The new trading week is off and stumbling. The SPX dropped through the 1548 support but recovered and is now printing 1549.44. The 8 MA stabbed down through the 34 MA on the 30-minute chart signaling bearish markets for the hours and days ahead, however, the 8 and 34 are continuing the battle so this has to be monitored all day long as the key determinant of who is winning, bulls or bears. Volatility jumps higher, the VIX is at 13.27, but far under the 14.95 bull-bear line (this target is reduced as trading begins). So the bulls are fine with VIX under 14.95; bears need to push the VIX above 14.95. The semiconductors, SOX, prints a low at 426 only five points from the 421 bull-bear line. If either the VIX moves above 14.95, or the SOX moves below 421, Keybot the Quant will likely flip short.
The Housing Index number is a shade weaker than expected but this is typically not a big market mover. Housing Starts tomorrow morning and LEN and KBH earnings are far more important to affect the housing sector this week. With the VIX remaining well under 14.95, watch the 8/34 MA cross as described above to gauge the broad market direction today. Markets may adopt a sideways funk into the Cyprus vote tomorrow and FOMC on Wednesday. The euro is leaking lower now at 1.2926. JJC (copper) is down -2.2% today and fell under the 43 level.
Note Added 3/18/13 at 11:21 AM: Markets languish sideways. The 8 MA on the 30-minute is 1556 so if the SPX, now at 1553, stays under 1556, the 8 MA will remain under the 34 MA and continue to create market negativity moving forward. VIX is 12.86, well under the 14.95 bull-bear line, so bulls are not worried. TRIN spiked to 1.66 at the opening bell, now at 1.32, and represents orderly selling today that could easily continue. There is no panic or fear although the NYAD spiked to a low at -2000 for an instant. A waiting game begins.
Note Added 3/18/13 at 1:03 PM: Markets move through a sideways malaise today. The 8 MA remains under the 34 MA projecting bearishness ahead. The SPX is at 1556 above the 8 MA now at 1554 so this will curl the 8 MA upwards for the bulls if this action continues. The market bears need to push the SPX lower immediately, under 1554 and lower and that will continue the overall bearishness moving forward. The VIX is 12.76, well under 14.59, so the bulls are not concerned since they will eventually retake control of the broad indexes if the VIX remains under 15. TRIN is 1.37 remaining elevated representing steady-eddy selling. Dr. Copper maintains its weakness even leaking lower. Volume is very light today at a run rate of only about 85% of a day's average expected volume. Looks like lots of traders are simply sitting and watching. The positive sentiment remains in the markets. SPX S/R is 1561, 1557, 1556, 1555.74 (Friday's LOD), 1553, 1552, 1551, 1548, 1547, 1543 and then 1531. The SPX held the 1548 support today and the 1561 is the upside ceiling. Pay attention to 1556, 1552-1553, and 1548. The waiting game continues.
Note Added 3/18/13 at 3:03 PM: SPX at 1555.74, battling the Friday low. VIX 12.79. TRIN 1.13. JJC 42.75; copper continues to become sicker and sicker as time moves along.
Note Added 3/18/13 at 3:28 PM: VIX 13.13, a potentially unlucky number for markets. The SPX leaks lower as the VIX moves above 13, but the VIX remains far away from the 14.95 the bears need to pop the champagne corks. TRIN 1.49 indicating firm market selling favoring bears. SOX is 428.70 far above the 421 danger line.
i guess now we have a closing gap situation on spx ... let's see what happens when price reaches 1552-1553.
ReplyDeleteV.
BTFD... Somebody asked me where I had my stops on my shorts; I see this market go MAX to 1570-1580 and will add at 1570 and 1575 if needed. IF we get there, soon, it would simply mean this was a 4 of 5 of 3. I can't reconcile the market going much higher in the current count. So 1580 is max pain
ReplyDeletetalk about a round trip... Gold was nuts lasst night
DeleteThe 8 MA is under the 34 MA on the SPX 30-minute chart giving the bears an edge, but the VIX stays under 15 giving the bulls the slightly stronger edge. Dr. Copper's collapse is serious today and should ripple through the markets, a big plus for the bear side. The doctor leads but everyone has been ignoring him for one month. Volume very light today so price can be pushed anywhere.
