The bulls leap higher at the open with new all-time highs for the Dow Jones Industrials and new 2013 highs for the SPX. The new all-time high for the Dow is 14413.17. The new SPX intraday 2013 high is 1551.65. Everyone looking for SPX 1550 was correct; Keystone did not think the SPX would print 1550. Markets have lots of Fed momo behind them. The dollar is up today to 82.82 and the euro has fallen under 1.30, a big drop, now printing 1.2976. This places Brent oil at 110 and WTIC crude at 91.42. The 10-year yield is elevated at 2.06%. So copper and commodities are down on the stronger dollar but equities are up. The typical asset relationship continues to adjust and is not operating in sync. The VIX is under 13 verifying the bull move today. TRIN dropped to place another uber low number at 0.50 at the open but is now back up to 0.92 a smidge on the bull side (1.00 is neutral bull-bear line). Keystone took profits on the AAPL long exiting the position and will look to reenter long. Also added more to the ERY long trade.
Note Added 3/8/13 at 9:50 AM: By the time it takes to blink or pick your nose, the markets reverse the up move and sell off. Sellers entered the market after the opening pop. The VIX is back above 13 now at 13.15. TRIN catapults to 1.30 now firmly favoring the bears and the sell side today. Never a dull moment at the circus.
Note Added 3/8/13 at 10:08 AM: The up dollar = down euro = down copper = down commodities relationship is in sync. Yields would be expected to want to come down as well as the equities markets, however, the equities markets remain positive. And the VIX is positive as well now which is another mixed signal. The 10-year yield was printing higher numbers this morning at 2.07%+ and are coming down a tick or two so that direction is in sync with the relationship listed. Equity markets are the odd man out, the asset relationships say equities should be selling off but they remain positive. That says stocks are pumped by the Fed, plain and simple.
Note Added 3/8/13 at 10:16 AM: SPX slips a bit negative, ditto Nasdaq. TRIN is 1.15 helping bears but only by a smidge. If the TRIN stays at 1.15 or higher, the markets will remain flat or sell off from here forward. The market bulls need to push the TRIN under 1.00 if they want to recover today. VIX is 13.26 hanging around that 13.2-13.5 support area again. XLF is flat at 18.17 so obviously the bank stress test results were priced in ahead of time.
Note Added 3/8/13 at 11:14 AM: The VIX steadily drops over the last hour from 13.30 to 12.69. Hence, the SPX moves higher. TRIN is 1.10 continuing to favor bears. Interesting to see copper beaten but the equities markets do not care. The 2-hour and 1-hour SPX charts are negatively diverged so the assumption is that the day should develop weakness moving forward. Crude is at 91.10. The 10-year yield is 2.06%. The euro is 1.2916. The broad indexes are all positive. The SPX is playing around the strong S/R at 1548. Bulls have the upper hand above 1548, bears below.
Note Added 3/8/13 at 2:03 PM: The bulls keep the broad indexes elevated. TRIN is 1.01 so the bears lost their advantage. VIX is 12.66. The SPX HOD is 1551.65 which is a new high for 2013. The two major prior tops years ago printed a high of 1552.87 on 3/24/00 and 1576.09 on 10/11/07. Note that today's high is only 1.22 away from the 2000 market top. For this week, once the big pop occurred on Monday, the SPX is moving through a tiny ten-point range at 1540-1550. The bulls are currently winning the fight for the strong 1548 S/R and the negative divergence on the hourly charts has not yet kicked in any downside for the SPX. The negative divergence should kick in before the closing bell so it may make for a dramatic finish today. Fitch downgraded Italy which created a five-point SPX drop at lunch time but the bulls already recovered the drop. The market bears needed a down week this week since next week is typically an up week for markets well over 80% of the time (type 'March Seasonality' into the search box above to review the March seasonality factors affecting the markets). Typically, Friday afternoon buoyancy occurs as short traders pare back positions to reduce weekend risk (typically a positive event occurs over the weekend), however, these are not normal markets. Considering the fearlessness shown on the CPC put/call ratio as well as negative divergences, and ongoing European, Japan and China drama, it is likely more prudent to lighten up substantially from the long side going into this weekend. China releases data overnight tonight. The markets are susceptible to a negative event and many times the Monday's receive the wrath of these events. Any longs in the protfolio should be reviewed in the context of 'are you willing to hold that long stock for two years?' If yes, any market pull back is of no importance and if the markets drop 10% you will not be shaken, but, if you are not thrilled about maintaining a particular long position moving forward, today may be a good day to throw it overboard. Remember, cash is a position, there is nothing wrong with letting cash sit in the account as the markets sort out the drama. You may not be making money but you are not losing money either. The SPX continues the fight for 1548. Pay attention to 1552.87 as described above.
