Alcoa kicks off Q3 earnings season this afternoon. YUM, a key China bellwether due to the KFC (Kentucky Fried Chicken) franchise, reports as well. NFIB Small Business Optimism is being released now. International Trade 8:30 AM. JOLTS Job Openings Report 10 AM. Fed's Pianalto speaks 12:25 PM. Fed's Plosser speaks at 12:30 PM. 3-Year Note Auction 1 PM. GTX 4888, JJC 40.19, RTH 54.79 and XLF 20.02 are the key market directional drivers today. Commodities, copper and retail are helping the bulls while financials are helping the bears, respectively. Markets will move to and fro based on how these parameters move.
For the SPX starting at 1676, the bears need a one-point drop under 1675 to accelerate the downside while the bulls need to push above 1687 to accelerate the upside. A move through 1676-1686 is sideways action. Keybot the Quant remains short. If the XLF moves above 20.02, and the SPX moves above 1687, and both stay above, Keybot will likely flip long. The SPX is under the 200 EMA on the 60-minute chart at 1685 and the 8 MA is under the 34 MA on the 30-minute chart both signalling bearish markets for the hours ahead. Key S/R is 1691-1692, 1685.08 (200 EMA on the 60-minute), 1689, 1687, 1685, 1682, 1680, 1679.53 (50-day MA), 1675, 1672 and 1669.
The CPC and CPCE put/call ratio's continue to signal complacency and lack of fear in the markets. The higher VIX, however, shows concern and worry beginning to surface. The VIX beach ball may explode from under the water (scroll back to Sunday's cartoon). The NYMO is negative but not yet at -40, -50, -80 and -100 that are better areas where a market bounce would occur. The VIX violated its upper standard deviation band which hints that a near-term market bottom is at hand. The next couple days are very important for markets. Copper is very influential now and helping the bulls prevent significant downside. If JJC 40.19 fails, markets are in trouble. For market direction today, watch GTX 4888, JJC 40.19, RTH 54.79, XLF 20.02 and SPX 1675 and 1687. Keystone added some DNDN yesterday to this ongoing speculative long trade.
Note Added 10:26 AM: Status quo with commodities, copper and retail remaining bullish and financials bearish. Thus, markets stagger sideways similar to the politicians after a typical lunch. SPX range is the 1672 support on the bottom side and 1675-1676 on the top side, so far. Bulls win above 1676. Bears win below 1672. Price remains under the 50-day MA at 1679.33, bearish. Equities meander waiting for the next politician to take the podium, of course after their underlings place trades so they all can play the markets on their own news. TRIN 1.04 so it cannot make its mind up either, teetering around the neutral 1.00, favoring the bears but only by a hair. The SPX may want to test the low from last Thursday at 1670.36 (last week's low). If 1669-1670 fails, the algo's should kick in more sell programs since a weekly failure is important. Under 1669, strong support is 1657, 12 points lower, with 1664 a stop-over place on the way there.
Note Added 10:49 AM: Here's the test of last week's low at 1670.36. Price is 1670.57..... whoosies daisies, now 1669 handle, so it stabbed down through. The SPX is now at a critical juncture, strong support at 1669-1670, it is time for the broad indexes to bounce, or die. What will it be bulls and bears?
Note Added 2:56 PM: It died. President Obama is speaking, rambling on with the same-o dialogue, cruising at 40,000 feet, blaming everyone else for the current political situation. All these political folks better get together soon since equities are starting to feel the pressure. VIX is over 20 now and hit 21 today. RTH failed at 54.79 which creates this afternoons weakness. TRIN is 1.69 helping bears. The SPX fell through 1669 support, tapped on 1664 from above and below, then fell to the LOD today at 1657.34. The SPX 2-hour and 1-hour charts continue to look weak although price is attempting to place a bottom. Look back at the SPX S/R list from the weekend to monitor support and resistance. If 1657 fails, then 1652 and 1649 support levels are on tap next. SPX sits at 1660.
Note Added 3:16 PM: The president continues talking and the markets remain weak; he needs to exit stage right. The president does not plan to negotiate so he could have said that in 5 minutes. As in musical performances, exit while you are at the top of your game since the longer you play, or talk, the more the audience disengages. RTH is 54.71 under the critical 54.79. UTIL 482.07. JJC 40.36. GTX 4909. VIX 20.58. TRIN 1.79.
pour mes chers connaiseurs :
ReplyDeletec=0.618*a = at 1662.18
V.
V,
ReplyDelete"The bears' thing doesn't work too well as far as I see.
V."
You are a great contrary indicator.
I just noted a ratio between A and C.
DeleteYou can do whatever you like.
V.
Do any of you morons ever realize that the market sells off early october through thanksgiving, and then rallies into christmas??? Its called a pattern. Also after the huge run up all year, a sell off in summer, idiots buying in, another sell off and here we go into a bigger sell off. All your TA is rear view mirror junk.
ReplyDeleteAnd he's back! Whenever the most obvious scenario plays out, this guy comes around to tell us all about it.
DeleteMark
That is remindful of the guy holding a sign that says 'moran' that has been circulating for years on the web. Simply google 'moran sign'. Very funny, since he could not spell moron correctly. LOL
Deletehttp://www.flickr.com/photos/26139347@N05/4774136353/
looking good keystones! Still short from 1703 because it is now highly probable we'll be lower next week. If we bounce to 1673 - Short there, with a tight stop if you want to ride down together.
