The markets have become a circus. The old-timer's look back to decades prior where at least the appearance of free markets existed but now, it has all become a joke. When a reporter can post an article at 2 PM EST that dumps the Dow Industrials 140 points, but then the same reporter tweets (Twitter) about one hour later at 3 PM that his article may have been misinterpreted, and the Dow recovers 100 points, the markets are officially an embarrassing carnival sideshow. The central bankers have created a shameful and sick market environment where equities now move based on journalist's opinions about the tapering of stimulus.
Sticking to technicals to make more sense of the mess, the utilities tumbled on the article release at 2 PM yesterday since the 10-year yield leaped to 2.19%. Watch UTIL 488.48 and 481.15. UTIL is 487.81 to begin the day so bulls are happy above 481.15 but bears are also happy below 488.48. The move in utes will dictate broad market direction. In addition, commodities remain key so watch GTX 4764 with price now only a few handles above creating market positivity. Market selling will appear if GTX falls under 4764. The markets are in a tug-o-war now, especially in front of the Fed rate decision, forecasts and Chairman Bernanke press conference tomorrow afternoon, and can easily go either way. Keybot the Quant, Keystone's trading algo, flipped long at the open yesterday but a whipsaw back to the short side would not be surprising. If either UTIL drops under 481.15 or GTX drops under 4764, and the SPX drops under 1631, Keybot will likely flip short. The bulls rule if UTIL stays above 481.15 and GTX above 4764.
The SPX 20-day MA is 1640.74 and price closed at 1639.04 so the bears receive a feather for their caps. The 50-day MA is 1615.26. Thus, the moving average bracket of 1615-1641 remains key and the move out of either side will provide oomph in that direction. The 8 MA is above the 34 MA on the 30-minute chart and the SPX is above the 200 EMA on the 60-minute chart at 1629.92 both signaling that the bulls are in charge for the hours and days ahead. The 1630 serves as a major bull-bear inflection point where bulls rule above 1630 and bears rule under 1630. For today, with the SPX starting at 1639, the bulls need to push up through 1646.50 and an immediate test of the strong 1649-1650 resistance will occur. The bears need to push under 1631 to accelerate the downside which will test 1626-1627 in short order. A move through 1632-1645 is sideways action.
The major Bradley turn is Saturday so markets are a window now where a major market trend change may occur. Markets also remain in Keystone's Eclipse Indicator window that signals the potential for a major market sell off to begin over the next couple weeks. The full moon is Saturday into Sunday and markets are typically buoyant through the full moon. Window dressing will occur in the remaining days of June since it it quarter end and the end of the first half of the year; EOQ2, EOH1. The week after OpEx is down in June 20 of the last 22 times but this month had a late start so this weakness may appear this week. During OpEx week, markets typically place a Tuesday low that runs into a Wednesday high so keep this in mind for today's trading.
The FOMC meeting begins today but the drama does not occur until 2 PM EST tomorrow. CPI (Consumer Price Index) and Housing Starts hit within the hour. Housing Starts printed over one million two months ago but last month a surprising drop to 853K was reported. The consensus is 950K so that would be a sentiment pivot. The housing recovery is verified above 950K Starts; above one million and the housing recovery has to be considered to have further legs. If Starts are under 950K, this places into question the strength of the housing recovery and under 900K will hint that the housing recovery is not as strong as people think. Watch the dollar/yen now at 95.32, above 95, creating buoyancy int he S&P futures. The euro is 1.3374 remaining elevated. The 10-year yield is 2.19%. WTIC oil remains elevated almost hitting 99 yesterday as worries grow over Turkey, Syria and the Middle East and Northern Africa region. Gasoline prices will move higher again. Keystone bot DNDN yesterday afternoon opening a new long position. Hurry up, step right up, step right up, get your ticket from that man in the black top hat waving the skinny cane, today's circus is about to begin.
