Keystone's Midday Market Action 2/28/14; EOM

Today is the last day of the month; EOM. February did not live up to its negative reputation. The broad market indexes are up about +5% or +6% this month. Today, financials (XLF) run strongly higher ignoring negative C news. Volatility collapses lower which created the rocket fuel to print a new all-time SPX high at 1867.92. VIX 13.93 is the key bull-bear line in the sand identified by Keybot so that is why equities leaped higher (VIX under 13.93) but note that as this is typed, with about one hour of trading remaining in the day and week, VIX is 14.01 back above 13.93. Hence, some market weakness appears. Even though the bears were smacked in the teeth this morning, they rise up to growl this afternoon pushing volatility higher once again creating market negativity.

The dollar/yen has fallen down to 102 so the stronger yen also creates the afternoon softness. Usually shorts like to pare back positions on Friday afternoon which causes lift in the markets but lately are there any bears remaining? The last two days of February are typically bearish so perhaps some of this seasonal weakness is filtering in this afternoon. The new moon is tomorrow and markets are typically weak moving through the new moon. Next week begins the new month of March and typically new money lifts markets the first few days of the month.The ECB Rate Decision and Press Conference, and then Monthly Jobs Report, hit next Thursday and Friday, respectively. Traders may be a bit too relaxed considering that drastic negative currency events tend to occur on weekends.

Note Added 3:02 PM:  The SPX is dropping now at 1855 which is the lower red trend line on the 2-hour chart posted a short time ago. You know what that means. Yep. Bounce, or die, time.

Note Added 3:36 PM: The SPX died, and then bounced. The markets are a circus. SPX now at 1855-1857. Ukraine unrest is blamed for the afternoon selling. The new government is telling Russia to not take over Crimea and to back off, thus escalating the ongoing turmoil. The all-time closing high from yesterday is 1854.29 so there will probably be drama around this number into the bell. VIX is 14.20 remaining above the important 13.93 level.

Note Added 3:55 PM:  XLF is 21.69 so bulls are riding the financial strength today. VIX 14.22. SPX is back above 1860 so this must be due to the additional money flow juice described in the previous chart. China PMI is tomorrow.

Note Added 4:10 PM: The SPX prints a new all-time closing high at 1859.45 and new all-time intraday high at 1867.92. VIX is 13.99 so the bears clutch this feather for their caps. XLF is 21.72 well above the 21.44 bull-bear line in the sand which carried the bulls to victory today. Next week will be a continued battle of financials and volatility, and copper should come into play also. China PMI is important this weekend and Putin likely holds the key to global markets. Putin will either sit on his white horse and provide a thumbs up, or thumbs down, to the Ukraine situation. The banks are very important over the coming days. A currency crisis usually develops on a weekend. Bulls are feeling good going into the weekend, however, they apparently could not muster up only six cents more of strength to push VIX under 13.93.

SPX 2-Hour Chart Fibonacci Retracements Overbot Rising Wedge Negative Divergence

The 2-hour receives a couple of negative divergence smack downs over the last two weeks but the bulls always bounce back. Price is softening this afternoon but a couple or few candlesticks may be needed to burn off the near-term juice from money flow. The red rising wedge would be expected to fail moving forward. If price tops today at these 1870-ish highs, the 32% Fib retracement is 1818.

The brown squares show the debt ceiling resolution rally in February, which turns out to be a very strong month when typically it is one of the weakest stock months, and also the Yellen rally that started 2/11/14 after the testimony before the House Banking Committee. The Senate testimony was yesterday and Yellen hit more home runs receiving soft ball pitches and knocking one after another over the fence. The senators had no will to beat up on such a nice matronly lady that looks like she just baked them a fresh apple pie. The Yellen rallies are just like the Bernanke rallies, about 30 SPX handles. The 2/11/14 rally ran from 1800 to 1830 and this weeks rally is 1840 to 1870.

The bottom red trend line is 1855-ish, so maybe some of that long and strong money flow juice gooses price a few handles higher, and then a roll over would be anticipated. The collapse out of the red rising wedge would be expected to send price towards 1818. Watch the lower red trend line and also the RSI 50% level that has been holding. If that fails, then price movement lower would be more sustainable. 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.

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Keystone's Midday Market Action 2/26/14

Lots of drama with volatility today. Watch VIX 13.93. Bulls win below and bears win above. VIX is printing 13.96 only three pennies on the bear side. Whichever way VIX moves, equities move opposite, and volatility is the key metric affecting market direction right now. XLF dropped to 21.43 today but recovered. XLF is at 21.51 above the 21.43 bull-bear line in the sand. Copper remains weak. The SPX keeps attacking the 1851-1853 resistance. The 8 MA moves up through the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead (see this morning's chart). Bears must reverse this cross immediately, otherwise, markets will likely float higher for a few days forward. Keybot the Quant is long with the algo going wild today printing nine numbers thus far in the session. Watch VIX 13.93 since it provides the market direction answer.

Note Added 2:42 PM: The 8 MA stabs under the 34 MA on the 30-mintue chart signaling bearish markets for the hours ahead. The last two days are an all-out bull-bear fight for market control. VIX jumps to 14.41 so the bears puff their chests out and start growling. XLF is 21.45 now only two pennies from the critical 21.43 bull-bear line in the sand. If XLF stays above 21.43, the bulls will be fine and send markets sideways into the closing bell. If XLF fails 21.43, the SPX will take another leg lower of several handles and Keybot may flip short. Just when it looked like the bears were rolling over to hibernate they jumped up and are fighting fiercely. Bears, however, got nothing unless they achieve sub XLF 21.43. The main market directional parameter now is XLF 21.43 since it will dictate the fate of equities into the closing bell.

SPX 30-Minute Chart 8/34 MA Cross Upward-Sloping Channel

The 8 MA stabs down through the 34 MA signaling bearish markets for the hours ahead. Note the tentative move, however. The bulls are always there to slap the bears in the teeth--yesterday was a wrestling match with three crosses occurring but the 8 remains under the 34, for now. Price came up late day to back kiss those lower channel trend lines and will decide today if the channel failure is locked in to lead to the downside. Bulls need to return price up inside the safety of the channel.

As long as the SPX remains under the 8 MA at 1847, markets should weaken. If price moves above 1847, it will curl the 8 MA higher and once again set up the scenario where the bulls may win with a positive 8/34 cross and the SPX will be on its way to more new all-time highs. S&P futures a short time before the opening bell have dropped from +5 to +2 so a few-handle open for the SPX is on tap. This action would tease the 1851 resistance at the get-go.

