Tuesday, December 29, 2015

SPX S&P 500 2-Hour Chart Negative Divergence Developing

The bulls punched the bears in the face today (Tuesday, 12/29/15) with a big upside rally the major indexes gaining over +1%. However, the CPCE and CPC put/call ratios collapse lower printing low numbers indicating complacency and a near-term market top at hand. If a market top is in the cards, a look at the SPX 2-hour chart may provide more insight into the potential for a top, or, dispel the idea.

On the 2-hour, the red rising wedge, overbot stochastics and money flow, and negative divergence for the histogram, stochastics and money flow (red lines), all indicate a bearish path ahead. Price will be spanked lower, however, the RSI and MACD line remain long and strong (green lines) so price will want to come back up for another high. The RSI has to be watched as well to see if it wants to move into the overbot zone. When price comes back up after the initial sell off in this 2-hour time frame, the RSI and MACD line will likely turn neggie d and send stocks down for a more sustainable move lower.

So the 2-hour chart does corroborate the low put/call ratios. The SPX needs from 1 to 3 candlesticks to roll over which is 2 to 6 hours of trading time which represents all of tomorrow's (Wednesday) trade. Thus, a guess would be that the market tops either tomorrow afternoon or on Thursday, New year's Eve. Rallies can be shorted.

Important S/R is shown by the brown lines; 2102-2103, 2093-2094, 2089, 2084, 2081, 2079, 2071, 2067, 2061 and 2046. 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 Friday, 1/1/16: Markets are closed for New Year's. The SPX rolls over to the downside as described above closing the year at 2044 down 15 points during 2015 after all that drama week after week. The MACD line was moving higher by a hair for the candlestick after the price high so technically, the bears would have been better off to see price come up to 2080-ish on Friday and then roll over, however, the neggie d from the other indicators and the low CPCE and CPC put/call ratios conspired to spank price lower. The 12-month MA at 2053 is the key level in the entire stock market. Bulls win for the short, intermediate and long term if the SPX is above 2053. Bears win for the days, weeks and months ahead if the SPX remains  under 2053. The new year begins at SPX 2044. Comically, all the Wall Street analysts are already calling for a winning year with targets from SPX 2100 to 2350. Everyone of these Einstein's called for higher markets in 2015 and every one of them  was wrong. Keystone called for a negative year and was correct. The 18-year stock cycle is in play with a secular bear market 2000 through 2018 (is is very common to have strong cyclical bull patterns like 2003-2007 and 2009-2015 inside the secular bear) so as Keystone has mentioned over the last couple years, it would not be surprising to see 3 of the next 4 years negative for stocks; we just got one.

CPCE CBOE Put/Call Ratio Signals Near-Term Market Top

Ay, Caramba! Holy smokes! This is ridiculous. The put/calls were higher signaling a market bottom at hand due to fear and panic so a market bottom and rally occurs today as would be expected. However, traders now swing all the way back into complete complacency again with the CPCE down to 0.54 and CPC put/call ratio down to 0.82. The stock market may continue rallying which would serve to send the CPC lower into the 0.7's an uber low number, however, the stock market should place a near-term top at any day forward due to the low put/calls..

Any further rally can be shorted. The choppy market behavior serves to chew up bulls and bears alike in recent days. It is best to trade less in this type of an environment. With the put/calls collapsing lower, it will be the bears turn at bat again with markets selling off beginning at any time forward. The SPX started December at 2080 and started the year at 2059. 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 Friday, 1/1/16: Happy New Year. Markets are closed. The SPX topped at SPX 2082 on Tuesday and ended the week, month, Q4, H2 and year at 2044. The two-day spank down created by the complacency described above is 38 negative SPX handles, so far.

Monday, December 28, 2015

SPX S&P 500 Monthly Chart 12 MA Cross is a Battle for Cyclical Market Control

The SPX 12-month MA at 2053 is the edge of the cliff for the stock market; the demarcation between a cyclical bull market ahead for weeks and months to come versus a cyclical bear market. Price is at 2057 forecasting a cyclical bull market  ahead, however, this fight will likely continue into early January. The 10-month MA is 2054 another important level and since it is with the 12-month MA the 2053-2054 level is the most important level in the markets right now. Bulls win big above 2055. Bears win big under 2052.

The year began at 2059 with only three trading days remaining (brown line in right margin). The blue line is the 2080 level where December began and will determine if the month finishes positive or negative. The CPCE and CPC put/call ratios catapult higher indicating that a near-term market bottom is likely say tomorrow or Wednesday so price may seek out the 2059 and 2080 targets by Thursday.

Bulls are cruising as long as they stay above the 12-month MA. Bears got nothing unless they can push the SPX under 2053 and then carnage would begin. 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.

