Lots of drama and theatrics ongoing under today's Big Top. Semiconductors are crushed with SOX now laying firmly in the bear camp. Financials, retail and volatility, XLF 20.13, RTH 54.08 and VIX 14.21, respectively, all failed into the bear camp today as well which created the gap down bludgeoning of equities at the opening bell. The bulls are pushing volatility lower right now with the VIX at 14.04 creating some market lift. Monitor these three parameters to determine market direction. Keybot the Quant flips short today and the bears appear in great shape if they can keep RTH and XLF negative.
Keystone took profits on the RTH short, covering the position and exiting. Also took profits on MZZ exiting that long ETF position which was short the markets. Keystone bot TLT opening a new long position which is the ETF that moves higher if yields drop (reference the previous $TNX chart). Also bot SCO opening a new long position which is an ETF that shorts oil. Also bot SPXL, the triple X long play today to help hedge against the heavy portfolio weighting to the downside (this position may be exited today using it as a day trade).
Note Added 12:32 PM: The 10-year yield is 2.78% off the 2.82% high today. SPX 1667.39 up off the LOD at 1659.24. XLF 20.10 only 3 pennies from turning bullish again at 20.13. RTH 53.83 firmly bearish under 54.08. VIX 14.04, under 14.21, so it is currently helping the bulls. TRIN 0.51, very bullish for today. The high TRIN on the initial selling only printed 1.4. For such a selling event it would be expected to be 2, 3, 4 or even higher. Traders are buying the dip today and remaining complacent even after the gap-down drubbing. Volume is above average today at a run rate of about 110% of a typical day's volume, more than you see on the buy days.
Note Added 12:58 PM: SPX 1665. VIX 14.12. XLF 20.08. RTH 53.82. TRIN 0.47 uber low number that will beg to move back above one either today or tomorrow, or Monday, which equates to market selling. The NYAD collapses to -2500 an uber bearish number that will want to see a market recovery to the upside today or tomorrow. Lots of mixed market signals continue. The higher yield on the 10-year hit 2.82%, with equities dropping, but equity weakness continues with yield dropping to 2.78%. The bond-stock relationship remains in flux. Markets continue to sort things out in a generally complacent backdrop, where no one appears particularly worried about today's sell off. Pay close attention to VIX and XLF. In this environment, also remember that markets may crash from oversold levels. Typically, oversold chart indicators are excellent signals for pending upside bounces, especially with positive divergence, however, in special market conditions under strong selling pressure, markets may crash from oversold levels. This is something to simply remain aware of and keep in the back of the mind while watching oversold indicators say on the SPX daily and hourly charts.
Note Added 1:06 PM: VIX 14.26.
Note Added 1:13 PM: UTIL tumbling to new lows now at 487.27 only 4 points from opening a trap-door for the equity markets.
Note Added 1:22 PM: Bulls successfully defend the LOD at 1659.24, so far. VIX 14.46. XLF 20.04.
Note Added 2:57 PM: SPX is 1662.63 with a new LOD at 1658.59. VIX 14.51. XLF 20.06. RTH 53.71. TRIN 0.42 (intensely low number--it is perplexing since TRIN should be 2, or 4 or higher??). UTIL 487. The SPX 50-day MA is 1656.76.
Note Added 3:40 PM: SPX 1660.59. Volume drops off slightly to a run rate of about 95% of a day's average expected volume. VIX 14.60. XLF 20.04. The 10-year yield is 2.77%.
how the sox pattern resolves will determine a lot
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=$SOX&p=D&yr=0&mn=10&dy=0&id=p17643186944&a=309132841&listNum=4
gap fill and bounce on qqq's
http://stockcharts.com/h-sc/ui?s=QQQ&p=D&yr=0&mn=4&dy=0&id=p23858577076&a=309988892
this 60min view of spx is less sanguine - shows some challenges to bounce
http://stockcharts.com/h-sc/ui?s=$SPX&p=60&yr=0&mn=2&dy=0&id=p72284737529&a=298978580&listNum=4
On SOX, Keybot's magic number is 473 and at 462, that appears to be a serious failure. The 20-week MA is 461.54 so watch that as support. Note the indicators all under their halfway levels at 50% or the zero line for MACD.