The three support levels on the chart are important for the minute and hourly time frames. The chart is weak and even though three of the indicators are sloping upwards, the set-up is not positive divergence since price has not yet even printed under the prior low of 1843 over the last 6 hours. Key S/R is 1859, 1851, 1848, 1843, 1841, 1839, 1828, 1808, 1803 and 1800. Watch the 8/34 MA cross as a bull-bear guide for equities. 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 1:46 PM:  The 8 MA pierces up through the 34 MA signaling bullish markets for the hours ahead. Bears will need to drive the SPX immediately lower to try and reverse the positive cross, otherwise, the bulls may run markets higher for a few days. There is no time to dilly-daddle. If bears are going to make a move it has to be now.

Keystone's Morning Wake-Up 2/25/14; Consumer Confidence

The markets are very fast-moving these days and it is difficult to keep pace. Ukraine, Turkey, Venezuela, Thailand, bitcoin drama, new market highs, there is a lot of wild stuff occurring. Turkey trouble is heating up again with the lira weakening so this may take the front seat in the drama parade today ahead of Ukraine. Yesterday was a huge short-covering rally. The bears have given up. Markets float higher since there are no sellers remaining. Buyers are selling to other buyers. The bullish euphoria was clearly evident yesterday. Traders, analysts and television pundits are giddy and joyous with calls of SPX 1900 echoing along the halls of the exchange yesterday. Funny how many turned somber into the close when the SPX could not print a new closing high despite printing about 10 handles above during the session.

The retail sector provided the upside juice yesterday and this was odd since many retailers were smacked. As soon as the RTH jumped above 58.63, equities thrust higher. The bulls need further upside juice from lower volatility but the VIX would not move sub 14 yesterday afternoon so the bears returned late day and pushed equities lower. Bulls need VIX under 13.92 to continue the market rally.

As always, look to the BOJ and Fed's collusion to determine market direction. Before yesterday's open, the dollar/yen was dropping towards 102.20 so equities were soft. The dollar/yen then ran higher to 102.70 to push equities higher with the rocket launch move. As the afternoon played out, the dollar/yen softened down to 102.50 so equities sold off. Japan's NIKK gained overnight following along with the US upside but the dollar/yen further drops to 102.33 as this is typed. Thus, lower dollar/yen means a stronger yen and lower equities and the S&P futures are -3. Kuroda and Yellen are on the telephone now plotting today's manipulation. Plain and simple, if the BOJ is printing yen, the dollar/yen moves higher and so do equities. If the BOJ stops the printing presses to take a break, the yen strengthens sending dollar/yen lower and equities lower.

Four parameters are controlling market direction currently; RTH 58.63, XLF 21.43, VIX 13.92 and JJC 39.85. Keybot the Quant flipped to the bull side yesterday but the markets are very erratic, unstable and unpredictable. The bulls need VIX below 13.92 and JJC above 39.85 to receive upside juice. The bears need RTH under 58.63 and XLF under 21.43 to receive downside juice. The RTH is within 7 pennies of 58.63 (on the bull side) so watch this closely at the opening bell for an immediate market directional signal. One of the 4 parameters will flinch and dictate market direction. If all 4 stay status quo today, then markets float sideways with a slight upward bias.

For the SPX starting at 1848, dead flat for 2014 thus far, the bulls need to touch 1859 to create an upside acceleration. The bears need to push below 1837 to accelerate the downside. A move through 1838-1847 is sideways action. Copper is very weak but everyone ignores the doctor. No one is worried about getting sick even though the only doctor in town is ill laying on a gurney in the emergency room. The CPC and CPCE put/call ratios continue to signal complacency and a market top at hand or developing in the days ahead. The BPSPX gave the market buy signals a couple days ago as highlighted in a previous chart so that bullishness followed through and helped create the market thrust higher yesterday. The buy signals remain on the BPSPX. Bears will need to move the BPSPX under 70% or they got nothing. The VIX is under the 200-day favoring bulls but this fight is ongoing and must be monitored to see who wins. Bears need the VIX above the 200-day MA or they got nothing.

The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead but the 8 MA is curled over to the downside and may create a negative cross today. Bears need the negative 8/34 MA cross on the 30-minute or they got nothing. The SPX all-time intraday high is 1858.71 so the 1859 is strong overhead resistance. The all-time closing high remains at 1848.38. The strongest S/R is 1859, 1851, 1848, 1843, 1841, 1839, 1828, 1815.25 (50-day MA), 1808, 1803 and 1800.

Consumer Confidence is 10 AM and will create a market pivot point. Richmond Fed Mfg data is also at 10 AM. Fed's Tarullo spins a yarn at 10:10 AM. The 2-Year Note Auction is 1 PM. Housing data including the S&P Case-Shiller House Price Index hit before the bell. Watch RTH 58.63 and VIX 13.92 today. Also the 8/34 MA cross on the SPX 30-minute and VIX 200-day MA cross. These four will tell the market story.

Updating the housekeeping on ongoing trades, all shorts are hammered as the indexes run higher. Keystone exited JCP as a flat trade last week which appears to be sheer dumb luck. JCP slipped -7.2% yesterday ahead of earnings tomorrow. It makes you wonder if insiders have already received the word ahead of time. A move lower would be expected to fill the gap at 5.7-ish but price has now dropped to 5.23. Everyday someone is bashing JCP and yelling the bankruptcy word to keep the fear elevated and that occurs again this morning. The bottoms in NFLX, BBRY, BBY, WLT and others followed the same dramatic path although the retail sector is more worrisome. Five is an important level since the funds are typically obligated by their by-laws to not own a stock that is priced under five bucks. That is why garbage C did the reverse split a few years ago. C is 48.98 so taking away the 10:1 reverse split means the piece of garbage (from a price perspective) is 4.90, a sub 5-dollar stock in drag. It would be negative if JCP chooses the reverse stock split route. As a rule, a reverse split simply indicates further trouble ahead; C is a very good example. JCP's charts remain attractive from a bottom-picking and positive divergence perspective. Anything can happen with earnings but the thought would be a bounce since the news has been all negative for weeks. The charts did not require price to drop lower again but the recent negativity may cause further sideways basing. Keystone will look to reenter JCP and it remains an attractive, albeit highly speculative and dangerous, stock to play on the long side. The prior customers of JCP are likely far more loyal than everyone thinks and may return to the stores a lot faster now that the Ron Johnson debacle is flushing out.

