UTIL Utilities Weekly and Daily Charts 50-Week MA Failure

A major tool of Keystone's gave way today but the outcome was not as expected.  Typically, once the UTIL 50-week MA failure occurs, within one-half hour's time, the markets are expected to go into free fall. Alas, not today. This drama is ongoing, Keystone is investigating with an oil can to see if the market trap-door did not open due to rusty hinges. On the daily chart price collapses thru the 200-day MA and prints at levels not seen since April.  The pink H&S is in play with a target in the 425-430 area.  The selling is fierce as the volume candles show, rats leaving a sinking ship.  Taxes are probably going up no matter who wins the presidency so trader's are locking in profits, taking the money, and gittin' out of Dodge.  Money flow shows positive divergence but this may fail tomorrow, the other indicators are weak and bleak wanting to see lower numbers.

The red circle on the weekly chart shows the 50-week MA failure today, this is a big deal but the markets reacted with a yawn.  The prior red circles show previous ruptures of the 50-week MA.  Summer 2010 the failure forced Chairman Bernanke to announce QE2 to stop the deflationary spiral occurring.  The August 2011 waterfall crash resulted in the Fed pumping more Operation Twist talk and the ECB announcing the LTRO1 and 2 quantitative easing programs that saved the markets this time. The broad indexes topped in April this year. We watched the top form and roll over as Keystone described the progress during March-May. But the drop in the broad indexes took place without the utilities sector rolling over. Look at how earlier this year traders flocked to dividend stocks and kept pumping utes higher. Keystone highlighted this at the time and forecasted the markets to return to their highs moving forward since the utilities did not lead lower. Lo and behold, the broad indexes recovered with the SPX printing the 1476 intraday high.

Interesingly, the utes topped as August began. Keystone has pointed this out every step of the way. Since utilities rolled over first, three months ago, and have led the way down, this is extremely ominous for the broad indexes typically forecasting a large drop for the markets ahead.  Here we are now with the UTIL charts above in horrible shape and an H&S pattern in progress. Keystone looks back 15-weeks ago to compare that close to the current weekly close. As long as the trend is up, the market bulls are happy.  Keystone highlighted how this trend changed over the last month and the weekly trend is now down.  This is bearish but a second part to the equation is if the 50-week MA fails. This firmly locks in serious market bearishness. Thus, Keystone was excited to see some wild downside action, but alas, the trap-door was stuck.  This is the back drop of the ongoing action. Projection is lower prices for UTIL ultimately moving thru the 410-440 sideways channel in the weeks and months 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.

Keystone's Midday Market Action 11/5/12; Presidential Election Tomorrow

RTH dropped under 44.45 but is now recovering. The big shocker is the utilities sector with UTIL dropping like a stone, now printing 465.12, no check that, under 465, it sliced straight thru the 50-week MA which should act as a trap-door for the markets. The SPX fell under 1413 so more downside is expected.  UTIL rupturing the 50-week MA is very serious. Watch the markets closely, they may roll over at anytime. The Nasdaq is not leading the downside so perhaps the bulls can avoid the cliff edge. RTH is hanging on by a thread. Hang on tight.  SPX is at 1411.

Note Added 11/5/12 at 9:42 AM:  RTH is 44.39.  UTIL 464.11 is under the 50-week MA at 466.39.  The 8 MA stabbed down thru the 34 MA on the 30-minute chart signaling bearishness for the hours and days ahead. The utes are omnious, the markets may break down. Use extreme caution. SPX is 1410.

Note Added 11/5/12 at 9:45 AM:  VIX is well over 18 at 18.32.  UTIL now lost the 464 level. This is a serious warning. Keep focused on the markets over the next one-half hour, bad things may happen. COMPQ is at 2978; the 200-day MA is 2980. Tech and the broad markets are now moving coincidentally lower.  Watch to see if the COMPQ accelerates lower. AAPL is up 7 at 584 but remaining under its 200-day MA at 589.42. RTH is 44.35.

Note Added 11/5/12 at 9:51 AM:  Keystone's UPS 20 and 50-Week MA Cross Indicator shows the 20-week MA stabbing down thru the 50-week MA triggering a Cyclical Bear Market moving forward. This is the first change for this signal since it said a Cyclical Bull Market had started in January, 10 months ago.

Note Added 11/5/12 at 9:55 AM:  UTIL is at 463.34, breaking down. VIX is at 18.42 printing today's high thus far. RTH 44.37.  The SPX is down -0.3% but the COMPQ is only down -0.1% so tech is not leading lower.  AAPL remains up 7 and is probably the only thing holding the markets together right now. It is extremely surprising to not see the SPX down 10 or 20 handles right now.  Perhaps the ISM services data in a couple minutes will serve as a trigger?

