Semiconductors are the big story falling over 4% in less than three days. SOX has a 417 handle far under the 425 that Keystone's algo identifies so perhaps this market move lower may have some staying power. The banks are getting hit today, XLF now under 18. Watch the XLF 17.80 level that will create market mayhem. Ditto VIX 14.50 (now at 13.56). The 8 MA is under the 34 MA on the 30-minute chart signaling bearishness for the hours and days ahead. The 1560 support failed as highlighted on the 30-minute chart so the 1557-1558 came quickly.
Crude oil drops to 95. The 10-year yield is 1.82% moving in line with equity bears. The euro is 1.2841; it will be tomorrow's story. TRIN is 1.48 firmly bearish for today. Markets do not typically bottom on a Wednesday so if this weakness remains through the closing bell, then tomorrow morning will likely show further weakness. Check out the RUT chart from last evening, price is now at the 50-day MA at 923.45, an important support test. RUT is down 1.2% today, Nasdaq down 0.8%, SPX down 0.8%, Dow down 0.4%. So tech and small caps are leading lower, as well as financials, which is bearish. At the same time, the Fed's easy money pumps the new asset bubbles in dividend stocks, healthcare utilities and such and this is evidenced by the Dow down the least amount. The central bankers have turned the markets into a circus. The SPX 20-day MA is 1556.21. The LOD is 1556.71 which tested the 20-day MA twenty-five minutes ago. A second test will be dramatic, here she comes.....
Note Added 1:29 PM: SPX bounces on the second test of the 20-day MA. The 10-year yield now drops to 1.81%. Bears have to keep pushing if they want to build momo and the 20-day MA at 1556.12 failure would create that momo. SPX is now printing 1556.63.
Note Added 1:33 PM: The 20-day MA fails. RUT fails the 50-day MA and it is leading so the SPX, Nasdaq and Dow should experience tests of their 50-day MA's moving forward. The SPX 50-day MA is 1528.59.
Note Added 2:55 PM: SPX is 1556.32--the fight at the 20-day MA at 1556.11 continues (a back kiss of the 20-day MA). SOX is 416. XLF is 17.94. VIX is 13.89. TRIN 1.43. RUT remains under the 50-day MA. Defense Secretary Hagel says North Korea threats are a "real and clear danger." An anti-missile defense battery is sent to Guam. Markets have ignored geopolitical events up to now.
Note Added 3:28 PM: VIX is 14.13, the bears need 37 more pennies of volatility upside and it will unleash horrendous market downside. XLF is 17.92 only one thin dime away from creating serious market mayhem. SPX is at 1554 under the 20-day MA.
Note Added 3:31 PM: Fed Willams, a dove, says that the Fed may taper QE starting this summer and end it by the end of the year. This news should weaken markets since Williams is a dove talking about tapering the QE (you expect the hawks to talk tough on QE--not the doves).
Note Added 3:38 PM: News wires report that North Korea has received internal final approval to lauch a nuke strike against the U.S. Of course, America is not all that concerned but these are tough inflammatory words that will create drama in the markets. SPX is now at 1550. SOX 414 continuing to crumble. XLF 17.87. Whoa, VIX 14.51. Markets may get very ugly very fast now on this volatility failure.
Note Added 3:45 PM: Stick save. VIX plummets to 14.29, it cannot hold the 14.50+ level so the markets recover. Lots of drama today. VIX 14.50 seals the bearish fate of the markets so the bulls are fighting to prevent VIX 14.50 with all they got.
Note Added 4:02 PM: SPX 1554. SOX 416. VIX 14.20. XLF 17.94. TRIN 1.62. Volume made an appearance today, the sellers came out strongly with volume running about 110% of a day's average expected volume.
Anon asked me y'day about tony and avi's websites:
ReplyDeletetony's: http://caldaro.wordpress.com/
avi: https://www.elliottwavetrader.net/ (paid service, but provides a very good update on Marketwatch each monday morning: http://www.marketwatch.com/trading-deck/stories?authorid=14296)
I regard Pretzel as the best EW-er!!
KAPOEJA, unless this morphs into something bullish which I can't even count, today's price action STRONGLY suggests we'll see 1500 +/- 15 before we'll see 1600 +/- 15... (like I said y'day!). SDSs nicely green today. I am holding this to 1530 +/-10, then sell for the bounce and then short the bounce again down to 1500 +/- 15.
ReplyDeleteSounds like a plan Arnie. SOX 4256 is key and it really looks like a significant failure today. Even if the broad indexes come back up, if SOX stays under 425, the markets will turn south again. Bulls need SOX 425. To increase the selling, bears need either VIX 14.50 or XLF 17.80. So the SOX, VIX and XLF take on more importance than the actual moves occurring in the broad markets, since their behavior will dictate market direction. SOX is 416.40 falling like a stone. VIX is 13.98. XLF 17.94. The drama continues.
ReplyDeleteFirst line should say SOX 425.