The FB short trade is getting killed because of the slap from the WhatApp acquisition; that entry short was unfortunate timing. You win some and lose some. The FB short trade will remain in place for now. The price action adds some oomph to the charts for Facebook but a top is expected in here at 71-73, then potential move down to 56-60. Biotech and pharma stocks are parabolic. MYL takes another jump higher so this short trade may have to be taken as a loss since shorting it appears futile. For now it will remain on. Keystone still likes shorting high-yield. Most all stocks benefited from the upside thrust in equities yesterday which creates more oomph that may need a couple few days to play out. Shorting HYG or longing SJB (thinly traded) are possibilities to scale into. JGBS will be added to as time moves along, also the micro cap MGPHF. SMN is in an inverse against basic materials and was enjoying upside despite the higher equity markets yesterday. Other assorted inverse ETF's are held that short the broad market but all are underwater as equities keep printing new all-time highs. Keybot, that handles two-thirds of the overall portfolio, is on the long side currently.

VIX Volatility Daily Chart Battle at 200-Day MA

The drama continues along the 200-day MA at 14.62. This moving average is an important market signal that says bulls win under the 200-day and bears win above. There are about eight oscillations above and below this key level over the last 9 days. Equities want to commit to a direction but cannot make up their mind. The blue sideways triangle is squeezing price in from above and below to force it to make a decision within the next three days, so the story should be written by the end of the week. The bulls are in good shape at 14.23 under the critical 14.62.

The above is a signal anyone can follow to guide your trading over time. Keystone's algo identifies important areas and levels in markets and the algo currently says VIX 13.92 is the line in the sand. So bears are actually favored now with the 14.23 above 13.92. The bulls needed to push VIX under 13.92-14.00 yesterday, and they teased all afternoon, but could not gather the juice to create lower volatility so equities sold off into the close. The 200-day MA is a key signal but the real line in the sand according to Keystone's algo is VIX 13.92. A lid should be placed on the market upside if VIX stays above 13.92. If the bulls push VIX under 13.92 the SPX is on its way well into the 1860's. This chart is important for the remainder of the week. 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 at 8:46 AM on 2/26/14:  The bulls jam volatility lower during the last minute of trading. The bulls are running the show with the VIX at 13.67 under the critical 13.93 bull-bear line in the sand which will create upward market lift.

SPX 30-Minute Chart 8/34 MA Cross

The 8 MA remains above the 34 MA on the 30-minute signaling bullish markets for the hours ahead, however, the 8 MA has curled over to the downside for a potential negative cross today. Bears got nothing unless the 8 MA crosses down through the 34 MA. The lower red trend line is important since it has numerous touches over the last couple weeks; so bulls are happy above 1846-ish and bears are happy under 1846-ish. The green ovals show the band squeezes and yesterdays opening bell was a doozy. The white candle shows a rocket launch. Price tagged the upper band so it moved back down to the middle band already. The lower band at 1835 would be in play if price fails the red trend line.

The MACD line is trying to squeeze out one more bit of upside price juice but overall the indicators created the spank down and are weak and bleak. The RSI dropped under 50% into bear territory. Watch to see if stochastics fall below 50. The strongest S/R is 1859, 1851, 1848, 1843, 1841, 1839, 1828, 1808, 1803 and 1800. Watch the 8/34 MA cross as a bull-bear guide for equities. 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 2-Hour Chart Rising Wedge Overbot Negative Divergence

The 2-hour chart is a mixed bag like the daily chart with very odd price behavior. The tight pink ovals show the band squeezes downward in early February and upward yesterday morning. It is odd to see yesterday's up move only last for two candles, about 4 hours trading time, then pierce the upper band and then reverse down. The neon green line shows the all-time closing high at 1848.38 which was pierced after the opening bell, with price remaining above all day long, only to close under as the bell rang not printing a new all-time closing high. The prior 1851 all-time intraday high was taken out and is now 1858.71 so the 1859 level is key overhead resistance. Price should move to the middle band, at a minimum, (since the upper band was violated) now at 1841.41 and rising. Note that price has not tapped the lower standard deviation band for one month and that is moving flat at 1827. The apex area of the red rising wedge keeps the door open to 1858-1870.

The red lines show the rising wedge, overbot conditions and negative divergence all in play and wanting to see lower prices ahead. The stochastics are hinting at one more run higher but overall the stoch's are overbot and wanting to see lower prices as the hours play out. So it may take one to three candlesticks for price to roll over which would be the bulk of Tuesday's trading day. The money flow is simply heading lower and wants nothing to do with a higher SPX. Projection is sideways to sideways lower. Watch the red rising wedge; once price collapses from the lower red rail, the drop may be quite dramatic. 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 Daily Chart Expansion Pattern

The blue H&S pattern disappears since price takes out the prior all-time intraday highs, however, it may be a Quasimodo H&S, said somewhat tongue-in-cheek, with a right shoulder the height of the head so if price moved lower from here and failed at the 1740 neckline, the downside target is 1630. It is remarkable to see price squeezed lower by the tight bands in late January but then for price to recover the move in quick order. It shows the power of the weaker yen courtesy of the BOJ. Price could not close at a new all-time high above 1848.38 today despite printing new intraday highs. There is an expansion pattern in play so the top rail at 1875 is in play. The upper standard deviation band is 1866. The SPX has already recovered from the lower band back to middle band and nearly back to the upper band.

Volume today continues to fall short of the selling volume one month ago. The red lines show negative divergence but the green lines show the near-term juice due to the MACD line and money flow that likely want another high after any pull back. Stochastics are topped out and want to see price simply head lower from here forward. The 1848-1851 remains as strong overhead resistance. A move up through 1851 likely leads to a test of 1859 again, then the 1866 area if the bulls are running. Price may want to oscillate at these elevated levels for a few days, the 1866-1875 area cannot be ruled out, but the expectation is for a topping in price and a roll over to the downside for the days and weeks ahead; sideways to sideways lower. The dollar/yen at 102.50 provides the answer; whichever way it moves so goes the SPX. 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 Weekly Chart Upward-Sloping Channel Rising Wedge Overbot Negative Divergence

The weekly chart continues to show a weak profile despite the new highs. The MACD line was flat going into this year with all other indicators negatively diverged so price was slapped down but that subtle remaining juice in the MACD was enough to bring price higher again. With the new highs today note the maroon lines in the right margin that should all remain negatively diverged. The short green lines, however, show the near-term momo the bulls developed except for the money flow. This provides the bulls some additional sideways juice to keep price elevated for a week or three but the anticipation is that all the indicators will remain negatively diverged and create another smack down like January. Price failed out of the red rising wedge and is now higher testing the apex of the wedge.