Note Added 8:59 AM: CPI is in line showing no signs of inflation. Housing Starts are 914K, a slight bit disappointing as described above and places into question the strength of the housing recovery. Starts cannot do above one million and this is the busy spring season. The house builder data yesterday shows strong confidence but this is comical since builders are never pessimistic. They are in the business of building and selling homes so they will always pump the happy talk. Show a pessimistic home builder and Keystone will show you hen's teeth. The dollar/yen is 95.59. Futures are positive.
Note Added 10:04 AM: SPX is 1641.33 above the 20-day MA at 1639.49 so the bulls take the feather from the bear's cap and place it in their cap. HOD is 1643.69 short of the 1646.50 the bulls need to accelerate the upside, so far. UTIL is 487.25, status quo, helping bears below 488.48 but helping bulls above 481.15. GTX 4782, status quo. VIX 16.88, up today, albeit by a smidge, with the broad indexes up. One of them is wrong. TRIN 0.83 favors bulls today. Keep an eye out for a low today for a potential OpEx Tuesday low to Wednesday high long play. The SPX 2-hour, 1-hour and 30-minute charts all appear agreeable to rolling over, however, the path is not clear-cut, and of course a Fed article may hit the news wires at anytime. Markets may continue to stumble sideways ahead of the Fed tomorrow but the SPX moving up above the 20-day MA is a big plus for bulls and will encourage the broad indexes to remain elevated. Dollar/yen 95.53.
Note Added 10:57 AM: UTIL moves up through 488.48 at 10:25 AM taking markets higher. Dollar/yen is 95.64, a touch higher, so the weaker yen creates market buoyancy as well. SPX punches through 1646.50 and pops to a HOD at 1648.20 but the upside move is muted so far. A jump to 1649-1650 would be immediately expected, as long as UTIL stays above 488.48. If UTIL drops back under 488.48, the markets will sell off. Keystone bot SSG, the 2X inverse ETF for semiconductors, opening a new long position.
Note Added 11:27 AM: Dollar/yen 95.40 dropping a touch but UTIL and GTX remain bullish. TRIN collapses to 0.64 providing bull rocket fuel. SPX now attacks the strong 1649-1650 resistance. Bounce or die. The TRIN indicates continued market strength today.
Note Added 11:32 AM: SPX jumps up through 1649-1650 resistance like a hot knife through butter. The 1652 is very strong resistance as well. HOD now at 1650.99. The SPX 2-hour, 1-hour and 30-minute do not share the upside enthusiasm but the RSI is not yet overbot. UTIL spikes to 490.22 so this keeps the bulls happy. TRIN 0.64.
Note Added 1:19 PM: SPX runs higher and hits its head on the 1652 resistance and falls lower to the 1650 support. UTIL and GTX are bullish. Dollar/yen drifts lower to 95.14 and it is surprising to not see more equity weakness. The UTIL and GTX bullishness, along with low TRIN at 0.66, keep the markets elevated. Keystone took profits on DNDN exiting the trade and will look to reenter. DNDN is at 4.12 and 4.25 looks doable quickly and it remains attractive overall for the days and weeks ahead. Also opened a new short position in MYL which shows very attractive negative divergence.
Note Added 2:19 PM: SPX keeps running higher now over the strong 1652 resistance. UTIL over 491. TRIN 0.60 pouring on rocket fuel. Dollar/yen 95.18. If the bulls can hold 1652 support, the next resistance is 1655, 1659, 1661 and the strong 1666.
Note Added 3:29 PM: SPX HOD 1654.19 not quite testing the 1655 R but close. TRIN now way down in the cellar at 0.56 shoveling the fuel into the bull furnace. Looks like the low for today was the open. Traders were in such a rush to buy the Tuesday to Wednesday OpEx buoyancy they were tripping over each other to buy long all day. The move above the 20-day MA at 1640.04 is a big win for bulls today.
Note Added 3:45 PM: SPX is dancing around the strong 1652 support. The 1652, 1650 and 1649 are all strong support levels. Keystone shorted more MYL increasing this short position and bot more SSG adding to this long position.
Note Added 4:05 PM: SPX parks at the strong 1652 S/R ahead of Fed day tomorrow. Volume remains light. TRIN is 0.59 uber bullish so that hints that a snap-back to the sell side may be needed tomorrow with a TRIN above one to relieve all the bullish euphoria.
