The SPX takes out the 50-day MA at 1967.04 but price may want to back test this critical moving average today or tomorrow. The inverted H&S is played out satisfying the pattern (brown bars). The expectation is for a roll over to the downside unless the RSI squeezes out any additional juice. The Fed decision is tomorrow so markets may favor a sideways move. The bulls have a lot going for them with copper and semi's boosting equities higher this week. Seasonality-wise, the week before the mid-term elections is typically up and so far this pattern is fulfilled. The starting month number is 1972.29 so price has less than four days to decide if a negative or positive month will print.
Key S/R is 1951, 1958, 1960-1961, 1962 (100-day MA), 1966 (20-week MA), 1967 (50-day MA), 1968, 1972.29 (October starting number), 1973, 1978 and the strong 1985-1986 ceiling. Note the strong moving average cluster at 1962-1967 identifying this area as very important S/R. Bulls win above 1967. Bears win below 1962.
Keybot the Quant remains long and the bulls are in full control receiving a boost from semiconductors above SOX 613. In addition, JJC (copper) moves above 37.16 (all bull-bear levels are identified by the Keybot the Quant algo) today creating the upside thrust to begin the day. The bulls start the day strong but bears should be able to top price out at these levels in the hours ahead. Watch the MACD line cross to verify the roll over to make for happy bears. Watch RSI to see if it prints higher to make for happy bulls. 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 9:59 AM: The HOD 1972.66 is teasing the starting month number and above the 50-day MA. The 1973 resistance holds back price, so far.
Note Added 10:01 AM: Consumer Confidence data is a blowout 94.5 not seen since the October 2007 market top. Richmond Fed manufacturing data is also strong. It's all going the bull's way. The SPX idles sideways. TRIN is 1.15 on the bear side not reflecting the strongly bullish day in stocks. Watch to see if the bulls can take out the HOD.
Note Added 10:05 AM: Price prints a new HOD above the 1973 resistance so the 1978 R is placed on the table.
Note Added 10:07 AM: The drama continues for the 2-hour chart above with the RSI dead flat sideways as price moves higher so the bulls do not receive the firm go signal. At the same time, the MACD lines do not yet cross negatively so the bears do not have the downside confirmation as yet. Thus, the battle continues through the 1968-1973 S/R zone. The 1973 R is key which would lead to 1978 if it gives way. Bears need to hold the line at 1973 and can only accomplish this goal with weaker semiconductors and copper. Price may try to remain sticky at the October starting number at 1972 until Fed Chair Yellen brings the tablets down from on high tomorrow and dictates how the markets trade.
Note Added 11:20 AM: The bulls inch the RSI higher taking out the prior highs so the bulls should receive 1 to 3 more candlesticks of upside juice; 2 to 6 hours of trading time. It is looking more like equities want to stay elevated into the Fed tomorrow. Price moves above 1974 taking out the 1973 R so 1978 R is firmly on the table. The expectation remains for a near-term top but the RSI has to reset with neggie d, so price should top out between 1974 and 1978 over the coming hours. The bulls have momo and note how semi's and copper remain strong providing bull fuel. Bears will need copper to roll over and JJC to drop under 37.16 if they want to stop the upside run in equities. TRIN 1.06 call it neutral (1.00). For a strong up day like today, the TRIN would be expected to be under 0.80.
Note Added 11:32 AM: The TICK machine prints +1000 at 10 AM-ish and about fifteen minutes ago corresponding to the tops in the SPX. HOD thus far is 1974.59 so watch this number. The bulls are trying to maintain buoyancy into the Fed decision tomorrow. If Yellen flaps her dovish wings with more stimulus, the SPX will receive the typical 20-30 handle pop and charts will have to reset. Price should back kiss the strong 1973 support that was resistance when the session began.
Note Added 11:36 AM: Here's the SPX back down to back test the 1973 S/R. It is time for price to bounce or die. What say you bulls and bears? A move above 1973 or collapse below? ..... 1973.08 .... 1973.00 .... 1973.06 ... 1973.16 ......1973.30 .... 1973.41 .... 1973.25 .... the battle for 1973 continues.....
Note Added 11:41 AM: Boom. A bounce. SPX 1973.88. If the bulls can hold the line at 1973 then 1978 R is next.
Note Added 12:07 PM: Bulls cannot hold 1973. SPX fails through the 1973 and dies. Looks like a lot of this sideways slop may continue. Price is coming back up for a back kiss of the 1973 from the underside for another bounce or die decision. This starting month number and strong S/R at 1972-1973 is a line in the sand for price today. So bulls win above 1973. Bears win below 1972.
