Keystone's Morning Wake-Up 8/30/13; EOM; Consumer Sentiment

EOM today. August started at 1686 so a down month should be logged at 4 PM EST when all the monthly charts receive new prints. It took the whole day but JJC (copper) finally gave it up in the final minute of trading falling to 39.96. It is amazing how Keybot the Quant algo can identify these important levels before they occur. Watch JJC  39.97 since it is now a key pivot. Equity markets move higher if JJC moves above 39.97 and equities will move lower if JJC moves lower. Copper is down in early morning trading.

SPX is 1638.17. The 100-day MA is 1638.96. The 20-week MA is 1642.83, a sturdy ceiling. Last week's low 1639.43. The bulls need to touch 1646.50 to create an upside acceleration  The bears need to push under 1631 to accelerate the downside. A move through 1632-1645 is sideways action to end the week. The 8 MA is under the 34 MA on the 30-minute chart signaling bullish markets ahead, however, the 8 MA is curling downwards and a negative 8/34 cross may occur today. BPSPX is now a market sell signal.  Markets receive a couple-day pop from the high TRIN and uber low NYAD discussed earlier this week. It is surprising to not see equities far lower and weaker. Perhaps the weak copper will kick in further downside today.

Traders believe strongly in the Fed and worship at Chairman Bernanke's feet; the junkies need the drug-pusher. CPC and CPCE put/calls continue to show complacency. VIX is climbing towards 17 but still not near 20 so overall, traders continue to lack fear. There are dip-buyers in the market more worried about missing the next big run-up in stocks rather than worrying about the markets selling off in any substantive way. Copper is key. S&P futures are flat to positive. If copper is weak (JJC sub 39.97), markets should be weak. Chicago PMI is on tap at 9:45 AM and Consumer Sentiment will create a 10 AM market pivot.

Note Added 9:34 AM:  JJC 39.68. SPX 1638.35 with the dance around the moving averages and last week's low continuing (pink numbers above). TRIN is 0.87 after dropping to 0.64 at the first minute, trying to help the bulls. Markets should weaken if copper remains weak. WTIC crude is under 108, Brent is under 115, and gold is under 1400, since the U.K. does not want to strike Syria and all the war rhetoric is easing. KKD is slipping on a stale donut laying on the dirty tile floor.

Note Added 10:20 AM:  Markets pivot lower at 9:55 AM on the release of Consumer Sentiment. The copper weakness today is causing the market weakness. VIX is 17.11, so each day, begrudgingly, another bull becomes a touch bearish, but overall, traders remain complacent and are not worried.  Most traders are likely more concerned over the pending picnic's and barbeque's on tap this 3-day holiday weekend than trading. The bears need to break down through 1631 to create a downside acceleration. SPX is printing 1635.81. LOD 1633.91 so watch this number. TRIN is 0.88 which keeps the bulls in the game today. Markets are typically bullish in front of a holiday weekend, typically bullish on a Friday afternoon, and typically bullish from the last day of the month through the first four days of the new month, however, the Syria situation, emerging market currency crises and numerous other macro headaches give traders pause.

Note Added 11:01 AM:  The 8 MA stabs down through the 34 MA on the 30-minute chart signaling bearish markets for the hours and days ahead. See if it holds. SPX 1632.67.  LOD 1631.84 so watch this number. The first test of 1631 support holds.

Note Added 11:44 AM: SPX testing the critical 1631 support now. Bounce or die. LOD 1630.85 so watch this number.

Note Added 1:08 PM:  Secretary Kerry takes the podium to speak about Syria and chemcial weapons. The SPX loses 1631, then 1630......, then 1629 ......

Note Added 1:12 PM:  VIX is 17.80 printing the HOD.  A few more traders are becoming concerned, seeking protection by buying volatility, with each word Kerry speaks. SPX 1629.20. The 1627 is the strong support that should send prices far lower if ruptured. The 10-year yield is 2.75%.

Note Added 1:15 PM: Kerry becomes squishy after all the talk of bravado. VIX jammed lower. SPX big bounce to 1634. Thus, a round trip of drama, from 1634 to 1628 to 1634 in twenty minutes time.

Note Added 1:20 PM:  Markets are jumpy like a deer in the headlights not knowing which way to leap. Kerry says the U.S. does not have to wait for the U.N. inspection report so it looks like the U.S. may strike Syria at any time before Tuesday. The SPX 1633-1634 appears to be a pivot level today, bulls win above, bears win below.

Note Added 2:21 PM: Equities are leaking lower with the SPX testing the 1631 support again, and bouncing again.  President Obama was to speak at 2:15 PM but the Whitehouse is typically late, like now, but he should take the podium any minute. Perhaps a few more Tomahawk's needed loaded on the war ships before he starts talking. Oil and gold remain steady, SPX is slightly under the 1633-1634 pivot. Markets await the news from the president.

Note Added 2:40 PM:  SPX is drifting higher now above the 1633-1644 pivot. VIX leaking lower. The president is no where to be seen. Send out a search party. He may not want to speak before 4 PM since equities are starting to float higher.

Note Added 2:51 PM:  The president's remarks are taped comments and the president repeats a lot of Kerry's squishy talk. Sounds like a strike on Syria is a 'definite maybe'. The Syria picture appears cloudier than ever but the markets view it as less aggressive so the SPX floats sideways with upward buoyancy at 1634.47. Traders are ready for the holiday weekend. There goes one sneaking out the back door. He is easy to spot wearing a straw hat, sandals and a Hawaiian-shirt.