ReplyDeleteThe 200 EMA on the 60-minute SPX chart is key at 1679. Equities will remain bearish and sick indefinitely as long as the SPX stays under 1679. This is a bearish signal moving forward for the days ahead.
billy shears and KeyS, I think the sox is in a classic "partial decline" pattern
Deleteif 460 holds then the odds are the pattern breaks to the upside...
food for thought here at the end of bubbleland
http://lh5.ggpht.com/_APmrYvpA45s/SxXMcMw7KEI/AAAAAAAAFmo/ULVJlvAtriI/s1600-h/BroadeningTopSample%5B2%5D.png
DeleteHow abt currencies ks? So far a strong usd n weak yen have been a driver for the rally.. usd/jpy weakness could be the key to the correction
ReplyDeletePerhaps but the negativity with earnings and guidance for the key sectors, semi's, retail, housing and utes already rolling over, and higher volatility, this all may drive market negativity moving forward. If all that QE for almost 5 years creates nothing more than 1.5% GDP and sickness now in retail, things will not look to good going forward. Especially since QE odes not appear to help anymore (the economy not the market). QE continues to bloat the stock market.
DeleteHi.
ReplyDeleteThis market as I see now executed a sideways.
All we need is a jump at or over 1673 to halt this 'c' or 3 from rolling to the downside some more.
As I can see the bulls didn't push impulsive at all. But the bears exhausted the technicals so a bounce is expected overnight.
GS guy
also it is to be noted the positive div.
DeleteGS guy
GS-
ReplyDeleteWas long the right play this afternoon? I began to question the trade into the close. I am still holding long into tomorrow, I expected a bounce off the 50 DMA, but the futures are -25 right now. If they reach this level in the cash session tomorrow, we're toast. What are your thoughts? Keybot is short, which is a pretty reliable signal, but I remained long because I think this is a bear trap. What do you think?
FeS2
yes it was the right one.
Deleteas long as we didn't hold shorts (too much) it was a good trade to enter step by step in longs.
chasing a waterfall with shorts is not always the best idea.
as wave structure I count 3 waves until now:
wave a: 1709 - 1684
wave b: 1684 - 1698
wave c: 1698 - 1659
wave c = 1.618* wave a
at the final stage of wave c I registered positive divergence on RSI 60 min (see RSI at 1660.12 when waterfall ended versus RSI 60 min at 1658.61 = positive div. on heavy oversold conditions)
On 60 min MACD is closing the negative cycle and heading to a positive cycle (look on charts).
Crude oil and copper are positive.
We bought longs on final stages of wave 'c' - what is wrong with that? :)? Ar you scared? Stay calm. You're a lot less scared than those who still hold shorts considering tomorrow it's OPEX day - Friday!!!! :)
A bounce tomorrow will be registered!
Watch 1680 pivot (1672 - 1687) and lower part of 1699 pivot (1699 - 1692).
Starting to believe those stories with 1987 crash ?
Get real!
It's saying that to you a man that's invested in long 90% of his capital.
A bounce is due. And not only tomorrow - maybe until mid of next week.
Keep it calm, relax, it will be ok.
I know waterfalls can get anybody emotional, but keep it calm! :)
You didn't bought at 1709 peak , but during the second part of wave c! :)
And there's a Int. B coming, a OPEX Friday, and consider also that during Fridays a great amount of short are covering before entering the week-end - stay calm!
GS guy
disclosure: 90% longs - 10% cash (and satified with my position).
p.s. Does it want to go lower? OK, so be it! Let it go to the basement!
But the technicals (RSI, MACD, Breadth of the move, and so on...) will not sustain the move!
The futures are not -25 points now after the market closed, they are -0 . 70 points!
DeleteGS guy
Everything failed today, SOX, Financials, UTIL, VIX, and Retail. The bear case is strong, it worries me a little.
ReplyDeleteFeS2
If the bear case is strong a bounce is due.
DeleteDo you know why?
Because if it's strong it has to have continuity based on the alternation principle.
If they just continue it lower tomorrow at the same pace they will develop such strong bullish conditions in the market that the bearish case will fizzle.
Forget about emotions, look on charts, look at the technicals ! Never heard of negative RSI :) Lol! :)
You will see tomorrow a lot of talking heads pumping the bearish case! They are working for the banks! In front of OPEX to start a bearish move? Hmmm.... smells like something is rotten here!
GS guy
Watch it out cause bears are uber-complacent right now and don't think at one possible case:
ReplyDeletemaybe all we have seen is just ... minor 4 that ended today (with peak of minor 4 B at 1709). Almost nobody thinks at that!
A sign for this would be if we don't see lower levels than today's lowest levels!
And a minor 5 targets at least 1720 if not Scott's 1770's!
Let's see what happens tomorrow!
This is a low chances case but it still possible if the market doesn't go lower than 1655-1660!
And no bear think at that for now!