The standard deviation bands, not shown, are coming inwards with the top band at 1868 so that would serve as an upside target, 1868-1870. The downside target would be the upward-sloping 20-week MA at 1805 and the lower channel rail at 1800, call it 1800-1810. Projection is sideways to sideways lower for the weeks ahead. Price may remain at elevated levels into mid-March but the sideways to sideways lower intermediate term move for the weeks and months ahead can begin at anytime. Pay attention to the MACD line crosses (small red and green circles). The SPX prints new all-time intraday highs today nearly at 1859. 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.

Keybot the Quant Turns Bullish

The soap opera continues with Keystone's algo, Keybot the Quant, flipping to the long side at SPX 1846. The retail sector creates the bull fuel. Bears need RTH under 58.65 to stop the market upside. Bulls need the VIX under 13.95-14.00 to send the SPX to 1860+. As always, stay alert for a whipsaw back to the short side either today or tomorrow especially considering the erratic and unstable nature of markets currently. More information is found at Keybot's site;

Keybot the Quant

SPX Monthly Chart Upward-Sloping Channel Overbot Rising Wedge Negative Divergence Fibonacci Retracements

February ends on Friday so the monthly charts will receive new prints. The MACD line refuses to die maintaining a slightly positive slope. This may flatten and turn negative this week if price drops significantly. The other indicators are negatively diverged and the negative divergence from the 2007 top to now has been previously highlighted with the monthly chart. The bump up in the RSI had a lot of juice and is instrumental in sending the SPX back up to test the all-time highs, last week up to 1848 before failing, and today already testing near these highs again. The red upward-sloping channel is in play with price in the center. The brown rising wedge reinforces the overbot conditions and negative divergence all wanting to see weaker stocks moving forward.

The 10 and 12-month MA's are very important and would signal significant trouble ahead. The last trouble was in 2011. The low this year at 1740-ish teased the 10-month MA at 1727 which would have ushered in much more market selling but the bulls saved the day. The pink line is the 1783 level where February began. The bears need a drop of about 50 handles in the next 5 days to print a negative month. Two consecutive down months have not been printed since 2011. The Fibonacci retracements are shown for the move off the 666 bottom to 1851 top and show that the first 32% Fib is at 1400 which would be shocking for most market participants let alone the lower Fib's.

The MACD line wants to see the higher price print moving forward over the next couple months but overall, the chart is topping out and should roll over for the weeks and months forward. Volume continues to trail lower. Projection would be sideways to sideways lower for the months forward. Price is testing the 1851 all-time high as this is typed. A move up through 1851 likely leads to 1860-1880. 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 Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 2/24/14

SPX support, resistance (S/R), moving averages and other important levels are provided for trading the week of 2/24/14. Only five days remain in the month and February began about 50 handles lower at 1783. Do the bears have 50 handles in their bag of tricks by Friday to print a negative month? The SPX is up 9 out of the last 13 days off the 1740 bottom. The bulls ran price up to the all-time closing high at 1848.38 but could not punch up through. If the bulls punch up through the 1846-1851 resistance gauntlet, 1860-1880 is likely.

For Monday with the SPX starting at 1836, if price moves above 1846 a test of 1848-1851 will occur in quick order where a major market decision would be on tap. The bears need to push any amount lower pushing price under 1836 to accelerate the downside. A move through 1836-1845 is sideways action for Monday. S&P futures are +5 one-half hour before the opening bell favoring the sideways trek in the early going. The 1825-1828 support area is strong and would open the door to the 1808 support, however, the 50-day MA 1814.35 and 200 EMA on the 60-minute at 1813.38 create support at 1813-1814. Thus, key S/R is 1851, 1848, 1846, 1843, 1841, 1839, 1836, 1832, 1828, 1824, 1820, 1813-1814, 1808-1811, 1803, 1799-1800, 1796-1797, 1793, 1791, 1783-1784 and 1772. 

1851 (1/15/14 All-Time Intraday High: 1850.84) (1/15/14 Intraday High for 2014: 1850.84)

1849 (12/31/13 Intraday High Top for 2013: 1849.44)

1848 (1/15/14 All-Time Closing High: 1848.38) (1/15/14 Closing High for 2014: 1848.38) (12/31/13 Closing High for 2013: 1848.36)

1847.50 Previous Week’s High

1846.13 Friday HOD

1846

1845

1844

1843

1842

1841

1840

1839

1838

1836.25 Friday Close – Monday Starts Here

1835.60 Friday LOD

1832

1828

1824.58 Previous Week’s Low

1824

1820

1815

1814.35 (50-day MA)

1814 (11/29/13 Intraday Top: 1813.55)

1813.38 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)

1812 (12/9/13 Intraday Top: 1811.52)

1811

1810

1809 (12/9/13 Closing Top: 1808.37)

1808

1807 (11/27/13 Closing Top: 1807.23)

1806

1803

1801

1800

1799.37 (20-day MA)

1799 (11/18/13 Intraday Top: 1798.82)

1798 (11/15/13 Closing Top: 1798.18)

1797.29 (20-week MA)

1796

1793

1791

1788

1785

1784.18 (100-day MA)

1783

1782.59 February Begins Here

1782

1781

1777

1775 (10/30/13 Intraday Top: 1775.22)

1772 (10/29/13 Closing Top: 1771.95)

1770

1768

1763

1762

1759

1756

1752

1749.51 (150-day MA; the Slope is a Keystone Cyclical Signal)

1748

1747

1745

1740

1737

1733 (10/17/13 and 1018/13 Gap-Up: 1733.15-1736.72)

1730 (9/19/13 Intraday Top: 1729.86)

1726.68 (10-month MA; a major market warning signal)

1726 (9/18/13 Closing Top: 1725.52)

1722

1721.73 (200-day MA; not tested for 1 year extremely odd behavior)

1720

1711

1710 (8/2/13 Intraday Top: 1709.67)

1708

1706

1703

1702.80 (12-month MA; a Keystone Cyclical Signal) (the cliff)

1701.23 (50-week MA)

1700

1698

1697

1696

1693

1692

1691

1689

1688

1687 (5/22/13 Intraday Top: 1687.18)

1686

1685

1683

1682

1680

1675

1672

1669 (5/21/13 Closing Top: 1669.16)

1666

1664

1661

CPC Put/Call Ratio Daily Chart Signals Significant Market Top

The CPC and CPCE charts were of great interest at the end of last year and as the put/calls forecasted back then, the stock market received a strong slap down in January and February. The CPC drops to a shameful 0.69 low on Friday clearly illustrating the non-stop bullish euphoria in markets. Traders fully believe in the power of the Fed, BOJ and other central banks and are confident that they can keep the markets elevated indefinitely with easy money policies. The bulls are bullish and the bears are even bullish. The green circles show recent market bottoms and the red circles show the market tops. The put/calls tend to lead with their signal providing the heads up just like in late December you knew the big sell off was about to begin any day. Here we are again.