SPX 30-Minute Chart 8/34 MA Cross

The 8 MA is above the 34 MA on the 30-minute signaling bullish markets for the hours ahead, however, the bears have curled the 8 MA to the downside for a potential negative 8/34 cross today. The indicators have a sideways vibe which is reflected by the moving averages lining out sideways. The short red lines for the indicators are weak and bleak wanting to see lower prices but the S&P futures point to a +4 start. Price is bouncing around in the 1638-1643 area which encompasses last week's low, the 100-day MA and 20-week MA. The channel range reflecting the highs and lows over the last couple days at 1634-1647 is important.  Bulls win above 1647. Bears win below 1634. The strongest resistance is at 1649 and strongest support at 1627. Watch the 8/34 cross. The bulls are in charge for the VST as long as the 8 MA stays above the 34 MA. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 11:05 AM: The 8 MA stabs down trhough the 34 MA signaling bearish markets ahead. See if it holds.

BPSPX Bullish Percent Index Daily Chart Triggers Market Sell Signal

The BPSPX triggers a market sell signal this week indicating that the market bears are in charge moving forward. During the May-June selloff, the BPSPX dropped under the 70% level, which created additional downside oomph, but alas, the bears were no match for all the Fed pumping talk that began late June and then the BOE and ECB easy money bazooka's on July 4th that catapulted global equity markets higher. This action created a six percentage-point reversal to the upside to trigger a market buy signal on 7/10/13 and the bulls received extra oomph since the BPSPX was above 70. The party continued, with the wine flowing like water, until the 8/2/13 market top.

The BPSPX peaked at 84.60 so a six percentage-point reversal is 78.60, which occurred this week on Tuesday. Note how the BPSPX dropped, and knowing the importance of the 78.60 level, tried to fight it off, but then collapsed down through. So a market sell signal is now in place. The bears will receive extra downside energy if the 70% level fails. The bulls need to push above 82.60 (76.60 + 6) to regain market control. More information is found on the BPSPX on the Other Market Signals page. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Morning Wake-Up and Midday Market Action 8/29/13; GDP

The EOM is tomorrow and August began at 1686. GDP is 2.5%; most everyone expected a number in the 2's. The S&P futures were up 5 early this morning, then dropped to flat, and are now +5 again. The 10-year yield jumps strongly higher to 2.83% after the GDP and lower Jobless Claims news. The markets are very indecisive right now and utilities and copper will light the way. Watch UTIL 483.32 and JJC 40.07. UTIL is printing below which is creating market negativity. JJC is printing above which is creating market bullishness. Bulls will drive markets higher with higher utilities. Bears will drive markets lower with lower copper. If UTIL stays under 483.32, and JJC above 40.07, the markets are moving sideways unable to decide on a direction. The higher yields should hurt the utilities and other interest rate sensitive stocks. Copper is weak in early trading.

For the SPX starting at 1635, the bulls need to push above 1641 to create an upside acceleration. If the SPX moves above 1641, and UTIL moves above 483.32, and both stay above, Keybot the Quant would likely flip to the bull side. The bears need to push under 1627.50 to accelerate the downside. A move through 1628-1640 is sideways action. The CPCE put/call is very interesting printing an uber low at 0.34 indicating that there is zero fear in the markets despite all the ongoing macro problems. Traders are complacent and simply not worried at all. The low CPCE indicates that the markets are at a significant top that, once confirmed to the downside in the weeks ahead, may continue lower for months or a year or more. The print may be an outlier but it is interesting none the less. The CPC put/call remains tame as well, dropping slightly yesterday now at 1.01.

SPX S/R is 1686 (August begins), 1685, 1673.55 (20-day MA), 1669, 1666, 1664, 1661, 1659.50 (50-day MA), 1659, 1655, 1654, 1652, 1651, 1650, 1649, 1647, 1643, 1642.67 (20-week MA), 1640, 1639.43 (last week's low), 1638.27 (100-day MA), 1636, 1634, 1632, 1629, 1627, 1626, 1624, 1623, 1618 and 1614. The 62% Fibonacci landing zone based on the June-July rally is 1616-1624 which serves as strong support, especially since it encompasses the strong horizontal support at 1623 and 1618. The SPX bounced off the strong 1627 support yesterday. The 1614-1624 zone is a serious support area. Bulls will recover and float markets higher as long as this area is not violated. Bad things will happen to markets if price drops under 1614. For Thursday, watch UTIL 483.32, JJC 40.07, SPX 1641 and 1627.50 to determine market direction. Futures trailing lower to the flat line and negative in the time it took to type this missive.

Note Added 9:37 AM:  JJC drops to 40.06 but Keybot is now tracking 39.96 as the bull-bear line in the sand. The higher yields are sending utilities lower. UTIL 478.25. So markets move sideways until either UTIL or JJC makes a decision. If JJC drops another dime under 39.96, the markets will noticeably sell off. Otherwise, another sideways malaise today. SPX is 1636 remaining under the 100-day and above the strong 1627 support. TRIN is 0.82 favoring the bulls today so far.

Note Added 2:14 PM:  The beat goes on. UTIL 477.97. JJC 40.02. Note that UTIL remains five points from the 483.32 bull-bear line but JJC has been knocking on the 39.96 bull-bear level all day long. The bears do not have the oomph as yet to push down under JJC 39.96, so markets stagger sideways. VIX is 16.77 moving higher. TRIN 1.05 favoring bears. It is surprising to see equities as elevated as they are today.  The dip-buyers and complacent traders believe in the Fed. SPX is 1641.64.  HOD 1669.51.  The 20-week MA is 1643.01. The 100-day MA is 1638.99. Last week's key low print was 1639.43. So price has to choose between 1643.01 and higher, or 1639.43 and lower.

Note Added 2:36 PM:  Here's the test of the 20-week MA, bounce, or die.