Note Added 11/5/12 at 10:36 AM:  RTH is tapping at 44.45 trying to recover. The bulls are focusing on retail and tech, AAPL, semiconductors, as a means to stop the downward slide. The SPX is coming back up to test the 1413 resistance, which was support when the day started. Very perplexing to not see a full-fledged market breakdown today. Nasdaq and RUT (small caps) are positive. The RTH up and over 44.45 provides the bullish lift right now. UTIL poked back above 464, now 463.90.

Note Added 11/5/12 at 10:58 AM:  RTH moved above 44.45 creating the broad market lift. Bulls are also targeting the semi's, the SOX 379.50 bull-bear level, now at 375.37. Markets idle along flat currently. The mystery continues, perhaps the central bankers entered the markets today? AAPL is up 9 but remains under the 200-day MA. Nonetheless, tech is leading on the upside so this helps the bulls maintain market buoyancy. VIX is at 18.29 now testing the 20-week MA resistance at 18.32. COMPQ is at 2993 recovering above the 200-day MA at 2980. Use RTH 44.45 as the main guide right now. The current print is 44.57 helping the bulls. Keystone took a couple heart pills from this erratic and unstable action. A slice of pie may aid in assessing the situation.

Note Added 11/5/12 at 1:06 PM: UTIL now has a 461 handle no doubt some of the weakness is due to the ongoing hurricane tragedy. This breakdown in utes is extremely bearish. RTH drifted lower to 44.47 but recovered again, now printing 44.51, stopping the donwnside from acceleratiing. SOX does not have as much gas as this morning. AAPL is now up 3. Tech continues to not lead lower which also helps maintain the market buoyancy. The COMPQ (tech) and RUT (small caps) are sligthly positive while the INDU (blue chips) and SPX (broad market) are a hair negative.  Volatility is moving higher printing at the highs of the day heading towards 19. Considering the enormity of tomorrow's election, markets may be content to stumble sideways.

Note Added 11/5/12 at 1:44 PM:  RTH is 44.56 holding above the 44.45 danger line, so markets stumble sideways as the tension over the presidential election mounts, and the victims of Hurricane Sandy suffer.

Note Added 11/5/12 at 1:55 PM:  Time to play the latest hit parlor game, Guess the President, which requires a look at the metrics that hint at either a President Obama victory, or Governor Romney victory.  Starting with the 12 stocks assessed this morning in the healthcare sector, they are 9 to 3 in favor of an Obama victory.  We see the utes collapsing today, as well as REIT"s and telecom's moving lower, all divvy stocks. DVY and SDY divvy ETF's are both down over the last couple days. Thus, if Obama is victorious, the capital gains taxes will be higher, so trader's will want to cash out this year and pay lower taxes, so the divvy stocks would move lower, hence, this indicates an Obama victory.  Coal stocks are flat to higher which is a feather in Romney's cap since Obama has the war on coal ongoing. The dollar is higher which is in favor of Romney since the anticipation is that Romney would lessen all the QE, thus the dollar would regain strength. So all this results in a 2-2 tie. Looking at the banks, the large 'too-big-too-fail' central bankers' favorite sons, JPM, C, BAC, etc..., all down today. The XLF is down but the KRE regional index is flat to up. Traders disagree over the potential bank reaction to the election. Keystone believes that Romney will favor the regional banks over the big boys, so the weakness today hints at a Romney victory. The regional banks built a strong nation with the local banks handling mortgages and other steady-eddy products, on a personal level, unlike the big boys which are huge hedge funds in disguise, taking huge risks and more concerned about their stock market plays via algorithms rather than Aunt Nellie's question about current CD rates. With an Obama vicotry the big banks will get bigger, Keystone estimates that over 3,000 regional banks will disappear, each one either closing or gobbled up by a large conglomerate. The election will decide which direction the banking sector moves and of particular interest is that many likely do not understand the effects of each outcome on the financial sector and realize that the result is counterintuitive to what they are actually expecting (Romney is likely better for regional banks and not for the big banks while Obama will allow the big bank era to continue). So the Guess the President game is pushed under the couch for now.  The stock movements today do not hint at a clear winner either way, both sides are well represented as explained above. However, in one more day, all the ties end, and a victor will emerge, and the stocks will react in kind. If Obama wins, the coal sector carnage will be epic with ANR, ACI, BTU, CNX, KOL, etc... beaten and bludgeoned beyond recognition. If Romney wins, these coal stocks will be exalted to greatness. Type 'Presidential' in the search box above and Keystone's 10/8/12 article will come up that describes the trades in play for an Obama versus Romney win.