It is very surprising to see the put/call not venture above 1.0 for months. This is very odd behavior. The complacency and lack of fear is rampant, so much so that markets are not permitted to wash out to actually create a strong bottom. Traders have 100% confidence in the Fed. Simply considering that the ratio has not moved above 1.0 would indicate a correction of from 50 to 200 handles in the SPX is a reasonable expectation. The last acceptable bottom (the CPC moved above 1.20) was back in October at SPX 1660.

At 0.69, the stock market is clearly printing another top currently. Can equities move higher for a few more days? Yes, definitely, but it appears that over the coming days or week or two the markets should place another top and the downside should begin at any time moving forward. This time the ratio will likely venture above 1.00, to 1.20, perhaps 1.30, or even 1.50. The higher the CPC moves the lower the stock markets goes. Your long shopping list should be ready to go by now but simply keep refining the selections since you do not want to consider the long side until the CPC moves towards 1.20 and higher, at which time you can scale in to the long side. Until then, staying in cash or scaling in on the short side appears a more prudent course of action. 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.

XLF Financials Daily Chart

The financials are the key to market direction the last couple days. Watch XLF 21.42 which is identified by Keybot the Quant. This is a critical bull-bear line in the sand where equities move higher if the XLF is above 21.42 and equities move lower if the XLF is below 21.42. Watch XLF at the opening bell since it tells you the fate of markets today. The bulls are winning by two pennies and the elevated XLF yesterday afternoon maintained the elevated stock market. The red lines show the negative divergence, overbot conditions and rising wedge that created the spank down in January. The bottom for price was cheesy as many are these days pumped higher more from central banker intervention rather than solid positive divergence. The RSI never reached the oversold level in early February.

The indicators are not tipping their hand; price is simply meandering sideways. Keep an eye on the 150-day MA (tiny blue circle) since it is starting to flatten and perhaps roll over negatively; this would be a very dire market signal. Two H&S patterns are in play. The neckline at 21 for the pink H&S failed but price recovered when it performed the back kiss. Using that 21 level projects a downside target at 19.85 if the 21 fails and a juicy gap is down there (pink circle). The blue H&S with the 20.50 neck line targets 18.85 if the 20.50 fails. Price may want to favor a sideways channel through 20.50-21.75 for the weeks ahead.

Right now, today, the 21.42 is what matters. The crowd forms. Bulls are on one side rooting for XLF above 21.42 that confirms stronger equity markets going forward with financials leading the parade. Bears are on the other side of the circus tent rooting for XLF below 21.42 since the flood gates will open to the downside ushering in strong market negativity. 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 3:57 AM on 2/22/14: The XLF drama continues. The bulls pushed the XLF higher in Friday trading for a HOD of 21.56, only to crumble lower at the closing bell down to the 21.42 bull-bear line in the sand, closing at 21.48, remaining on the bull side which maintains the elevated stock market. So the drama continues on Monday. The 150-day MA is 20.75 so the slope of this moving average increased only one single penny yesterday form 20.74. Watch to see if this MA flattens and rolls south since it would mean dire consequences for the stock market going forward. XLF 21.42 will decide the winner on Monday. Bears want to hear negative bank news over the weekend. Bulls want to hear positive news.

BPSPX Bullish Percent Daily Chart Market Buy Signal

The BPSPX performs a six-percentage point reversal which provides a market buy signal and the move above 70 confirms the buy signal, a double whammy of joy. The bears receive the sell signal in mid-January, and then the drop through 70% in late-January providing the double whammy of doom, now erased. The bulls are back in the driver's seat according to this tool but there are many mixed signals in the markets nowadays.

The bears will need to reverse the buy signal today or at least by tomorrow, otherwise, markets are heading far higher. Bears will need to pull the BPSPX back under 70 today and will need to move down to 64 and lower by early next week to receive a market sell signal again. For now, the BPSPX says the bulls are going to push equities higher. 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 4:12 AM on 2/22/14: The BPSPX finishes the week at 71.00. There is no doubt the bulls have both market buy signals in their favor. Bears got nothing unless they can push price under 70 then under 65 (71-6). The BPSPX signal says the bulls will push markets higher over the coming days.

VIX Volatility Daily Chart 200-Day MA Market Sell Signal

The VIX is above the 200-day MA at 14.61, albeit by pennies, signaling bearish markets ahead. There are many mixed signals in the markets nowadays, however. The 50-day is 14.67 so use this 14.61-14.67 zone as a S/R gauntlet. Market bears win big above 14.67. Bulls win big below 14.61. Remember, volatility moves inversely to equities.

Keystone's algo, Keybot the Quant, is currently tracking VIX 14.00 as the bull-bear line in the sand so the bears are favored moving forward. So even if the moving averages fail, and the bulls receive the nod forward today, the bears remain in the game as long as the VIX stays above 14. If VIX falls under 14, the bears will be running back to the den to hybernate because equities will be running far higher. For now, the bears have the ball and will have a happy weekend if they can maintain the VIX above 14.67 and preferably above 15 moving higher. Watch the 200-day MA as a key market signal for the days ahead. 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 4:18 AM on 2/22/14:  VIX ends the week at 14.68. The 200-day MA is 14.62 so bears smile. The 50-day MA is 14.70. So price is sneaky deciding to sit inside the 14.62-14.70 S/R gauntlet all weekend long and decide the path forward on Monday. Same analysis is in place. Bears have the upper hand above the 200-day MA but need to send volatility far higher to create market mayhem. Bulls need to drop price under the 200-day MA, which they did for much of Friday only to lose control late-day, and then push under 14 to guarantee a higher stock market.

