The bulls are relentless. Bears cannot even receive a small break. The S&P futures are up strongly pointing to a test of SPX 1531-1534 at the opening bell and likely a new all-time closing high print for the Dow Industrials overtaking 14164.53 from the October 2007 market top. The all-time intraday high for the Dow is 14198.10 on 10/11/07. The lower volatility crushed the bears yesterday. Market bears do not have hope unless the VIX moves back above 15.55. The markets need to resolve the divergence of commodities versus broad indexes. The regular asset relationship of euro down = dollar up = commodities down = yields down = equities down, and euro up = dollar down = commodities up = yields up = equities up, is being tested. Equities are moving up no matter which direction the other assets move. Obviously, equities are being pumped by the Fed's easy money.
The CRB Rind Index slipped under the 13-week MA. This is one of Keystone's Other Market Signals and indicates bearishness ahead, however, it is only by pennies, and last week it failed only to recover. The Rind simply is another indicator that says the markets are at a decision point right now. Watch the 8 and 34 MA cross on the SPX 30-minute chart, currently the 8 is above the 34 indicating bullishness ahead. SPX resistance above is 1526, 1531, 1534 (upper BB), 1540 and strong R at 1548 and 1553.
Note Added 3/5/13 at 9:35 AM: Sound the trumpets. The Dow Industrials exploded up through 14200 which overtakes the closing and intraday al-time highs from October 2007. The Dow has never been this high in its entire history. Interestingly, Keystone's 80/20 rule is complete with the move from 13800 to 14200. The 14180 should lead to 14220, which is currently printing, and 14218 should lead to 14222. The SPX is running towards 1437 so the 1440 resistance is likely on tap. The SPX reaches the upper Bollinger Band on the daily chart. The upside target for the sideways triangle on the 30-minute chart is also achieved. TRIN is 0.85, bullish, but for such a euphoric day it would be expected to be even lower. VIX drops under 14 now at 13.46. VIX 13.40 is strong support so it will be important to see if 13.40 holds today, or not. The 10-year yield is 1.89% a touch lower than the 1.90% this morning. The euro is flat along 1.30 at 1.3045. Copper and commodities are higher today and equities choose to join in this direction, unlike the last few days. The RTH (retail) is down slightly.
Note Added 3/5/13 at 10:38 AM: Broad indexes continue higher. The SPX is through the 1540 resistance so a test of the strong 1548 resistance is likely. The ECB rate decision is Thursday morning so the equities markets may want to run or at least remain buoyant through tomorrow. VIX is holding the 13.40 support. TRIN 0.82. Volume is above average currently but not as enthusiastic as would be expected for such a historic day. The utilities, UTIL, have taken out their October 2012 high. RTH, that carried the markets higher the last couple years, is negative today. Tech and small caps are leading higher today which is a feather in the bulls cap.
Note Added 3/5/13 at 11:46 AM: TRIN is 0.66, uber bullish, so the markets will have no trouble remaining elevated all day long and print new highs into the close. VIX is 13.31 holding on to the lower support level. SPX HOD is 1542.53, call it 1543, so the move to test the strong R at 1548 remains likely. The previous Dow intraday high from 2007 at 14198.10 may become an interesting focal point late day. The Dow intraday and new all-time high today is 14286.37 so pay attention to this number the remainder of the day. Using the 80/20 rule for the Dow, a close above 14280 should lead the way to 14320. The 14270-14285 range is important for these reasons so price is churning sideways through here for the last hour. A break up through 14286 signals more blue skies for bulls, under 14270 should take the wind out of the sails. TRIN at 0.64 says lots more upside ahead. Volume was above average as the historic day began, but is petering out as the day moves forward, now on a below average run rate of about 85% of a day's average expected volume.
Note Added 3/5/13 at 1:10 PM: TRIN is 0.66 remaining low but appearing to want to base for today. VIX is 13.48 moving up off the support. Thus, some slight leakage appears inthe broad indexes. With a TRIN in the 0.6's, however, the bulls will rule through the close. WTIC crude oil lingers around 90. SPX is flat at 1540-1541. Dow is 14265.
Note Added 3/5/13 at 2:17 PM: The 30-minute chart is posted for reference (see the separate post); a bull flag target was hit today at 1543. The 1538 upper BB on the daily chart was also violated today. The 30-minute chart is negatively diverged now but the 1-hour and 2-hour charts want to play around through 1540-1548 for a few more hours. TRIN is 0.60 so the broad indexes will remain elevated through the close. VIX is 13.53 holding the 15.3-15.5 support level. Watch to see how much spank down power occurs into the close today from the 30-minute negative divergence. The thin volume is disappearing into vapor volume and fumes as the day moves along; the volume run rate on the markets is now only on pace for about two-thirds of a day's average expected volume.
the bears will be declared endangered species and will be protected by law... some little bears will be exposed to children in the FED's new Zoo, in a few years :)
ReplyDeleteV.
if XLF breaks 17.80 spx will head even higher
DeleteV.
I think I'm going to name my first child Keystone. My wife probably won't like it, but you know.... Shut up and get me some coffee.
ReplyDeleteKS, I wondered what you think of Cashin's thesis that the Smart Money will be selling as we come up to the SPX triple top (1553 in 2000; 1576 in 2007)?