CPCE CBOE Put/Call Ratio Daily Chart Signals Near-Term Bottom

The wild whipsaw choppy sideways behavior continues in the stock market. A couple days ago the maroon circle at 0.55 indicated a market top at hand due to complacency but the bears got jipped. The SPX dropped from 2066 to 2044 from last Thursday to today a measly 22 handles. The market drop due to the red circle was 75 SPX handles. However, look at the spike in the CPCE up to 1.21. As Jed Clampett would exclaim on the Beverly Hillbillies television comedy show, "weellll, doggies."

Traders have went from complacency to fear and panic in only a couple day's time. The CPC put/call ratio is also elevated at 1.31. Both the elevated CPCE and CPC indicate that a near-term market bottom is at hand. So any further drops in stocks tomorrow can be bought on the long side (for very short term trading). Traders were drinking Fed and ECB champagne on Christmas Eve buying any stock with a heartbeat but today the opposite occurs. Traders were panicking this morning and buying downside protection to guard against any market drop, hence, the market will not drop. The fear and panic shown by the elevated put/call ratios should create a rally starting any day ahead. The SPX began the month at 2080 and the year started at 2059. 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 Tuesday, 12/29/15, evening: The stock market launched higher today as the put/call ratio dictated. The SPX is up 22 points, +1.1%, to 2078. The Dow gains 193 points. Here is the funny part. The CPCE and CPC put/calls immediately collapse lower into complacency again now signaling a market top. This is odd behavior.

Thank You for Your Generosity

Wikipedia, Mozilla and other sites are conducting membership drives so what better time and season to seek funding for those less fortunate than now when everyone is in a good mood. This message is not directed at the regular donors to the K E Stone Blog Series of sites including Keystone the Scribe, Keybot the Quant and The Keystone Speculator, but instead to the thousands of others that have not.

The sites seek to entertain and educate market participants on technical analysis, algorithmic trading and macro economics (remember that you must seek the advice of your financial advisor before making any investment decision). Thousands of international users enjoy the sites daily.

Ridiculously, the traffic to the three blogs increases month after month but the ad revenue from the sites has been cut in one-half over the last few months due to ad-blocking software. The ad blockers are killing the original content creators on the web. The ad revenue from web sites using services such as Google Adsense help deter any costs of a site. Ad blockers, however, are drastically changing the landscape. Original content creators will have to seek other methods of supplementing the losses in revenue from the ad blocking software. Comically, those that block out ads to read the original content in a simpler format may actually end up without having any original content to read.

So if you have some leftover change, press the button in the right margin. The original content posted on the sites will be provided as per the interest received in the sties. A couple other web sites are planned but will not be pursued if the current sites are not supported, especially with the increased use of ad blockers which has drastically changed the game for original content providers.

Food banks are on tough times. In Pennsylvania, USA, the idiot politicians cannot agree on a budget for the last six months and the loss of funding is negatively impacting schools and most importantly the food banks. Do not forget to clear out your pantry and toss the canned goods into a box and drop it off at the local food bank. Also donate any old coats since a child would be happy to have something warm to wear this winter.

SPX S&P 500 Daily Chart Sideways Channel

The SPX daily chart shows the W pattern bottom, a very powerful pattern especially when it forms under both the 50 and 200-day MA's, sending price to 2100 perfect symmetry from the 1880 bottom and 1990 breakout. Price is staggering through the brown sideways channel at 2020-2103. The indicators are mixed and not tipping their hand concerning the path ahead. The price action has a sideways feel. The CPCE put/call is uber low which says a near-term top is at hand so the bears have to be given a slight edge. S&P futures are -10 minutes before the opening bell.

Price violated the lower standard deviation band (pnk) so that targets the middle band; which has occurred. If price moves higher, say above 2080-2084, then 2100+ is likely coming so price will target the top standard deviation band. The bears must hold the line at the 200-day MA resistance at 2061. 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 S&P 500 Daily Chart Moving Averages 150-Day MA Negative Slope Signals Cyclical Bear Market

The moving averages are lining out sideways for the SPX daily chart indicating a continuation of the sideways choppiness. Price is at 2061 held down by the 200-day MA resistance at 2061. The 50-day MA is at 2064. On the underside, the 20, 150 and 100-day MA's serve as support.

The slope of the 150-day MA (pink) remains negative (red box) signaling that the stock market remains in a cyclical bear market pattern since late August. Market bulls need to curl the 150-day MA upwards to prove that stocks can move higher in 2016. If the 150-day MA continues to slope negative, stocks will slide down the rabbit hole.

The pivot from 2061 to begin the last trading week of the year will either send price higher to the 50 at 2064 or lower to the 20 at 2056. S&P futures are -10 about 30 minutes before the opening bell for Monday which sets up a potential test of the 150-day MA at 2050.