Keybot the Quant Turns Bearish

Keystone's proprietary trading algorithm, Keybot the Quant, flips bearish in the closing minutes yesterday at SPX 1828. Higher volatility, and lower copper and financials all conspired to create the market weakness and potentially continued weakness ahead. Watch XLF 21.42, JJC 39.92 and RTH 58.70. All 3 are in the bear camp causing market negativity. The bulls need to pull at least 1 of these 3 parameters back to the bull side to stop the market selling. As always, stay alert for a potential whipsaw today or tomorrow. More information is found at Keybot's site;

Keybot the Quant

SPX 30-Minute Chart 8/34 MA Cross Overbot Rising Wedge Negative Divergence Band Squeeze

The 8 MA remains above the 34 MA signaling bullish markets for the hours ahead. The bears need to keep price below 1841 to get the 8 MA to curl downwards. Bears got nothing until the negative 8/34 cross occurs so watch the pink circles. The bulls have maintained the positive cross for the last 8 days. Expectation would be for the SPX to roll over to the downside moving forward as highlighted yesterday. Note the standard deviation bands squeezing in tight ready to launch a move either violently up, or violently down. The last three squeezes were all bullish. Is it the bears turn?

Price is battling in the 1837-1843 resistance gauntlet zone and had tested 1843 several times yesterday without being able to burst up through. Bulls will jump to 1848-1851 if they move up through 1843. Bears need to push lower under 1835-1837 to prove they held the bulls at bay at the 1837-1843 resistance and now plan to begin the downside again.

Oddly, both the SPX and VIX were up yesterday so today we find out which one was wrong. Bulls must keep the VIX under 14, otherwise, the bears will push equities lower the further higher the VIX moves. JJC (copper) 39.92 is another important bull-bear line in the sand. Bulls win above JJC 39.92. Bears win below JJC 39.92. 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 10:05 AM:  Bulls are relentless pushing the SPX higher to test the critical 1843 resistance for the sixth time over the last day. How many chances does it get? VIX is above 14 creating market negativity but was above the important 200-day MA at 14.59 only to pull back under. Bears need to push VIX above 14.59. Bulls holding the line with copper keeping JJC above 39.92. The band squeeze highlighted above is extremely tight now so the SPX is going to jump sharply one way or the other and price then goes either to 1870-1880 or 1800-1810. Lots of drama.

Note Added 10:11 AM:  Huge spike above the 1843 resistance, on the seventh try, piercing the 1837-1843 gauntlet to the upside. SPX shoots higher to HOD at 1844.69 in a heartbeat. VIX collapses lower down to 14.22. It is surprising to see the upside spike considering the chart set-up above but the bulls look like they want to run to the 1848-1851 all-time highs.

Note Added 10:24 AM: Dollar/yen 102.25. Banzai!! The BOJ rides to the rescue to weaken the yen and pump the stock market higher. SPX HOD 1846.44 running 3-1/2 points higher in ten minutes time once it broke up through 1843 R. The bulls may want to keep price at the all-time closing high at 1848.38 until the FOMC Minutes this afternoon. The all-time intraday high is 1850.84.

Note Added 10:49 AM: Interestingly, the SPX came up to fill the 1845-ish gap on the daily chart from the third week of January to button up the top side.

Note Added 3:18 PM: The bulls ran out of gas right when they started to break out to the upside. The SPX falls back through the 1843 support, then through the 1835-1837 support. Now the bears are happy since they have held the 1837-1843 resistance gauntlet after all and the 8 MA crosses under the 34 MA on the 30-minute chart above signaling bearish markets for the hours ahead. Can the bears hold the negativity into the closing bell? VIX is well elevated at 15.12. JJC (copper) lost the important 39.92 level although only about 8 pennies below. SPX is now printing the lows of the day with a 1830 handle. The dollar/yen ran higher well above 102.30 today so the weaker yen kept equities buoyant but the yen is strengthening again and the dollar/yen is now drifting lower to 102.25. Bears need this far lower and under 102 to gain downside traction but the softness in the dollar/yen aids the market selling. The circus continues.

SPX 30-Minute Chart 8/34 MA Cross Overbot Rising Wedge Negative Divergence

We have been watching the hourly and minute charts set up with negative divergence since the back half of last week. The red lines show all indicators negatively diverged on the 30-minute wanting to see a spank down moving forward. Ditto the 1-hour chart. The 2-hour as well but the RSI and MACD line are trying to squeeze out more juice. So if 1 or 2 more 2-hour candlesticks are needed to roll price over on the 2-hour chart, that would be 2 to 4 hours so the expectation would be that price rolls over today or tomorrow.

The 8 MA remains above the 34 MA signaling bullish markets for the hours ahead. Each time the bears have started to push lower the dip-buyers come in and maintain an elevated price. The debt ceiling resolution provided the 30-handle orgy from the 50-day MA cross that occurred at 1809. The bears need to send price below 1840 to simply get the 8 MA to curl downwards. Bears got nothing until the negative 8/34 cross occurs. The bulls have maintained the positive cross for the last 8 days. Expectation would be for the SPX to roll over to the downside moving forward.

Price is battling in the 1837-1843 resistance gauntlet zone and has tested 1843 a couple times today already. Bulls will jump to 1848-1851 if they move up through 1843. Bears need to push lower under 1837 to prove they held the bulls at bay at the 1837-1843 resistance and now plan to begin the downside again. Both the SPX and VIX are up; one of them is wrong. VIX is above 14 which will push markets noticeably lower if the bears can keep the VIX above 14 and moving higher. Bulls must push the VIX under 14 to maintain an elevated stock market. Bulls are overcoming the negative affects of higher volatility by pushing copper higher. 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.

BPSPX Bullish Percent Index Remains on Market Sell Signal -- Barely

The BPSPX was highlighted a couple days ago where the bulls need the six percentage point reversal to receive the market buy signal. Price is parked at 67.80 directly at the bull-bear demarcation line. Check the chart on Tuesday evening to see who wins. If bulls push only a smidge higher a market buy signal occurs, and if price pushes up through 70%, the SPX all-time highs at 1848-1851 will be in the rear view mirror on the way far higher to 1880. The bears must hold the line here and spank the BPSPX lower from the get-go next week, otherwise, the increasing bullish signals, like the BPSPX, and prices moving above key moving averages, will catapult the broad indexes higher.

