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.
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=5&g=0&id=p79943806562&a=307800791&listNum=6
ReplyDeleteKeystone, what are we to make of this Velocity of Money chart after years of QE?
ReplyDeletehttp://tinyurl.com/lewvaza
Sean
sanitized QE
Deletewhich is to say internal deleveraging and balance sheet rectification
which is to say the fed gives digital fictional money to shore up the balance sheets of bankrupt institutions and the fed takes the worthless paper derivatives onto the black whole of their balance sheet. a=l+c and that still equals negative 1.5 quadrillion! LOL
Yep, the velocity of money has been the problem all along. All the central banker easy money is sloshing around inside the banks but it is not going out in loans and not being put to use. This is what creates the multiplier effect with money since if a business takes on a loan, they are hiring some extra people which helps jobs, all these folks stop for breakfast each day, lunch, maybe the parking lot guy receives extra money, etc..., this velocity of money is what jump starts the economy, but instead, money is sitting there doing nothing. Then there is the bad side, this has to unwind and if all that dough hits the streets in force you will see inflation, or perhaps hyperinflation hit. All this is what Chairman Bernanke is worried about because QE is not helping the economy it has only bloated equity markets making the wealthy wealthier and the common person suffers more, and is paying the bill for it all. That is why the Fed may have to taper, not because data is good, there may simply be no choice anymore since the Fe dis doing far more damage now than helping--and they know it.
DeleteKeystone, what´s your take on TSLA? Could be a nice opportunity for bears. But hard to catch a top...
ReplyDeletehttp://scharts.co/15pXuXd
Regards
Andrew
If you wouldn't step in front of a moving Bus! Why step in front of an accelerating electric car manufacturer's speeding stock - 5* safety results aside -
DeleteBB
BB
Yep, its a toughie to short momo stocks, like Keystone's KKD currently running higher. TSLA has some additional short-term momo, it is remarkable to see it move higher, there was positive news about selling more cars in China. Perhaps a short possibility over the next one to three weeks from 172-178.
Deletethe RUT is back to its gap so a failure there would stymie the advance to be sure.
ReplyDeleteNote the RUT 20-day MA at 1042.62. Price is now 1043.30, so today will be an important closing number to see if it holds the 20-day, or not.
Deletehttp://www.usnews.com/news/politics/articles/2013/08/26/kerry-to-make-statement-on-syria
ReplyDelete2 PM, probably more finger-wagging at Syria, and Kerry saying that he really, really, really means it this time.
Deletefunny how all the suppose anti-war "heros" are now firmly ensconced in the military industrial apparatus...
DeleteKerry has always been CIA and will always be a Bonesman.
War it is, again. Athens will have her slaves and proclaim to be democratic! lol
Truth is: there's not a whole hell of a lot Kerry or the US can do about Syria, except wave a finger here and there.
DeleteMark
?? we are already fighting 74 "conflicts" around the globe - what's one more killing zone?
Deletehttp://dissenter.firedoglake.com/2013/05/06/the-united-states-is-fighting-how-many-wars/
Americans have NO IDEA the carnage our empire inflicts and the ill-will it creates through the murder of children http://www.youtube.com/watch?v=FbIX1CP9qr4
remember the goul Albright's assertion that 500,000 dead kids is worth it in pursuit of US interests!
With a completely debt financed PRIVATE Mercenary force, drones, etc, Syrians are the next people to be broken.
Who do you think funded al qaeda in syria anyway? Al Qaeda never stopped being functionaries of the CIA (not even during the 911 ruse).
This is an endless war machine and it is going into Syria - IRAN is going to be surrounded and it isnt about terror or nukes.
We have some idea. That's why every time we travel abroad we pretend to be Canadian. The funny thing is: it works. But the average American has no more say over what our government does than the average Russian has a say over what Putin does. Sure, we "vote" but does anyone really believe in that process anymore? You have two choices: rock and hard place. Both are owned by very deep pockets that don't give a sh** about its people. How very American!
DeleteMark
so stop trying to have "a say" and take action on what you know to be right.
DeleteTPTB learned along time ago to "allow" free speech as a fiction of American Freedom but try to act free and see what happens.
if you know children are being murdered then action not speech is necessary.
http://stockcharts.com/h-sc/ui?s=$SPX&p=60&yr=0&mn=2&dy=0&id=p75790520724&listNum=4&a=312297654
ReplyDeleteSo, now there's the whole war question. As usual, there's very little we can do about that. For our purposes, we need to ascertain whether it's good for stocks or bad for stocks
ReplyDeleteMark
profit off murder! lol of course it is good for stocks!