Note Added 2:48 PM:  SPX 1643.08. The 20-week MA is 1643.08. Bounce or die.

Note Added 3:23 PM:  Die. SPX 1641.51. Price continues through the sideways 1639-1643 range, however, so no great shakes. Copper keeps hanging on by pennies. JJC 40.01. UTIL 477.89.

Note Added 3:30 PM:  SPX loses both last week's low and the 100-day MA. JJC 39.99 keeps holding above 39.96 by a hair on its chinny chin chin.

Note Added 5:44 AM on 8/30/13:  EOM today. August started at 1686 so a down month should be logged at 4 PM EST.  The monthly charts all receive new prints today. It took the whole day but JJC (copper) finally gave it up in the final minute of trading falling to 39.96. It is amazing how Keybot the Quant algo can identify these important levels before they occur. Watch JJC  39.97 since it is now a key pivot. Equity markets move higher if JJC moves higher and will move lower if JJC moves lower. Copper is down in early morning trading. SPX is 1638.17. The 100-day MA is 1638.96. The 20-week MA is 1642.83, a sturdy ceiling. Last week's low 1639.43. BPSPX is now a market sell signal. Markets receive a couple-day pop from the high TRIN and uber low NYAD discussed earlier this week. It is surprising to not see equities far lower and weaker. Traders believe strongly in the Fed and worship at Chairman Bernanke's feet; the junkies need the drug-pusher. CPC and CPCE put/calls continue to show complacency. VIX is climbing towards 17 but still not near 20 so overall, traders continue to lack fear. Politicians, the Fed and other central bankers always save the day and kick the cans down the road, supplying infinite easy money, so why worry? As Alfred E. Neuman says, "What, me worry?" So there are dip-buyers in the market more worried about missing the next big run-up in stocks rather than worrying about the markets selling off in any substantive way. Copper is key. S&P futures are +3.5. If copper is weak, markets should be weak.

WTIC Crude Oil COT (Committment of Traders) and Daily Charts

The COT chart shows the large speculators, the so-called smart money, long oil, while the commercial's, the so-called dumb money, is net short oil. The red circles show the tops in the oil market where the selling begins and the green circles show the bottoms where the buying begins. Oil moved through the 86-98 range for over one year until the break out in late June due to the Middle East turmoil. A higher range is established at 104-109 and oil broke out above this level yesterday. WTIC is printing 109.13 at this writing back kissing the important 109 support. The red lines show negative divergence in place. The expectation is for oil prices to drop moving forward but the Syria, Egypt and Middle East and Northern Africa drama's continue. A move back into the 104-109 range is anticipated over the near-term. The 109 S/R is a key pivot. Keystone is shorting oil via SCO, a 2x inverse oil ETF. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

The COT chart is from COT Price Charts annotated by Keystone.

Keystone's Morning Wake-Up and Midday Market Action 8/28/13

Oil leaps higher overnight, then drops a couple bucks, now up again. WTIC crude oil punched through the 108.70-109.00 resistance area so it ran higher to 112. WTIC is now printing 109.97 and Brent oil is 115.77. S&P futures were up +5 and +6 a few hours ago, now flat. The bears need to push the SPX only one-point lower down through 1629, and the downside will accelerate. The strong 1627 support will fold like a cheap suit opening up a quick test of 1623. The 1617-1625 area is the 62% Fibonacci retracement for the June-July rally. The NYAD and TRIN indicate a near-term VST bottom is likely as well as the positive divergence on the SPX minute and hourly charts. Today may provide an opportunity for a near-term bottom and quickie long play perhaps into next week.

Markets are typically buoyant moving into the 3-day holiday weekend which is tomorrow and Friday. Markets also tend to be bullish from the last day of the month through the first four days of the new month. Mortgage Applications are weak again this week. Pending Home Sales are 10 AM. Oil Inventories are 10:30 AM and very important today considering the Syria turmoil and focus on oil. The 5-Year Note Auction is 1 PM.

Keybot the Quant remains short through the theatrics this week thus far. The algo is tracking UTIL 483.32 and JJC 40.10. UTIL is printing below 483.32 causing market bearishness while JJC is printing above 40.10 causing market bullishness. The bears need to send JJC under 40.10 to create the next strong leg lower that will send the SPX to the low 1600's. Copper is weak in early morning trading pointing to a loss of about 20 or 30 cents in JJC to start the day, perhaps to the 40.50-40.70 area, which would remain in bull territory. The bulls need to push UTIL above 483.32 to signal an end to this round of selling and a recovery rally is beginning. Watch UTIL 483.32, JJC 40.10 and SPX 1629 to determine market direction.

Note Added 10:55 AM:  Bulls are trying to create a near-term bottom today. LOD 1627.47 bouncing directly off the sturdy 1627 support. HOD 1635.77. UTIL is 480.96 moving higher. JJC is 40.73. TRIN is 0.78, uber bullish today relieving the 2.63 uber bearishness yesterday. The 1636 is resistance that held on the first try. If the bulls gain strength, watch last week's low at 1639.43 as an important test. The 100-day MA is 1638.28. The 20-week MA is 1642.74.

Note Added 11:14 AM:  UTIL 482+ now so the bulls are making a run for UTIL 483.32+ which would lock in a recovery rally. SPX pokes up through 1636 resistance so a test of the important 1638-1640 resistance gauntlet is next. A move of UTIL above 483.32 would signal SPX 1640+. If UTIL stalls moving lower, so will the SPX.

Note Added 12:22 PM:  SPX 1638.30. The 100-day MA is 1638.30. How do you like that?  Bounce or die.

