Keybot the Quant Turns Bullish

Keystone's proprietary trading algorithm, Keybot the Quant, flips to the long side this morning at SPX 2082.

Keybot the Quant Turns Bearish

Keybot the Quant flips short today at SPX 2082.

Keybot the Quant Turns Bullish

Keystone's proprietary algo, Keybot the Quant, flips back to the bull side at SPX 2090. The whipsaws continue. The bears need to drop UTIL under 596.72 to stop the market upside. More information is found at Keybot's site;

Keybot the Quant

Keybot the Quant Turns Bearish

Keystone's algo, Keybot the Quant flips back to the bear side after this morning's opening bell at SPX 2077. Markets are very erratic and unstable. The whipsaw move leads to the likelihood of another whipsaw move for tomorrow (Wednesday) morning back to the bull side again. Keybot will likely flip long unless the bears can send the VIX above 15.86 and the NYA under 10842. The excitement continues. More information is found at Keybot's site;

Keybot the Quant

Keybot the Quant Turns Bullish

Keystone's proprietary trading algorithm, Keybot the Quant, flips to the bull side after this morning's opening bell at SPX 2066. Bulls are receiving upside juice with JJC above 31.88, NYA above 10841 and VIX under 15.87. If any of the three parameters turn bearish, the upside stock market rally will stall. As always, stay alert for a whipsaw. Markets remain very erratic and unstable. Note how SPX price is fighting to push up through the 2075-2079 resistance gauntlet described in the previous post. The fear previously described in the CPC and CPCE put/call ratios created the near-term bottom. More informaiton is found on Keybot's site;

Keybot the Quant

SPX Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 3/16/15

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for trading the week of 3/16/15. 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 2119.59 on 2/25/15 and the SPX all-time closing high is 2117.39 on 3/2/15. The low for this year is 1980.90 which identifies the starting point of the huge February rally.

For Monday with the SPX starting at 2053.40, the bulls need to touch the 2065 handle to accelerate the upside. At this writing about 3-1/2 hours before the opening bell, the S&P futures are up +9 threatening to attack the 2065 area. Bears need to push under 2041 to accelerate the downside. A move through 2042-2064 is sideways action to begin the week. The SPX began the year at 2059 so stocks are slightly negative on the year. March began at 2105 so the month Is currently printing negatively.

In the previous CPC and CPCE put/call ratio charts posted on the weekend, Keystone highlights the tinge of panic and fear in markets which typically identifies a near-term bottom. Markets may float higher into Wednesday when Fed Chair Yellen brings the tablets down from on high to instruct global markets on how to trade. This week is OpEx so Monday is typically higher, as well as a Tuesday low into a Wednesday high. This week in March is typically bullish 80% of the time so everything is going the bull’s way. On Friday, a new moon occurs in the morning and markets are typically weak moving through the new moon so Yellen’s words may disappoint late in the week but overall the week should finish higher.

The 2061 and 2067 levels are strong overhead resistance. If the 2065 level is overtaken today, the 2067 resistance will likely give way and price will immediately seek 2071 R. Market bears are in good shape as long as they do not relinquish the 200 EMA on the 60-minute chart at 2074. The 2075-2079 level is a strong resistance gauntlet but if 2074 is taken out price will likely run higher taking out the gauntlet and crushing the bears. If price takes out last week’s 2083 high, the SPX will be running into the 2090’s.

On the downside, the 2046 is strong support (100-day MA). Bears can accelerate the downside if they push down through 2040-2041 support; the 2030-2032 support will be tested quickly. Markets remain elevated for years due to central banker intervention and the party continues with the ECB QE program.

Looking at the big picture the strongest S/R is 2120, 2118, 2110, 2094, 2091, 2079, 2075-2076, 2067, 2061, 2046, 2040, 2038, 2032, 2030, 2023, 2019, 2011, 2002-2003, 1997-1998, 1993, 1988, 1985-1986 and 1982. The 2002, 2032 and 2040 levels are the strongest S/R levels for the entire 120-point range between 2000 and 2120.

2120 (2/25/15 All-Time Intraday High: 2119.59)

2118 (3/2/15 All-Time Closing High: 2117.39)

2115

2114

2111

2110

2105

2104.50 March Begins Here

2104

2101

2100

2099

2098

2097

2094 (12/29/14 Intraday High: 2093.55)

2091.91 (20-day MA)

2091 (12/29/14 Closing High: 2090.57)

2089

2088

2086

2083.49 Previous Week’s High

2083

2082

2080

2079 (12/5/14 Intraday High: 2079.47)

2076 (11/28/14 Intraday High: 2075.76)

2075 (12/5/14 Closing High: 2075.37)

2074.06 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)

2074

2073 (11/26/14 Closing High: 2072.83)

2072

2071 (11/21/14 Intraday High: 2071.46)

2069

2067

2065

2064.56 Friday HOD

2063

2061

2059.27 (50-day MA)

2058.90 Trading for 2015 Begins Here

2057

2056 (11/18/14 Intraday High: 2056.08)

2055.96 (20-week MA)

2054

2053.40 Friday Close – Monday Starts Here

2052

2050

2046 (11/13/14 Intraday High: 2046.18)

2045.75 (100-day MA)

2041.17 Friday LOD

2041

2040

2039.69 Previous Week’s Low

2038

2034

2032

2030

2024

2023

2021

2019.59 (150-day MA; the Slope is a Keystone Cyclical Signal)

2019 (9/19/14 Intraday High: 2019.26)

2018

2016.40 (10-month MA; a major market warning signal)