''When a reporter can post an article at 2 PM EST that dumps the Dow Industrials 140 points, but then the same reporter tweets (Twitter) about one hour later at 3 PM that his article may have been misinterpreted, and the Dow recovers 100 points, the markets are officially an embarrassing carnival sideshow.''
ReplyDeleteconsidering that a medium-to-low level hacker might make a joke and exercise his hacking skills (with some good DDOS Sql injection - it takes 20-30 minutes) on FT or WSJ and post an alert with a breaking-news declaration Yellen or Bernanke of imminent tapering in June ... can you imagine the market losses?
and even a dummy young prankster can do that!
I've heard about IT guys from my country that hacked CIA and NASA sites ... FT or WSJ would be week-end jokes for them.
Thank God they don't know what impact might what they could do and thank God I'm a rational guy and don't intent to tell them... :)
V.
as from the FX front:
ReplyDeletewatch today on usd/jpy 95.80 - if this one is taken, 98 is on the way.
now the usd/jpy is at 95.30
V.
Hello V, the FXY yen chart shows the rally for the yen since mid-May, that created the lower dollar/yen and lower equities. Price is now hitting a ceiling with the indicators developing negative divergence. The MACD line remains long and strong, as well as histogram, and RSI. Stochastics are overbot as well as money flow so they are content with a weaker yen again. RSI never reached overbot so this hints that price may want to squeeze out a touch more of strength. So, from the FXY chart, there appear so be a bit more juice left in the yen. The weekly chart is long and strong. So, perhaps some muddling around in the current area, dollar/yen 95-96, some leakage into 94's again, then a move up as you say to 96-97 maybe 98 but the weekly yen chart says that will reverse again with lower lows expected for dollar/yen in the weeks ahead (stronger yen). The chart show that the BOJ has a real tiger by the tail, the six-month run was one big party but things are shaky now.
DeleteThank you , KS.
DeleteV.
Hello KS. I have been watching the WTIC Oil chart and the sideways triangle you've been following. Since Friday there is a breakout move to the upside. Do you think this is the fakeout with a future drop out the bottom? I know middle east tensions have given it a bump lately, so hard to predict future course. I have been in RUSS for awhile and I am looking for further downside ahead. Also holding FAZ. Thanks. C.
ReplyDeleteOil is a very difficult call right now. Interestingly, the oil markets are not as affected by the Middle East as years ago since there is an ongoing supply glut as well as all the new supply available in the world especially North America. It does appear that oil price is breaking to the upside out of the long-term triangle but it is suspect simply due to a weak global economy. So it is a weak economic environment versus the escalating Middle East wars. What sometimes happens with sideways triangles is they morph into longer more stretched out sideways triangles. So these new high prints in oil may simply create a new data point for the upper trend line and the triangle behavior will continue. Keystone's 80/20 rule says a print above 98 would lead to 102, so this current 97-99 area is very important. The thought is that oil will back off again and overall probably lots of sideways ahead.
DeleteRUSS is interesting; Keystone was not familiar with this ticker. It is Russia. No offense to all our Russian readers, but the country is mired in corruption, as all countries are, but Russia would take the Olympic gold in this category. Many regions are still war-lord type regions where you have to bribe your way through for passage. An associate of Keystone's years ago was getting ready for a trip to Russia; he packed cash, vodka and chocolate bars, the three favorite bribery tools. Thus, Keystone will not invest in Russia even if they right the ship. The EEM/EEV plays have a smidge of Russian in them so that comes into play but it is a smaller amount of these ETF's, perhaps a better way to consider, since they would provide a smidge of Russia exposure. RUSS has based on the weekly chart and looks good. Daily chart just signaled negative divergence 4 and 5 days ago and would have been a great short. Price falls from 24 to 20 in a heartbeat. Pay attention to the divergences, that is why Keystone talks about them all the time. Looks like lots of sideways ahead for RUSS. weekly chart developing an inverted H&S. a break out above 23-25 and you are in clover since 33-37 is likely on the way. Looks like lots of sideways ahead, however.