Note Added 12:27 PM: Big bounce so the bulls won that contest. SPX is 1639.58 now performing the back kiss of last week's low at 1639.43. This test is important. Time to bounce, or die, once again. UTIL is 482.14 remaining one-point under what the bulls need to lock in an upside market rally.

CPC Put/Call Ratio Daily Chart

Looking more at the weekly and monthly time frame, say short to intermediate term, the best time to substantially increase shorts is at the sub 0.8 numbers. The best time to go long the markets and individual stocks is when the fear and panic shows up at CPC 1.20+. Traders remain very complacent despite Syria, the taper talk, the emerging markets crisis, the potential India, Indonesia and/or Brazil currency crisis, the U.S. debt deadline, and on and on. Traders firmly believe that Chairman Bernanke will always pat their behinds. So far he has, but will things change on 9/18/13? The CPC simply says it is not attractive to bring on longs until the 1.20+ prints. In the mean time, develop a long shopping list of stocks you would like to own, review their fundamentals, study their charts, and fine tune the list. Then, when the fear shows up, you will be ready to buy when there is blood in the streets. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

SPX 30-Minute Chart 8/34 MA Cross Falling Wedge Oversold Positive Divergence

The 8 MA remains under the 34 MA signaling bearish markets for the hours and days ahead.  The oversold conditions, falling green wedge, and positive divergence (green lines) want to see a bounce. The MACD line continues lower so it wants price to play around at these lower levels for one to four candlesticks (one-half hour to two hours). The 2-hour and 1-hour charts are setting up with positive divergence as well so if one to four candlesticks are needed on those charts for price to base and then bounce, that is about one to six hours of trading time. Therefore, a near-term bottom is likely at hand, which is signaled by the TRIN and NYAD as well, and should occur, say between 10 AM and 2 PM today. This is VST behavior only. Overall, the bears will continue to drive the market bus as long as the 8 stays under the 34. Keep in mind that there are two large gaps left behind, one at 1680-1685 and the other at 1652-1657, which will need filled at some point in the future. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

NYAD Advance-Decline and SPX Daily Charts

The +2100 and -2100 levels on the NYAD signal near-term reversals. Keystone calls it the Blackjack 21 Trade since typically you can short the markets at prints of +2100 and higher, and/or go long the markets at prints of -2100 and lower, for VST trading only. So the first day of August prints an elevated NYAD which creates the market top. Then the low on 8/6/13 which led to the low in the markets the following day. Then the 8/8/13 high which pegged the exact market top that day as well.  Then the 8/15/13 low in the NYAD, an uber low at -2500, created the bottom at SPX 1640 four days later. Then the +2000 NYAD on 8/22/13 which creates the market top two days later at 1670. Yesterday the NYAD prints -2200 signaling a near-term recovery rally at hand. The 8/15/13 is atypical behavior, taking four days to establish a price extreme, the 1 or 2 day time period appears more average.

Thus, with the -2200 yesterday (8/27/13), the anticipation would be a recovery move for SPX for a few days, and this timing coincides with expected pre-holiday market buoyancy in the back-half of this week, as well as the beginning of the new month buoyancy on tap. The TRIN Arms Index also jumped to 2.65 so a relief rally would be in order to relieve some of this bearish pressure. So the binoculars are out today and tomorrow to spy a near-term market bottom and start of a relief rally. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Morning Wake-Up and Midday Market Action 8/27/13; Consumer Confidence

Monday was interesting how the various tools discussed here signaled bull fun but then late-day the indicators reversed to favor the bears, except for the 8/34 MA cross on the SPX 30-minute chart, which should flip bearish after the opening bell (reference this morning's chart). The tools to watch are the 8/34 MA cross, the SPX 50-day MA at 1660.01, the SPX 8/21/13 LOD at 1639.43, the VIX 200-day MA at 14.61 and Keybot's areas and levels of interest currently which are VIX 14.33, UTIL 483.32, XLF 20.11 and RTH 53.91.  The 8/34 cross should turn bearish this morning, the SPX is under the 50-day, the big test at 1639.43 is on tap resulting in a bounce or die maneuver after the opening bell, the VIX is above the 200-day MA and all four of Keybot's metrics are causing market bearishness. Consumer Confidence will create a market pivot point at 10 AM. S&P's -17.  Dow -128.  Nasdaq -38. The 10-year yield is down to 2.76%. WTIC crude oil is 108.69 and Brent is 112.98 hitting 113 on the Syria tensions.

Note Added 10:24 AM:  The 8 MA slices down through the 34 MA  on the 30-minute chart signaling bearish markets for the hours ahead.  A line in the sand is drawn at the 1639.43 described above. The LOD is 1640.36 less than a buck away so a test should occur. Bounce or die. Keystone took profits on the SDS long trade exiting the position. Also added more JO and SCO to these ongoing long trades which are long coffee and short oil, respectively. WTIC crude is testing the recent resistance at 118.70-119.00 so crude either punches up through, or dies. The war strike talk is ramping up for Syria but it is not all that important from an oil standpoint. In general, the Middle East does not have the impact on the oil markets it once did. That said, any turmoil in the Middle East and North Africa will definitely send prices higher, like today.

Note Added 10:33 AM:  The 1639.43 is pierced to the downside. The battle for 1639-1640 support is now in progress. Bounce or die time for markets. The SPX 100-day MA is 1637.66 so watch this as support. The Whitehouse says it has not made a decision concerning a military strike on Syria. A huge POMO pump is on tap this morning. Keystone added more SPXL to this ongoing long trade that is long the S&P to play a countertrend move and help hedge against the heavily-weighted short portfolio.