2016

2014

2012

2011 (9/18/14 Closing High: 2011.36) (9/4/14 Intraday High: 2011.17)

2009

2007 (9/5/14 Closing High: 2007.71)

2005 (8/26/14 Intraday High: 2005.04)

2004

2003.46 (200-day MA)

2003 (8/29/14 Closing High: 2003.37)

2002

2001

1999

1998

1997.62 (12-month MA; a Keystone Cyclical Signal) (the cliff)

1997

1995

1993 (1/15/15 Closing Low for 2015: 1992.67)

1992

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)

1984.48 (50-week MA)

1983

1982

1981 (2/2/15 Intraday Low for 2015: 1980.90)

1979

1978

1976

1973

1970

1968 (6/24/14 Intraday Top: 1968.17)

1965

1964

1963 (6/20/14 Closing High: 1962.87)

1962

1961

1960

1958

1956 (6/9/14 Intraday Top: 1955.55)

1951 (6/9/14 Closing High: 1951.27)

1949

1947

1946

1942

1940

1937

1936

1931

1928

1925

1924 (5/30/14 Intraday Top: 1924.03) (5/13/14 Closing High: 1923.57)

1920

1917

1912

1910

1906

1902 (5/13/14 Intraday Top: 1902.17)

1901

1897 (5/13/14 Closing High: 1897.45) (4/4/14 Intraday Top: 1897.28)

1894

1891 (4/2/14 Closing High: 1890.90)

1889

1886

1885

1884 (3/21/14 Intraday Top: 1883.97) (3/7/14 Intraday Top: 1883.57)

1882

1880

1879

1878 (3/7/14 Closing High: 1878.04)

1877

1874

1873

1872

1871

1868

1867

1865

CPC and CPCE Put/Call Ratios Daily Charts Signaling Near-Term Bottom

A few days ago Keystone highlighted the high print in the CPC put/call ratio which typically identifies a near-term bottom, however, the CPCE remained benign not moving higher. For the CPC, a move above 1.20 shows fear and panic entering markets and that is when a market bottom occurs; ditto the CPCE above 0.80. When the CPC drops under 0.80 complacency is rampant in markets identifying a near-term top; ditto a CPCE under 0.55.

Thus, with the CPC above 1.20 and CPCE above 0.80, a near-term bottom in the stock market is very likely leading to a rally next week. If thinking of playing the long side in a quickie trade, it would be ideal if markets were weak on Monday since any further weakness can be bot on the long side. Even without any further drop in stocks the expectation would be for a recovery rally since traders are becoming worried. Once the boat is fully loaded with worriers and people becoming fearful, bingo, stocks recover. The fear and panic was rampant for the mid-October bottom. Keystone highlighted the low prints in late February (market complacency) calling for a near-term market top, which occurred. So if you are a very short term swing trader you can cover the short side that you enjoyed over the last two weeks and flip that trade to the long side.

Of course the Fed will be in play in the week ahead with Fed Chair Yellen bringing the tablets down from on high on Wednesday afternoon to instruct everyone on how to trade so that is a wild card. Next week is OpEx week and in March that week is typically up about 80% of the time which reinforces the long side matching the CPC and CPCE prognostications. During OpEx week, a Tuesday low typically leads to a Wednesday high--more bullishness. Late in the week, early Friday morning at 5:36 AM EST, a new moon peaks for the month and markets are typically bearish moving through the new moon providing a sliver of hope for bears as the week draws to a close. Thus, the bulls may run higher through Thursday and if there is a high print then that would be a good candidate to short and weakness would be expected into the weekend but overall the week would be expected to finish higher.

This pattern is interesting since markets are constantly goosed higher with central banker easy money. Yellen is expected to remove the "patient" phrase from the Fed statement which means the first rate hike is on tap in a couple meetings which is the June-July time frame. The Fed is in a quandary, however, basically committing to the word change but knowing that the economy is weaker than anyone realizes and inflation is nowhere in sight; deflation and disinflation remains the order of the day in the US as last week's economic data verifies.

After six years of obscene Fed intervention with ZIRP and QE, the end game may be very near; and not the happy ending expected. The central bank intervention is a confidence game. As long as traders and investors believe in the Keynesian money-printing it will goose stocks higher; simply look at the upside orgy occurring in Europe now after ECB President Draghi is firing the QE money bazooka. When confidence is lost, all is lost.

If Yellen does not remove "patient," then stocks may launch with a rally since the easy money fun continues, but at the same time, since the removal of patient is expected, after a few hours or a day or so, traders may come to realize the Fed is clueless and making it up as they go along; confidence will be lost. If the Fed removes "patient," Yellen may change the rules again and say the two-meeting expectation for a rate hike may or may not occur. This would cause a loss of confidence since the Fed will be back pedaling from their own guidance. If the Fed removes "patient" and is on track for the June-July rate hike, confidence may be lost since the economy is simply in no shape to receive the rate hike.

Keep in mind that all the people touting a great economy are those that own stocks and see their quarterly statements rising for the last few years as they become wealthier due to the easy money and in their minds the economy is doing great. These are the folks buying iPhones and enjoying the American dream. The other one-half of the United States, that do not own stocks, are suffering daily through continuing high debt and lack of employment. All the commentators in the media and television are all part of the upper class that have benefited so in their minds all is well with the economy; none of these folks understand how ill the economy remains since they only see the US through the cloudy prism of their own joyful circumstances.

Thus, the put/calls and OpEx factors point to a mini upside rally early into mid week as Yellen takes the stage, however, perhaps after six long years of obscene Keynesianism, the end game is at hand and confidence will be lost in the money printing scheme that will eventually hurt America and likely send the country into years of social unrest. 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.