FAZ is the triple X financial short, one of Keystone's bone-head calls and an ongoing long. Financials will be front and center as a result of the Fed tomorrow. FAZ weekly chart has a nice base and it should move higher from here, which means sick financials. The daily chart based nicely and is heading higher although it has stumbled into a sideways funk ove rthe last three weeks. Watch the 20-day MA at 33.05, price now at 32.80, if price can stay above the 20 it is smooth sailing higher. Watch XLF since this is financial sector, daily chart rolled over but receives a reprieve with some sideways action corresponding to the FAZ sideways action on the daily. XLF weekly chart says down for the weeks and months ahead. Time will tell.
Thanks KS. I have been in FAZ for awhile as well, so I have some losses to recapture when XLF heads south. On RUSS my thoughts are this, longer term support on RSX is about 23.00, so an SPX down move would pressure and possibly lead to a breakdown of that RSX support and RUSS may see blue skies ahead mid to longer term. At the very least I think we see a test of the 23.00 support on RSX moving forward. You are right, time will tell. I appreciate your insight.
ReplyDeleteI exited my WLT $11.50 calls bought yesterday this am for +120%. WLT is probably on its way back to $15 but in this market better to take a profit...
ReplyDeleteInteresting that SPY calls at strike 165 are more than double the puts--a lot of traders are betting on the Fed giving the market a boost tomorrow. Meanwhile VIX remains elevated.... what would be the max pain move? A quick spike up followed by a huge move down?
KS, do you see any technical reason to be long or short on the SPX? Maybe a straddle trade?
Good one on WLT. What may be occurring is that MS put a floor in for WLT, note the obscene volume the last couple days and today is strong, already over a days volume again, but not near the prior two days. MS handles a lot of deals and the action in the stock yesterday, as it dropped, you could see the shares being absorbed, so perhaps a floor is in and traders may be realizing that a potential deal is coming. It remains a very speculative trade. On the broad indexes, most traders try to lighten up until the Fed drama is over since it is always too much of a crap shoot. The thinking is that the markets will leak lower but UTIL above 488.48 and SPX above 20-day MA negates this idea, if these two parameters cooperate, then that will be different. Today will be interesting to see if any kind of low is printed since typically a Tuesday low leads to a Wednesday high during OpEx week, so far it is all up.
Deletewatch with a hawk eye 1648-1662.
ReplyDeleteV.
great updates KS! Especially on RUSS... My GF is from Ukraine, same story...
ReplyDeleteBut, the CB shenanigans won't last forever (like everything else in this world)
Appears as if Bernanke is about to leave:
http://www.marketwatch.com/story/obama-praises-bernanke-mum-on-successor-2013-06-18
http://blogs.marketwatch.com/thetell/2013/06/18/obama-bernanke-did-an-outstanding-job-stayed-longer-than-he-wanted/
I am interested to see how the market will respond once official, as the "bernanke put" will go with him...
yellen put?
DeleteV.
p.s. although yellen might support the market, the inflation will oblige her to cut and eliminate QE (in q1/q2 2014).
It may not matter who is next since the markets may already be realizing that we are at the diminishing returns area. The Fed actions are creating a worrisome balance sheet and with nothing to show for it. The markets may simply start to move independent of the Fed. The central bankers have created a mess. Bernanke may stay on despite all the talk otherwise, if not Yellen is mentioned a lot, more dovish, and Geithner, since he may want it to be a man that would have held both powerful positions, the Treasury and the Fed, he would go down in the history books that way, and Bullard may be after it, no one mentions him, but considering his turn from a hawk into a dove, like when Greenspan wrote an article calling for a gold-backed currency in his younger days, that he turned his back on once he was placed in power, Bullard is now flapping his wings like a dove praising QE so he must want to sit in the chair as well. Maybe by the time January arrives, no one will want the job?
Delete''Maybe by the time January arrives, no one will want the job?''
