SPX Daily Chart Overbot Rising Wedge Negative Divergence

SPX daily chart clearly shows a rising wedge where price sits at the apex. Rising wedges are bearish as well as the overbot RSI, stochastics and money flow conditions. Another higher high in price occurs so the indicators must be studied to make note of any divergences. Starting at the left hand side of the chart, the green lines show a long and strong profile, higher high in price with higher highs in the RSI, MACD line and money flow. This is bullish and forecasts another higher high in price coming in the future.

After that fast and strong October rally, the red lines for the MACD histogram and the overbot stochastics forced the November smack down. Then price started its upward trek from the holidays. In late January, price satisfied the higher highs demanded by the indicators in late October. Note that now negative divergence exists across the board--except for the RSI that wants to see another higher high. Today we receive the higher high at 1345 and negative divergence exists across all indicators--except for that pesky RSI again. See the green circles how the RSI poked a wee bit higher than the previous level? Thus, after a smack down from the negative divergence red lines, price will want to come back up again to the current highs to satisfy that pesky RSI, then the SPX should roll over for an extended move down off what should be negative divergence in place across all indicators at that time.

Note the 150-day MA green line that flattened then turned positive in early January indicating bullishness ahead (one of Keystone's secular Signals). The 20 MA crossed back above the 50 MA in late December also indicating bullish fun ahead. Note the pink 200-day MA flattening out. Watch this carefully since the 200 MA sloping positively will be a big feather in the bulls cap; if the 200-day MA moves flat and turns negative again this is obviously signaling big trouble ahead. Projection is for a price move down now, either starting Monday or Tuesday, first targeting the 1320's, then, depending on how the buy-the-dip crowd responds, perhaps a move to 1290-1310, then back up to the current price highs and a bit higher to satisfy that pesky RSI.  This behavior will also permit the weekly chart to line up with negative divergence after price comes back up on this daily chart.

In a nutshell, price should move sideways to sideways down for the  forseeable future, intial pattern of down then back up to 1330-1350, then roll over. 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.

INDU Dow Industrials Daily Chart Price Matches High from Four Years Ago

Another feather in the bulls cap today comes with the Dow Industrials price exceeding the April 2011 close thus placing the Dow at levels not seen since early 2008, four years ago!  Note the difference between this Dow chart and the previous Nasdaq Composite posted.  The Nasdaq 100, XLK and Nasdaq Composite charts are all at the 2001 highs. The Dow will need to exceed the 14000 plus high at the October 2007 top to ever dream of exceeding numbers from over a decade ago. For now, 4-year highs must do.

Also of interest is that the Dow exceeded the closing high from 4/29/11 at 12811 but price did not exceed the intraday HOD, however, from that period at 12928 on 5/2/11. Thus, keep an eye on 12928 in Monday's action.

Note the purple line H&S (head and shoulders pattern) that reached its target at 11K, then the green H&S formed with a neckline at 10.5K that targeted the 7000-ish area.  At the bottom, the blue inverted H&S led the way back up targeting this current 12500-13000 level. A pull back is needed to rest from this obscenely strong rally move but another matching high should occur afterwards.  This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor befofe making any investment decision.

COMPQ Nasdaq Composite Daily Chart Shows Price Matching 2001 Highs

Today the Nasdaq Composite, COMPQ, a broad-based index, has joined the XLK Technology Sector and NDX Nasdaq 100 with printing highs not seen since 2001, eleven years ago! This is a huge feather in the bulls cap and these new eleven year highs verify the strength of the tech sector, which further launched off the AAPL earnings in January. This tech strength, along with accommodative China news, and a quiet Europe lately, has created this upside push.

Markets are toppy currently and a pull back is in order. With the recent momo, however, prices will likely revisit these highs again to burn off the upside energy in place. 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 Midday Market Action 2/3/12

The Monthly Jobs Report was a blow-out with the unemployment rate dropping to the low 8% area, at levels not seen since March 2009. Futures sky rocket higher, the S&P futures are up 0.91% with the Nasdaq up 0.89%. Note that the projected move up for the open comes without tech leadership, thus the upside move in the markets should be limited.  APKT earnings disappointed and this is probably creating some tech hesitation today.  Thus, the markets are set for a large opening pop but perhaps many traders benefiting from the long bull run will be anxious to consider their great fortune and hit the sell button. The industrials and consumer discretionary sectors may pop proportionally higher at the open as compared to the broad markets due to the blow-out jobs number.