For now, the BPSPX remains on a market sell signal, by one single hair, hanging on by a fingernail. For this tool, a move of six percentage points to the upside creates a market buy signal and a move above the 70% level verifies the upside and a continued bull market. Conversely, a drop of six percentage points creates a market sell signal and a move below 70% locks in the strong negativity and forecasts bearish markets ahead.

The market bears received the sell signal mid-January and then the confirmation sell signal as the BPSPX fell under 70 in late January. The bears were drinking champagne and throwing confetti. Then the 'V' bottom occurs as the BOJ yells Banzai! and starts printing yen like madmen, destroying their currency, sending the dollar/yen higher, and sending equities higher creating the near-term bottom. The bulls need a six percentage point reversal to receive a market buy signal. This is the 67.80 target (61.80+6=67.80). The market bears remain in control unless the bulls can move the BPSPX above 67.80-68.00. If price moves above 68, and then above the critical 70% level, a strong market rally will be firmly in place and the bears will be running for cover as a market melt-up occurs. Under 68, the bulls got nothing. Check the chart on Tuesday evening and everyday forward to discover who wins. 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.

COMPQ Nasdaq Weekly Chart New 13-Year High Upward-Sloping Channel Negative Divergence Potential M Top Price Extended

The Nasdaq is the first of the four major indexes (SPX, INDU, COMPQ and RUT) to take out the January highs. The Dow and Russell are lagging. The SPX is threatening now only a few points away form the 1851 all-time high. The Nasdaq is at new 13-year highs printing at 4251. The upward-sloping channel remains in place. The tag team stock market pump over the last year by the Fed and BOJ is astounding. One of the big, if not biggest game-changers was the BOJ shock and awe last spring that launched Japan and US markets, and most importantly saved European stocks and bonds. The bulls are maintaining this happiness and do not want the party to end.

The chart is printing a textbook M top, or double top. It will be interesting to see if the pattern follows through moving forward. All the indicators were negatively diverged, except for the MACD line, and overbot to end 2013 which created the smack down. The MACD line, however, wanted one more price high, and it received its wish yesterday.  Note how price is now at a higher high and how much weaker the MACD line is; neggie d. Can price continue higher even to the upper rail of the channel? Sure, especially if the BOJ announces more money printing plans early next week. The expectation, however, would be for a price top either now, or next week, perhaps a few days into the following week, as February ends and March begins. The majority of traders believe financials will lead markets higher and financials require a lot of technology power, thus, these two sectors are always wanting to move together.

The same recent question remains. Are traders buying financial and technology stocks since they see strong fundamentals, a strong global economy and nothing but blue skies ahead with a far higher stock market, or, are traders buying financial and technology stocks since they know these sectors should lead the way higher so they are trying to front-run everyone else, figuring they are smarter than the average bear, as Yogi would say, buying now and willing to wait for the markets to catch up? If it is the latter, what happens if the markets and economy do not move higher and stall? The retreat could be swift.

Technology typically peaks in Q4 and then in February traders start to sell out of the sector especially in the second and fourth weeks. Obviously they were not selling last week as seasonality dictates. In recent years it has been bullish year round for tech since the central banker easy money is simply flowing into the high-flying tech stocks and momo creates momo. Traders are now leveraged to the long side just like the 2000 and 2007 market tops. The volume has picked up this year so the wine is flowing like water; everyone is willing to buy and even wait a while if they have to for stocks to move higher since the Fed and BOJ have guaranteed that the stock market will move continuously higher forever. There is no reason to worry; the bulls are already drunk as skunks this weekend and are raising wine and beer glasses to toast Yellen and Kuroda, the wizards controlling the markets.

The chart above is nasty. Next week's candle will be very important. For the bulls to recover, they have to pull at least one of the indicators above the prior high. The steep negative slopes shown by the red lines illustrate that this would be a formidable task. Price remains far extended above the moving averages desperately needing a mean reversion. Price dropped and bounced off the 20-week MA but really needs to visit the 50-week, at a minimum, and if she starts dropping that far the 200-week MA will provide a further negative target. All indications are that this is an 'M' top finishing now printing the second peak. Some traders call these patterns a double-top; it's the same thing.

Projection is for price to top out in the days or couple weeks ahead and drop again, beginning a long multi-week and multi-month trek sideways to sideways lower through 2014. Tuesday will be important since traders are expecting the BOJ to provide good news after their 2-day meeting, with more easy money talk, beating the yen lower, dollar/yen higher, and pushing the stock market higher. This catalyst either creates the last upside candlestick for the top, or, the BOJ fails to deliver where the top may already be in. Price has no reason to move higher; the indicators are all negatively diverged showing that there is no longer any oomph available. 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 2/14/14; Consumer Sentiment

Volatility holds the key today. As previous missives highlight, VIX 14.15 is the key bull-bear line in the sand and this market metric holds more clout controlling market direction than any other indicator today. Bulls win if the VIX remains under 14.15 (now at 14.14) and heads lower under 14. Bears win if the VIX crosses above 14.15 and heads higher.

For the SPX starting at 1830, the bulls need only a smidge of positivity and price will likely launch through the 1832 resistance and march higher. The bears need to push under 1809 to accelerate the downside. A move through 1810-1829 is sideways action into the weekend. The important 50-day MA support is 1510.39. The SPX hourly and minute charts are setting up with negative divergence so the anticipation is that price should roll over to the downside. The 8 MA remains above the 34 MA signaling bullish markets for the hours ahead, however, as discussed in this mornings chart, a negative 8/34 cross is anticipated moving forward. Markets will pivot at 9:55 AM on Consumer Sentiment.

Markets are closed on Monday for the Washington/President's Day holiday so today is the last day of trading until Tuesday morning. Typically, equities are bullish moving into a 3-day holiday weekend. In addition, a full moon occurs at 5 PM EST today and markets are usually bullish moving through the new moon. Don't forget to howl as the closing bell rings. On Monday and Tuesday, the BOJ meets so if Kuroda yells Banzai! and pumps more stimulus weakening the yen and sending dollar/yen currency pair higher, US markets would catapult higher come Tuesday. Next week is OpEx and typically markets are bullish from a Tuesday low to a Wednesday high. This month is odd, however with the holiday, so perhaps the bullishness would right-translate one day. The 'Three Amigo's Summit' is on tap for Wednesday where the US, Canada and Mexico meet so it provides an ideal time to announce the Keystone XL pipeline approval which would pump the stock market higher. President Obama, however, continues to crush this pipeline project that would create thousands of high-paying jobs since he does not want to lose the votes of the environmentalists. Considering all of the above, why the bears may as well just go home and give up, or should they?