MSFT Microsoft Daily Chart Death Cross Lower Band Violation

Mr Softy prints a death cross (black circle) a few days ago so as often happens, price tends to recover higher once the death cross occurs but the pattern does point to weakness a couple months out. The bounce on Friday is due to the tiny two-day positive divergence with RSI and stochastics but the other indicators remain weak and bleak wanting lower prices. The thin green lines for the indicators show a positive slope over the last six weeks but this is not positive divergence since price did not print a lower low. Microsoft bulls would have been better off if price would have falllen to 37-40 since the indicators would be possie d and create a strong launch higher. The move higher now may not have much gusto.

The gap at 41.5-42.0 will need filled as well as the remaining gap at 44-45. The lower standard deviation band was violated so a move back to the middle band at 43.16, at a minimum, is on the table. Price is using the 40.0-41.5 level as support since this represents a strong congestion zone from last summer. MSFT has a sideways vibe in play through 38-45 for the weeks and months ahead. Microsoft should remain in a sideways malaise, perhaps choppy sideways, for a few weeks. There are far better places to invest money than Microsoft. Another concern is recent information provided by INTC about lackluster PC sales. Businesses are not hiring workers or expanding so the demand for computers is not occurring and if you do not need computers you do not need software. 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.

BAC Bank of America Daily Chart Death Cross Sideways Triangle

The banks explode higher today after the stress test results with the exception of one skunk at the garden party; Bank of America. The 50 MA drops under the 200 MA creating a death cross pattern albeit by one penny. Seasoned technicians do not pay much attention to golden crosses (20-day MA up through 200-day MA) or death crosses since price typically reverses once the cross occurs, although in the longer run for the weeks or couple months forward price will typically obey the cross. The golden cross occurs in October to signal bull times ahead and look at how price falls like a stone, however, price recovers and does print a high to begin the year. This is what typically happens.

The death cross occurs now so price may break out up through the sideways triangle and run higher but if the death cross remains in play price would be expected to leak lower again and print a lower price than current price say out in April-June. The red lines show a rising wedge, overbot conditions and neggie d that create the spank down to begin the year. The green lines show the oversold conditions and possie d that create the launch in late January. The blue lines show the sideways nature of the indicators and the sideways symmetrical triangle for price. Note that a major decision will occur for BAC within the next one to three weeks where price should break one way or the other.

Considering the bank orgy today, some of that buoyancy should impact BAC and it did recover off the lows today so a guess would be a move higher to the 16.70 resistance then perhaps a roll over to perhaps print sub 15 out a couple-three months. The chart can be reassessed in a couple weeks or one month from now to see if the death cross is maintained. An alternate scenario is for price to simply leak lower here on out. At any rate the expectation is for a lower price a couple months out from now. 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.

NKE Nike Monthly Chart Overbot Negative Divergence Developing

Since the UA chart was posted a couple charts back it is prudent to post its kissin' cousin NKE. Under Armour and Nike are two phenomenal bull stocks over the last six years; big-time winners. But, there comes a time when the tent must be folded and everyone goes home. The red lines that lead to the peak at the end of last year clearly show neggie d wanting a spankdown, which occurs but the green line for the MACD wanted another higher high in price and that is what is attempting to occur now. A matching high is basically in place but you would expect a little bit higher. When this occurs the maroon line will be in play and create another spankdown but the MACD line remains long and strong wanting another higher high in price. When that occurs that will identify the top for NKE. Price is extended far above the moving averages requiring a mean reversion lower.

The money flow is already trailing lower which will act as a weight on price helping to pull it down. Thus, the expectation is for some additional loftiness in price this month, then down in April, then back up in May to a matching or higher high again and that will be the top with NKE likely trailing sideways to sideways lower there on out. Thus, if you enjoyed the long side take your money and look for other opportunities. You can stick around to try and eke out a bit more of upside but the upside should be limited and you may have to endure choppy trading now into June. Both NKE and UA will likely top out over the next one to three months. If you stay in the stock, by summer time when you are thinking of visiting the beach, you will be depressed for owning it. 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 Saturday, 3/14/15: On the Fox News Business Block, Charles Payne tells viewers to buy NKE with both hands. As discussed above, folks may be happy for a month of three but by summer time will be crying in their lemonade.

USD US Dollar Index 15-Minute Chart

The US dollar tags the 100 level overnight for the first time in 12 years then promptly falls on its sword dipping down to sub-99 now traveling sideways through 99.2-ish. The euro briefly fell under 1.05 printing a 1.04 handle then launching like a rocket above 1.06 as the dollar retreated. The chart is courtesy of INO.com and annotated by Keystone. 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.

DIS Walt Disney Monthly Chart Overbot Negative Divergence Developing

The Mouse House runs from 14 to 103, +636%, since the 2009 bottom. Investors are chasing into DIS stock and parents are buying it for their kids; too bad that over the coming years as the kids grow older they will watch the stock fall. Keystone posted this chart a couple months ago before the huge spike higher. The stick save prevented the top from forming and extends the price move for a bit longer. With the higher high in price the indicators are negatively diverged except for the MACD line so after an initial spank down in the monthly time frame, price will come back up for a higher high. As soon as the MACD goes neggie d, over the next one to three months, the top is in for Walt Disney.