Note Added 11/5/12 at 2:11 PM:  RTH is at 44.58.

Note Added 11/5/12 at 3:18 PM:  RTH is at 44.56. The utilities are really giving it up.  With the UTIL 461 handle today, a new low has been printed that goes all the way back to test the levels in April-May this year, seven months ago. Watch SOX 378.60, price is at 377.98. The bulls will gain strength with a very strong finish higher for the broad indexes if the SOX moves above 378.60.

Note Added 11/5/12 at 3:40 PM:  Holy smokes, the semiconductors catapulting higher. SOX at 378.88 markets should moive several handles higher. SPX now 1418. SPX is testing the strong 1419 resistance. Major indexes all positive now. RTH 44.64.  This is wild action today, craziness in front of the election.

Note Added 11/5/12 at 4:25 PM:  That was a wild finish. Tech and semiconductors saved the day for the bulls today, however, in the final eight minutes, the SOX fell on its sword dropping back under 378.60 to stay in the bear camp, closing at 378.38.  RTH closes at 44.61 staying above 44.45 preferring the bull camp.  Thus, tomorrow's market direction is determined by retail and semi's, the two sectors most greatly effecting the broad indexes right now.  The bulls win if SOX moves above 378.60.  The bears win if the RTH drops under 44.45. Check them at the opening bell in the morning. The SPX was held down by the 1419 R. The utility sector failure (UTIL falling thru the 50-week MA) is uber important and bearish. Perhaps this trap-door market indicator has rusty hinges and is stuck only to give-way suddenly tomorrow? Keystone's UPS 20 and 50-Week MA Cross Indicator triggered today signaling a Cyclical Bear Market for the weeks and months ahead. Very odd market behavior today but perhaps it is expected considering the next leader of the Free World will be decided tomorrow.

Keystone's Morning Wake-Up 11/5/12; Presidential Election Tomorrow

The economic data is thin this week until Thursday and Friday. The U.S. presidential election is tomorrow so markets are waiting for the answer.  The media has already pronounced President Obama as the winner and has moved on to the fiscal cliff worries.  The reality is that the contest will probably be a lot closer than anyone thinks.  Some traders commented on how the markets dropped Friday due to the markets anticipating an Obama victory. Keystone wrote about the effects of the election on the markets a couple weeks ago (simply type "Presidential" into the search box above to review that information). If the president is reelected, then HCA, HMA, THC, CYH, LPNT, UNH, ISRG, CERN and MASI should all bounce. CI, AET and WLP should sell off.  On Friday, it is a split decision with these stocks; six went the way as would be expected but six did not. The answer is that no one knows what is going to happen.  But the early tell will be from the East Coast results tomorrow evening; watch Florida, North Carolina, Virginia, Pennsylvania and Ohio. If Romney takes Florida and Virginia as the results come in, then it is game on for a long evening. If Obama takes either Florida or Virginia to start the evening's results, Romney's hopes will be fading quickly. Keystone does not have a dog in this hunt, both candidtates are the same so it does not matter who wins, both are Keynesians that promote war, and the debates prohibited other candidates from participating.

An interesting concept on the polls (which slightly favor the president and is the basis for the majority of pundits proclaiming an Obama victory tomorrow), that no media analyst talks about, is that much of the polls are done thru contact via land lines.  Think about it. The working professionals, typically republicans favoring Romney, use Smartphones these days and have long since abandoned a land line in their homes.  The less well-to-do, however, and typically the democratically-leaning voters, many seniors, continue to display the land line on the kitchen wall or on the hutch in the hallway. The common sense thinking is that the polls would be heavily sampling democrats versus republicans and the flat to slight lead by Obama is actually reflective of Romney leading since perhaps two-thirds of the voters called are probably democrats and one-third republicans (Keystone pulls these numbers out of thin air).  Further, the bluster that Obama has already won may cause democrats to simply sit home since everyone is saying it is already over.  We will know if this hypothesis is correct, or not, tomorrow. Either the polls are correct and Obama squeaks out a win without too much effort, or, this hypothesis is correct, and Romney will squeak out the win and that will show early on with Romney winning Florida, North Carolina and Virginia. It is a circus now and will only reach a fevered pitch through the night into tomorrow. Strike up the caliope and bring the jugglers on stage to start the festivities. We are all part of the carnival whether you want to be, or not.

Back to the market technicals, something that makes far more sense. RTH 44.45 will tell you the market story today.  Remember the dramatic Friday close with the retail sector stumbling lower tagging Keystone's RTH 44.44-44.46 target area? The bulls finished one penny above at 44.46, so as the bell rings, watch the reaction. If the RTH stays above 44.45 and heads higher today, the market bulls will rule the day. If RTH fails 44.45, the broad indexes will take another leg lower with the SPX moving into the low 1400's.