Note Added 3/8/13 at 2:42 PM: The 1, 5, 10, 15 and 30-minute charts, and 1 and 2-hour charts are almost all universally set up with negative divergence now. With 75 minutes of trading remaining, this may prove difficult for the bulls to keep the markets elevated. Things may get interesting now.
Note Added 3/8/13 at 4:02 PM: The bulls are relentless but some of the negative divergence created some price spanking in the final minutes. SPX minute and hourly charts will remain set up in favor of the bears for early next week. Interestingly, the new moon is Monday, so markets would be expected to be weak from now through Tuesday. The SPX took out the HOD today at 1551.65 and prints a new 2013 intrady high at 1552.48 and attacks THE top from March 2000 at 1552.87, but was unable to punch through, only 39 pennies away, that is interesting. The SPX closes at 1551.18. Volume is light again today. The Dow closes at a new all-time high at 14397.07 and prints a new all-time intraday high at 14413.17. The markets are fishy and now it is time for an enjoyable fish dinner at the local fire hall. The ladies have no doubt baked some tasty pies today.
whats the logic behind the ery buy as opposed to other etf shorts? Thanks
ReplyDeleteNothing Anon, there are always many ways to play, the general theme would be short energy. The ERY weekly and daily charts are setting up with positive divergence so a stronger bounce may occur for it (or conversely stronger losses). The chart appears to have based with limited downside remaining and proportionally more upside. The trade may be exited today if the markets sell off strongly, but it is an attractive trade moving forward. Looking at XLE, the sector spider for energy, it is trying to come back up for another high which would create negative divergence. The initial spank down from negative divergence occurred mid-February. XLE is a very attractive short on the weekly chart, but, as always, it may take a few days or week to set-up and roll over.
DeleteThanks KS, ERY makes sense, I am with you, just wanted to see your logic as the chart didn't look totally oversold yet
ReplyDelete"By the time it takes to blink or pick your nose, the markets reverse the up move and sell off. " hahaha I felt the same way, this business not a match for an indecisive person:-))
ReplyDeletekeystone,
the euro is under 1.3, does this indicate some reliable weakness now.
Filiz, weakness would be expected due to the drop in the euro but the equities continue to move up and against the grain of what the other asset relationships want. VIX is printing lows but the hourly and minute charts are setting up with positive divergence, as the SPX sets up with negative divergence for its hourly and minute charts, so that should indicate market weakness ahead. With the Fed, however, anything goes. TRIN 1.18, this will tell the story today, bears will create selling today as long as the TRIN stays here or higher.
ReplyDeleteDoes this market remind anyone else of '07?
ReplyDeleteOn another tree, notice the stalemate at 435 with apple. That had to be broken. Buying more it seems if 420 holds at this point. 80/20 still in effect.
ReplyDeleteShane, this market is definitely remindful of 2007, but Keystone said that a month ago. LOL Especially in the context of the duration of the rally. TheIraq War Rally started March 2003. Any rally is expected to last two years, 24 months, when the rally was in 2007 at four years, holy smokes, that was really something, like a correction would never come, then in October 2007, 4 1/2 years after it began, it ended. That weakness continued into the Fall 2008 crash. This current rally started with the QE1 stick save in March 2009. Thus, this rally is exactly 4 years, very long for a rally to not have a substantial pull back of 10% or more. It's close, probably any day or within a month or so.