The hedge funds are looking for bag holders and pumping the stock daily in the media encouraging investors to "buy it for the children." Price is extended far above the moving averages and requires a mean reversion. The upside is limited here on out so if you enjoyed the rally or have any profits in DIS it would be prudent to take the money and look elsewhere for opportunities. The expectation would be for DIS to top out over the next three months; the thrust higher in February creates momo that will help continue buoyancy for a few weeks. DIS would be expected to be moving towards or at 90 in summer time. Watch the MACD line to see when it rolls over with neggie d. 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 7:54 PM: DIS rallies a huge +4.2% today on news of new film releases and other happy talk printing at 107.17 new all-time record highs. Traders are throwing money at Disney stock without any concern or worry. As discussed above, the MACD line has further upside juice available and DIS will not roll over until the MACD rolls over. A print at 108 may lead to 112 but the current thinking would be that DIS tops out during April-June at 107-112 but the expectation is for a pull back perhaps to 90-102 first during March-April. NYSE floor trader Steve Grasso advises investors to buy DIS stock with both hands at these levels as he expects the good times to continue so it will be fun to watch going forward. With that big +4% pop today this would be a great place to exit for the near term. The neggie d with stochastics and money flow should create an initial spankdown in the monthly time frame in the near term say March-April. For the month of March thus far, DIS is up +3%.

Note Added Saturday, 3/14/15: On the Fox News Business Block, Gary "Chartman" Smith advises viewers to buy DIS with both hands and is calling for a +50% increase in Disney stock within two years; Smith is saying that DIS will be over 160 in 2016/2017. 

UA Under Armour Monthly Chart Overbot Rising Wedge Negative Divergence

UA has had a phenomenal move off the 2009 bottom from about 3 to 75, an astounding +2400%. The chart is painting a weak picture ahead, however, so now is not the time to chase into this hot-shot darling. The cheerleaders working for hedge funds are telling retail investors to buy with both hands since they need bag holders as Under Armour tops out. The RSI and stochastics are overbot and the rising wedge pattern is in play favoring bears. The red lines clearly indicate negative divergence in play that will smack price lower. Further, price is extended far above the moving averages requiring a mean reversion lower.

Stocks experiencing a great amount of momentum are never attractive short candidates since momo begets momo but an experienced trader looking for excitement can begin to bring on a short position. It is more important that anyone that has enjoyed the long side the last few years, or even months, take profits and move on. The MACD prints neggie d as price prints a new high this month so there is no reason for price to move higher again. However, a momo stock can sometimes take a little time to top out and roll over simply due to the strength and power of the move.

The expectation would be for UA to top out anytime now and over the next month or three and roll over to the downside. The upside is limited from here on out. An initial downside target say for April-July would be the 20-week MA at 58 and rising; call it the 58-65 landing zone. If you now buy into UA on the long side or remain in Under Armour on the long side you will regret it by summer time. 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 8:07 PM: UA bounces +2.7% to 76.69 today. For the month of March thus far, UA is down -0.4%.

CPCE CBOE Options Put/Call Ratio Daily Chart

The CPC put/call ratio spiked slightly the other day but has since retreated and the CPCE put/call above shows an uninspired move higher. This confirms the ongoing complacency in the stock market despite the large Friday and Tuesday selloffs as well as yesterday's weakness. Traders could not care less about the pull back in stocks the last few days and are simply planning where to enter long expecting new all-time highs ahead. Traders are complacent completely lacking any fear in markets since the central bankers are printing money like madmen continuing to pump global stock markets higher. The mantra was always "don't fight the Fed" and now is "don't fight the ECB." There is no reason to worry since the central banks will support the stock market forever. As Alfred E. Neuman says, "What? Me Worry?"

The green circles show recent bottoms in the stock market due to a tinge of fear and panic while the red circles show market tops due to complacency. The double circles show the significant tops and bottoms. Remember at the end of February Keystone pointed out the complacency calling a near-term top in stocks which occurred. The put/call remains in no mans land nowhere near the levels that identify fear and panic above 0.80. Note the October stock market bottom was created above 0.90 with the highest level of worry among traders in many months. The expectation is, despite any short term machinations, that stocks will maintain weakness and selling pressure will continue until traders become worried and develop fear at 0.80 and higher, at least at 0.75 and 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.

DAX Germany Weekly Chart All-Time Record Highs

The DAX has gone parabolic as a result of the obscene ECB QE Keynesian spending program. Traders have rushed into the DAX anticipating the ECB's easy money and the QE purchases began this week. From the 8350 low in October, the DAX is up over +41% above 11.8K. It is absolutely shameful since the move has nothing to do with fundamentals and instead everything to do with money printing. The wealthy, that own stocks, benefit greatly, while common folks that do not own stocks, are left behind.

The rich have no allegiance to the long side so once the party ends stocks will be thrown overboard and the wealthy will enjoy their winnings for the rest of their lives. The next economic and market downturn, however, will only crush the middle class, poor and disadvantaged to a greater extent than is currently occurring. The grand global central banker experiment is making the rich wealthy beyond their dreams at the expense of common people. Today, Thursday, the DAX is trading flat to lower in early trading retreating from the top channel trend 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.

CAC France Weekly Chart 7-Year Record Highs

The ECB QE is pumping stock markets higher with easy money making the wealthy, that own stocks, wealthier. Yesterday the CAC printed above 5K at 5004 intraday closing at 4998 comparing back to mid-2008 highs. The CAC is trading dead flat in early trading today, Thursday, printing an intraday high thus far at 5000.81. 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.

