is falling on its sword after word that Berlusconi may have done far better in the Italy elections than anyone thought. The euro is 1.3245 well off the 1.33 only one-half hour ago. You know the refrain, down euro = down markets, so the SPX is retracing right now at 1518. WTIC oil is dropping back down towards 93. Lower oil means lower markets. The 10-year yield hit 2.00% a short time ago but now back to 1.97%. Keybot flipped back to the long side but do not be surprised for another whipsaw to the short side again. The 8 MA is above the 34 MA on the 30-minute chart signaling bullish markets for the hours ahead and the 8 MA has not yet curled over, so the bulls are feeling comfortable today. The TRIN is 1.16 favoring the sellers and the move lower in the SPX. SPX S/R is 1531, 1528, 1525, 1524, 1521, 1520, 1518, 1516, 1514, 1512.10 (20-day MA), 1511, 1509 and 1505. The HOD is 1525.84 with the 1525 R holding. Copper is flat. Financials are negative. Retail sector is positive with LOW helping. Voaltility is moving up with VIX above 14 but bears cannot be happy until they see VIX 15.60+.
Note Added 2/25/13 at 11:25 AM: The action becomes more odd each day. The euro has now plummeted from 1.33 to 1.32 in one-hour's time on the Italy election news. SPX is 1518. TRIN 1.14 bear-friendly. VIX 14.36 bull-friendly. President Obama is now making a speech pumping up the fear over the sequestration that hits on Friday.
Note Added 2/25/13 at 12:33 PM: The SPX is moving across the 20-day MA at 1511.84. Bears have the upper hand below the 20-day, bulls rule above. The 1509 support held. VIX HOD is 15.36 twenty-four cents shy of the 15.60+ goal for the bears. TRIN 1.62 firmly bearish for today. The 8 MA curls over to the downside on the 30-minute chart. Euro is 1.3279 under 1.33. The 10-year yield collapses to 1.93%; money is running into bonds for safety today, not the 'great migration' out.
Note Added 2/25/13 at 3:00 PM: Wild whipsaw action all day. Keybot is close to flipping short again but needs to see 1502 and lower. The 8 MA just stabbed down through the 34 MA on the 30-minute chart to signal bearish markets for the hours and days ahead. The VIX exploded higher straight up through 15.60 now printing 16.84, heading to 17. The VIX is up 20% today. The euro is 1.3103 and fell under 1.31 a short time ago. Wild move in the 10-year today jumping over 2% today now under 1.9% at 1.89%, printing 1.86% for a low today. A fifteen-basis point range is a big deal. With the Italy turmoil, traders are seeking safety, this is a spectacular move in notes and bonds. The 30-year yield is at 3.09% heading towards 3.00%. Yields moving down is disinflationary and deflationary behavior. The SPX is at the strong S/R at 1505. Crude oil is 93.10 performing a round trip as well today, from 93 to up over 94 and then back down to 93. Keystone is searching through the junk drawer for the dramamine.
Note Added 2/25/13 at 4:36 PM: The smoke and dust is still clearing. What a wild whipsaw day, one for the ages. Keybot flipped back to the short side this afternoon at SPX 1502. The 8 MA is under the 34 MA on the 30-minute signaling bearishness ahead. Importantly, the critical 200 EMA on the 60-minute chart at 1499.91 failed today. The SPX 50-day MA is 1476.72, only ten points lower, so price may want a touch. The bears are driving the bus and unlike the fake-out move to the downside the other day, where the VIX dropped to signal that the market selling was phoney, today the VIX sky rocketed higher and stayed high as markets fell. Today was another key reversal day as well (today's high moved above the prior days high and the low and close is under the prior days low), the second one in five days, a very bearish indication. As long as the VIX stays above 15.60, now at 18.99, the bears have no worries. The move in the 10-year yield is phenomenal, closing at 1.86%. The financials were weak today causing market weakness. MS was hit hard so it must continue to maintain exposure to Europe.
The usual Monday ramp to trigger stops and HFT buying, but it didn't last long, not exactly a sign of strength. Sequester looms along with a -2% reduction in GDP and the market loves it? Everybody's VIX buy signal triggered but nothing is guaranteed in trading....