Deleteright you are! Amazing to see how everything works in concert and is related to each other in the market. I am stoked to see KBQ short now too! We all knew this day was coming, and it surprised me by by a day or so. But, I hedged for it by going short, since the upside was limited regardless (MAX 1600 vs MIN 1500 from a 1574 high surely puts the most rewarding cards on the short side...)
DeleteVIX just punched up thru 14.50 but it did not hold. VIX above 14.50 and you will see nothing but bearishness ahead. VIX now dropping at 14.21 so the bulls provided a stick-save. Should be another battle at VIX 14.50 today or tomorrow.
ReplyDeleteThis Kim Un guy has lost his mind.
ReplyDeleteStay calm.
DeleteNKoreea rockets can barely reach the western part of Alaska (an area of 80-120 miles counted from the ocean) ... not a big deal, not one single US american town is endagered!
Yes, Guam may be reached, SKoreea also, but the mainland of USA no.
My opinion it's that this kid is a suicidal psycho! His father was wiser than him in the way he balanced the international relations with his neighbours....
V.
It's sad. You have to figure that a good majority of the North Korean people live every day in fear. A bunch of innocent people are going to end up getting hurt (or worse) if this guy keeps it up. Regardless if it's North Koreans, South Koreans, Japanese, or even Americans that are hurt in the process, it's still unnecessary.
DeleteKS, a big picture question...aren't the indicators u use, like VIX--X a result of the collective bets all the traders make, and not a tool they use? so how can the bulls fight to keep vix--x below 14.50? In reality it just IS below 14.50. Tomorrow the psyche may change that and it goes above 14.50, or perhaps it stays below. not just semantics here, or is it? thx!!
ReplyDeleteThat is correct the way you write that but the description helps visualize what is going on. Keybot the Quant identifies what sector or sectors are of greatest influence on the market direction at any point in time and at what level. So, for today, SOX 425 was most important, which failed and joined the bear camp, followed by VIX 14.50, which failed but recovered for the bulls falling back under 14.50, and the third is XLF 17.80 which is pennies away from failing but bullish for now. So you are correct in saying the VIX simply is where it is. But to illustrate the importance of the 14.50 level, visualize it as a fight for that price, so the bulls are fighting to keep it under and bears fighting to push it above. Since SOX turned bearish now, VIX and XLF remain important for tomorrow at these respective levels, they may be tweaked a few pennies depends on what Keybot says when the commentary is updated. So it is simply a visualization thing to understand what is driving the market direction underneath the hood.
DeleteThis board is so funny, when the market goes up it's very quiet and KS is pretty calm. When the market tanks KS goes maniac with alot of posts. Really funny. On bull days all the regulars are non-existent along with KS, and you know they are just suffering. MArket drops 100 points after going up 1500 in a year and it's war drums, and Cyprus and WOW, wow saw that coming on the indicators. SOX! POW! WOW! FOOEY! LOL.
ReplyDeleteI'd like to see your face in q3/2013, smart*ss, when the market will fall like a stone in the face of all now-FED pampered bullish traders.
DeleteIt's easy to be a hot-shot when you're FED-backed!
V.
It may seem that way Anon but it is simply due to the wild action in play on any given day, or as Keystone is available. Today was a wild and important trading day, failure in semi's, the statement by Fed's Williams, the N. Korea stuff although that is only bluster, the major indexes losing 50-ay and 20-day MA's, and so forth. When the markets sell off and the CPC spikes up over 1.20 and the VIX jumps into the 20's, the same wildness will appear on the board as a market bottom will be identified and time to go long. Get with the program my man.
DeleteAnd also Keybot the Quant flipping short, very wild day today, tomorrow likely will be as well.
DeleteI do believe u can go start ur own site, and try to make it better than KS has...but that would be impossible, since KS doesn't work from opinions, like you do. KS has his indicators and simply reports them. what YOU do with them, that is another thing... KS isn't suffering at all, but blogging in a humorous and educated way that provides real market insight. Once you get your education part done (since it is obvious you can't see past your own silo) then you can work on the humor part. good luck!
ReplyDeleteGreat comment. KS .... keep up with the great commentary. There are many more of us that appreciate your work and effort. You just have to ignore the a**holes.
DeleteAll comments are welcome. As long as everyone states their case in an intelligent manner, it is all good, some of it is great comic relief as well. No profanity since younger folks may be reading. It is interesting to hear everyone's opinion no matter what it is. Central bankers may plot a stick-save overnight.
ReplyDeleteBulls hate bears. Always have, always will. Bears are fist pumping because April has brought reality to the market. It's not invincible and it's artificially propped up. Making an investment is no longer based on fundamental corporate research. It's a game and the bears (and smart bulls) know how it will end. Now it's a matter of timing the demise.
ReplyDeleteThe market will probably gap up Thursday for no substantive reason which is fine with me. We can all play both trends.
Great job KS. This site is the most informative and entertaining market site I've ever seen. Thanks for all your hard work !!!