The markets turned lower after the open more in line with expectations after the euro drops and the 10-year yield sinks. The SPX fell through the 1505 mentioned in the morning missive, so price printed 1499 in quick order. The utes moves above UTIL 475.49 but the smiles on the bulls faces turned to frowns as UTIL fell back through and is now printing 473. Bears will accelerate the market downside strongly if UTIL 467.67 fails. The SPX sees strong support at 1495-1498 as discussed with this morning's commentary and charts. The 8 MA stabs down through the 34 MA on the SPX 30-minute chart signaling bearish markets ahead.
Keybot the Quant remains long but if either UTIL loses 467.67, or, if VIX moves above 16, Keybot will likely flip short. The 10-year yield dropped to 1.93% and recovers a bit now to 1.95%. This was a clue that the high equity futures this morning were questionable. Ditto the euro, which fell thru 1.34 and now is fighting to stay above 1.34. WTIC oil fell thru 96 after being over 97 a couple hours ago. Oh vey. These are crazy markets with mixed signals and erratic and unstable behavior continuing. European markets are closing; they had a weak day across the board. Remember, all this trouble was beginning last week with Spain falling apart. With Draghi perhaps opening the door to easing and weakening the euro, the euro/dollar pair drops, dollar up, thus, this weakens copper and commodities, and equities. Copper turned negative.
The Dow Industrials are down triple digits. Watch to see if the SPX loses 1500, and more importantly 1495-1498 support. Big trouble is on tap should this occur. TRIN is 1.53 verifying the bearish preference today but it is not overdone, a bit stronger than steady-eddy selling, firmly bearish. AAPL is flat at 457. MWW is moving wildly today. Keystone would have taken profits yesterday knowing about earnings today but forgot. MWW remains attractive despite the negativity.
Note Added 2/7/13 at 12:31 PM: The euro is at 1.3401. Gold is flat. Copper is negative. The SPX is 1502. WTIC oil is 95.75. The 10-year yield is 1.95%. Markets are stumbling along. Copper and JJC will likely become important in the coming days. QQQ still inside the tight BB, for now. TRIN is 1.46 reinforcing continued bear action today.
Note Added 2/7/13 at 2:54 PM: The euro is at 1.3400. UTIL is 474.68 the bulls trying to flex their muscles and push up through 475.49. The SPX is 1507 recovering off the lows. The markets continue to want to give the bulls the benefit of the doubt. VIX is fighting for 14. Crude 95.80, under the important 96 level. Brent oil is positive, over 117, so there must be some underlying problems ongoing in Egypt, Syria and/or Iran. The 10-year yield is 1.95%. The parameters result in markets staggering sideways not unlike Cousin Larry after he imbibes in some moonshine, for medicinal purposes, of course. TRIN is 1.26 keeping the bears firmly in control today. The SPX minute and hourly charts are not tipping their hand today and simply venturing sideways ahead. The 8 MA is curling up on the SPX 30-minute chart due to all the mid-day lift. Watch to see if the 8 stays under the 34 MA on the 30-minute chart through the close, if so, that signals continued bearishness into the weekend. AAPL keeps teasing the island reversal on the daily chart. The weak euro is going to create continued market weakness.
Note Added 2/7/13 at 3:30 PM: UTIL 474.87. SPX 1507. TRIN 1.27. Keystone shorted LL opening a new position that is short lumber. Lumber was pumped higher with the Boise lumber IPO yesterday, BCC, that is likely a good short as well even though it is only a couple days old, but since no TA exists for it yet, it is best to leave BCC alone. In the housing sector, we have watched the negative divergence spank down for MHK, flooring, SHW, paint, USG, gysum, WY, lumber, but interestingly, LL has held up, so perhaps it is time for it to take a turn in the barrel. LL exhibits attractive negative divergence on daily and weekly charts. The retail sector had good news this morning but RTH and XRT are flat to down, perhaps the retailers are priced to perfection and the negative divergence will start pushing them lower.
Note Added 2/7/13 at 3:48 PM: Bulls tried to push the TRIN lower but it popped again now at 1.35. If bears keep the TRIN above 1.20 they are fine through the close.
I love it... "Oh vey. These are crazy markets with mixed signals continuing and erratic and unstable behavior"....
ReplyDeleteIt's just sick we got flooded with sells in Gold this morning only to get pushed back with a flood of buys running us from 1675 to 1665 to 1680 - and oil I just didn't even bother with that one I wanted to buy 96.60 this morning but I know how that works because I feared 96.00 today runs to 97 and I don't even know where it is now. JO got hair cut of 9 cents I was looking for but I'm not going to add anymore hear just in case it comes off 50cent or more tommorow on shakeout in the coffee. Futures are just down right disorderly choas lately.
there it is 1.405 KC @ the the NYBOT checks in taking a little more taking that .15cents off the JO I know I should turn back on and buy more again here but I also know from past experience go to well once a day unless you go to many times and have to much and it spoils over night...