TNX 10-Year Treasury Yield Weekly Chart

The Tweezer Bottom in early February helped create the bottom in the 10-year yield with the sliver of positive divergence across the indicators. The yield continues higher and all the indicators remain long and strong (green lines) wanting higher highs in yield after any pullbacks. The 200-day MA is 2.23% a first resistance level. Then the neon blue line at 2.32%-ish. There is a congestion zone at 2.32%-2.38% that may stall the yield's climb. The 50-day MA is 2.35% and falling, and the purple trend line is 2.30%-2.37%, so those create a confluence at 2.32%-ish giving this level more street cred. The 2.46% level matches the middle standard deviation band on the monthly chart which provides another upside resistance level.

Yield will move higher until the indicators negatively diverge. Yield may prefer to move up through the rising red wedge as it decides where to top out at. The monthly chart has more of a sideways vibe to it although the 2.46% and dropping, as mentioned above, is in play. The 2.32%-2.38% is a very good candidate for where yields will eventually stall say in April perhaps into May. A significant move higher in yields is not expected at this time. The expectation would be for yields to move sideways through 1.80%-2.40% for the remainder of the year. The chart will have to be revisited going forward since markets are in a tumultuous time currently due to the ECB QE intervention. The projection is that yields will top out in April at 2.30%-2.40% and then begin moving sideways to sideways lower in the back half of the year but this analysis will have to be revisited every couple weeks going forward to see how it tracks. It all depends on when the indicators begin rolling over with neggie d.

The red lines show the top in yields at 3% when 2014 began. That was an easy call compared to the current set up. Back then, the consensus was 95% of traders saying yields were unstoppable to the upside but the red lines showed that everyone was wrong, and they were. That was one of Keystone's best calls for the top in yields to begin 2014, and it was easy with the neggie d in play, and yield stumbled the whole way down to 1.65%. 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.

USD US Dollar Index Weekly Chart Overbot Rising Wedge Negative Divergence Developing Upper Band Violation Price Extended

The euro and dollar move inverse to each other. The euro drops to 1.0545 today and US dollar sky rockets to near 100. Momentum begets momentum. The stochastics and histogram want the price move higher to end (negative divergence), however, additional higher highs will occur after the initial pull back. The monthly chart has some upside juice in it as well. The price violated the upper standard deviation band (pink) so a move back to the middle band at 92 and rising is in play. Price is also extended far above the moving average lines desperately needing a mean reversion lower.

Note the tight band squeeze that started the big move higher (pink arrows). You always want to avoid shorting stocks with such momentum but if you are long the dollar take the money and run. If you are willing to ride out what may be a sharp drop, but then a return to higher highs again, you can stay long but much of this move higher has occurred. A breach of 98 opens the door to 102 (Keystone's 80/20 rule for prices). The move is powerful and a tricky call since you have ECB QE smacking the euro lower which sends the dollar higher.

A scenario ahead would  be the dollar pulling back sharply as the euro bounces but the dollar will move higher again say over the next 1 to 3 weeks after an initial slap down and print above 100. Once the indicators all turn neggie d with a higher high in price a more firm top will be in place say during March-April. Since the monthly chart has juice, the dollar would  be expected to then stall off the highs during April-May but then move higher to make new highs say in May-June so the monthly chart has a chance to top out.

The dollar is not a good short since you want to typically avoid shorting momentum but it is more of a sell the long position trade right now. If you enjoyed the ride, cash out and look elsewhere for trades. The dollar may play around at 96-103 into summer time but the action will likely become very choppy going forward and if you stick around in this trade from either perspective it is typically the action that will chew up bulls and bears.

The euro chart is the inverse and all the same analysis holds only the mirror image.The euro should receive a quick recovery rally but will then drop again for new lows, then that will create a more firm bottom say in March-April. Then multiple weeks will likely create ongoing buoyancy int eh euro but then moving towards summer time the euro will make new lows again to satisfy the monthly chart. Everyone expects parity to occur any day. The ECB QE has everyone lathered up and ready for a continued plunge and this may be the case but the current projection would be sideways from here. Parity, if it occurs may come in summer or fall but currently the jury is out as to if it occurs. We will have to wait a month or so to revisit the charts.

The ECB may have difficulty going forward due to inavailability of bonds to buy throwing a wrench in the works for President Draghi's plan. In addition, the obscene global central banker Keynesian intervention is six years along and at some point all will realize the emperor is not wearing any clothes. The charts tell you that if long the dollar take your money and move on. if short the euro take your money and move on. The sideways choppiness expected going forward does not make the dollar or euro an attractive trade. What you can do if you are in these trades that are trending in your favor is set a mental stop in your head and stick to it. if the dollar retreats to that level, or euro bounces to that level, exit the trades and avoid reentering until the chart get further along say into April. 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 Daily Chart

The BPSPX  remains on a double whammy buy signal. The BPSPX had reversed six percentage-points and then once the 70% level was crossed to the upside in early February that created the double whammy buy signal indicating that the market bulls are firmly in charge. The BPSPX has topped out at 75.80. Thus, a six percentage-point reversal is 69.80 and this is conveniently at the 70% level as well so simply use the 70% level as the key bull-bear line in the sand. Below 70 and the bears will receive a double whammy sell signal and markets will begin selling off in force. Bulls are fine and stocks will recover as long as the 70 level does not fail. 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 2-Hour Chart Positive Divergence Developing

The SPX trails lower today despite the robust futures overnight. On the 2-hour chart, the stochastics are overbot wanting a bounce from here, ditto the other indicators but the MACD line remains weak and bleak wanting another lower low in price after any bounce. Thus, one to three candlesticks are needed to likely create the near-term bottom which is 2 to 6 hours of trading time. So today is a good candidate for a bottom. Watch the MACD line to see if it flattens and improves to the upside. The 2030-ish level represents the support lows from early February trading action.