ReplyDeleteWhat ever you do dont go long the bounce at this juncture.
The short term trend is down, not up, down.
BB
BB,
Deletedo you mind to make a call when we're getting near bottom or start long again? Thanks!
Of course
DeleteBB
It looks initially (amazingly) like we are going for another 'down and pound' day in the markets tomorrow - hard to believe with all these down days I know but so long as you didn't buy the bounce you're fine and if you are short - dandy
DeleteI said a week ago this level here could provide support 1655-1648 but if we slice through that - well I would still likely close because thats nearly 50 SPY points captured and interestingly its only really today that the bulls are getting tired of their beating and so below 1648
and dreaming for a minute, if you missed this down move and got suckered in by the bullish writings of the Bulls there would be a SUPREME buying opportunity at 1600 -
if we get to 1600 - im going long in the face of anyone saying anything bearish - even if the market goes against me for 2-4 days - 1600 even if the world ended would be a fantastic place to go long but its going to feel scary doing so. - As soon as my system goes long I shall post it here - until then best of luck KS's
BB
Thank you BB!
DeleteI've been chewed up by shorts earlier this year and learned my lesson.
I will not short in a Bull Market since I'm still learning but will try to get long when time is right.
Hey Amy,
DeleteThere isn't a trader alive who hasn't been chewed up at some point, or two, or 12, but you nailed it when you said "learned my lesson". Its OK to short in a Bull market when evidence supports a pullback, after all, there are lot's of P2s and P4s on the way up. Two things to look for in a pullback are the depth and length. Last pullback in SPX was 82 points in 15 trading days. If this current pullback exceeds 82 points in less time, then a more severe correction may be on tap. DON'T CHASE THE DOWNSIDE, let the trade setup come to you. And keep things in perspective by having a view of the market in weekly, daily and hourly time frames.
Thank you Anon and BB for your guidance.
DeleteI'll keep that in mind.
Today I bought TNA when spx drop to 1657 but got out at 1660 because I feel that it has not reach my goal.
I am looking for spx 1643...well, it may or may not get there.
Anyway, thanks All !
Down near 1600 the strongest support is 1614, then 1598, then 1593 and 1589. Thus, 1614 may hold, if not, sub 1600 and 1598 may be the level. The 80/20 rule says, however, that if 1620 fails, price may want to visit the 1580's. But, we probably got a few days or couple weeks before this may play out if it does.
DeleteKS, how about a mid day update on this melt down. I'd like to know your thoughts about current levels.
ReplyDeleteThe SPX 1669 failed so that led to 1664, then the 1657 support the LOD. So 1657 is the base line support now, if that fails, then 1652, then 1649. This is an uber strong support gauntlet in here, 1649-1657, if this fails big trouble would be ahead and extended market weakness. RTH 54.79 failed today which is very key, watch this closely. This shows the retail sector has fallen into the bear camp today and will create continued equity weakness. Price may play around in this 1649-1657 area as the political dance continues this week. Bulls are hanging in there with JJC 40.19 and GTX 4889 on their side, if these fail, you will see a dramatic drop in the markets. UTIL tried to regain the 50-week MA at 483.63 watch this very closely, the bulls were trying to close this trap-door but failed. Bulls are hanging on by their fingernails with commodities and copper. It would be interesting to see the dollar bounce now since this would likely drive both lower.
ReplyDeleteI have a question, when the United States bankruptcy finally goes public, what happens to these Federal Reserve Notes? The government is already bankrupt now, but masking it with artificial credit injections. No one seems to notice that paying debts with more debt, artificially created out of thin air, means that you are insolvent.
ReplyDeleteI mean, I hate to sound like one of these doomsday guys, but the situation appears to warrant a doomsday attitude. The Greek and French disasters put insanely tight austerity on the taxpayers, but if the dollar fails, you could not even put on any austerity measures; unless you just started taking private wealth from people's homes by force. I dont know what that would look like in America. Do we really imagine mass famine and complete collapse of the dollar? I mean really?
One the one hand, it seems like the answer is Yes, because of deficit financing and the bottomless appetite for government spending; and the FED's desire to debase the currency with no bound; but on the other hand, I hesitate to jump to a conclusion and say that another Great Depression is looming. It just sounds silly, but the current monetary policy, economic conditions, and sovereign debt loads, all seem to point to an eventual dollar collapse.
I am trying to understand this on a macroeconomic scale, I realize my words sound like conspiracy theory, but what do you guys think? We joke on this blog everyday, with some hilarious zingers by the way; but this is pretty serious and I wonder how to best move forward from here.
FeS2
Janet Yellen to be named Fed chair on Wednesday
ReplyDeleteNormally I would say this is extremely bullish (if for the wrong reasons) but after today, I can't see her nomination giving much lift to the market.
ReplyDeleteYep, the U.S. is bankrupt and all that but what will probably happen is a world war, significant terrorism event, and/or global pandemic, since this will distract attention from markets. Once all that breaks loose there will be larger global problems. The news is not good any way you look at it. It is only a matter of when, now, a few months from now, a few years, 10 years? We are probably only months or years away from the troublesome turmoil. Enjoy each day until then. These Autumn days are beautiful in Pennsylvania.
ReplyDeleteYellen bump is not much, S&P's up about +6 about 3 hours before the Wednesday opening bell. Everyone expected it. It's a shame how it played out since she begins her tenure as someone the president never wanted.
ReplyDelete