Keystone's Midday Market Action 10/17/14

The volatile market week is coming to a close with a bullish stock market orgy in play. The central bankers are up all night partying ever since Fed's Bullard popped the first cork of Fed Booze just before lunch time yesterday. Other Fed members chime in with dovish talk. The BOE is ready to further support their market. The ECB plans to begin purchases to goose European stocks. The BOJ is printing yen to send the dollar/yen pair higher overnight and create today's rally. The PBOC also plans to pump the Chinese economy. Grab your toga and join the debauchery. Mingle with central bankers and enjoy the Caligula-style orgy of perversion that pumps asset classes higher to make the rich richer while laughing at the poor.

As the previous chart indicates, the key cyclical bull and bear signal for the broad stock market (SPX 12-Month MA Cross) is currently on the line. The 12-month MA is at 1875-ish. Below 1895 ushers in the long-awaited cyclical bear market while above 1895 leads the way higher with continued Fed-induced bullish joy. Watch SPX 1895 like a hawk. If the SPX overtakes 1895 then 1900 plus is coming quickly and the bulls will extend the relief rally allowing price to attack the 200-day MA at 1906 and 10-month MA at 1908. The 1895 level is a very big deal. It looks like price may want to poke up through and it would not be unreasonable to see a several-day fight between the 1888-1908 S/R since this is the key moving average cluster. The 50-week MA is 1888. The key S/R is 1928, 1924, 1910, 1897, 1889-1891, 1884, 1878, 1872-1874, 1848, 1841, 1828-1831 and 1808. 

Utilities are important as identified by the Keybot the Quant algorithm. Watch UTIL 559.53 which is a line in the sand for bulls and bears for all of next week. So check the closing UTIL price today to receive a heads-up for Monday. If UTIL finishes above 559.53, the bulls are going to continue rockin' higher at Monday's opening bell. If UTIL finishes below 559.53, the bears are going to create weakness at Monday's opening bell. If thinking of nibbling short for a trade, you can monitor UTIL to see how Monday may shape up. UTIL is currently printing 562.82 at the highs today so this hints at continued bullish juice into early next week.

Yesterday is a Bradley turn date and the period of two turns, one on 10/7 and one on 10/16 remain in play. The 10/7 may have been the near term top resulting in the stock market drop and yesterday's Bradley may now signal the relief rally. The upside joy may continue into next week as price plays inside the wide SPX 1888-1910 moving average cluster. A new moon is Thursday and markets are typically weak moving through the new moon. Use the moving averages and S/R listed to gauge the strength in today's move higher.

Keystone took profits on the SSO, DFE and ATRS long trades there is probably more up to them but the SSO and DFE were countertrend rally trades and we are receiving the countertrend rally right now. ATRS can be held longer. With the ECB juice announcement, DFE should continue running higher as traders will be chasing stocks higher with central banker easy money. For now, the overall price action will be monitored and a lot of plays do not look particularly attractive long or short at the moment.

Note Added 11:42 AM:  The SPX punches up through the 12-month MA at 1894.83 signaling a cyclical bull market for the months ahead. Price is at 1895.91. Watch to see if the bulls can remain above for 7 to 10 minutes to lock it in, or not.

Note Added 11:47 AM: Here is the test of the 1897 resistance right now.

Note Added 11:48 AM: SPX keeps punching out new highs. Traders are chasing the long side. A move above 1897 sets up the back test of the 200-day MA at 1906 and then the 1908-1910 resistance gauntlet representing the 10-month MA at 1909 and strong horizontal price resistance at 1910. The bulls are finishing the week strong. UTIL 563.70 placing more distance up and away from the UTIL 559.53 level.

Note Added 11:58 AM: SPX drops back to back kiss the 12-month MA at 1894.83. It is bounce or die time. The bears must push lower now or they will fold like a cheap suit. A bounce will assure bull victory........ 1894.76..... 1895.04 .... 

Note Added 12:11 PM: The bears growl pushing SPX under 1895 to 1892 ushering in a cyclical bear market for the months ahead. How many more times will this flip-flop today? UTIL 562.24.

Note Added 3:06 PM: SPX 1880.96. Looks like the bulls ran out of gas. UTIL 561.25. The TRIN prints an uber low 0.23 this morning which is excessive bullishness and that leads to the recoil. Traders were buying any stock with a heartbeat this morning all pumped up over the central banker stimulus provided around the world. The 12-month MA at 1895 is holding for bears and interestingly, the SPX is now at 1883.35 and the 50-week MA is 1888.33 so it will be important to see where price ends in relation to the 1888. Marry the 1888 with the 1889-1891 resistance and a confluence of resistance is in place at 1888-1891 so bulls win above 1891 and will attack the 12-month MA again and bears win below 1888. Bulls are going to receive upside market juice on Monday morning unless the the bears push UTIL under 559.63. Keystone bot ENZY opening a new long position. The stock is thinly traded only moving 9K shares today. The weekly and daily charts show attractive positive divergence across all indicators. It is a knife-catch and the typical highly-dangerous and speculative style stock Keystone plays. The expectation would be for a recovery rally after ENZY's one-year beating.

Note Added 3:20 PM: Here is SPX at 1887.63 attacking the 1888-1891 resistance gauntlet. Can the bulls push up through before the closing bell and take over that critical 12-mth MA? Or will the bears maintain the 50-week MA resistance ceiling area and go home happy? UTIL 562.09. Bulls have the utility sector feather in their caps with another one-half hour remaining in the week.

Note Added 3:49 PM: The bulls call for all hands on deck and they make a late day rush for glory punching up through, 1888, 1889, then 1891, now fighting inside the 1888-1891 resistance gauntlet. It is time to bounce or die. Bulls win at 1891 and higher. Bears win at 1888 and lower. UTIL 562.79 with bulls determined to keep utility stocks well bid.

Note Added 3:56 PM: SPX 1888.72. 50-week MA 1888.44. A game of pennies.

Note Added 4:01 PM: The bounce or die results in a die. Price ends at 1886.75 so bears were unable to maintain both the 50-week MA and 12-month MA today after they were taken out to the upside. Give the bears a feather for their caps. UTIL ends at 562.55 above the important 559.53 level for all of next week so this will help the bulls maintain market buoyancy come Monday morning. Give the bulls a feather for their caps. That was quite a snap-back rally that started from the 1820 low. The possie d on the SPX 2-hour bounced price, then Bullard goosed the markets with dove talk, then overnight last night all the other central bankers chimed in dropping money from the sky that created the market rally. HOD 1898.16 so watch that number on Monday. A 78-point move in only three days is impressive.