Note Added 2:08 PM:  Bears are cruising along today, the SPX taking out the 1639.43 low and the 100-day MA at 1637.61, now printing 1636.38. The 20-week MA is 1642.64 where a lot of this morning's action occurred.  TRIN is 1.72 reflecting the selling. Bulls are trying to push utilities higher, taking advantage of the lower Treasury yields, with UTIL at 481.79. The markets would receive upside fuel at UTIL 483.32. Oil is a touch off the highs with WTIC at 108.68 (continuing to test the key resistance at 108.70-109.00) and Brent at 113.89 (Brent was over 114). Keystone took profits on the TLT long trade exiting the position.

Note Added 3:02 PM:  SPX 1633.33. LOD 1631.42. Stocks move lower and bonds move higher (yields lower) with a deflationary vibe. VIX up 13% today to 16.83. The intraday and day-to-day market swings will become much more dramatic going forward. Transportation stocks such as airlines, shippers FDX and UPS, and truckers such as R, are all hammered today on the higher oil prices. UTIL 480.63.  TRIN 1.68 representing steady-eddy selling, there is no panic to it at all, which is bear-favorable since the slow burn 3-week move lower should continue. Retail and financial sectors crumble. Bulls are hanging their hats on copper and commodities. On the short-term, or intermediate-term basis, say weeks and months, ideal long entries are made when panic and fear exists due to high put/call ratios, which is CPCE above 0.8+ and CPC above 1.2+, so they have a ways to go. Traders continue to not take the equity selling seriously despite all the waxing of worry today.

Note Added 3:20 PM:  The 1639.43 is also last week's low so price taking out a weekly low is bearish. The 100-day MA and 20-week MA are important overhead resistance. SPX is now printing 1632.10. LOD 1630.66 making a new low today. SPX S/R is 1634, 1632, 1629, 1627, 1626, 1624, 1623, 1618 and 1614. The 1627, 1623, and 1614 levels are the strongest support. If these give way, then 1606-1607, then sub 1600 is next at 1598. SPX is now losing 1632 support so it looks like 1629 is next and the strong 1627 test is more likely. Bulls need to move back above 1632 as quick as possible.

Note Added 3:32 PM: The 62% Fibonacci retracement for the rally from the June closing low to the 8/2/13 top is 1625. Using the June intraday low the 62% Fib is 1617. Thus, the Fib's create a landing zone at 1617-1625 as a potential near-term bottom.

Note Added 3:35 PM:  Bulls cannot hold SPX 1632 support so 1629 is next and more likely a test of the very strong line in the sand at 1627. The 10-year yield is 2.72% 20 bips off the 2.92% yields only a couple days ago.

Note Added 3:49 PM:  The SPX regains 1632. Keystone bot DNDN opening a new long position. This is a very dangerous and speculative trade. DNDN is receiving a beating but is setting up with positive divergence and should be basing and recovering moving forward.

Note Added 3:58 PM:  TRIN spikes to 2.63, now this is very elevated hinting that a recovery rally is needed to relieve the near-term bearish pressure. Ditto NYAD. NYAD prints a -2200 low so this hints at the need for relief. Note how the NYAD printed sub -2200 to mark a bottom about 8 days ago, then it ran up to print above +2000 to mark a top, now today back down at -2200 for a potential bottom at today's close or tomorrow. Bulls are having trouble trying to hold onto 1632, it keeps slipping from their fingertips into the closing bell.

SPX 30-Minute Chart 8/34 MA Cross

The 8 MA is above the 34 MA on the 30-minute chart signaling bullish markets for the hours ahead, however, the S&P futures are now hitting the lows at -17 which will easily cause the 8 MA to stab down through the 34 signaling bearish markets ahead. The red rising wedge top yesterday was not completely convincing from the standpoint of the MACD line and money flow but there is no doubt the indicators are all now in a weak and bleak move lower. Even after price would bounce, the indicators likely want to see a second step down on this 30-minute candlestick basis. Note the support levels at 1645, 1643 and 1640. A 17-point drop on the SPX would place price exactly at the 1640 support for a major decision. The exact price low on 8/21/13 was 1639.43 so write this number down and watch it like a hawk since markets will either bounce, or die.

August started at 1686 so this must be kept in mind with 4 trading days remaining in the month. The 1680-1685 gap is big enough to drive a truck through. The dip-buyers may rush in this morning to buy the drop. Markets tend to be bullish on Thursday and Friday ahead of the Labor Day 3-day holiday weekend. With the weak and bleak indicators, this hints that a price bottom may not occur for 2 to 5 candlesticks so that would be 1 to 2-1/2 hours time, at 10:30 AM-Noon, in the Fed POMO window. Watch the 8/34 cross. As long as the 8 MA is under the 34 MA the bears will be in charge moving forward. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 10:50 AM:  The 8 MA stabs down through the 34 MA today signaling bearish markets for the hours and days ahead.

Keystone's Morning Wake-Up and Midday Market Action 8/26/13; Durable Goods

Durable Goods are down across the board verifying a lackluster economy. Traders will probably view bad news as good news (since Fed may now delay tapering QE) and the futures are buoyant after the data hovering along at the flat level. The bulls need 2 positive S&P's to launch an upside acceleration but the futures are not yet signaling the green light.  The SPX begins at 1664 and if the bulls touch the 1665 handle, equities will run strongly higher to test 1669-1671 in quick order. The bears need to push under 1664 to accelerate the downside.

Utilities, financials, retail and volatility determine market direction currently just like last week. The Friday leap higher in markets late day was due to the VIX dropping under 14.24. VIX begins at 13.98 causing bullishness. Bears need the VIX above 14.24. Watch UTIL 483.14, XLF 20.12 and RTH 53.96 as well.  All three are causing market bearishness so if the bulls regain any of these three levels, equities will move higher.  Keybot the Quant is short but if UTIL moves above 483.14, with volatility remaining low, and the SPX moves above 1665, Keybot will likely flip long.