The 12-month MA is at 2053; this is a critical cyclical market signal. If 2053 is lost, markets will fall down the rabbit hole and the 150-day MA at 2050 would be expected to fail quickly. So there is a major test that will occur at 2050-2053 after the opening bell. Will the year go out with a bang or a whimper? 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 S&P 500 Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 12/28/15

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for trading the week of 10/19/15. Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and important S/R. The SPX all-time intraday high is 2134.72 on 5/20/15 and the SPX all-time closing high is 2130.82 on 5/21/15. The intraday low for this year is 1867.01 on 8/24/15. The closing low for this year is 1867.61 on 8/25/15.

For Monday, 12/28/15, today, the start of the last trading week of the year, a holiday-shortened week, with the SPX at 2061, the bulls need to push above 2067 to accelerate a strong and quick move into the 2070’s. The market bears need to push under 2059 to accelerate the downside to the critical 12-month MA at 2053 where a major bounce or die decision would occur. SPX 2053 is the most important level in the stock market currently since bulls win for the short, intermediate and longer terms if price stays above 2053 while the bears will growl and create short, intermediate and longer term carnage in the stock market if the SPX falls below 2053; the cliff.

A move through 2060-2066 is sideways action for Monday but this is a tight range so a winner and loser will likely occur. S&P futures are -10 about 90 minutes before the opening bell. Looks like a battle at 2053 is in the cards; it is for all the marbles.

There are only four trading days remaining in 2015 the end of the month, EOM, end of the fourth quarter (October-November-December), EOQ4 and end of year, EOY. December began at 2080. The year began at 2059.

The 2061 level is very strong overhead resistance so that is why price stopped here and it is important which way it pivots. The 50-day MA is 2064 and serves as resistance. The 2067 R is key which will lead to far higher prices if it gives way to the upside. On the bear side, price may tease around the 2059 level determining whether 2015 is a positive, or negative, stock market year.

The importance of the 2053 support cannot be overstated. This level is hugely important and represents the cliff for the stock market. Bulls are fine as long as price stays above 2053. The stock market will collapse under 2053.

Looking at the big picture the strongest S/R is 2121-2123, 2114, 2110, 2102-2103, 2093-2094, 2089, 2084, 2081, 2079, 2071, 2067, 2061, 2046, 2019, 2011, 2002, 1985-1988, 1978, 1973, 1965, 1961, 1951, 1942, 1924, 1897, 1884, 1878, 1874, 1872, 1848, 1841, 1808 and 1803. Note the air pockets between 1872 and 1848 and between 1841 and 1808.

The full moon peaked on Christmas which provided lift to stocks late last week. The pre-holiday expected bullishness also boosted stocks. The Santa Claus rally typically occurs this week between Christmas and New Years and two days into the New Year so today through 1/5/16. Will Santa appear? New money is put to work to begin the year which should create market buoyancy. The bulls have the seasonality factors in their favor but the rally in stocks last week may have stolen Santa’s thunder.

The stock market is closed for New Years Day on Friday, 1/1/16. Consumer Confidence on Tuesday at 10 AM EST is very important this week. Volume should be light this week. Trading is expected to be calm but in light volume wild price swings may occur. If the VIX begins moving higher, the markets may become dicey. The CPCE put/call level logs a low print signaling ongoing market complacency so a near-term market top should be at hand perhaps it begins today.