Note the euro weakness that we highlighted last week.  Trader's may be sniffing out a rate cut by the ECB on early Thursday morning before the U.S. open. That would weaken the euro, and equities.  Europe has no choice but to weaken the euro since they need to boost manufacturing and exports as a means to create growth to dig out of their debt mess. In addition, the BOJ is weakening the yen thru intervention which drives the dollar/yen pair higher, thus the dollar basket, $USD, higher, now well over 80, and the euro lower, since the dollar and euro move opposite each other. Pay attention to the following asset relationships this week that have been in place a long time; Euro down = dollar up = dollar/yen up = copper down = commodties down = gold down = equities down = Treasury price up yields down.  And, visa versa, euro up = dollar down = dollar/yen down = copper up = commodities up = gold up = equities up = Treasury price down yields up. The euro is at 1.2779, falling under the psychological 1.28 this morning and now under the 200-day MA.  Watch the 20-week MA support at 1.2646. The Germany 2-year yield slipped back into negative territory as traders seek safety. The U.S. 10-year yield is 1.68%.

SO missed on earnings so this should negatively impact the utilities sector. Watch the 50-week MA at 465.63 for UTIL which represents a trap-door for the broad indexes. If UTIL loses 465.63, it is very likely that the markets will drop into free fall in short order. UTIL begins at 469.78, only four points away from causing market catastrophe. Watch to see if the 8 MA stabs down thru the 34 MA on the SPX 30-minute chart since that would signal bearishness for the hours and days ahead. Watch Keystone's cyclical indicators such as the SPX 150-day MA slope and the UPS 20 and 50-week MA cross as highlighted this weekend. For the SPX today beginning at 1414, the bears only need one measley point, to drop under 1413, and this will accelerate the downside into the 1400's. The 1406 and 1403 levels are very strong support and if they fail, bad things will happen for the markets, SPX in the low 1390's would be a given for starters. The bulls have to stop the downward slide that began Friday and this is accomplished by preventing the SPX from falling under 1413 and the RTH from falling under 44.45. In a nutshell, RTH 44.45 and SPX 1413 tells you the broad market direction today. The futures are flat, S&P's dancing a point or two lower, but then moving a point or two higher. Dr. Copper remains ill and needs further medical attention.

Keystone's Key Events and Market Movers for Trading the Week of 11/5/12

Keystone presents the following underlying market currents, sometimes subtle, sometimes turbulent, that move global markets in real time.  The key dates and times below typically correspond to market pivot points.

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week: The U.S. Presidential election is Tuesday.    The fiscal cliff is 57 days away, 8 weeks.  Earnings for the shippers are in play this week so watch the Baltic Dry Index.  Retail sector earnings are also important. Economic data is thin, Consumer Sentiment is important on Friday.  The main event is obviously the election, then followed by the ECB on Thursday morning.  The European news flow directly dictates global market direction. The ECB Rate Decision and Press Conference is Thursday morning.  Europe must cut rates to weaken the euro and help the continent grow out of the debt mess. If the ECB cuts, the euro will drop and so should equities. If the ECB stands pat, the euro will be flat to up as well as equities.  The Spain bailout request drama continues. Spain will likely delay the bailout until December and perhaps a package deal for Spain, Greece and Cyprus will emerge. The ECB’s bond-buying program cannot be unleashed unless Spain requests the bailout but Spain does not want to give up sovereignty by accepting conditionality.  The SPX 1403 level represents the Draghi put supporting the markets where the ECB’s OMT bond-buying program was announced.  A flight of deposits out of Greece, Spain and Italy is ongoing which may lead to bank runs.  Spain’s bad loan percentage is now over 10.5% and growing.  European riots and violence are worrisome with events occurring in Greece, Portugal, Spain and France. The banking union is very important but European leaders do not appear to be making progress.  Merkel likely wants Greece to stay in the euro until her election in the Fall 2013.  Watch for further China easing measures such as lowering rates or triple R’s which will bounce copper, commodities and equity markets, but, do not hold your breath.  China appears hesitant to act since they correctly worry about the commodities inflation and asset bubbles that will be created (Chairman Bernanke incorrectly defends QE saying it does not create asset bubbles). Oil price should remain buoyant as the violence remains or escalates in the Middle East but overall, the weak global economy is driving the oil price lower.  WTIC oil has an 85 handle now.  Oil price dropped last week as rules are relaxed on bringing oil and oil products in faster to help the Hurricane Sandy victims.  The SPX moves in the same direction as oil.  The ocean shipping industry earnings this week will provide a gauge on the strength of the global economy.  The retail and infrastructure sectors are also important this week. JWM tells you if the rich are still spending, or not. The earnings are about as would be expected this season but the bottom lines are barely beating while the top line revenue numbers are missing, so this does not project good times ahead. In addition, major companies are canning workers which will help those stock prices short term but the ramifications to the economy over the intermediate and longer term are worrisome. Further, many stock buyback announcements are occurring and this actually forecasts lower stock prices two or three months out. The weak copper, utilities, transportation stocks, shipping sector and tech and semiconductor industries indicate a weak global economy. The weak behavior in the tech (COMPQ) and small cap (RUT) market leaders is signaling trouble ahead so watch to see if this trend continues.  Watch AAPL closely moving forward since it has a huge impact on tech and the markets. As AAPL goes, so goes the markets.  The VIX continues to climb which will lead to large and wild intraday and daily swings in the equity markets.  Congress is on vacation until after the presidential election; markets are typically bullish when Congress is not in session but considering the seriousness of the impending fiscal cliff, Congress is creating market negativity on a continual basis moving forward. Keystone’s Eclipse Indicator targets this period from now thru the end of the year as having potential for a large market selloff, especially over the next couple weeks and then the period between Thanksgiving and Christmas. A Bradley window is open from now thru Thursday, 11/8/12, for a potential market trend change to occur.  Another Bradley turn is 11/14/12 so a turn window will be open from 11/7/12 thru 11/21/12 with a special focus for a turn occurring between 11/9/12 and 11/16/12.