Today decides if the relief rally is real, or not.  The initial thrust of equities moving higher on Thursday and Friday began with the 8/34 MA positive cross on the SPX 30-minute chart, then the SPX 50-day MA was taken out to the upside, the VIX 200-day MA failed to the downside, and Keybot's VIX 14.24 number failed next. Then UTIL poked above 483.14 to guarantee a sustainable recovery rally, but immediately failed staying in the bear camp to think about it over the weekend. So these are the tools to gauge the market strength in either direction. For bulls, you want to see UTIL 483.14 and higher, and then XLF 20.12 and RTH 53.96, and the living will be easy.  For bears, a retracement of the parameters above must occur. UTIL must stay under 483.14, and then the VIX needs to move back above 14.24, and so on.  Another week under the Big Top is about to begin.  If you listen real close, you can hear the calliope music in the background.

Note Added 12:22 PM: The circus is full of theatrics today. UTIL cannot make a run at 483.14 today preferring to stay in the bear camp at UTIL 481.76. Instead, however, watch RTH 53.92 and XLF 20.11. The bulls managed to send prices above both these levels to receive some rocket fuel but in a short time, both sectors dropped back into the bear camp deflating the SPX. Watch XLF 20.11 as the key metric today. Bulls win above XLF 20.11.  Bears win below XLF 20.11. VIX is 14.02 helping the bull case today. TRIN is dead neutral at 1.00 unwilling to choose a side today. Watch the SPX HOD at 1669.51. Keybot the Quant remains on the short side but if XLF moves back above 20.11 and higher, and the SPX moves above 1669 and higher, and these levels are held, Keybot the Quant will likely flip long.

Note Added 12:43 PM:  SPX 1667.72.  HOD 1669.51.  XLF 20.10, bearish by one single penny. RTH 53.85, bearish by 7 pennies. VIX 14.02. TRIN 0.95. Secretary of State Kerry will speak on Syria at 2 PM EST, about one hour away.

Note Added 2:03 PM:  SPX 1665.95.  HOD remains at 1669.51. The 50-day MA is 1660.20. Volume is light only running at about 55% of a day's average expected volume.  XLF 20.08. RTH 53.83. VIX 14.15 starting to catch a bid. TRIN 1.01, now bearish by one single hair.  The beat goes on. Kerry statement is imminent. The 8 MA remains above the 34 MA on the SPX 30-minute chart signaling continued bullishness ahead but the 8 MA is now curling over to the downside for a potential negative cross into the closing bell today or tomorrow morning. The 8 MA is 1667.31 so bulls can signal upside if they move above 1667.31 again and then take out the HOD. The Kerry statement is now delayed until 2:30 PM. The dog ate his speech.

Note Added 3:16 PM:  VIX 14.49.

Note Added 3:20 PM:  SPX just lost the 50-day MA at 1660.06. The VIX just moved above the 200-day MA at 14.61.

Note Added 8:22 AM on 8/27/13: Monday was a wild start to the week. The bulls ran higher with the financial and retail fuel but then petered out in the final hour.  Volatility jumped strongly higher sending equities lower. S&P futures are -12 this morning which sets the SPX in the 1640's again perhaps setting up a test for the 1640 low from 4 days ago. Keystone cycled out, and then back into JO yesterday, taking profits and reestablishing the long coffee trade.  Also bot SPXL as a countertrend play since the portfolio is so heavily-weighted short. Oil is moving strongly higher this morning due to Syria concerns. WTIC crude oil is 108.16 testing key levels (recent closing high is at 108.22-ish where price sits now and recent intraday highs are 108.90-ish).  Brent crude is 112.73. Gold and silver are higher, yields lower (bond and note prices higher) and defense stocks catch a bid in a safety and war-type trade.