For broad market direction a bull-bear battle continues and UTIL and CRB will decide the outcome. Very simply, if UTIL moves above 452.66, this verifies more bullish fun ahead and extended market upside. If the bears can push the CRB under 309.50 that will verify broad market downside ahead. In addition, at the close today, watch to see if UTIL closes above or below 453.69.  This is the UTIL level of interest to watch for next week, already identified by Keystone's algorithm.  Thus, at 4 PM today, if UTIL closes above 453.69, the bulls should start next week in a happy mood.  If UTIL closes under 453.69 at todays close, this will cast a dark cloud over Monday's trading action.

For the SPX today, the bulls only needed to push above 1329 to accelerate the upside, and that appears handily beat by the projections from the futures.  Thus, the SPX should test 1331 and 1333 resistance in quick order. Interestingly, Keystone left the door open for this higher push, if you look back at the SPX daily chart, but study that chart closely after the close today to see if negative divergence is in place (it likely will). If so, that will signal a bearish bet at today's close to be an attractive idea. The market bears today need to push the SPX under 1322 to start any downside momo. This will only come into play if the profit-taking runs amuck and creates a sharp pullback. A move thru 1323-1328 is sideways action.

Lots of cross currents remain in these markets. Do not become complacent due to the encouraging job numbers. Company earnings are a disappointment with many companies guiding lower but the markets continue to brush this news off. Good news is good news and bad news is good news.  Traders do not appear concerned about the Greece resolution with bondholders since that goal line was moved so many times. Macro events in Europe and China can occur at anytime. Caution is warranted in these low volatility, low volume markets.

Note Added 2/3/12 at 9:32 AM:  UTIL makes a beeline for 452.66, now testing. How does Keystone always know these numbers ahead of time? This UTIL 452.66 level will tell you whether the bulls or bears win today.

Note Added 2/3/12 at 9:41 AM:  An overhead resistance cluster exists for the SPX at 1337-1339.  1337 is extremely strong resistance and would be very bullish if the close is above 1337.  Every minute that the SPX stays over 1337 adds to market bullishness.  UTIL received a smack down after testing 452.66 but the day has just begun; this provides the market bears some happiness.  SPX is up 0.91% and the Nasdaq is up 0.95% so the tech leadership has not faded today, this will provide at least steady sideways support today for markets. The Greece resolution appears to be pushed forward again with a deal not even likely for Monday, but markets are not phased. SPX:VIX ratio is at 78 far above 68 so the bulls have little to worry about and even a pull back now would not have any sustained bearish effects unless the ratio loses the 68 level. The market bulls are popping the wine corks, starting the weekend early, and already searching for lamp shades to wear as they dance on top of the trading desks.

Note Added 2/3/12 at 10:47 AM:  SPX punches thru resistance without losing a step, placing the 1337-1339 resistance cluster in the rear view mirror and then attacked 1341 R.  This crumbled as well with price hitting 1343, pulling back to back kiss the important 1341, now support, and then the successful back test leads higher.  SPX enjoys a bull day with a 1342 handle currently.  SPX 1344 is strong resistance, then 1347 and 1349 and 1354 next. The Nasdaq leads the SPX to the upside so this continued strength in tech is providing bull fuel.  Typically, the long players in technology playing Q4 strength start to cash out the second week of February but after profiting from the large upside move in tech over the last couple months, a smart trader would take the money and run now.  On the SPX daily chart with this price high occurring today, all the indicators remain firmly negatively diverged indicating that market selling will follow along close behind today's uber bullish behavior.  The SPX daily chart will require studying after the close.  NYAD spiked over +2000 so this will set up for a market pull back either later today or Monday. NYHL shows an extremely interesting print, at 295, very elevated but short of the prints two days prior--when the markets were lower.  In other words, the new highs are diverging and not confirming this broad market rally move higher, and in fact, is showing that a market pull back is preferred.  The TRIN is at 0.94, near the neutral 1.0, very surprising since if this bull move had legs, the TRIN would be expected to be in the 0.5-0.8 range.  UTIL has collapsed since the opening test of Keystone's all important 452.66 number.  This is a big feather in the bears cap. Strong sustained rallies occur as the utilities print weekly uptrends week after week. The utilities are signaling that this is over which is very bearish for markets moving forward despite today's huge market move. UTIL now printing 448.80, about four points under the critical number for this week and five points under the critical ute number for next week. UTIL is down -0.2% while the markets are up well over a percent today. Interesting markets indeed.