ReplyDeleteYep Charlie, very erratic action to begin the week. Italy election polls are getting traders in a tizzy. They were drinking wine this morning on the projected Bersani win but now Berlusconi is a wrench in the works. We will know for sure this evening, say between 8 and 10 PM EST. Bears need VIX 15.60 which would signal smooth sailing lower for markets. If VIX stays under 15.60, then the bulls will keep markets flat and floating higher.
ReplyDeleteIt's time for Congress to quit kicking the can down the road and make some tough decisions. If that means sequester, so be it. There's nothing that Congress can decide 6 months or a year from now that they can't decide today. Really, what's going to change? Only that more time will have passed and they will have done nothing.
ReplyDeletevery interesting markets :)
ReplyDeleteas said in a previous message, 1523 acted on ES as resistence (B wave in a possible a-b-c = forming down wave 4 / or wave (2) of down wave 4)
So now we are in C or in (3) of 4 , a down wave.
potential targets as per my opinion:
a.1508-1510 on ES than 1531-1535 on ES (30% possibility)
b.1497 (+/- 1 point) on ES than 1535-1540 (50% possibility)
c.1474-1478 on ES than 1497 than 1464 (final target in a 4th wave developed with 5 sub-waves) = (only 20% possibility due to the non-impulsive nature of late movement of 4th wave, a corrective movement as per my opinion , announcing a final 5th wave targeting 1546-1578).
d. another possibility credited by me with 0% chances but noted here: target : 1400 in a 5 sub-waves of the 4th wave down, also announcing another 5th wave higher after reaching 1400's area.
My strategy is to load the first longs at 1490-1946 (the previously owned longs were sold at 1523 today with a profit). Than more longs at 1474-1480, and at 1462-1464.
Watch out for March 1, or March 4 - the moment of start of 5th up-wave that will develop until April-May'13 (target: 1546-1578, with a potential uber-extension less probable to 1610-1615).
V.
As the market behaves seems like it's a) option: 1508-1510 on ES than 1531-1535-where B wave of ABC (4th wave) will finish , where A=B.
DeletePay attention cause from 1531-1535 a lower move to 1497 might start (the C from ABC-that's the 4'th wave - reaching 1531-1535 will be made with ugly RSI over 70 on 60 min, 4 hours, maybe 1 day charts, and with some negative divergences on other indicators-i.e MACD).
Cool markets... they're like some wild animals ..like them :D!
V.
Interesting stuff, V. On the technical side, the VIX 15.60 is key. If the SPX drops under 1500 and the VIX is over 15.60, the broad indexes should sell off as long as VIX stays above 15.60. The 200 EMA on the 1-hour chart is 1499.91, let's call it 1500, so the failure of 1500 is serious business and a bounce right away would not be anticipated, but, the VIX would answer that question at that time. It is interesting times, this Q1 period of 2013.
DeleteVery tricky market here, PTB are clearly trying to keep DJIA above 14K and SPX above 1500, if they succeed then there could be another rally up to 1531 or even 1540. By all rights markets should be tanking due to bad news out of China, Italy, etc.
ReplyDeleteKS what would it take for Keybot to flip short again?
The spike in the VIX well above 15.60 is very bearish for markets. SPX 1502 and lower, if it holds for several minutes would probably cause Keybot to flip short.
DeleteBeing traders, this is the kind of day we like. But can you imagine someone investing their life's savings in a market like this, and not watching the day-to-day action? This is the kind of trading day that Congress should be quizzing Bernanke about tomorrow. (But that's probably putting way too much faith in their wisdom.)
ReplyDeleteAunt Maggie and Uncle Bennie already run in circles in their houses with their heads burning in flames after they bought right on the top .... screaming :" Aaahhh, my head is on fire!" (Beavis & Butthead style) :) ...
DeleteAnyway, "The" top is not yet here...
Although, this market behaviour is strange. The a) option from my previous comment is not valid.
Still searching....
V.
Looks like the drama will continue into the evening until the Italy election results are sorted out. Italy will probably have another election, what a mess, this will cause trouble all over Europe. Euro is 1.31. But, markets keep ignoring bad news. The clump of stuff to ignore is growing too big to ignore.