2135 (5/20/15 All-Time Intraday High: 2134.72)
2133 (7/20/15 Intraday High 2132.82)
2131 (5/21/15 All-Time Closing High: 2130.82)
2130 (6/22/15 Intraday High 2129.87)
2128 (7/20/15 Closing High 2128.28)
2126 (4/27/15 Intraday High: 2125.92)
2124 (6/23/15 closing High: 2124.20)
2121 (4/24/15 Intraday High: 2120.92)
2120 (2/25/15 Intraday High: 2119.59)
2118 (4/24/15 Closing High: 2117.69)
2117 (3/2/15 Closing High: 2117.39)
2094 (12/29/14 Intraday High: 2093.55)
2091 (12/29/14 Closing High: 2090.57)
2080.41 December Begins Here
2079 (12/5/14 Intraday High: 2079.47)
2076 (11/28/14 Intraday High: 2075.76)
2075 (12/5/14 Closing High: 2075.37)
2073 (11/26/14 Closing High: 2072.83)
2071 (11/21/14 Intraday High: 2071.46)
2067.36 Previous Week’s High
2067.36 Thursday HOD
2064.48 (50-day MA)
2061.48 (200-day MA)
2061.28 (50-week MA)
2060.99 Thursday Close – Monday Starts Here
2058.90 Trading for 2015 Begins Here
2058.73 Thursday LOD
2056 (11/18/14 Intraday High: 2056.08)
2055.91 (20-day MA)
2054.07 (10-month MA)
2053.35 (12-month MA; a Keystone Cyclical Signal) (the cliff)
2052.98 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2049.91 (150-day MA; the Slope is a Keystone Cyclical Signal)
2046 (11/13/14 Intraday High: 2046.18)
2028.74 (20-month MA)
2025.84 (100-day MA)
2022.45 (20-week MA)
2019 (9/19/14 Intraday High: 2019.26)
2011 (9/18/14 Closing High: 2011.36) (9/4/14 Intraday High: 2011.17)
2007 (9/5/14 Closing High: 2007.71)
2005.93 Previous Week’s Low
2005 (8/26/14 Intraday High: 2005.04)
2003 (8/29/14 Closing High: 2003.37)
2002.87 (100-week MA)
1993 (1/15/15 Closing Low: 1992.67)
1991 (7/24/14 Intraday Top: 1991.39)
1988 (7/24/14 Closing High: 1987.98)
1986 (7/3/14 Intraday Top: 1985.59)
1985 (7/3/14 Closing High: 1985.44)
1981 (2/2/15 Intraday Low: 1980.90)
1968 (6/24/14 Intraday Top: 1968.17)
1963 (6/20/14 Closing High: 1962.87)
1956 (6/9/14 Intraday Top: 1955.55)
1951 (6/9/14 Closing High: 1951.27)
1924 (5/30/14 Intraday Top: 1924.03) (5/13/14 Closing High: 1923.57)
1902 (5/13/14 Intraday Top: 1902.17)
1897 (5/13/14 Closing High: 1897.45) (4/4/14 Intraday Top: 1897.28)
1894.66 (150-week MA)
1891 (4/2/14 Closing High: 1890.90)
1884 (3/21/14 Intraday Top: 1883.97) (3/7/14 Intraday Top: 1883.57)
1878 (3/7/14 Closing High: 1878.04)
1868 (8/25/15 Closing Low for 2015: 1867.61)
1867 (8/24/15 Intraday Low for 2015: 1867.01)
1851 (1/15/14 Intraday Top: 1850.84)
1849 (12/31/13 Intraday High Top for 2013: 1849.44)
1848 (1/15/14 Closing High: 1848.38) (12/31/13 Closing High for 2013: 1848.36)
1814 (11/29/13 Intraday Top: 1813.55)
1812 (12/9/13 Intraday Top: 1811.52)
1809 (12/9/13 Closing Top: 1808.37)
1807 (11/27/13 Closing Top: 1807.23)
1799 (11/18/13 Intraday Top: 1798.82)
1798 (11/15/13 Closing Top: 1798.18)
1775 (10/30/13 Intraday Top: 1775.22)
1772 (10/29/13 Closing Top: 1771.95)
1771.57 (200-week MA)
1738.87 (50-month MA)
1733 (10/17/13 and 1018/13 Gap-Up: 1733.15-1736.72)
1730 (9/19/13 Intraday Top: 1729.86)
1726 (9/18/13 Closing Top: 1725.52)
1710 (8/2/13 Intraday Top: 1709.67)

Sunday, December 27, 2015

CRB Commodities Index Weekly Chart Oversold Falling Wedge Positive Divergence

Commodities have been crushed over the last couple weeks. Iron ore, coal, nickel, PM's, there is nothing spared. The worst appears over in the weekly time frame, however, as shown by the falling wedge pattern (bullish), positive divergence (green lines) and oversold conditions. Thus, price should bounce and already started a +2.3% move higher last week. The purple dots show the mean reversions that occurred and is likely now due to price far below the moving averages.

The pink box shows the ADX losing its strong trend pattern. The move down in CRB is very strong through the entire year--until now. If ADX falls anymore the strong downtrend is over. The expectation is for the CRB to move higher and move sideways to sideways higher for the weeks and few months ahead. If this plays out as the above technical's dictate, that means the US dollar index will likely not rise further as the consensus of market pundits proclaim. If the CRB recovers now, the USD will instead move sideways to sideways lower.

You can poke around in the commodities and pick a couple long plays if the charts mimic the CRB above. The general expectation is for commodities across the board to recover so the dollar index would move sideways with a downward bias opposite of what the consensus expects. 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.

MUB Muni Bond Fund Daily Chart Rising Wedge Overbot Negative Divergence

While high-yield junk bonds are hit, muni bonds are in a parabolic move higher breaking up and out of the sideways prices during October and early November. MUB is up from 108.35 to 110.45, over 2 points higher, +1.9% in seven weeks. The purple lines show negative divergence that will spank MUB lower in the days ahead but price will come back up again due to the long and strong MACD line. That price high will likely serve as the near-term top with the MACD line turning neggie d. Price should then roll over for a more substantive rest after the strong move higher.