Note Added 2/3/12 at 11:09 AM:  SPX testing that strong 1341 area again. 1341 was resistance turned support after price punched up thru this morning. Now price is deciding whether 1341 will serve as R or S moving forward. Broad markets will probably trail lower after the European close. UTIL trying to fight back to even on the day. Tech strength continues to lead the markets favoring bulls.

Note Added 2/3/12 at 11:42 AM:  SPX 1341 support holds. Price now traveling sideways thru 1341 S and 1344 R.  UTIL remains under 450.

Note Added 2/3/12 at 12:46 AM:  SPX is now attacking 1344 R. See if it can poke up thru, or not.  TRIN is 0.77 more of what would be expected for a bullish day.  Tech is leading the upside and whipping the bears hard. Volatility, VIX, is at 17, see if it continues to hold the 16.78-16.80 level today, or not.

Note Added 2/3/12 at 1:27 PM:  SPX 1344 R is holding, so far. Small caps (RUT +2.2%) and tech are running strong today.  The bears are getting beat with a baseball bat but instead of 'Louisville Slugger', the printing reads 'Technology'. NDX (Nadaq 100) is up 1.4% and the COMPQ (Nasdaq Composite) is up 1.6%. VIX is above 17 and moving up. Copper strong, gold weak. XLF (financials), XLI (industrials) and XLY (consumer discretionary) are outperforming to the upside on the strong jobs number. The wine is flowing like water today for the bulls, the party rages on. Here comes the SPX for another look at 1344 R......

Note Added 2/3/12 at 1:55 PM:  SPX failed at 1344 R so price travels sideways thru the 1341-1344 range. For the Nasdaq Composite today, COMPQ, price is currently at 2903.33, at a level not seen since 2001, eleven years ago. Keystone provided the charts for XLK technology sector and the NDX Nasdaq 100 over the last few days showing how price is now matching highs from eleven years ago. The Nasdaq Composite is a broader based index so this would place a feather in the market bulls cap should the COMPQ close above these levels; 2887 (HOD 5/2/11) and 2873 (4/28/11 close). For the Dow Industrials, INDU, this price level is breaking to highs not seen since 2008 just before the waterfall crash. The Dow is now printing 12844.41. The bulls will receive a big feather in their hats if the Dow closes above 12928 (HOD 5/2/11) and 12811 (4/29/11 close). The Nasdaq is above both of the levels shown while the Dow is currently only above the prior closing high but not above the intraday high. Also of interest is that the infamous SPX 666, the satanistic low after the panic sell off in early 2009, has now doubled off the low, 666 x 2 = 1332.

Note Added 2/3/12 at 2:16 PM:  SPX price coming up to test 1344 R again. UTIL moving up now printing 450.80.

Note Added 2/3/12 at 3:12 PM:  Tech keeps pushing the markets higher; as long as tech leads, the wine is flowing like water. SPX keeps fighting 1344 R.  The market bears are trying with all their might to stop this upside orgy by preventing a breach of 1344.  UTIL is at 450.87 remaining under the 453 and 454 levels so this is actually market bearish for the days and weeks ahead.  COMPQ is printing 2905, about 20 to 30 points above the important 2873 and 2887 levels. INDU is printing 12856 which places it 45 points above the all-important 12811 level but below the 12928 level. Lots more drama ahead as the close is 45 minutes away.