On the bear side, the hourly and minute chars are setting up negatively as described above and in the previous charts. In addition, February is an odd month, it is one of the weakest stock trading months of the year, and interestingly, the move through the Washington/President's Day holiday is typically negative. Thus, even though holiday seasonality wants to see bullishness, the previous data over the years indicates weakness from now through next Thursday, 2/20/14. So, choose your poison. There is something for each side to tout. The neggie d on the charts should exert its force favoring bears and the history of weaker markets at this time of the month would reinforce this direction. However, the BOJ early next week, and perhaps to a lesser extent the Three Amigo's (since the president may stand firm and continue to crush the Keystone XL project) are wild cards that could create bull fuel.

As always, take it one day at a time especially with all the mixed signals. Watch VIX 14.15 and SPX 1832 R and 1828 S to determine market direction. The bears can throw confetti if the 8/34 MA negative cross occurs on the SPX 30-minute, however, bulls will celebrate with a 3-day alcohol binge if they can prevent the cross. Dollar/yen is 101.88 dropping from the 102.20+ level yesterday afternoon. The drop in the dollar/yen (stronger yen) slams the Nikkei -1.5% overnight and creates the flat to softer futures. The Fed and BOJ control the stock market so a lower dollar/yen means lower equities while a higher dollar/yen, if it moves back above 102, will result in another bullish up day into the holiday weekend. The 10-year Treasury yield remains flat all day yesterday into today at 2.73%-2.74%.

Note Added 2:28 PM: Volatility is crushed today. The BOJ is idle allowing the dollar/yen to remain flat all day at 101.88 but the tag team approach is alive and well with the Fed stepping on the neck of the VIX keeping it at carpet level. Type 'Bernanke VIX beachball' into the search box at the right to bring up Keystone's cartoon from the Fall that perfectly describes the action today. Instead of ex Chairman Bernanke holding the VIX beachball underwater, Chair Yellen has taken over the duties. When the torch was handed from Bernanke to Yellen, the VIX beachball exploded up and out of the water but Yellen has wrestled it lower and has the VIX beachball completely submerged again. Volatility is key today and the VIX is bludgeoned lower. VIX continues to print new lows now at 13.50 and dropping creating a rocket launch for stocks. Equities remain in melt-up mode. The bulls push through 1832 resistance so a move to 1838 R was on tap, which occurs, and importantly, the bears could not even hold that level. Price is now in the important 1838-1843 resistance gauntlet that either charts the path to 1880, if 1843 is taken out, or lower if the bears can close under 1838 support, then 1832 S. The Dow leads the way higher, and SPX, while COMPQ and RUT lagging. Tech and small caps were actually negative before lunch now marginally on the plus side. On the Dow Industrials, CVX is up 1 point, DIS 1.5, IBM 2.3, MMM 2, PG 2, TRV 1, UNH 2.2, V 1.4 and XOM 2.7. Now that is an upside orgy. Total points are 16.1, thus, using a rule of thumb of 8, these stocks are creating 130 points of upside, hence the whole upside. Simply taking IBM, MMM, PG, UNH and XOM, these five stocks are creating 90 upside Dow points. Traders are chasing into blue chip dividend stocks like there is no tomorrow. Any short traders that held on through the debt ceiling resolution upside catalyst this week threw in the towel today and gave up. All that is left is raging bulls creating the happy move into the holiday weekend. Since 1838 was taken out, the SPX will likely want to play around inside the important 1838-1843 resistance gauntlet into next week. Traders must sniff out some happy talk from the BOJ come early next week after their 2-day meeting so they are getting a head start on an anticipated stock market rally. Kuroda will have to deliver the goods before US markets open on Tuesday morning and this is fully expected by the long traders (weaker yen which will send the dollar/yen up through 102 on the way to 103). Traders expect a brand new shiny pony from Kuroda come Tuesday and he better show up at the NYSE with that shiny new pony when US markets reopen providing free rides for all the long players.

Note Added 2:48 PM:  Look at equities go. SPX 1841. The Nasdaq is at new 13-year highs. Yellen just stuck here high heel into the eye of the VIX making it crawl even lower. VIX LOD 13.44.

Note Added 2:57 PM: SPX over 1841 near 1842 only a point or so from busting through 1843 resistance which will guarantee the test of the all-time high at 1850.84 and higher. SPX is within 9 points from the all-time high. For the bears, the Nasdaq is now above the mid-January price high with the weekly chart showing nasty negative divergence across the board so an M top, or double top, for markets may now be in the offing. Biotech, the favorite son, is down today with IBB dropping -0.8%, but this fades into the background as the bullish euphoria consumes traders.

Note Added 3:41 PM: VIX is 13.59 recovering slightly off the lows so stocks come slightly off the highs. The SPX 1838 is key S/R so it will be interesting to see which side it closes on. Regardless, the bulls punched strongly higher today so price likely wants to play around in this 1838-1843 resistance gauntlet as it plans the next move. Volume is shamefully low for such a strong up move at less than two-thirds of a days average expected volume. TRIN is 1.01 dead flat neutral. For such a strong up day, the TRIN would be expected to be down under 0.80. Keystone bot more SMN adding to this ongoing long position which is a double X inverse of basic materials. SMN is thinly traded so caution is required.

Note Added 3:58 AM on 2/15/14: VIX was key in Friday's session and it collapsed through 14 down to 13.57. Markets rally strongly with SPX and Dow up over +0.5% but Nasdaq and RUT flat so tech and small caps did not lead. The volume was light. Interestingly, gold rallied, now up over 1300 to 1319. The 10-year Treasury yield is 2.75% remaining flat for the last three days. Nikei plummets the last two days but the US markets sky rocket. Dollar/yen sits stone cold flat all day at 101.80-101.90. The debt ceiling limit resolution was the key bullish catalyst this week that created 30 points of upside and it was a surprise when the House buckled under on Tuesday creating the past week's upside orgy. Price exploded up through the 50-day MA at 1308-1310 which tags the 1340-ish. This places price in the important 1838-1843 resistance gauntlet where the stakes are high. Traders expect BOJ's Kuroda to deliver a bright shiny pony when the US returns Tuesday morning; he had better deliver it.