·         Sunday, 11/4/12: G20 Finance Ministers meet in Mexico today and tomorrow.

·         Monday, 11/5/12:  Monday’s are typically down days in recent weeks.  Earnings: ALTI, AWR, BRKR, CLNE-natty, GNOM, ED-ute, CTRP, CUR, CUTR, EGLE-important for shipping and the Baltic Index, ENOC, EOG, FTEK, HUM, ICE, KITD, MTW-infrastructure, MDR-infrastructure, MUX, MYGN, OCZ, OSIR, PAR, PBT, SABA, SIGA, SOHU, SO-ute, STEM, SNCR, TSLA, TNK-shipping, VGZ, WLT, Z.

·         Tuesday, 11/6/12: U.S. Presidential Election decides on Obama or Romney. Type ‘Presidential’ into the search box above to bring up the Presidential Election Stock Market Effects article that highlights the effects that either outcome will have on stocks. 3-Year Note Auction 1 PM. Treasury STRIPS 3 PM. Earnings: AMSC, AMRS, ANDE, ARNA, BIO, CDE, CW, CVS, EMR, EZPW, FOSL, GMO, HALO, HW, HL, ISIS, KERX, LPX-lumber, MRO-oil, MOD, OAK, ODP-a gauge for business, OMX, KWK, RAX, RSOL, SRE, TNGO, TNH, TDW, URZ, URS, VSAT, VVUS.

·         Wednesday, 11/7/12: European Commission provides economic forecasts. Mortgage Purchase Applications 7 AM. Markets may react violently due to the election. Oil Inventories 10:30 AM. 10-Year Note Auction 1 PM. Consumer Credit 3 PM. Earnings: AONE, AWK, CBS, CECE, CPK, CLH, CDXS, CTSH, COGO, DVN, ERII, ETP, FTK, ITMN, M-retail, MWE, WFR, MITK, MYRG, NKTR, ONTY, OPXA, OSUR, OREX, PRGO, POWR, SJT, SODA, TEU,  THC, TTEK, TRLA, TIE, PANL, WFM.

·         Thursday, 11/8/12: Spain bond auctions. ECB Rate Decision 7:45 AM EST and Press Conference 8:30 AM- if the rate is lowered the euro will weaken and weaken markets, if the ECB stays on hold, the euro will elevate and elevate commodities and equities. New China Premier Xi Jinping is officially selected and named Head of Party. The transition of China leadership begins with the 18^th Party Congress. International Trade and Jobless Claims 8:30 AM. Natty Gas Inventories 10:30 AM. 30-Year Bond Auction 1 PM. Fed Balance Sheet and Money Supply 4:30 PM. Earnings: CBOU, CG, CYTX, DF, DIS, DUK-ute, ECTE, ENR, ES, ESSX, FE, FCN, GXP, IGT, JWM-retail high end, KSS-retail, KOP, LUNA, MTRX, MCHP, MCP, NWPX, NVDA, OXGN, PPL, PGNX, RTK, SD, TK-shipping, TGP, TOO, ZIP.