The MUB weekly chart is negatively diverged across all indicators over a one-year time frame, however, there is some near-term juice for a week or two. The expectation is for MUB to stutter sideways in the days and week or two ahead printing a new high or two, but not much higher than current levels, then MUB should roll over to the downside. If you made money on the way up, scale out over the next couple weeks and move on. Do not start a position in MUB. It would be a potential short say in a couple weeks time early January.

The monthly MUB chart is negatively diverged so the expectation is that MUB prints a multi-year top probably in January, maybe February or so, then it would be sideways to sideways lower for months and potentially a year or three ahead. So if you missed the MUB train on the long side on the way up do not chase it now, let it go, there are always plenty of other fish in the ocean. 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.

UST2Y 2-Year Treasury Yield Weekly Chart 6-Year High

The 2-year yield has launched higher after Fed Chair Yellen hiked the key rate by one-quarter basis point. The 2-year yield is above 1% to 1.03 at levels not seen since April 2010 six years ago. Traders are throwing the 2-year overboard (lower prices higher yields).

The yield has been in an uptrend since bottoming in 2011. The move higher in yield (lower prices) was a strong trend until late 2014 when the trend petered out (pink box). Yield staggered sideways into an ascending triangle pattern (bullish) and pierced up through due to Yellen's hike. The ascending triangle targets 1.05%-ish essentially where yield is at satisfying the pattern.

The RSI and MACD line are long and strong. The stochastics are overbot and neggie d, the histogram is also negatively diverged. Thus, 1 to 3 candlesticks are needed to roll yield over to the downside again which is 1 to 3 weeks time. A down-up-down pattern for  yield is on the table over the next couple weeks or so (down yield due to stoch's and histo then back up in yield to satisfy RSI and MACD line and then potential roll over in yield if the MACD line rolls over). The MACD line will need to roll over and then you will know a near-term top in yield is at hand. There is likely lots of sideways 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.

BDI Baltic Dry Index Weekly Chart

The Baltic Dry Index remains at record lows. The falling wedge pattern, positive divergence and oversold conditions should bounce price higher. The BDI is so far down that up is the only way it can go; even if it is only a dead cat bounce. Price is under the moving averages requiring a mean reversion higher. The crashed Baltic indicates a lack of need of raw materials such as iron ore and coal. In addition, China's economy is slowing with less need for commodities.

Any other time, a low Baltic Dry Index would occur in concert with a weak stock market. But in today's central banker controlled markets, money printing keeps the stock markets afloat. The record-setting low BDI confirms a global slowdown in progress. 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.

VIX Volatility Daily Chart 200-Day MA Cross

Two days ago, the market bulls sent the VIX under the 200-day MA at 16.57 signaling a stock market rally on tap. Bulls are the stock market winners under the 200-day MA while the bears are the winner above the 200-day MA. Bears got nothing unless they push the VIX above 16.57.

The red line is at VIX 19.38 a number identified by the Keybot the Quant algorithm. The stock market would be in serious trouble collapsing lower if the VIX moves above 19.38. For now, the bulls have their feet up on the desk and they are not worried or concerned due to the low volatility. 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.

Saturday, December 26, 2015

TWTR Twitter Weekly Chart Sideways Triangle Breakdown Downward-Sloping Channel Falling Wedge Oversold Positive Divergence

The tweety bird is laying on its back with its feet up in the air. Remember a year ago as Keystone began highlighting the long-term sideways triangle pattern (red)? Price sneaked out to the upside earlier this year but it was a fake-out move. TWTR collapsed back into the red triangle and then out the bottom side. It was obvious that things would get ugly, and they did. The vertical side of the triangle is about 40 handles and the failure from the pattern occurs at 40 so this places price at zero but this will not happen. Twitter is a young stock and would need more months and years to play out to provide better data. The triangle breakdown simply indicated that price would collapse drastically and it did.

The green lines show a falling wedge pattern (bullish) and positive divergence occurring across all indicators. Indicators are at or near oversold (bullish). Price is under the moving averages requiring a mean reversion higher. The money flow has VST downside momo so that may create a quick jog move of up-down-up over the next couple-three weeks but the overall expectation is for a more sustainable recovery going forward. Price should move through the blue channel establishing a base. The monthly chart is sketchy but for now Twitter should base and recover sideways to sideways higher going forward. TWTR can likely be scaled-into on the long side starting now. Keystone does not currently hold a position in Twitter.