ReplyDeletehistory is being written; ben bernanke has accomplished a new all time high with his money printing! will the S&P follow suit??? Kinda feels like it. 2 more pushes higher to finish this up wave, suck in the last retail investor, eradicate the last bear and then we can have a nice correction!
ReplyDeleteBut, more importantly. Thanks for the latest AAPL update KS. I bought at $422 yesterday. Nicely green already. IMHO the downside is limited vs. the upside. That falling wedge and positive divergence on many time scales simply can't be ignored. THANKS!!!!
For the the EW-ers among is. Market is now in a 3rd of a 5th wave, which means a samller 4th down and a 5th of a 5th up. IMHO SPX 1555-1565 with an outside shot at 1576 are possible. For now, the trend is your friend and the trend is up!
Markets remain a crap shoot at this point. As written on the site here, there are many tools that can favor both camps although the charts overall favor the bears for the weeks forward. Interestingly, volume today is now only at a run rate of 80 to 85% of a day's average expected volume. Sometimes in these markets it is best to sit and watch since the churn will get you otherwise.
ReplyDeleteThanks Arnie and KS. Arnie, where do you expect waves 3 and 4 will each end?
ReplyDeleteBen, it's a tough call since this is a 5th wave, which have failed/were truncated last 3 out a 4 times on the spx.
Deletebut my main count is as follows, based in FIB extensions:
1485->1525=wave 1 (40 points)
1525->1501=wave 2 (~20 points, 50% retrace, text book)
wave 3 is often 1.618x wave 1 = 1485 + 1.618x40 = 1485 + 65 = 1550.
wave 4 often retraces ~25% of wave 3 = 16 points = 1535. Wave 5 extends to 2x wave 1 or is equal to wave 1: 1485 + 65 =1565 or 1535 + 40 = 1575.
That's my preferred count.
correction!!!
Deletewave 5 = 1485 + 80 = 1565 (2x40=80, not 65...)
And KS, TRIN has been around 0.7 for an hour and a half, but the S&P has been waffling. If this is an indicator of buys vs sells, is this saying that people are generally selling non-S&P stocks but equally buying and selling S&P stocks?
ReplyDeleteTreat it more simply than that. TRIN at 1.00 is neutral with no advantage either side, under 1.00 and bullishness grows. At 0.60 the bulls will be running the markets higher into the closing bell. If the TRIN moves up to 0.8 or 0.9, the markets will flatten out and perhaps drift a touch lower. If the bears can push the TRIN back up to 1.00 and higher, the markets will sell off strongly into the close. To get back to your question, very simply, the low TRIN says the bulls are in control today.
DeleteHi Arnie
ReplyDeleteWhat figure you think will be the bottom of wave 4 and begining of wave 5.
Thanks
Anon, please see my reply to Ben above!
Deletethanks!
VIX still maintaining the lower support at 13.3-13.5. TRIN at 0.6, however, will rule the day for the bulls.
ReplyDeleteDoes TRIN matter once the trading day ends? So for instance, since TRIN has been low all day, including after the rally, but no additional rally occurred, is the expectation that there would be further rallying after hours or tomorrow? Or once 4PM hits, low TRIN for the hours before is meaningless?
DeleteIf the TRIN closes uber low, say under 0.6, or uber high, say over 3, the following day a move back to the other direction typically occurs. So a close this evening at 0.69, that is a low number, but nothing to firmly draw from. Use TRIN during trading hours only. Study its movement against the movement of the SPX. Today the TRIN started at 0.9-ish and worked downward all day long to a low under 0.6 at 3 PM (where the SPX was printing the highs), then the TRIN pushed higher into the close the last hour moving back up to 0.77 before closing at 0.69. So the move up in the final hour caused the markets to sell off into the close.
DeleteKS and Arnie, as always your insight is much appreciated. Thank you.
ReplyDeleteyou are welcome, please be aware that my counts are just theoretical, not set in stone, and based on text-book FIB-extension. The market always -of course- reserve the right to do something entirely different and in the end the market is always right. KS' market internals, charts, etc are KEY for me in tracking if a count will come to fruit or not. Never turn your back on this monster... it's been whipsawing many alike!
DeleteKS,
ReplyDeleteWhat does this mean :
Keybot the Quant Actual Trading -0.3%
The algorithm is a computer program that runs through its motions and supplies the trigger signal to tell the algo to flip long, or short. When that trigger occurs and the quant is committed to the turn, the ongoing trade is exited and the new trade is brought on line. The inefficiencies in this mechanical move (losing some seconds of time), as well as commissions are some of the costs included in the actual trading number. Also the algo may use double ETF's which will provide different percentage moves than the algo program itself. So the program is more of a one to one comparison with the algo directly pitted against the SPX Index, then the actual trading is simply the actual trading that occurs off of Keybot's signal and reflects the true trading return using the quant. This year is a shade negative, call it flat, so it is a difficult year of trading thus far despite the 7% gain in the SPX.
DeleteWow, have been following thia site and the geniuses that comment. are you guys done yet? Fiscal clif, divergence, overbought, keybot the snot, has blown it. Short positions must be getting margin call galore. You guys are LOL hysterical. Rear view mirror cowboies with no clue. I feel sorry for ya.
ReplyDelete