Note Added 2/3/12 at 4:45 PM:  The market bulls show no mercy today, slapping the bears from start to finish.  The Nasdaq Composite, COMPQ, now closes at highs not seen since 2001. The Dow Industrials, INDU, closes at a 3 1/2 year high although it did not close above the intraday HOD that occurred on 5/2/11 at 12928. Nonetheless, the markets continue to exhibit impressive strong bullishness driven by technology.  Financials, a large consumer of technology, ran today as well. The SPX is up 1.5% today, closing above the sturdy 1344 resistance, that now becomes support.  All news is perceived as good news by traders and the jobs report delivered the cheer from early this morning.  China promising support for Europe this week, as well as the strong China PMI mid-week, helped the bullilsh momo.  Treasury yields jumped today showing that money moved out of bonds into stocks.  There is always two sides of the story. The utilities triggered an extremely negative indication this week that no one will report in the mainstream media.  UTIL closed at 451.36 below the 452.66 number that now indicates the utes to be a in a weekly downtrend after a multi-month move up.  When the utes roll over it portends bad things coming for the broad markets.  Next week the 453.69 level is the line in the sand for UTIL so price begins two points under.  If UTIL stays under 453.69 thru next Friday, the broad markets will weaken and sell off. The uber low TRIN at 0.59 and NYAD printing over +2000 today, as well as the NYAD and NYHL divergences, all indicate that a pull back for the broad indexes would be prudent.  The Greece situation is unresolved but no one cares. Europe is quiet, relatively, these days, so out of sight out of mind.  Earnings are meeting lowered estimates, at best, with weak guidance, but again, markets are wearing rose-colored glasses.  SPX daily chart shows negative divergence so buying long today does not appear the correct move. The RSI, however, sneaks out a higher high so after a sell off occurs, which should be any time, the SPX will want to come up to these highs again. The question will be when the buy-the-dips crowd reenters and thinking out loud at this juncture the 1320's are an attractive target.

European Bond Yields 2/3/12

The European bond market continues to settle down in recent days.  The Italy 10-year moved as low as 5.55%, remaining under 6% for four days, with a fourth straight week of rises (bond price up yield down). Spain is on a two-week winning streak with yields remaining below 5%. The Greece talks continue along, each day a promise, but more confusion develops instead.  The Grece talks have become a joke, but unfortunately, none of this is a laughing matter.

10-Year Yeields:
Greece 34.07%
Portugal 14.44%
Hungary 8.79%
Italy 5.60%
Spain 4.93%
Belgium 3.47%
France 2.85%
U.K. 2.11%
Germany 1.84%
U.S. 1.82%

The 10-year Gilt is now at 2.11%.  U.S. 10-year yield is now a smidge under Germany showing money preferring both as a safe haven with a slight advantage to the U.S. Hungary yield moved lower 10 basis points over the last 24 hours. Perhaps the ECB saw trouble brewing and focused their bond buying approriately. The Portugal 2's, 5's and 10's are 17.91%, 19.10% and 14.44%, respectively, thus, inverted across the 5's and 10's.  Watch the 2's, the ECB was likely intervening with purchases to bring the 2-year yield lower, but the 2-year is an important indication moving forward.  Also, watch the following levels to indicate trouble afloat; 15% for Portugal, 8.9% for Hungary, 6% level for Italy, 5% for Spain and 3% for France. Keystone continues to suggest watching Hungary closely.

Eurozone retail sales data is weaker than expected this morning further validation of a European recession occurring. The big event today is the U.S. Monthly Jobs Report at 8:30 AM EST, less than three hours from now.

Note Added 2/4/12 at 8:46 AM: Hungary seeks 15-20 billion euro IMF/EU credit line as per Reuters News Service. We could see it coming.

NDX Nasdaq 100 Daily Chart Matches 2001 Highs Rising Wedge Overbot Negative Divergence

NDX reaches the highs of 2001 about eleven years ago. Keystone pointed out the XLK, technology sector, a few days back, so no surprise that the top tech companies have propelled the NDX to the multi-year high. Note the various techanical analysis chart patterns that have played out, pink and green channels, the orange inverted H&S, the teal H&S, and all the various positive and negative divergences that forecasted the bottoms and tops, respectively.

Today's price helps form that purple rising wedge which is bearish. The negative divergence should create a spank down now but the green lines over the last four months show a desire to make another matching high after a pull back, thus, the projection is shown by the black line, price is topping now, so sideways to sideways down moving forward. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

UNG Natty Gas Weekly Chart Tweezer Bottom Positive Divergence

UNG price has finally worked downwards to bounce off the lower rail of the channel. Note the neon green box showing the tweezer bottom (the two candle shadows stick out lower giving the appearance of tweezers). UNG has matched the intial price low from two weeks ago and note the strong positive divergence. The long red candles show the capitulative selling over the last couple weeks where long players held, until the pain was too great, so they yelled 'Get me out!'