Note Added 12:11 PM: SPX is at 1973 for another bounce or die decision. What say you bulls and bears..... 1973.02.... 1972.86 .... check out the RSI on the 2-hour chart it is dead flat sideways at the prior highs but not over so this places the bears in good shape for the spank down ahead (negative divergence since the RSI is flat to lower while price moves higher). Bears still need the negative cross of the MACD lines to know the downside move is locked in.
Note Added 4:20 PM: Right when the bears appear ready to go they are stuffed. The MACD cross will not yet confirm the downside on the 2-hour chart above so the bulls keep pushing and send the RSI higher for a higher high. This creates more short term juice of 1 to 3 candlesticks so equities are going to idle into the Fed decision tomorrow afternoon. That was touch and go and bulls win. The 1973 is taken out so 1978 was on tap and look at the melt-up that occurs when price approaches 1978; it shoots straight up through so you knew 1985-1986 is next and that is where the final print is. Traders are frontrunning Yellen's dovishness. The clear majority of traders expect more easy money dovish talk tomorrow. It was a given that the Fed will likely extend the ZIRP Forever scheme from June 2015 for the first rate hike until probably late in 2015 or even 2016 but more importantly, traders believe Yellen will leave the possibility of further QE on the table. As obscene as it is and destructive to the US over the long term, as well as screwing the middle class and poor more, so be it, 'let them eat cake'. Long traders are raping the upside with Yellen's blessing so take a slice of the pie before its too late. Copper gains +1% providing bull fuel. Ditto semi's. The NYA overtakes the 40-week MA at 10646 (now at 10678) which is a huge win for bulls. This is one of Keystone's cyclical indicators that now removes the prospect of the ongoing cyclical bear and sends equities back into a cyclical bull market pattern. The bears are bludgeoned today and the NYA above the 40-week MA is a fatal blow. The bears must reverse this tomorrow or the SPX will run far above 2K. The 2-hour chart remains negatively diverged except for the RSI so as soon as the RSI goes neggie d the top is in. Usually the tops are far more straight forward but the Fed meeting adds the new twist. Afterall, the bottom two weeks ago was not created by positive divergence but instead Fed's Bullard that promised more QE so the top may as well continue to be delayed due to the Fed intervention as well. For a Fed dovish decision, the SPX typically rallies 25 to 30 handles. Today is a repeat of the last Fed meeting pattern where stocks rallied ahead of that decision as well. With a 23 handle gain in the SPX another 7 is on the table after Yellen flaps her dovish wings tomorrow. The S/R is 1985-1986, 1988, 1991, 1993 and 1997-1998. So the 1998 and psychological 2K level is on the table. This 1985-1986 is very strong resistance so price should take time to chomp through. Since the Fed decision is tomorrow, the bears will probably be thrown a token bone tomorrow morning ahead of the Fed with a minor pullback. Note the TRIN drops to 0.79 to confirm the bullishness as the day plays out. AAPL prints a record all-time high. The Dow is above 17K. The major indexes take out their 50-day MA's another bullish indication. The TICK machine shows three late-day +1200 prints at 3 PM, 3:30 PM and the final TICK of the day at +1139 at 4 PM. These are the exact intraday highs at 1981-ish that occurred after the spike up through the 1978 resistance, then the 1984-ish print at 3:30 PM then the final print of the day clsoing at the high at 1985.05. The +1200 prints show the uber bullish euphoria in the markets and indiscriminate buying. Traders do not care about what to buy; any stock with a heartbeat will do since Yellen is going to pump the stock market tomorrow. That was quite a day. Once the word got out on trading floors that QE would be on the table for the future the stock market never looked back. The central bankers are the market. The VIX drops to 14.52 the 31 high two weeks ago long forgotten. The bulls appear unstoppable. The expectation remains for a pull back as soon as the RSI turns neggie d on the 2-hour chart. The 1985-1986 may hold until the Fed decision and then afterwards SPX 2K would be possible. The table is set. If Yellen stops the QE as planned but then does not make a mention of future QE on the table, the stock market would likely collapse tomorrow afternoon. Yellen is Queen of the Doves so she likely already plans to leave QE on the table and the insider traders sniffed it out and were told ahead of time and are buying indiscriminately sending stocks wildly higher. The upside orgy today takes some of the wind out of the market upside tomorrow; 23 of the 25-30 expected SPX points for a happy dovish Fed meeting already occurs.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.