·         Friday, 11/9//12: Import and Export Prices 8:30 AM. Consumer Sentiment 9:55 AM-expect a market pivot point. Wholesale Trade 10 AM. The stock market is open on Monday but the bond markets are closed; equities may be buoyant today ahead of the Veteran’s Day holiday. Earnings: APO, CEP, CWCO, HOGS, NTRI, OMG, URRE.

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·         Monday, 11/12/12: Ecofin Finance Ministers meet. Troika decision on Greece (delayed from August to now). Troika decision on Cyprus is needed. Veteran’s Day Observed. U.S. stock market is open but bond market is closed.

·         Tuesday, 11/13/12: Italy and Greece bill auctions. NFIB Small Biz Optimism Index 7:30 AM. Treasury Budget 2 PM.

·         Wednesday, 11/14/12: Italy bond auctions. EU announces carbon requirements-watch utilities and energy markets. PPI and Retail Sales 8:30 AM. Business Inventories 10 AM. FOMC Minutes 2 PM-expect a market pivot point. Bradley turn date so a turn window opens for a market trend change to occur between 11/7/12 and 11/21/12. This period matches up with Keystone’s Eclipse Indicator.

·         Thursday, 11/15/12: European GDP reports. Empire State Manufacturing Survey, Jobless Claims and CPI 8:30 AM. Philly Fed Survey 10 AM.

·         Friday, 11/16/12: TIC data 9 AM—a gauge of foreign investment.  Industrial Production 9:15 AM. E-Commerce Retail Sales 10 AM.

·         Tuesday, 11/20/12: Spain bill auction.

·         Wednesday, 11/21/12: Spain bond auction.

·         Thursday, 11/22/12: EU Leaders Summit. Thanksgiving Day.

·         Friday, 11/23/12: Markets close early at 1 PM.

·         Sunday, 11/25/12: Catalonia regional elections.

·         Tuesday, 11/27/12: Spain bill auction and Italy bond auction.

·         Wednesday, 11/28/12: Italy bill auction.

·         Thursday, 11/29/12: Italy bond auction.

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·         Thursday, 12/6/12: ECB Rate Decision 7:45 AM EST and Press Conference 8:30 AM.

·         Tuesday, 12/11/12: FOMC meeting begins.

·         Wednesday, 12/12/12: FOMC Rate Decision, Forecasts and Press Conference at 12:30 PM, 2 PM and 2:15 PM, respectively.  Expect market pivot points especially at 12:30 PM and after 2 PM.

·         Saturday, 12/22/12: Major Bradley turn date so a turn window opens for a significant market trend change to occur between 12/14/12 and 12/28/12. This period matches up with Keystone’s Eclipse Indicator.

·         Monday, 12/24/12: Christmas Eve. Markets close early at 1 PM.

·         Tuesday, 12/25/12: Christmas Day. Markets are closed.

·         Monday, 12/31/12: Last day of trading for 2012.

----------------------------  2013  ----------------------------------

·         Tuesday, 1/1/13: New Years Day. Markets are closed. ESM is officially open for business but ‘will not be fully operational’.

·         Wednesday, 1/2/13: If Congress does not act, the U.S. drives off the “massive fiscal cliff” (a phrase coined by Chairman Bernanke in early 2012) that will cut the GDP, increase unemployment and immediately launch the country into recession, but, on the positive side, the nation’s debt will decrease. Chairman Bernanke stated that the Fed does not have the tools to help should the fiscal cliff occur.

·         In February or March:  New China Premier Xi Jinping is named Head of Government and takes control.

----------------------------  2014  ----------------------------------

·         Wednesday, 1/1/14: ESM is officially ‘fully operational’.

CPC Put/Call Daily Chart

Hear is the Fear Index. Under 0.8 indicates complacency in the markets, no fear at all, a belief that markets will go up without any worries. Of course the opposite happens and markets sell off. Conversely, when the CPC moves above 1.20 that shows worry and fear in the markets, the party is over, traders are now frantically worried about losing money each day on the long side, so, the markets do the opposite and rally. When the boat is fully loaded on one side make sure you walk over to the other side. Complacency remains since the spike to 1.10 was quickly retraced.

When the June bottom occurred for the markets, note how the CPC signalled the bottom was in with prints spiking well above 1.20 to tell you the fear was rampant, perhaps one or two traders jumped out a window, let's hope it was a first floor window.  So markets rallied strongly from June on. The red box shows when the 20 MA crossed above the 200 MA that  was when the plus 1.20 prints started occurring, thus, look for the same fractal action to occur now, see if the 20 moves above the 200 MA this week. The market top was called successfully due to the uber low 0.7 prints and now price is being squeezed into the sideways triangle. Perhaps it will stay in the apex until the election results are known Tuesday evening. Even if the CPC would drop towards the 0.7's again, which means the broad indexes will be running higher, that will only set up a new top.