Keystone's Key Events and Market Movers for Trading the Week of 8/26/13

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week:  Earnings season dwindles although there are a few key retailers remaining as well as global bellwether JOY.  Durable Goods will set the tone for Monday trading. Consumer Confidence is extremely important and will create a market pivot at 10 AM Tuesday morning. The 2-Year Note Auction will provide insight into the 2-10 spread. GDP is Thursday. Personal Income and Outlays, Chicago PMI and Consumer Sentiment all hit on Friday which is also EOM (August started at SPX 1686). The Labor Day holiday is Monday of next week so this Thursday and Friday tends to be bullish moving into the 3-day holiday weekend. The Sequestration budget cuts create concern over a second half slowdown this year. The Debt Ceiling limit and CR (Continuing Resolution to fund the government) deadlines occur in 5 weeks, but Congress is on vacation for one more week. The Whitehouse scandals and Obamacare problems are distracting politicians from addressing the fiscal mess. Traders are not concerned since the politicians will always kick the can down the road and vote in favor of pumping the stock market higher, just like the current Fed policy. Congress is out of session which is typically bullish for markets and will be in session in September which is typically bearish for markets. The European debt crisis continues but is held at bay by BOE and ECB easy money talk. Cyprus is bankrupt. Greece remains in depression only able to survive as bailout money is provided.  Portugal and Spain yields remain elevated. Spain is in a housing crisis and at the same time holds much of Portugal’s bad paper. Italy remains economically challenged and the post-election mess continues.  France’s debt-to-GDP ratio is out-of-control and particularly worrisome for this highly Muslim-populated country. The ECB’s OMT bond-buying program, not fully accessed as yet, creates faux stability. Merkel (Germany) does not want any nation to exit the euro before her re-election on 9/22/13, only 3 weeks away, but will not care afterwards. The next ECB Rate Decision and Press Conference is Thursday, 9/5/13.  Draghi leaves rates unchanged on 8/1/13, 7/4/13 and 6/6/13 after a one-quarter point cut to 0.5% on 5/2/13. The euro dropped like a stone due to Draghi’s dovish talk on 7/4/13.  A lower euro is needed to help the European manufacturing, export and automobile sectors and pull the continent out of recession and depression.  When the Fed beats the dollar lower, however, this sends the euro higher. Europe must also compete with the race to debase (currency wars) ongoing around the world. A lower euro will push the dollar higher and pressure commodities and equities.  The China hard versus soft landing saga continues. China is propping up the banking system and money markets to avoid collapse.  Weak copper and commodities surprisingly did not negatively impact U.S. equities over the last three months; instead, markets print new all-time highs due to the central banker QE easy money. China promises to keep growth rates high and economic data paints a rosier picture lately so copper, commodities, iron ore, coal and steel recover. This joyousness may not have a long shelf life, however. The ‘protectionism’ wars continue with nations targeting each other with tariffs, fees and legal action. The equity markets continue to ignore the geopolitical landscape.  U.S. warships are positioned for a cruise missile strike on Syria. Oil prices remain elevated which will keep gasoline prices high and pressure the American consumer further weakening retailers. Egypt is in chaos on the verge of civil war. Countries bordering Syria cannot handle the refugees. The Turkey unrest continues.  Protests and social unrest also continue across Europe, Brazil and other areas of the globe.  Common citizens are fed up with bailouts for financial institutions, that only become bigger, and bankers only becoming wealthier, while no one ever goes to jail for the white-collar crimes. Geopolitical risk is getting priced into the oil markets but is not properly priced into the equity markets.  Q2 earnings season is generally unimpressive. The top line sales numbers are not growing and companies that beat on earnings do so by reducing jobs and expenses. The most important earnings are highlighted in red below and other key earnings are in bold.  Retailers are important again this week. Global bellwether JOY is the most important release. The Fed and BOJ easy money creates asset bubbles in dividend stocks, healthcare, staples, utilities, telecoms, REIT’s, MLP’s, high-yield instruments, home builders and blue chips in general. The interest rate sensitive sectors such as utilities, REIT’s, homebuilders and telecom will sell off if Treasury yields rise, and visa versa. Keybot the Quant is short but if UTIL gains a few pennies and moves above 483.14, and if the SPX gains a couple points, Keybot will likely flip long. The SPX dropped 70 handles to 1640, from the 1710 top, before the relief rally began last Thursday and Friday.  August began at 1686 and there are only five days remaining in the month. The Labor Day holiday is next Monday, 9/2/13, so markets tend to be bullish in front of the holiday weekend (this Thursday and Friday). On the esoteric side, Keystone’s Eclipse Indicator targets 9/26/13, give or take a couple weeks, a window of 9/9/13 through 10/11/13 for a major market selloff. The next Bradley turn is a major turn date on 10/8/13.  Solar activity is expected to increase this year and may affect electronics, communications and markets negatively, but so far the peak solar cycle is a bust. A large coronal mass ejection occurred 8/20/13 but did not cause any problems last week. Comet activity is ramping up over the next few months. Broad market topping and roll over action is anticipated as the weeks play out.  The epic and historic market action continues.

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·         Monday, 8/26/13: Durable Goods Orders 8:30 AM.  Dallas fed Mfg Survey 10:30 AM. Earnings: CWTR, PVH.

·         Tuesday, 8/27/13: Case-Shiller Home Price Index 9 AM. Consumer Confidence 10 AM—market pivot point. Richmond Fed Mfg Index 10 AM. 2-Year Note Auction 1 PM. Earnings: AVAV, BWS, ECTY, LDK, SAFM, TIF, TIVO, WDAY.

·         Wednesday, 8/28/13: Mortgage Applications 7 AM. Pending Home Sales 10 AM. Oil Inventories 10:30 AM. 5-Year Note Auction 1 PM. Earnings: CHS, DLA, FRO, GES, JOSB, JOY, OTIV, OXM, SDRL, SFL, SWS, TLYS, WSM, ZLC.

·         Thursday, 8/29/13: Corporate Profits, Jobless Claims and GDP 8:30 AM. Natty Gas Inventories 10:30 AM. 7-Year Note Auction 1 PM. Markets are typically bullish moving into a 3-day holiday weekend. Earnings: BEBE, COCO, CPB, FLWS, FRED, GCO,  GLNG, JASO, KKD, MAGS, OVTI, PLL, CRM, GAME, SHLO, SIG, SPLK,

·         Friday, 8/30/13: EOM.  Personal Income and Outlays 8:30 AM. Chicago PMI 9:45 AM—market pivot point. Consumer Sentiment 9:55 AM—market pivot point. Farm Prices 3 PM. Markets are typically bullish moving into a 3-day holiday weekend. Markets are typically bullish from the last day of the month through the first four days of the new month. Earnings: BIG, SOL, YGE.