The way the game is played, if you remember, is the pundits across media told traders that natty gas price is going under one dollar so any long that held thru the bounce, only to see price drop again, finally capitulated with these negative thoughts in mind. Guess what? The hedgies and institutions just so happen to want to be nice guys and they will take those shares off your hands, doing you a favor since they simply want to help. Yeah, sure. Note the huge buy week candle last week illustrating the huge buying, much of it short-covering, in UNG.

Thus, Joe Sucka rides natty south from October to January, and gives up and capitulates at the bottom while the 'smart' money comes in and buys ready to ride the projected sideways to sideways up move from here forward. The hedgies own the shares now and Joe Sucka is holding the bag.  Natty remains Keystone's favorite commodity for 2012. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

UNG Natty Gas Daily Chart Positive Divergence

Keystone liked the long natty play with UNG in the 7's, thus, as the ole Wall Street adage goes for a position going the wrong way, he must love it in the 5's. The final drastic leg down was weakness in aluminum, fertilizer and other industries which are high consumers of natty. The mild winter has also added to plentiful gas supplies. Thus, more supply, lower price. Perhaps additional companies will cut back on drilling as in recent days which then will help to pinch supply and boost price.

Note the first bottom in mid-January. The UNG chart is very attractive on the long side with positive divergence in mid-December but, as Keystone mentions time to time, sometimes divergences are divergences until they aren't. In December and January the price collapse occurred and the lower lows with the indicators pointed towards continued pain. The red lines with the indicators show that another price low was needed to test the mid-December lows, those price lows occurred over the last couple days.

Look at the powerful positive divergence blue lines that launched price. This is a nice base forming now. Initial target is the gap between the neon green lines and also the confluence of the 20-day MA and horizontal support at 5.70, then 6.0 horizontal support. Projection is sideways to sideways up for the forseeable future. If long natty, pray for cold weather. Punxsutawney Phil must own natty futures since he saw his shadow today forecasting six more weeks of winter.  This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

SPX Weekly Chart Upward-Sloping Three-Year Channel

Just when it looked like price would not be able to regain the channel, bingo, price is back inside the safety of the channel for the last three weeks. Price collapsed thru the bottom rail of the channel as the August waterfall crash occurred.  The SPX has been in a fight ever since to regain the channel, and as shown by the first pink box for the October rally, popped up over the lower rail but fell thru again during the November market sell off.

Price is back up again into the second pink box and has not yet back tested the bottom rail.  That lower blue trend line is uber important so price has to show it respect, just like at the first pink box, and come back to test the bottom rail.  At that time price either decides to collapse back thru once again, or to bounce from the bottom rail and signal that the market bulls are back inside the channel for some time to come.

The 20-week MA under the 50-week MA is very bearish. From peak to peak, October to now, note the corresponding green lines for the indicators, all long and strong, bullish.  The lower three indicators do hint at negative divergence shown by the short red lines, but overall the indicators are saying they will likely want to see at least another test of these current highs or higher in the future, after a sell off.

Projection is for price to move down into the 1290's to test the bottom rail (this also satisfies the current negative divergence pointed out in the minute and daily charts), then a bounce back up to current levels then roll over for the weeks and months to come. After the projected near term sell off the next move up in price could very well mark the top for the year, but, first thing is first, a back kiss of the lower rail is needed. This information is for educational and enterntainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

UTIL Utilities 5-Minute Chart Descending Triangle

Utilities moving along a descending triangle.  Price failure would occur at about 490.70, the base line of the triangle.  The target would be the same distance as the vertical side of the triangle, about three points, or 447-448. This is far below Keystone's critical 453 level and a failure is another feather in the bears cap.  The clock will probably run out in today's session before price decides. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your finanical advisor before making any investment decision.

Note Added 2/2/12 at 4:01 PM:  UTIL closes at 449.84, on top of the baseline.  Have to wait until tomorrow to see if price failure occurs (price drops under the baseline at 449.70-ish).