The broad consensus takes turn punching Twitter in the face each day. The majority of market participants are skeptical on the stock. No one appears happy at CEO Jack Dorsey's dual role at Twitter and point-of-sale payment service provider Square. The chart above hints that the worst is over and the tweety bird should stumble out of the nest and begin flying again. Twitter will probably be a big success story in 2016 but it may be weighted towards the back half of the year. As global events intensify and a thirst for real-time information is sought, people will flock to Twitter; it is a news service at its heart. Dorsey and others will likely find a way to monetize the site better and place the company on a firm footing. 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.

Thursday, December 24, 2015

SPX S&P 500 2-Hour Chart

The market week is quickly ending in 20 minutes with the early 1 PM EST closing bell. The CPCE put/call chart predicts a near-term market top so we look to the 2-hour chart for hints on when that will come. The stochastics are topped out, overbot and negatively diverged. The histogram is neggie d. So this will create a retreat in price but the RSI, MACD line and money flow remain long and strong so another 1 to 3 candlesticks are likely needed to roll price over with universal neggie d (about 2 to 6 hours of trading time). Markets are closed until Monday morning.

Thus, a guess would be for stocks to top out Monday or Tuesday morning. The RSI will impact the path ahead watch to see if it becomes overbot. The SPX wants to sneak out more highs and may target that 2072-2074 resistance. At that time, a rising wedge pattern, overbot conditions and universal neggie d may print which would mark the top and begin the spank down.

Interestingly, considering the low put/call ratios are looking for a market top at anytime, will a negative news event occur over the Christmas holiday weekend to start next week's trading on a sour note? 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.

CPCE Put/Call Ratio Daily Chart Signals Near-Term Market Top

Remember Keystone pointed out the uber complacency with the maroon circle last Wednesday, 12/16/15? Low numbers signal trader complacency. Market participants are busy drinking Fed booze and smoking BOJ and ECB crack and do not have any worries that stocks will ever sell off. The boat was fully loaded to one side. Instead,12/17/15 and 12/18/15 flushed lower as would be expected by the low put/call.

In only a few days time, here we go again now at the red circle. Traders have short memories. They are now sipping Fed eggnog and smoking the BOJ and ECB mistletoe again care free and fearless. Traders believe stocks will go up forever due to easy money as the low 0.56 CPCE indicates. They are buying on the long side not even paying attention to what they are buying so you know what is likely to happen. Yes, another near-term top.

The seasonality factors are in the bulls favor with bullishness expected before a 3-day holiday weekend. The Santa Claus rally is technically between Christmas and New Years and into the first two days of the new year, however, traders have jumped the gun. Tomorrow is also a rare full moon Christmas and stocks are typically buooyant moving through a full moon. So the bulls have the wind at their backs seasonality-wise.

The CPCE says a top will occur any time, any day forward and another selloff of 40 to 80 SPX handles would be expected in the near-term. The holiday and today's early close creates odd market action. Volume is light. The expectation is that stocks should top out on Monday, if not, then Tuesday. It may be prudent to dump longs that you are not in love with or do not plan to hold for several years. 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 but Whipsaw Action Continues

Keystone's algo, Keybot the Quant, flips back to the long side at SPX 2031. The site has not been updated since early Tuesday. Low volatility and higher financials are pumping markets higher. Currently, utilities are key with price fighting at the important UTIL 581.70 bull-bear line in the sand. In this immediate time frame, as utilities go, so go the markets. Bears need SPX under 2053 and XLF under 23.86 to prove they have the strength to crater stocks. Bulls need UTIL above 581.70 to take the stock market higher. Pay attention to the current pivot from UTIL 581.70 since it will tell you broad market direction. More information is found at Keybot's site;

Keybot the Quant

Note Added 1:27 PM EST:  Markets are closed until Monday. UTIL ends at 581.02 in the bear camp by 68 cents. The fight for UTIL 581.70 will resume on Monday morning. As utes go, so go the markets.

Tuesday, December 22, 2015

GOLD Commitments of Traders (COT) and Gold Daily Chart

Gold is staggering sideways like a drunk in Times Square on Saturday night. The red circles show important tops in gold price and the green circles show the important bottoms. Followers will remember the July and September lows Keystone described as they formed. The COT chart bars pulled in towards the center hinting at a bottom and the positive divergence (green lines) for the indicators on the weekly chart made a bounce call easier. In addition, the herd was very negative on gold everyone expecting a crash in August-September; right when it bounced as the charts indicated.

Gold is very much in a sideways pattern going forward the brown sideways channel lines are in play. Note how the moving averages maintain a downward bias but are perhaps starting to line out sideways encouraging a sideways move in price. The indicators are slowly squeezing in towards the center lines signaling sideways behavior. The ADX drops to 19 so there is clearly no firm trend in place which means price is moving sideways.