ReplyDeleteKS, as you predicted; markets weak, but AAPL strong! Sometimes trading can be that predictable and easy.
ReplyDeleteSome other techies I am closely following: FB, BBRY, HPQ. The former is putting in a nice bullish reversal candle on the daily with a stab below the lower BB, and Dec 28-31 gap fill today. IMHO that was all she wrote for a big 4th wave since the Jan. 28 High. May now be in the starting gates to a 5th wave to close that nagging gap between opening day and 2nd trading day... Also note the positive divergence on the daily MACD, FSTO and RSI
BBRY has some nice big green candles on the daily and price remains above the 50d SMA.
HPQ is now in the depths of a 3rd of a 3rd wave (strongest wave); looking at 23-25 area for this wave to peak. Will load up on 4th wave (low 20s) to ride the 5th wave up; probably to high 20s.
Perhaps correct with AAPL but still incorrect on the inverse ETF's. The copper weakness is big-time and no one is even paying it any attention. FB looks sideways with a lower bias, but look for the handle to finish for the C&H with break out line at 32.4, bottom of cup, 18, so target of 47, but the breakout will probably not occur until May-June. BBRY looks like lots of sideways so not much going on there for a play. HPQ ot the moon, it looks like it even has a bit more juice, it will likely form an M top and roll over sideways. 18 led to 22. 22.8 should lead to 23.2. So HPQ has a some more juice but that is like picking up a nickel in front of a bull dozer. So FB looks like the only one worth watching, watch the C&H develop.
ReplyDeleteThanks for the insights on AAPL, FB, BBRY and HPQ. Beside HPQ -which I sold at 19... I know too early... LOL..., but profit is profit! I am long each of the other tickers. Interesting to note your possible break-out time frame on FB. I agree on the C&H, and target. All of these are LT (months+) hold for me.
DeleteBtw, another one I "scaled" at 4.27 and sold at 5.27 is PGH. Looks like it completed a nice 5 waves up and now waiting for it to drop and settle at 4.80s area -or even 4.20s again- before another blast off. Thanks to your updates I am now much better at spotting bottoms and trade those
Arnie and KS - i noticed your conversation about FB and thought I'd share with you my thoughts on it as well. With tech momentum trades like GOOG and PCLN taking big dives today, I think FB's solid close (hammer looking) was notable. I have a trade idea and chart marked up on learningmarkets - let me know what you think of my points. I think 26-26.50 is important support that also represents a possible neckline of a H&S pattern.
ReplyDeletehttp://www.learningmarkets.com/facebook-looking-ahead-to-april-earnings/
thanks for your insights and reply. I am seeing the same. target wise i am not sure if it will be $32ish, or gap fill based on the C&H pattern: 26 + 15 = 41. Time will tell,
DeleteInteresting stuff Terrence. The squeeze of the Bollinger Bands, however, are showing that price is moving strongly lower so far as a result of the squeeze. Look back at the BB squeeze in late December that was a rocket ride upwards. The squeeze appears to be down now. The RSI (7) is very interesting for identifying bottoms, however, it never has fallen thru the lower red line as yet, note how the overbot conditions show moves well above the red line. The RSI (14), Keystone's default, shows an RSI at 38 and appears to favor a move lower. FB very much has a sideways vibe to it. The BB squeeze actually makes the price action forward more negative potentially. Probably a move through 24-27 for a month or two to finish up the handle for the C&H, and then up and away. The money flow, stochastics and MACD histo are positively diverged bolstering your outlook, but overall it may be lots of sideways ahead for a few weeks.
DeleteKS - yes - I did notice the directional bias of the BB's aiming lower so I agree with you on that point. The H&S formation is bearish as well. I often find around necklines that there can be multiple attempts by bulls and bears to push prices around. An interesting trade idea might be a long strangle, expecting an increase in price volatility instead of playing a directional trade. I may consider converting my idea if I see price start to go against me
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