Deleteby March 2014 this stocks run-up might look like that ...running in air , no support :)
"...meep...meeep !" :)
http://ironmountainmovement.com/wp-content/uploads/2011/06/wile-e-coyote-falling-off-cliff.jpg
V.
Mr. Market is looking pretty euphoric right here. As noted previously, I made some nice gains going long the past week or so, am now nibbling on some SPXU in the event Bernanke's reassurances that the smack/coke cocktails will continue to be free falls flat tomorrow. Am looking for max pain trade here as the general expectation is for more Fed-inspired rally.
ReplyDeleteWARNING:
ReplyDeletethe following 35-50 points and the following 3-8 trading days should be the end of this uptrend.
the conservative target to the downside: 1623-1650
the wild target: 200 daily MA (can't point it here, it's a dynamic value; check on charts).
V.
sorry, typo error, i'm tired.
Delete''the conservative target to the downside: 1623-1650'' is 1523 - 1550.
V.
Thanks, V. Right now it seems like a lot of players are counting on that next 30-50 points of upside, at which point they plan on taking profits. Very few are willing to be on the short side, other than maybe a few puts to hedge their long positions. That makes the max pain trade a sharp decline that triggers stops and panics everyone who was sure the Fed would deliver another 30-50 points of goodies.
ReplyDeleteAs ZH noted, the market has a history of registering disappointment after Fed meetings. It also has a tendency to gyrate wildly, dropping big and the recovering, or shooting up and then plummeting a few minutes later.
Tomorrow should be interesting.
Many thanks to KS, V, and Arnie to continuously keeping us update with your market view especially KS and V. Thanks:)
ReplyDeleteBTW..V, where do we end today? Are we moving toward the end of B-wave of int.4?
think we might go higher.
Deletewe might still be in a B wave that might meet the following extensions from 1687:
.786 = 1669
.887 = 1678
.941 = 1682
or(!)
1 = 1687.
If the market wants to blow all participants it will register >1.00 fibo retracements (there are still important amounts of shorts in the market). And that is where it might just get nasty!
Everybody might (!) see new all times highs (1689-1712) and not even bother thinking that it's still int.4 !!! Wouldn't that be really tricky ?.... A new all time high put in place by a B wave of int 4? It would be completely sick! :D!
Anyway, EW aside, without giving a s**t in what EW wave are we now, watch your steps as we rise in the market. The area 1652-1662 might be a rejection area, 1668-1669 another rejection area, 1678 and 1682 also, potential rejection areas.
I would suggest if having longs to continually sell equal parts of longs at each S/R level mentioned and buy the correspondent shorts amount. This would assure a good cost control of shorts and a good profit taking on longs under good risk-reward policies!
Bernanke has a special talent to put in tops , as I've observed :)... so, you might handle some longs but don't get overbullish, cause we have in front of us OPEX and after that q2/mid-year 'window dressing' at the end of June.
So... maybe storms ahead, not guarranteed clear skies!
I want to note again the potential presented by me here on a Saturday KS article that we are experienced an expanded flat triangle (A down to 1598, B up to 1687 (+/- a few points) and C down to 15xx-1600-16xx depending if A=C or if C= 1.xx fibo extension *A).
Good luck all,
V.
one more thing:
Deletethere is potential for strong whipsaws.
today the peak of B wave might be put in ... the HSBC China manufacturing PMI has been moved from friday to thursday ! so pay close attention at the balance of shorts vs longs in your portfolio!
Bernanke might paint clear and rosy skies ahead, the us market closes and than ...BANG! comes a bad Chine manufacturing PMI to spoil the party!
there are big, big whipsaws dangers until Friday (including OPEX Friday)!
V.
Watch out and be intelligent, think logical!
Deletebefore announcing the manufacturing PMI for China for June, look what HSBC has issued:
http://www.marketwatch.com/story/hsbc-cuts-china-growth-view-for-2013-2014-2013-06-19?link=MW_home_latest_news
Think logical!
V.
The rupee was at 60.64/67 in early trades as against Thursday’s close Of 60.43/44. Agri Tips
ReplyDelete