The COT chart is consistent with a near-term bottom so an edge has to be given to the bulls but overall sideways should be the order of the day going forward. The projection is sideways to sideways higher for gold emphasis on the sideways.

The US dollar index should move sideways to sideways lower going forward, and euro sideways to sideways higher (despite ECB QE), this corresponds to oil and commodities recovering going forward and would help create some buoyancy in gold. 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: COT chart is courtesy of Cot Price Charts a very useful site for commodity research. The chart is annotated by Keystone.

Note Added on Thursday, 12/24/15 at 11:46 AM EST:  Gold is at 1076 the flat sideways behavior continuing. Price bounced off the 20-week MA at 1067 so treat this level with respect.

M Macy's Weekly Chart Oversold Positive Divergence

Macy's has been slapped silly over the last six months from 73 to 35, -52%. That is going to leave a mark. M was a darling of long traders for the couple years prior now it is thrown into the trash bin of history. As Keystone mentioned at the time, the red rising wedge and negative divergence and indicators coming off the oversold levels forecasted a spankdown and it was a doozy. The collapses from rising wedges can be quite dramatic; this one was.

Macy's receives hand wringing and prophecies of doom as traders have given up on the retail giant. Temperatures in the northern hemisphere are very warm but Macy's has racks and racks of winter coats, sweaters, wool suits, and other cold weather clothing no one wants. Nonetheless, as often is the case, stocks turn at extreme periods of sentiment. The charts always forecast the way forward. The daily chart is set up with positive divergence wanting to see a nice recovery rally and shorts covering will create rocket fuel to the upside.

The weekly chart above is set up with possie d (green lines) but the MACD line remains weak and bleak wanting another low in price after price bounces for a couple-few weeks from the other indicators. The monthly chart is in shambles and wants another low in price going forward on the monthly basis. Thus, short term, for you nimble traders, M is a nice play. It should receive a nice bounce but you cannot get too greedy since price should roll over again due to the MACD line. At that point, a more sustainable bounce will occur for the weekly chart but then that nasty monthly chart will reexert longer term negativity after that bounce.

So M should bounce right now and it may be a nice recovery rally, then after 2 or 3 weeks it may roll back over to the downside but that base can be bought as well for another bounce, then some sideways say into February and then Macy's will likely roll over and fall down the rabbit hole again. Keystone does not currently have a position in M. 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.

WTIC West Texas Intermediate Crude Oil Weekly Chart 11-Year Low Oversold Falling Wedge Positive Divergence

Everybody and his brother appears on television wringing hands and professing the end to oil, alas, the consensus says there is nowhere to go but down for oil. Funny how all these same pundits said oil was going to the moon during summer time 2014 when overbot conditions, a rising wedge (bearish pattern) and negative divergence formed (red lines). As expected, oil is spanked lower in 2014 and continues down the rabbit hole, however, the green lines show the overbot conditons, falling wedge (bullish pattern) and positive divergence across all indicators. Thus, the pundits are wrong again as usual.

Oil prices would be expected to recover using the multi-year red trend line as support. WTIC and Brent oil are both at 11-year lows. Oil will likely bounce along sideways well into 2016. Very interestingly, the WTIC monthly chart is agreeable to the price bounce forecasted, however, the MACD line remains weak and bleak on the monthly. Thus, oil should bounce higher, and the recovery bounce will likely be very strong since shorts will be covering creating more rocket fuel, then a sideways move say into the new year well into January.

This upside action provides a chance for the possie d on the weekly chart to play out with buoyant prices, but then the MACD negativity on the monthly chart will reassert itself with oil prices rolling over again, let's say mid to late January, maybe early February, and oil will come back down to the current lows at that red trend line say in February-April. Charts will have to be reviewed in a couple weeks or a month to assess the progress of this analysis.

If you bring up the WTIC daily chart, there was possie d which created the slight bounce on 12/14/15. Price comes back down due to the weak MACD line only over the one month time frame. The MACD line is positively diverged on the daily chart over the last four months. So the daily chart is setting up to agree with the weekly and monthly in the very near term. If price sneaks lower it will lock in the positive divergence and likely create the near-term bottom let's say at 34.5-36.00.

Oil can likely be scaled-into right now for a long play. Keystone has no position in oil currently. To end the year and into the new year perhaps through January, oil should recover to the 38-48 area, then in late January or February roll back over to the downside back down to sub 36, then likely bottom in March-May at 32-35, then sideways to sideways higher there forward. Of course, the forecast will be refined as time proceeds. Going forward, from the dollar and euro charts, the USD dollar index is expected to move sideways to sideways down while the euro is expected to move sideways to sideways up (despite the ECB QE); this projection is opposite of the Wall Street consensus. 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 on Thursday, 12/24/15, at 11:48 AM EST: Oil prints a strong +6% and more rally but you knew that was going to happen. WTIC oil is at 38.07. Brent oil 37.84. Remembering Keystone's 80/20 rule, 8's usually lead to 2's so 38 hints that 42 is on tap.