Deletehttp://stockcharts.com/h-sc/ui?s=$SPX&p=M&st=1990-01-01&en=(today)&id=p59506140174&a=300429387&listNum=4
"War is the Health of the State" - http://www.historyisaweapon.com/defcon1/zinnwarhea14.html
the 60min wedgie is breaking down at resistance...
Thanks, that we need to know. Maybe they'll stimulate the economy after all.
DeleteMark
The war play is always about the timing, like everything else in trading. Typically markets will drop as everyone grows fearful of a conflict, but the bottom usually occurs when the bombs are dropped and missiles fly. There may be a need for market softness first. The new moon is Thursday 9/5/13, 10 days away, this is the darkest time of the month and when military operations would be likely to take advantage of infrared and other technology like night-vision. So, say a first window for a strike occurs perhaps 9/3 thru 9/7. If that does not occur and diplomacy is pursued, perhaps a next window would be around the 10/4 new moon.
Deleteit muti-level stimulus - employ the undereducated, kill those with raw materials you need, force the dollar down people's throats at the point of the gun, use IMF conditionalities to sell off their infrastructures...
Deleteand the world is reborn.
http://bcove.me/864x3m5z direct video link to Kerry statement
ReplyDeleteif the US does get involved with Syria, would that effectively remove the taper in sept. fears?
DeleteGood question, but there are a lot of moving parts, a lot of plates spinning in the air. The Syria thing may be a non-event somewhat since it may be a cruise missile strike and not really the beginning of a conflict per se. There will be no boots on the ground and that type of thing. The sticky point is that Syria has the coastal ports and this is Russia's only place to gain access that is why they keep backing Asaad. So a missile strike could ramp up a lot of trouble between the U.S. and Russia. The guess now would be that markets may not pay a lot of attention to Syria, and this may be evidenced by oil dropping in price today, the oil markets should be most affected and they do not appear to be concerned.
DeleteGood,because I was really sweating the SCO calls I bought.
DeleteKS,
ReplyDeleteCould you please comment on FB? Do you see any negative divergence on this now? It went up too much in a week. what are next support levels?
Thanks.
This comment has been removed by the author.
ReplyDeletepretty sure the weakness today is DIRECTLY related to Kerry's conference (or lack thereof!)
ReplyDeleteTold ya! Monday is a down day that it will not make it to 1670. Better get out of longs, too risky at this point with so many events hit at the same time, remember..we are in major 4!
ReplyDeletesorry anon but you sound like a kid on a playground - see, I told ya so ! lol
DeleteIf i were Long I would sell IF 1653.4 is breached today on a microbounce to 1663.
ReplyDeleteOtherwise we are still on track for a bounce
Best
BB
interesting day with a lower close today than on Friday.
ReplyDeleteI don't see that much damage was done, but the futures will decide the fate of the rally. Lots of the cycles are reset so this could be a good springboard higher - but much lower -1 to -3 points and my system will flip to short by the morning - so be careful Longs.
BB
rut and mid caps and loss of the 50ma are big today - may have to reposition tomorrow...we will see if it is a discounted news event.
ReplyDeleteA few models and indicators have been quite specific stating that today 26th August would be a low for the week. Who knows? But just in case I closed my shorts at the end of business today.
ReplyDeleteStevo
The NYSE summation index seems to be painting out a market bottom, or close to it.
ReplyDeleteThe PSAR thingy (for the SP500) should have flipped over today, supporting higher (or sideways) equity prices for this week. The PSAR thingies for SPXU and UPRO flipped last Friday, supporting higher equity prices for this week.
Big POMO days coming, Tuesday and Wednesday. Almost $9 billion total.
Fat stock market returns are about all BS Bernanke can hang his hat on since 2009. Ben won't let it go without a fight. This is his legacy. :)
Hi, so approximately what level do you think it's going to bounce to this week? 1700? Thanks!
DeleteYep, the PSAR thingy for the SP500 did flip today. It now supports higher (or sideways) prices for the week.
ReplyDeleteinteresting, $NYAD is showing higher lows for the last few days, including yesterday, and the $NYHLR rocketed back up to 7. today looks to be a make or break day for the rally. with so many people bearish, we need a bounce, even my 87 year old grandma asked if I was short the market yesterday and the only numbers she usually cares about are the cash 5 and powerball.
Delete