If you only like to trade on the long side, and are hoping for the market bulls to make a comeback, you do not really want to be long until you see the CPC print higher. Once over 1.20 the nibbling on longs can begin since a base is forming in the markets for a rally. Projection is for a spike into the 1.20 area at some point which will correspond to a near term bottom for the broad indexes, the SPX in the 1390's, perhaps lower, in the 1350-1380 zone, and, perhaps even lower than that. It will depend on how high the CPC spikes. If the CPC moves upwards slowly, then the markets can fall a long ways. The bulls would be smart to let go of the handlebars and simply let the markets drop, the fear come in with the CPC spiking over 1.20, then that will serve as an all-clear to jump on the long side and ride the bull train once again. With the election, and ECB this week, flip a coin, the action is going to be a circus. 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 UPS Weekly Chart with 20 MA and 50 MA Cross Indicator

The UPS 20 and 50-week MA cross is another Keystone Cyclical Signal. The cyclical bulls are in charge when the 20 MA is above the 50 MA, the cyclical bears if the 20 is under the 50.  Cyclical references the weekly and monthly time frame moving forward, the intermediate into longer term.  The Cyclical Bulls continue to rule but the 20 is very close to stabbing down thru the 50 (red circle). Watch this closely this week and next. If the 150-day MA slope turns and remains negative, and the UPS turns bearish, that would be two cyclical indicators in the bear camp and assure that the bears will rule for weeks and months ahead.  But, as always, the signals have to occur first. 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 SPX Daily Chart with 150 MA Slope Indicator

A few days ago, after many weeks and months, we saw how the slope of the 150-day MA turned negative (blue box) which signals that a Cyclical Bear Market has started. Those pesky bulls, however, slapped the bears by inching the 150-day MA up a few pennies to negate the downward slope but the slope should turn negative in short order again. Watch this closely this week.  Here are the last few prints for the 150 MA;

1384.71 on 10/25/12 continuing the long steady-eddy upward slope of the 150-day MA.
1384.67 on 10/26/12, bingo, the slope turns negative by four pennies indicating that markets have now fallen into a Cyclical Bear market pattern.
1384.67 on 10/31/12 flat as a pancake showing the cyclical bears in good shape.
1384.82 on 11/1/12 the bulls slap back and push the slope higher again regaining the cyclical high road.
1384.89 on 11/2/12 the bulls push higher another day telling bears their hopes for extended cyclical downside are pure folly.

Tomorrow, Monday, 11/5/12, we receive the next print for the 150-day MA.  If you are long the markets and want to see bullishness, you need to see the prints continue higher, say, 1384.92, 1384.95, etc.... day after day and you will be whistling dixie. If you are bearish the markets and want to see the markets tank, you are looking for lower numbers for the 150 MA such as 1384.85, 1384.80 and headed lower day after day. If this occurs it is important since it signals that a cyclical market change has occurred and it is best to be wearing a bear suit for the weeks, perhaps months, ahead. This week will provide the answer. 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 Daily Chart Triple Top H&S Channels

The neon green circle shows the dramatic confluence test that occurred on Friday morning. The 20 MA, 50 MA and price all converged at 1435-ish, and price failure resulted. The chart above looks like spaghetti, you may have to bring up a fresh daily chart to study the 20 and 50 MA's closer.  Price fell thru the 20-day MA about nine days ago and did not yet back kiss this key moving average. Seven days ago price fell thru the 50-day MA and also did not yet back test this critical moving average. On Friday price killed two birds with one stone, coming up to back kiss, and it was a successful back kiss for bears, resulting in collapse. This is a bearish signal since price has now decided it is happier with staying under these important moving averages.

We watched the triple top form and roll over the last two months. The triple top can also be considered a Head and Shoulders pattern.  The left shoulder is a bit taller than the head in the center, but, think of it as the Quasimodo H&S pattern.  For the purposes of setting downside targets the triple top and H&S provide the same input.  A top, or head, at 1465-ish, and baseline support, or neckline, at 1430-ish. This yields a 35-handle difference.  Thus, when 1430 was violated to the downside, this places the lower target in the 1390's (blue line) in play. 1430-35 = 1395. So if price would fail the critical 1403 level a print at 1391-1396 would satisfy the triple top, or H&S, patterns and forecast a recovery move.  If 1391-ish fails then a whole new can of worms is opened that would send price down to test the 2000-day moving average now at 1379-ish.  The pink line highlights this strong support area at 1375-1385.