If the bears push lower today a bottom is likely at say lunchtime into the afternoon or first thing at tomorrow's opening bell. If the Fed starts jawboning the markets that will likely create a bottom so watch the news wires for any happy talk from the central bankers. The SPX is down three points to 2044 so the expectation would be a near-term bottom say at 2030-2044 over the coming hours. Once price recovers it may run quickly higher. Whoa, price keeps dropping now at 2041. Watch the MACD line to see when it goes possie d; it remains weak and bleak right now. 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 7:38 PM: The bulls ran out of gas today and markets fell into the closing bell with the SPX ending at 2040. Price makes a lower low and the RSI is positively diverged. Ditto the histogram, and stochastics, however, the MACD line keeps sloping lower and also the money flow indicator (not shown above). The ROC is positively diverged. The falling wedge pattern is in play (bullish) and the RSI and stochastics are oversold (bullish). So the chart is in very similar shape this evening to the way it was this morning (above). Thus, a bounce in price is needed and would be expected tomorrow morning but the MACD line and money flow want to see another lower low in price after the bounce. This should take 1 to 3 candlesticks to place the near-term bottom about 2 to 6 hours; unless the Fed or ECB pump the markets with happy talk overnight where a rally will immediately occur. So the expectation if for a near-term bottom to occur tomorrow. The SPX may proceed with a bounce to 2045-2050, then retreat back down to 2038-2042, where the MACD line should turn possie d, then that would be the bottom and the bulls will stage a recovery move that initially targets the 2055-2057 area. The 100-day MA S/R is 2042.05 so watch this level like a hawk; bulls win above bears below. The critical 20-week MA is 2055.30 serving as overhead resistance. Bulls got legs above 2055 but got nothing if price stays below 2055.

SPX S&P 500 Daily Chart Lower Band Violation

The SPX sells off Tuesday in force sending price under the lower standard deviation band at 2057 so the middle band at 2095 is in play (pink). Price may play out similarly as the fractal in December (brown circle). Note the first violation of the lower band back then sent prices immediately back to the middle band then further downside continued. The central bankers saved the day as usual with jawboning resulting in the vertical spike in mid-December so listen for any happy Fed talk today or tomorrow.

Price lost the 50-day MA at 2061 so that is the first test of resistance for price. If the bulls take that out to the upside then price will seek the middle band, also the 20-day MA at 2095, as the next upside target. Bears need to hold the line at 2061 and weakness will resume. The stochastics are oversold wanting to create a quickie relief bounce which appears on tap this morning but all indicators remain weak and bleak desiring lower lows in price after any bounce. The only thing that can change this negativity is the Fed pumping the markets with happy talk which is what typically happens.

The long red lines identified the negative divergence top as Keystone pointed out several days ago when it formed. Volume is strong for both Friday's and yesterday's selling comparing back to late January and early February. It will be key when price moves below current levels since these are the same levels as early February and will provide a direct comparison in volume and show whether the bears have downside juice, or, if the volume trails off allowing for the bulls to recover easier. Watch the 50-day MA at 2061 as the key market metric for the next couple days. Also pay attention to the critical 20-week MA at 2055.76. 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.

AAPL Apple 2-Minute Chart Apple Watch Release

The Apple Watch event begins at 1 PM EST. AAPL stock runs higher as CEO Tim Cook discusses Apple TV, then Apple Pay and releases a new MacBook that is the thinnest ever. The euphoria reaches a crescendo at 1:55 PM the exact minute that Cook begins discussing Apple Watch. It was clearly a 'sell the news event'. The collapse a few minutes before 2:30 PM was due to the announcement that Apple Watch only has 18 hours of battery life (purple circle) and the next drop (brown circle) is the collapse when Cook announces the pricing. The event ended at about 2:36 PM EST. Apple stock continues selling off for a few more minutes until the intraday bottom at 2:42 PM. Obviously, traders, investors, analysts and potential purchasers of the watch device were disappointed with the battery life and high prices. 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 March Seasonality Factors for Trading the Markets

March is typically an up month (based on many decades data) with the markets gaining +0.8%. Interestingly, however, March has trended lower for the majority of years since 2000. In general, the largest gains in the stock market are made from November thru April with flat returns May thru October. The greatest market gains occur in Q4, with Q1 (Jan-Feb-Mar) next at +2.1% and Q2 after that with an average +1.8% return. February is typically a down month where traders look for a dip to enter long and hold through April ahead of the 'sell in May and go away' period. This year February was a robust bullish month with a record-setting rally to new all-time highs for stocks. Central banker easy money typically overrules all seasonality factors and fundamental and technical analysis.

The dollar is typically strong from January into April and that occurs in spades. The seasonal strength for the dollar may be played out for now with a retracement on tap ahead. The USD basket is above 97.

The Monthly Jobs Report was last Friday, 3/6/15. The market direction on jobs day typically dictates the direction for the month. Markets typically pull back three times a year with -5% sell offs which is healthy behavior for a robust bull market but the stock market simply continues higher month after month due to global central banker easy money. Traders are addicted to easy money.

The markets tend to trade poorly when Congress is in session, and do well when Congress is out of session.  What a sad commentary it is, but it is true. Thus, for March, the Congress, and much of the political drama in general, should create a market negative. The debt ceiling limit must be raised in the days ahead that will create market drama. From the last day of the month through the first four days of the new month, equities tend to be bullish as new money enters. March follows the seasonality partially with markets topping with Nasdaq 5K on Monday, 3/2/15, the first day of trading for the month, but then dropping like a stone.