GS guy
Thanks gS. I'll check out the charts more tonight. Thanks for getting back to me. I needed some hand holding. Yes, I was scared. Lol.
ReplyDeleteFeS2
v., are u holding shorts after today? Scott, what percent are u long/short after today? GS guy, do u recommend loading shorts on the next bounce?
ReplyDeleteNot holding shorts with technicals so oversold and with price rejection at 10 weekly MA (1658).
DeleteIt would be suicidal to hold shorts after such a strong down move that will bounce!
V.
1680 superior area to 1699 inferior area are the MINIMAL targets for a bounce here (1687-1692).
DeleteThose targets are minimal.
If yesterday we saw a bottom (minor 4?) tha price may climb in a matter of a few days to 1725-1760 (minor 1=minor 5 or minor 1*1.618=minor 5).
We will see.
Too oversold now to hold shorts!
V.
Except for the runup/selloff around Bernanke's taper remarks in May/June, every market selloff since last Christmas (this is the 4th sp500 50-point selloff since then) has ended at 50 points only to violently snap back up to the same old trendline within a few days.
ReplyDeleteUnless "it's different this time", GS dude's 1720 or higher is in play for early next week.
This is Bernanke's market, until it isn't. QE is the "wind beneath the sp500's wings". That's an ancient Bette Midler tune from back in the days when Tall Paul Volcker was filling Ben's shoes. LOL.
Touching cloth is an ancient English saying for I'm almost shitting myself
ReplyDeleteBB
Try using asterisks like sh*tting instead to avoid the profanity.
DeleteRelax BB!
DeleteTechnically a bounce is 100% due!
V.
Anyone agree with Caldaro, that this current wave is minor A of Int. A of Major 4? What this implies is to get short around the 1680 pivot after minor B and ride the minor C-wave down which will be relentless selling (perhaps even waterfall crash).
ReplyDeleteYes, I've saw what Mr. Caldaro is saying.
DeleteHis 1680 pivot is somewhat compliant with GS guy's target of 1688-1699.
But Caldaro treated end of Int.v maybe too short (in relation with Int I of major 3).
Maybe he overlapped one wave degree and yesterday we saw only the bottom of minor 4 of int.v of major 3, not the kick-off of major 4).
If we see higher levels than 1680 pivot (1673-1687) we are heading to int I = Int. V and that's 1725!
We will see!
Not assuming 100% a position different than Mr.Caldaro's but trying to view all the possibilities and not marry to only one single option!
V.
One more option to express here:
Deletebe carefull because in this type of BB wave tightening on daily as we have saw before the breakdown there are a lot of situations when the first move is the fake out move! And not because the BB are expanding and a strong bounce is due to the upside we may see the market making a very awfull surprise to bears!
So pay attention to this and follow the upside move!
V.
typo:
Delete''And noW because the BB are expanding and a strong bounce is due to the upside we may see the market making a very awfull surprise to bears!''
There was technical damage today and the selling came at increased volume. The 50-day MA failed for the Dow and now it is testing its 100-day MA. Watch to see if the SPX 50-day MA fails, or not. The 200 EMA on the SPX 60-minute failed. SOX, RTH, XLF and VIX all failed. Tight bands resolve to the downside. Markets are selling off in response to the uber complacency in the markets, the bulls simply do not believe the markets can ever go down (so the complacency is on the bulls side not the bears). This was evidenced by the CPC and CPCE put/call ratio charts over the last few days that are now jumping higher with the selling as would be expected, ditto VIX. VIX 200-day MA is another must-watch market indicator for tomorrow. XLF 20.13 and VIX 14.21 will be key for market direction. In general, you do not want to start buying aggressively long the market until the $CPC put/call moves above 1.20+. CPC is now at 0.96.
ReplyDeleteIn the VST time frame, however, there may be a bounce, say from tomorrow into Monday, or, on Monday, something like that but it may be more of a dead cat type bounce. The full moon is Tuesday when markets should be buoyant, also markets tend to move opposite on Monday the way they move on OpEx Friday. So a possible set-up based on seasonality factors alone would be more market selling tomorrow to set up a bounce Monday afternoon into Wednesday, then resume the downside.
the SPX 50 day MA held!
DeleteV.
Excellent play-by-play over the last few weeks. Especially interesting now with the confidence GS and being contrary to Keybot. Great having GS on board and having the forum to explain how this will play out. I suppose only one will be right now, recognizing Keybot is a quick flipper of course. Great blog and as you say.... "for entertainment purposes only" Indeed!
ReplyDeleteGood call at the beginning of the week about a cage match where 2 would enter and only 1 would emerge. Right on target.