ReplyDeleteSpx below 1500 .... Oh my!
ReplyDeleteSearching for someone financially really powerful to lift those markets .... :) ... i didn't bought my shooorts :) !
I'll start singing "I need a hero" - Bonnie Tyler - and my voice is awful when the markets leak and i don't have shorts! :)
" i need a heeeeero " :)
V.
wow crashhhh
ReplyDeleteHelloooo...get ready for the ride to VIX 22.00! I love it!
ReplyDeletebuy the dips folks. wave 4 down may have completed today with wave 5 to 1550+ to come starting tomorrow! that's why the keybot remains long through this selloff...
ReplyDeleteWow that was fun. So V, you're thinking we'll keep this drop alive until then end of the month and move down another 10-15 points? Are there other EWT possibilities now? KS, did our algorithmic friend ever flip? Just a note that Arnie posted the following a while back, which seems to still be in play (although for full disclosure, I know NOTHING about ANYTHING so don't trust anything I write). "The move up from 1343 to 1438 was IMHO wave 1. Then we got an ABC for a wave 2 correction with A to 1412, B to 1448, and C to 1398. Wave B and C and whole wave 2 relate perfectly from a Fib. retrace and extension perspective. Now the market is working on a wave 3.Assuming wave 1 was 95 points and wave 3 started at 1398, we can assume 3 to extend: 1.382x wave 1+ wave 2= 1.382x 95 + 1398 = 1530. A wave 4 should then retrace to ~1500-1490, and wave 5 should then extend to 1.618x 95 + 1398 = 1550. If this 1520-1550 top would be IT long term for the markets or not, I don't know. I don't want to look that far ahead in time. Let's trade it day by day, but for now the market has spoken." Where is Arnie by the way? As much I love everyone else here, I still miss him too.
ReplyDelete''So V, you're thinking we'll keep this drop alive until then end of the month and move down another 10-15 points? Are there other EWT possibilities now?''
DeleteI don't know. For the moment I'm quite thrilled by the action today.
Even Bonnie Tyler died on my lips :D ... Don't need a hero anymore... no more paper-wave fake heroes and markets :).
Maybe Ben will talk-up the markets tomorrow and the day after ... but sequester being close Thursday will mark a lower point reached in the markets ... Yes, I think that more downside might be expected.
V.
The way things have been going, it feels like our Congressional friends will kick the can tomorrow so hard that 1550 will come in no time. Is it possible that the sequester is priced in already?
DeleteIs Anony's point valid? How would Keystone know to wait for this huge drop and not flip? If KS programmed it that well, even more props. You are clearly infinitely more brilliant that I can even imagine.
ReplyDeleteKeybot flipped back to the short side at SPX 1502 this afternoon. You could have that vibe this morning, it was in the air today. Keybot had to eat about 4% or so but we are in special markets right now. It's interesting to see the markets react to the Fed, Bullard on Friday, that saved the day, and then Italy today, that killed the market. Stay tuned since the results from Italy in about four hours may change it all again. In a nutshell, as long as the VIX is over 15.60, the bears are in control.
ReplyDeleteIs the action last 3-days constitute a bullish stick sandwich? Any TA experts care to chime in? We had a bearish stick sandwich back at the beginning of February. I see the quant got whipsawed twice in the past few days...
ReplyDeleteAnon, Keystone has to say that you did provide a laugh. Bullish stick sandwich. LOL
DeleteHi keystone,
ReplyDeleteOn my screen KB flipped short after hours not during trading hours. I checked many time in disbelief. Is this a technical website error?
Keybot flipped back short at 3:20 PM. If time permits, the updates are provided as soon as possible, otherwise, as time permits. Today was a busy day especially with the rare double flip. That is why the target sectors and numbers are provided ahead of time so a heads up can at least be provided since it may take some time before things are posted and updated. Today, once the day started going south, SPX 1502 was a trigger to move back to the short side.
DeleteI checked the KB on the left bar of the blog web page by clicking reload. When the page was reloaded it was indicating bullish in green fonts. Is there more reliable way to check KB status?
ReplyDelete