ReplyDeleteWas going to add more JO today, one-hour and 30-min charts are happy as this as a bottom but 2-hour wants another low. Thus, maybe add today at 31.20-31.40. Now printing 31.47. Since under 32 it may want to explore down to 28. Since a 2-hour candle or two means four hours, maybe let JO play out today and check the action into the close today. Coffee will be tricky but it is very reminiscent of natty gas last year. Perhaps it will take some patience moving forward.
ReplyDeleteSlow and steady because coffee ussually doesnt rip up we are at historically low levels.... So translated into Jo when coffee fails todecline any further it will probably just be an inside day taking JO up 50 cents.... This isnt going to pop up a few dollars this more like an investment that you trade if it pops instead of trade futures market take time to basee and ussually test a base three times before the rip up... We cold be talking about months here but 1.40 holds this week we can get some opportunity to lighten up and/or sell calls in order to ratchet down less than ideally priced purchases...
DeleteHy KS,
ReplyDeleteThe megaphone pattern might also look like a broadening top , or something alike. I guess in January or February 2010 something like that appeared.
The key today is the level were we will close. I guess (if i'm right) we won't see my target of 1520-1527 - for the moment - :( ....
One question : this pattern - broadening top - can have more than 3 waves or it has to have 3 waves (not more, not less)?
I guess that the potential broadening wave (with a target at 1425-1440) will be denied if we close in green today? Or not?
thanks,
V.
I longed into London close there are 1000 contract buys gallore on the ES that was all the support I need to see...
Delete@ MCAP:
Deleteand what that this mean with this support? That the scenario with broadening top with 3 swings is not valid? Or it is?
V.
I refer to the charts but I trade based prices predominantly there was large trades crossing the tape to the upside once London close my algo colleagues all had there algo on buy I bought it thats all no further thought given to it than buy the dip...
DeleteIs the UTES based on the close or intradat to flip short?
ReplyDeletedon't worry I don't thinking KS is flipping short today... Utilities should hold up going through the day. VIX is falling off anyways...
DeleteYep, MCAP is correct. VIX is above 14 so 16 is not that far away. Chris, UTIL uses real-time numbers. Now at 473.36, bulls need 475.49, this number is in play thru tomorrow. The bear number is the 50-week MA now at 467.67. The winner of this ute fight is likely more important than where the broad indexes sit now, since it will verify the correct direction forward.
ReplyDeleteYou can monitor $UTIL on www.stockcharts.com to keep track of it throughout the day.
V.
ReplyDeleteWhy do you keep asking KS to comment on your elliot wave counts?
I do not seem to remember KS using elliot wave in his brilliant analysis techniques.
Anon, all questions and comments are good. All the various techniques gel together to form an overall picture. Keystone does watch the wave counts but relies mostly on other techniques as you say.
DeleteI think we might be finishing a diamond topping pattern in the market very soon, even this week. What do you all think?
ReplyDeleteThat is observant Paul and it definitely jumps off the page. With overbot conditions and negative divergence it does favor a top and reversal, however, this SPX 1507-1508 level represents the right hand side of the diamond so price should not move higher than this resistance, for the diamond pattern to remain intact. If price moves up into the close, the indicators are more important, to see if negative divergence remains, since any late day pop will simply lead to a negative divergence spank down tomorrow. If SPX 1495 fails, that will get all long players in a tizzy and fear and panic will start to fester. Above 1495 and the bulls are okay. Bulls trying to force UTIL higher but cannot seem to get it moving.
DeleteOK. I Googled the diamond pattern and hardly anyone seems to be talking about it yet.
DeleteI am looking at going leveraged short if the S&P 500 drops below 1495 (bottom of diamond) and utilities ($UTIL) drop below your ~467.67 level.
KS, thanks for maintaining such excellent, broad-based analysis. As you keep noting, given XEU (euro) looks to have topped and UUP (USD) to have bottomed, SPX will have to succumb to gravity here as the euro sinks. Mario et al. are pulling every trick in the PR book to keep the fantasy that EU is fixed afloat, reality is intruding...
ReplyDeleteas long as he keeps talking down the Euro this will slow things in equitys and gold
DeleteKS, TRIN closed @ 1.37, which is above 1.20, so are the bears looking good thru the weekend into Monday? Next week is OpX plus a 3-day weekend coming, the market will likely be buoyant. What are the possibilities that SPX will get to 1520?
ReplyDeleteAlso, you mentioned SOX is negatively diverged, it gap down to 415 today and head back up to 420? Your comments will be appreciated.
Kamry