The indicators are weak and bleak wanting to see lower lows for price as time moves along. Interestingly, price has a sideways vibe to it currently as shown by the black lines, so price may move thru the 1403-1419 red sidewasy channel as it funnel into 1413 for a decision up or down. This may be on tap into the presidential election since Monday and Tuesday will trade without the States knowing who won. Price may sit at 1413 come Tuesday afternoon and then either launch or collapse once the election results occur. However, the triple top and H&S patterns remain in play, and price has now also back kissed the neckline failure level, and moved lower, so the 1391-1396 appears very much in play right now.

Projection is sideways with a downard bias and then we will see once the election results are known. The chart wants to send price lower. The thin black square at 1400-1403 is the bull-bear line in the sand now representing that lower trend line. Bad things will happen if 1403 fails. The 1391-ish level would be the last ditch effort to stop the downward slide, after that the bears will be performing serious and long term damage to the broad indexes. If Keystone's SPX Monthly Chart with 12 MA Cross Indicator fails, now at 1372-ish, all hop is lost since the markets will be in a prolonged cyclical bear for many months forward. The bulls are going to have to come to play this week to stop the negativity. 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 SPX 30-Minute Chart with 8 MA and 34 MA Cross

The 30-minute, one of Keystone's Turn Signals, is providing theatrics lately. The bears were in firm control for many days then on Halloween, 10/31/12, the first day the markets reopened after Hurricane Sandy, the 8 MA moved above the 34 MA on the large positive volume push at the opening bell. The bulls were waving victory flags but alas, at noon time, the 8 MA fell back thru the 34 MA so the bears picked up the flag and starting waving it to and fro.  The bears were feeling good overnight until Thursday morning when positive earnings, and positive data from China, boosted markets with a strong rally.  The 8 jumped above the 34 and now the bulls were in full regalia, puffed chests and positive that the bottom was in. Long traders patted each other's back, one telling the other how smart they are.  You can see the red rising wedge, overbot conditions and negative divergence that created the top and the spank down.

The bulls are actually in charge right now but it appears academic since the 8 will most probably stab down thru the 34 at Monday's openign bell which would place the bears in the drivers seat for the hours and days ahead. The indicators are all weak and bleak except for stochatics which has a hint of positive divergence. Therefore, price may test the 1413 and bounce due to the stochastics, then the negativity from the other indicators would remanifest itself and pull price down to 1406 perhaps lower. The red channel is highlighted here just as the 60-minute chart showed; the top rail is 1419, middle S/R at 1413 and 1406, and lower rail at 1403. Bad things happen to the markets if 1403 fails.

The takeaway is to watch the 8 and 34 MA cross so you know who is winning. The bears should sieze control as the bell rings to start the new week of trading. 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 SPX 60-Minute Chart with 200 EMA Cross Indicator Remains Bearish

The wavy blue line, the 200 EMA, tells you if the bulls or the bears are winning for the days ahead. Right now, the bears.  The blue squares show the back tests that occur since breaking thru this vital moving average is a big deal.  Friday price came up for the back kiss and promptly fell on its sword, collapsing, a successful back test for the market bears. Price then dropped from 1435 to 1414 in six hours, -1.5%, within the Friday session. Note the teal downward-sloping channel where price has now reentered the lower teal channel.  The red sideways channel thru 1403-1419 continues to be a dramatic battle zone. The 1413 and 1406 S/R levels within this channel are key levels to use to gauge which side is winning moving forward. The tiny red circle shows the test of 1403, a successful test for the bulls, since price recovered and ran to the 1435 level. The oversold stochastics, falling wedge and positive divergence (green lines) provided the rocket fuel.

Price rolled over on Friday due to the MACD and stochastics negative divergence but the money flow and RSI were not as convinced. The indicators in general have a sideways vibe to them moving forward. The 1403 is hte Draghi put where a floor exists under the markets due to the ECB bond-buying program, however, Spain must request a bailout for the program to begin. Thus, trader's are frozen like a deer in the headlights. Losing 1403 means all confidence is lost and markets will be in big trouble, and this appears to be on the way. If 1403 is lost, price will likely explore 1350-1380 but the markets can bounce on any godo European news at any time. Price may overshoot to the downside in coming days printing sub 1400 but overall may be content in motoring sideways thru the red channel until Spain announces their intentions perhaps in early December. Of course, the presidential election can wildly catapult the SPX to the sky, or send it to Hades this week.

The takeaway on this chart is to watch the 200 EMA.  The bears rule the markets as long as price stays under the 200 EMA, which is now at 1432-ish. 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.