The full moon occurs on 3/5/15 and markets are typically buoyant through the full moon and stocks do trade higher on Thursday, 3/5/15, before losing the buoyancy on Friday after the Jobs Report. The new moon is 3/20/15 and markets are typically weak moving through the new moon so Thursday, 3/19/15, may print a near-term high with weakness then occurring into the weekend. The BOE and ECB rate decisions occurred on Thursday, 3/5/15. Further details on the ECB QE bond-buying program were provided.

During OpEx week, markets tend to be buoyant on Monday, 3/16/15. Also markets tend to be buoyant from a Tuesday low into a Wednesday high during OpEx; 3/17/15 into 3/18/15, thus, a one-day long trade can typically be placed on Tuesday.

The FOMC meeting is 3/17/15 and 3/18/15 with the rate decision, forecasts, and a press conference occurring the second day.  This date is significant since FOMC day in March typically results in a market up day 76% of the time. Spring arrives 3/20/15. OpEx Friday, quadruple witching, is 3/21/15, and markets tend to move opposite on Monday, 3/23/15, as compared to Friday's direction. March OpEx week, 3/16/15 through 3/20/15, is typically up 85% of the time.

The end of the month, EOM, occurs on Tuesday, 3/31/15, which will also close out Q1; EOQ1 (end of the first quarter). Window dressing will occur to end the quarter so bullishness may be expected 3/24/15 into the end of the month. St. Patrick's Day is Tuesday, 3/17/15, a day when everyone is Irish drinking green beer.

March typically plays the role of a correction month. The month sells off where many traders then enter long at a market bottom to ride the last pop up in March-April before traders 'sell and go away in May'. There is typically a smartphone conference in March so technology and telecom stocks may receive positive attention. Tech is always strongest in Q4, and then peters out in the winter and spring. Tech remains surprisingly strong all year round due to the Fed and other central banker easy money policies distorting markets. Traders typically take profits in technology this time of year. Summer time is a slow period for technology.

The Hurricane Season will begin in June and runs through November. March is typically a great month to do your homework on hurricane plays, power outage plays and oil and natty plays, since the hurricane watch coming in a couple months will effect trading in these sectors moving forward.  Tax refund checks start to trickle into lucky hands now through April and with on-line filings growing, the time frame is shortened and favors March even more. Perhaps the refunds already helped fuel February gains. This money windfall is typically spent which helps the economy, albeit in a minor way.

Gasoline costs typically peak between March and May as the refineries switch from winter to summer grades and undergo maintenance. Of course the turmoil in oil markets are currently dictating gasoline prices.

Remember, seasonality factors simply provide the gentle background current for trading, and are never used as a sole basis for trading. Just as it is easier to swim with the current, not against it, it is easier and more advantageous from a risk-reward perspective, to trade with the seasonality current rather than against it. 

Using the above information to paint a mosaic for March, market buoyancy would be expected from 3/16/15 through 3/19/15 (so consider this as trading ends for the week on 3/13/15). The new moon may usher in market weakness on Friday, 3/20/15, even though the entire week of 3/16/15 is typically bullish. Then perhaps market weakness occurs from 3/20/15 into 3/25/15 where the EOQ1 window dressing may be on tap into the end of the month. If March is up strongly, the last couple days should finish weak. If March is a weak month, the last couple days should finish stronger.

NYA NYSE Composite Weekly Chart 40-Week MA Cross

The drama with the NYA 40-week MA cross begins anew. This is one of Keystone's important cyclical market signals that point the way ahead for weeks and months, perhaps years like the chart shows with the bulls enjoying the top side of the 40-week for over two years (cyclical bull market). The 40-week MA is 10845. Price is 10842 so the bears are in charge albeit by only three bucks.

This chart has been highlighted since late September. The market bears were pushing lower in October and on the verge of creating a serious downside market event. That is why the Federal Reserve panicked in October and goosed the markets (this was explained in detail in prior articles). The global central bankers are acting in collusion and an October crash was saved by the Fed jawboning with days later the BOE, the BOJ, then ECB, then PBOC, etc..., until they regained the 40-week MA and then they congratulated each other over how they can manipulate markets. The central bankers are the market and have been since March 2009.

The central bankers repeat their goosing and market support to save the day in December, and then again with the February rally. It is truly sickening. It clearly shows how capitalism does not exist. Free markets are a joke; they do not exist. If you believe in such folly you sir, are a fool. In trading, you could care less which way markets move; all that matters is that you are on the right side of the trade; this is what capitalism and free markets are meant to be but that only exists in history books. Regardless, trading for the last few years is an ongoing assessment of what the third man on the field is doing (Fed and central bankers) in addition to the ongoing fight between bulls and bears.

If the NYA stays under the 40-week MA, markets are toast this year so keep a close eye on the NYA on Monday morning. It will tell you the market direction answer. The NYA has moved through that sideways red channel range of about 800 points for over one year's time. As price made new highs two weeks ago, the indicators are negatively diverged (red lines) showing that the upside is running out of gas, and the spank down occurs. Watch to see if the MACD cross turns negative; if so, the bears will push the NYA far lower. If the MACD cross remains positive, then the bulls will recover again likely with the help of Fed jawboning probably on tap for Monday. Also watch to see if the RSI slips under 50% into bear territory to signal further weakness ahead. If the RSI stays above 50 bulls are fine.

If the markets tumble next week watch the volume. Price is moving into the same areas as the large volume candlesticks from December and early February. Thus, at the same price levels the volume needs to be assessed to see if it can overcome the prior buying volume to show the bears mean business. If stocks fall next week on lackluster volume than the bulls will likely recover again. 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.