ReplyDeleteFeS2
What happen to "V" on such a crazy day? No one single comment?
ReplyDeleteI was out of town until now! :)
DeleteV.
One more IMPORTANT THING to think at:
ReplyDeleteCaldaro says that 1709 was the top of minor 5, major 3.
Also he counts ONLY 3 waves down from potential 1709 top.
Ok.
IF THIS MOVE DOWN FROM 1709 is impulsive and an impulsive move should have 5 waves (impulsive waves) not 3 waves (corrective waves) HOW COME even Mr. Caldaro is counting only 3 WAVES for the assumed wave Minor a of Int. wave A of Major wave 4.
Minor a of Int.A of Major wave 4 as an impulsive wave SHOULD HAVE 5 DOWN WAVES, NOT 3!!!!!!!!!!!!
The only case where we can assume this down trend from 1709 as having only 3 waves (1685-1697-1659) from 1709 assumed top is this one: 1709 was the peak of "b" of minor 4 of major 3, and wave 'c' of minor 4 of major 3 AS EVERY CORRECTIVE WAVE has 3 internal waves as even Mr. Caldaro is saying!!!!!!!!!!!!!!!!!!!!!!!!!!!
So based on EW, we might be here at the real start of minor 5 of major 3 heading to 1725 (if 1=5) of 1760 (if 1*1.618=5).
Let's see how market behaves!
But on Mr. Caldaro's own assumtions how can the first kik-off of a major 4 down impulsive wave have corrective structures? :)?
Wave a of Int.A of Major 4 having ....3 waves , not 5 impulsive waves ?????? Come ooooonnn! :)
V.
What I want to say it's that a down major wave has a structure at Int. waves level of 5-3-5 waves.
DeleteSo Int.A should have 5 down waves, Int. B 3 up waves, and Int. C 5 down waves.
How come Mr. Caldaro is saying that the kick-off of a Int.A through a first minor 'a' should have finished after only 3 waves (corrective) not 5 (impulsive) ?
Maybe because also my scenario fits in?
If we get above 1709 you know the answer: 1725 or 1760's !
Ok?
V.
One more thing:
Deleteyesterday market closed heavily oversold OUTSIDE DAILY lower BB bands, being sustained by Weekly 10 ma that means that at least a cross of middle daily BB is due (1685-1690) or a cross/touch of upper daily BB bands (and that, my friends is at 1715 and expanding to the upside!)....
Bears beware cause something is prepared for you! :)
V.
Thanks for your thoughtful and very informative answers V. I regard you right up there with Scott and GS guy. But that Caldaro has been dead on reading the waves and there are a lot of talented traders on that board. Are u 90% long and 10% cash like GS guy?
ReplyDeleteCaldaro was not dead on!
Delete2 weeks ago he was caught as calling the end on major 3 and one more fast up-rising wave made him to publicly say he was wrong!
Remember that there are no gods and everybody can have a moment when he is wrong!
Yesterday I was not in front of my PC, out of town.
I still have about 10%longs (now underwater, but certainly not afraid after the bottom of yesterday!) and 90% cash, no shorts.
Now I'm curious just what Caldaro will say if 1709 is taken to the upside?
And what all traders in the world (!) that got short yesterday will say if they will experience such a horrible outcome ????
Can you even imagine what their faces would be like if they - fully short - take a nap on Thursday and wake up on friday near the all times high???
That's a show I'd like to see :).
V.
Not one single trader in this whole world cannot be considered a market wave genius!
DeleteThere's no such thing!
Market has the maximum amount of wisdom, not one trader or another! Those are ants !
V.
Caldero has posted a tentative green 3 on his chart, meaning he is considering us in major 4 but needs confirmation. I think he wants another down day. However, he is calling for a retrace to the 1680 pivot and then a resumption of this micro wave i down in a c wave.......
DeleteThanks for your posts V, you are most helpful and I appreciate it!
no problem, anyway, I'm faaar lower as experience and tech. expertise than Mr. Caldaro.
DeleteBut I underlined the fact that an impulsive wave should have 5 waves , not 3 waves down!
With 3 waves down the possibility of a hyper-ramping minor 5 of int v of major 3 are still here! Although yesterday's bear action was impressive!
Below 1650 and this scenario of a minor 5 of int v of major 3 dissapears! Although I never saw 2 consecutive daily closings under daily BB! Not calling for really :) it but seems nearly impossible 2 consecutive closings under daily BB's!
V.
Dan, the 1680 retest is interesting. The 1685 support was important and the bears finally broke down through. So a back kiss would be in order for 1680-1685 at some point forward.
ReplyDelete