ReplyDeleteOn AAPL, it's receiving the positive divergence bounce, would not be surprised to see 450 still yet on this initial bounce, then back down to 420-430 which may be a very quick move, then back up to 450-480. As everyone runs from Apple, it is likely a relatively safer stock than others. If the markets sell off strongly, AAPL is already beaten down and will not receive as harsh a down move, and with the positive divergence will likely be sideways through here or much higher in the days and few weeks ahead. By summer and into Fall, however, that will be a different story again, but over the coming days, weeks, and say month or two, Apple will probably be one of the better performers.
thanks for all the updates KS, I sold my longs at 1550, long since 1490, it's been a nice run, time to take profits and reflect. we may have seen iii of V of 3 at 1552 this morning, then iv of V of 3 to 1543, and v of V of 3 to 1552 again. The negative divergence on pretty much all times scales (except weekly and beyond), but especially hourly and daily, is not inviting me to hold on to my longs anymore. Never wrong to take profits, neither before a weekend (anything can happen...) and when the market is in such OB and diverged state. Now let the market show it's next hand and follow, cause I can't put my will on the market.
ReplyDeleteWe may have only seen iii of V of 3 today, with a last push of v of V of 3 to 1560s-1570s. But I leave those last points for the rest. If this up wave is down, than the downside risk is IMHO 50-60 points, whereas the upside reward may only be 10 points... Not liking that odds ration...
Have a great weekend!!!
bigger picture count: this 3rd wave is about done, and we should see a 50+ pullback soon (~1500). After that pullback there will be another run up to -IMHO- new all time highs. This all-time high should be followed by an ever larger pullback (75-100 points, depending on how it will get), which could be around the "sell in may and stay away time-frame). After that sell-off we should see one more final push, but it may not best the previous high, since it will be the final 5th. It should go own through summer into the fall. By fall a possible 40-50% haircut should start. Often crashes happen/start in fall due to change in social and investors' mood. This 40-50% drop will last about a year!?
ReplyDeleteSo there you have your road map IMHO. It will time well with KS' prediction and the fact that it never seems to end. Those are the typical hallmarks of a bullmarket. I am just waiting for my mailman to give me stocktips. If that happens, then we all know the end is near!!
Hi Arnie!
DeleteThis weird market will take small incremental up steps up to 1570-1590 (new all time high included).
after that , according to my calculations, a correction of aprox. 200 points to below 1400 (1343 - 1375) will happen in a waterfall move, during 3-6 weeks. The start of this down move will appear in my opinion after the FOMC of FED meeting in March'13 or April'13 (watch if Ben is saying that "members of committee argued for an exit strategy, an exit plan" - this will be the trigger that will make QE-addicted to fly away from the market).
Mid-to-end of April/or May will see the end of this move.
I don't see the present move getting beyond 1600-1615, the bull energy is almost exhausted (just take a look at participation, volumes vs. actual points gains). I don't see powerful traction forces there.
After falling and reaching and executing a double bottom in the 1345 area , we will see a final up move (based on a QE4 extension monthly volume-Yes, there will be smoething like that!) , up to 1615-1650 , maybe - just maybe!- close to 1700 points (but this option is in the most wet and wild bullish dreams - ... After that ... there will be a mayhem down move with a final target after 1-2 years in the 525-545 area on spx.
The second half of 2013 will see real wild VIX moves, both directions. Those using UVXY and others like that...check your life insurance :), might need that!
After VIX is reaching it's historical bottom (9-11 points) the BOOM VIX party may begin!
Those who are getting long now, at the present level for only 30-40 points potential gains vs potential loss of 200 points, must really have a strong wild heart.... or maybe they hate their own money!
V.