UTIL Utilities Weekly Chart Stock Market Teetering On Edge

The market bulls are dodging a bullet as the trading day is underway. The UTIL 50-week MA represents a trap-door in the stock market. If UTIL loses the 573.19 level, stocks will likely go into free fall in quick order. The bulls know this and are fighting desperately to keep UTIL above the 50-week MA. Watch it like a hawk since carnage begins in equities if UTIL loses 573.

The VIX spikes higher to 14.68 but not yet above the 200-day MA at 14.72 (see previous chart). This is why equities recovered from the selling in the opening minutes of trading. If the VIX moves above 14.72, stocks will deteriorate and UTIL may drop under 573 which ushers in major market carnage. If the VIX stays below 14.72, the bulls are fine and should be able to recover today and prevent stocks from moving any lower. 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 9:51 AM: SPX 2091. UTIL 575.56. VIX 14.52 so the bulls are holding the line. Volatility is starting to move up again; watch it closely.

Note Added 10:16 AM: SPX 2092. UTIL 573.12. The 50-week MA is 573.13. Failure by one penny. As the astronauts said decades ago, "Houston, we have a problem." VIX is at 14.43 not yet above the 14.72. Markets are on the verge of creating a dramatic 'event' and no one knows it yet. Bulls must push UTIL higher or the stock market will begin selling off in force.

Note Added 10:19 AM: SPX 2092. UTIL 573.13. The 50-week MA is 573.13. The drama builds. By price hesitating at the key UTIL 50-week MA it verifies how critical this level is. Utilities determine the immediate fate of the stock market. Bounce and bulls win, failure and market carnage begins. Since the VIX is not above its 200-day MA the bulls have the advantage to create a bounce. VIX 14.23.

Note Added 11:17 AM: Bingo. SPX 2083. UTIL 571.73. Failure. VIX 15.03. Failure. Markets are in trouble. Dow is down 165 points but that is surprising since with the UTIL failure a 200 or 300 point down day for the Dow would be expected. If it does not occur today, then on Monday. Things should become far uglier--unless bulls can send VIX lower or UTIL higher. Every minute that goes by brings equities closer to a significant downside flush.

Note Added 12:32 PM: Dow is down 231 points; now that is more what is expected considering the UTIL 50-week MA trap-door opened. VIX is 15.55. The Keybot the Quant algorithm is tracking VIX 15.76 as a key bull-bear level. If VIX moves above 15.76 the bulls will be bludgeoned further today and the Dow will be down three hundo. If the bulls can prevent VIX 15.76, only 21 pennies away, and keep volatility at VIX 15.55 and moving lower, then stocks should recover (bulls will be okay if VIX stays under 15.76; bears win big if VIX moves above 15.76) Keystone took profits on the quickie SDS long trade mentioned the other day comically catching the exact market top with the negative divergence analysis when the trade was entered. SDS is the 2x short play against the S&P 500. There is no use passing that dough up so the position is closed. Remember, the Keybot the Quant algorithm remains short and that maintains about two-thirds of the portfolio on the short side so there are plenty of short instruments in play currently. Keystone bot BALT opening a new long position due to its attractive positivie divergence set-up but as always, these trades are extremely dangerous and speculative. BALT was traded successfully on the long side a couple weeks ago and now price has come back down to give it another whirl. Keystone will likely add to BALT if it keeps falling.

Note Added 1:51 PM:  Here we go; VIX 15.74. The Keybot algo adjusts the VIX bull-bear line to 15.81 only 7 cents away. If VIX moves above 15.81, markets will go into a mini crash event with the Dow losing over three hundo. Market bulls must prevent 15.81 with all their might, otherwise they will fold like a cheap suit and need a weekend to recover from their beating. What say you markets? VIX 15.69....... 15.68..... bulls are fighting with all their might...... 15.70 ....... the drama continues....... 15.69 ...... bounce or die....

Note Added 2:14 PM: Volatility drops and stocks recover. VIX 15.35. Bears need VIX  15.81 to cause more market carnage. Bulls have stopped the market selling as long as VIX does not move above 15.81. UTIL is at 570.36. Bulls will mount a huge intraday recovery into the clsoing bell if UTIL moves above 573. Markets will move sideways if UTIL stays under 573 and VIX under 15.81; these are the two key market metrics to follow which are currently controlling broad market direction and these levels will remain important into Monday trading. Whoa. Here comes the VIX again moving higher....... fasten seat belts and install helmets their may be turbulence ahead........VIX 15.55..... 15.61.... 15.68.......

Note Added 8:04 PM: The bears did not have the oomph to push VIX above 15.81. UTIL remains under 573 which will cause ongoing weakness. The NYA 40-week MA failed which is a cyclical market signal now turning from a bull market to bear market. The CPC put/call ratio spikes to 1.28 which indicates a near term top at hand. Remember when the low CPC printed a few days ago, 2/20/15, that showed uber complacency in markets so Keystone called for a top within days, which occurs, then the spank down. Now the opposite with the CPC spike above 1.28 showing tinges of fear and panic which indicate a bottom very near. The CPCE did not yet spike higher so there may be more selling Monday but a near-term bottom early next week is likely and a recovery rally. The UTIL and NYA weakness signals ongoing weakness in the stock market after any very short term bounce occurs. NYA 40-week MA is 10846 and the most important thing to watch Monday at 9:30 AM EST. As NYA goes, so goes the markets. That was entertainment today. Keystone packs away the guitar and sound system until next week; don't forget to leave a little something in the tip jar on the way out.