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·         Monday, 9/2/13: Markets are Closed in Observance of the Labor Day holiday. China and Asia PMI’s.  European PMI’s. Earnings:

·         Tuesday, 9/3/13: Markets reopen for trading. Congress returns from August recess to address the fiscal problems within the next four weeks. Motor Vehicle Sales. Construction Spending and ISM Mfg Index 10 AM—market pivot point. Earnings:

·         Wednesday, 9/4/13: Mortgage Applications 7 AM. ADP Jobs Report 8:15 AM. International Trade 8:30 AM. Oil Inventories 10:30 AM. Beige Book 2 PM—market pivot point. Markets are typically bearish through the new moon. Earnings:

·         Thursday, 9/5/13: Challenger Jobs Report 7:30 AM. Jobless Claims and Productivity and Costs 8:30 AM. ISM Non-Mfg Index and Factory Orders 10 AM—market pivot point. Natty Gas Inventories 10:30 AM. Oil Inventories 11:00 AM. New moon. Earnings:

·         Friday, 9/6/13: Monthly Jobs Report 8:30 AM—market pivot point. Earnings:

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·         Monday, 9/9/13: Consumer Credit 3 PM. Earnings:

·         Tuesday, 9/10/13: NFIB Small Business Optimism Index 7:30 AM. JOLTS Report 10 AM. 3-Year Note Auction 1 PM. Earnings:

·         Wednesday, 9/11/13: Anniversary of 911. Muslim Million-Man March. Mortgage Applications 7 AM. Wholesale Trade 10 AM—market pivot point. Oil Inventories 10:30 AM. 10-Year Note Auction 1 PM. Earnings:

·         Thursday, 9/12/13: Import and Export Prices and Jobless Claims 8:30 AM. Natty Gas Inventories 10:30 AM. 30-Year Bond Auction 1 PM. Treasury Budget 2 PM. Earnings:

·         Friday, 9/13/13: PPI and Retail Sales 8:30 AM.  Consumer Sentiment 9:55 AM—market pivot point.  Business Inventories 10 AM—market pivot point. Earnings:

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·         Monday, 9/16/13: Empire State Mfg Survey 8:30 AM.  Industrial Production 9:15 AM. Earnings:

·         Tuesday, 9/17/13: FOMC Meeting begins with traders listening for ‘QE tapering’. CPI 8:30 AM. TIC data 9 AM. Housing Market Index 10 AM. Markets are typically bullish from a Tuesday low to a Wednesday high for OpEx week. Markets are typically bullish through the full moon. Earnings:

·         Wednesday, 9/18/13: Mortgage Applications 7 AM. Housing Starts 10 AM—market pivot point. Oil Inventories 10:30 AM. FOMC Meeting Announcement and Forecasts 2 PM. Chairman Bernanke Press Conference 2:30 PM. Earnings:

·         Thursday, 9/19/13: Jobless Claims 8:30 AM. Philly Fed, Leading Indicators and Existing Home Sales 10 AM—market pivot point. Natty Gas Inventories 10:30 AM. Full moon. Earnings:

·         Friday, 9/20/13: OpEx-Quadruple Witching. Atlanta Fed Inflation Expectations 10 AM. Earnings:

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·         Sunday, 9/22/13: Germany reelects Merkel and now there is no longer a need to keep countries like Greece or Cyprus in the euro, or even Germany itself.

·         Monday, 9/23/13: Flash PMI’s. Chicago Fed National Activity Index 8:30 AM. Earnings:

·         Tuesday, 9/24/13: FHFA House Price Index and Case-Shiller Home Price Index 9 AM. Richmond Fed Mfg Index and Consumer Confidence 10 AM—market pivot point. 2-Year Note Auction 1 PM. Earnings:

·         Wednesday, 9/25/13: Mortgage Applications 7 AM. Durable Goods Orders 8:30 AM.  New Home Sales 10 AM. Oil Inventories 10:30 AM. 5-Year Note Auction 1 PM. Earnings:

·         Thursday, 9/26/13: Corporate Profits, Jobless Claims and GDP 8:30 AM. Pending Home Sales 10 AM. Natty Gas Inventories 10:30 AM. 7-Year Note Auction 1 PM. Earnings:

·         Friday, 9/27/13: Personal Income and Outlays 8:30 AM. Consumer Sentiment 9:55 AM—market pivot point. Farm Prices 3 PM. Earnings:

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·         Sunday, 9/29/13: The Debt Ceiling Limit and CR Continuing Resolution to fund the U.S. government deadlines occur.  Perhaps last minute antics occur today which is typical for the politicians. The Whitehouse scandals are distracting politicians from addressing the fiscal problems.

·         Monday, 9/30/13: EOM; EOQ3. Chicago PMI 9:45 AM—market pivot point. Dallas Fed Mfg Survey 10:30 AM. Markets are typically bullish from the last day of the month through the first four days of the new month. Earnings:

·         Tuesday, 10/1/13: Q4 begins. China and Asia PMI’s.  European PMI’s. Construction Spending and ISM Mfg Index 10 AM—market pivot point. The Affordable Care Act (Obamacare) exchanges open so people without health insurance can sign up for healthcare but will the exchanges be ready? Earnings:

·         Wednesday, 10/2/13: Mortgage Applications 7 AM. ADP Jobs Report 8:15 AM. Oil Inventories 10:30 AM. Earnings:

·         Thursday, 10/3/13: Challenger Job Report 7:30 AM. Jobless Claims 8:30 AM. ISM Non-Mfg Index and Factory Orders 10 AM—market pivot point. Natty Gas Inventories 10:30 AM. Earnings:

·         Friday, 10/4/13: Monthly Jobs Report 8:30 AM.  European bank stress tests will occur in Q4. Earnings:

----------------------------  2014  ----------------------------------

·         On Friday, 1/31/14: Chairman Bernanke’s term ends at the Fed. Yellen, Summers and Kohn are candidates. Yellen is the front runner, very dovish and will likely continue QE indefinitely which is happy news for stock market bulls.

·         On Friday, 2/7/14:  Winter Olympics begin in Sochi, Russia, through 2/23/14. Watch $RTSI and RSX.

·         In February/March: the new Fed Chairman testifies before Congress.

·         In March: ESM is officially ‘fully operational’. The banking union schedule has been delayed from January 2013 to January 2014 and now to March 2014.