Friday, December 18, 2015

Keybot the Quant Turns Bearish

Keybot the Quant whipsaws back to the bear side. Failure in financials and semiconductors, as well as higher volatility caused the flip back to the short side this morning at SPX 2037. Reference Keybot's site for more information;

Keybot the Quant

Wednesday, December 16, 2015

CPC and CPCE Put/Call Ratios Daily Charts Signal Significant Market Top At Hand

Keystone posted the CPCE put/call ratio chart the other day which signaled a market top nearing but the conclusion, however, was that the Federal Reserve rate hike circus had to play out first to see how that affects markets. That drama is in the rear-view mirror after Fed Chair Yellen hikes 25 basis points today the first FOMC rate hike in nearly 10 years.

Stocks rally strongly on the news since Yellen flapped her dovish wings in the wording in the statement and also in the press conference. The CPC and CPCE put/call ratios print lows not seen since the August top. The SPX dropped about 220 handles for the August waterfall crash. Another key top identified by the low put/calls was Halloween; markets topped out and the SPX tumbled about 90 handles.

The stock market is expected to roll over any day forward and the drop may be very significant. Any further rally can be shorted. The bulls may goose stocks higher but the low put/calls signal the uber complacency in markets and market top at hand.

The expectation is for stocks to top out any day forward, if not tomorrow then Friday, if not Friday then Monday, if not Monday then Tuesday, but very likely stocks should top out by Tuesday. The SPX would be expected to drop, says, from 60 to 200 handles, maybe more, who knows, in these crazy markets. Thus, assess all your long plays, do not stick around in the long trades you do not like. Cut bait and run. Do not get caught up in the long side if there is another mini rally tomorrow or Friday, they would actually be good rallies to short. Stocks should have an exciting finish to the year and it should be a dramatic selloff into the New Year. 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 Friday evening, 12/18/15, at 7:48 PM EST: The SPX pukes over the last couple days teaching everyone that was complacent a lesson. The S&P 500 plummets from 2077 down to 2005, 72 handles, -3.5%, but all of you knew it was going to happen ahead of time.

Keybot the Quant Turns Bullish

Keystone's proprietary algorithm, Keybot the Quant, flips to the long side today from SPX 2059 after a wild and rare intraday whipsaw. The bulls and bears are battling. More information is found at Keybot's site;

Keybot the Quant

Tuesday, December 15, 2015

SPX S&P 500 60-Minute Chart 200 EMA Cross

The SPX remains under the 200 EMA at 2060 so the bears are in control for the hours and days ahead, however, price is rapidly rising and may create a positive cross to place the bulls in control. The indicators are long and strong (green lines), the stoch's are starting to show only a slight hint of neggie d; the overbot conditions help create the current pause in the upward move in price. The long and strong indicators hint at more upside ahead and a likely test of the critical 200 EMA for a bounce or die decision. Perhaps it will sit at 2060 as Fed Chair Yellen brings the tablets down from on high and tells global traders how to trade tomorrow afternoon. The central bankers are the market.

The SPX 2-hour chart also shows long and strong indicators so stocks will likely move sideways to sideways higher into the Yellen circus tomorrow. The indicators may be in negative divergence just as Yellen takes the stage. Of course all bets are off until the Fed provides the answer tomorrow. Bulls need to move above 2060 to signal the all-clear. Bears must keep the SPX under 2060 by all means necessary, otherwise, the bears will fold like a cheap suit and receive coal in their Christmas stockings. Price should test the critical 2060 this afternoon or early tomorrow.

The 10 and 12-month MA's are at 2052-2053 and price is currently battling at this resistance level. Bears need to hold the line at 2052-2053 and spank price lower. The 20, 50 and 200-day MA's are all in the 2062-2069 range. Including the critical 200 EMA discussed above at 2060. Thus, the 2052-2069 area is a major battle zone. Bulls win big above 2069. Bears win big under 2052. The S/R levels can also be looked at as two stages.

First, the 2052-2053 resistance for a bounce or die decision, then, if price moves above, that becomes support and price will move towards the 2060-2069 resistance gauntlet. The HOD today thus far is 2054; the bears are trying to hold the line. 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 7:25 PM EST:  The bears held the line at the critical 2052-2053 resistance discussed above. The battle continues tomorrow. The 100-day MA is 2030.