SPXA150R Daily Chart

The SPXA150R is a Short-Term Market signal. As price moves higher above 80 the bulls are rallying strongly but a skeptical eye has to be taken towards equities. When price moves above 85, this is a Strongly Bearish signal for markets. When price moves above 90, this is an Uber Bearish signal, a gift to short-sellers since it is screaming that a market top has now occurred. Those shorting at the May top when this was highlighted were happy campers as the May-June swoon followed.  Now price recovers back above 85 on 7/11/13 over 17 trading days ago. Interestingly, the SPX has made new highs compared to May but the number of stocks above their 150-day MA's are falling, the opposite of what should be expected for a continuing rally.

The move through 85-90 illustrates the bull-bear ongoing fight for market control. Bulls win above 90 but all that does is provide a signal to go short with conviction. Bears win under 85. SPXA150R cannot make a decision as yet, perhaps it will in the week ahead. Markets are topping currently. Projection is down ahead, however, even if markets continue to stretch the upside, a move over 90 on this chart will be another gift for short-sellers. 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:VIX Ratio Indicator Signaling Rolling Market Top Behavior Continuing

The SPX:VIX ratio is a Short-Term Market signal, however, the central bankers keep pumping the markets so the rally case lives on. The ratio is now at the same levels as when markets topped in 2007. The ratio was spanked down with negative divergence and the current top is set up the same way. The top in early 2007, however, occurred about one-half year ahead of the actual October 2007 market top. The SPX moved another 100 handles higher for a few months before the big roll over occurred. Things were different back then. In 2005-2006, the real estate bubble peaked and popped, and into 2007, the whole mortgage and banking fiasco unraveled leading to the Fall 2008 market crash.

The purple dots show how the ratio becomes over extended above the 20 MA above the 50 MA above the 200 MA which always identifies a top.  The question is will a topping and smack down in the SPX:VIX directly lead to the broad indexes rolling over or will the SPX continue higher for a little while longer like 2007?  The big difference nowadays is all the central banker pumping. Note the multiple tops over the last there years, all of which are stick-saved by the Fed's easy money printing.  In late 2011 to now, the central banker intervention is globally coordinated as the Fed and ECB teamed up with the Fed's Operation Twist program and the ECB's LTRO1 and 2 programs. Then from late last year into this year, the BOJ has jumped into action yelling "Banzai!!" bludgeoning the yen which has sent the Nikkei, U.S. equities and European equities and bonds higher. The markets are simply a reflection of central banker intervention, plain and simple.

That is why the current topping action is so unpredictable. The red line at 68 is where a crash signal is triggered but the ratio is far above this danger level. The ratio failed 68 (brown circle) for one day the last day of trading last year signaling markets going over the cliff, but alas, the politicians stick-saved the markets by kicking the fiscal cans down the road and beginning 2013 with the strong rally sending the ratio higher again. The green line at 35 signals time for a long market rally but using this signal is probably a year or two in the future. Projection is for markets to top out and roll over to the downside at any time moving forward. Pay attention to the 20/50 MA cross on this chart since that will indicate that the downside direction is real and locked in. 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 Trading Week in Review and Path Ahead for Markets 8/3/13

(the most important event last week was not the central banker announcements, economic data or earnings, but instead China pledging to maintain a high growth rate moving forward which provided support to commodities, copper and equities)

On  Friday, 7/26/13, China cuts manufacturing capacity so copper takes a -1.1% dive. Japan data shows a hint of inflation. The Nikkei drops -3% and the dollar/yen pair drops under 99 to 98.69 showing that traders think the BOJ may pull back slightly on QE due to the inflation improvement. Global markets clearly move according to central banker actions.  GS’s Blankfein says the Fed stimulus will continue for a ‘considerable time’.  The weaker dollar and higher euro keep the stock market elevated in recent days.  UBS Bank pays a 900 million settlement to Fed regulators for missteps during the 2008 housing and financial bubble.  The new Fed Chairman talk increases with Yellen favored over Summers currently. The Whitehouse tries to tamp down all the talk as it takes on a life of its own, releasing a statement that a list of potential candidates to replace Bernanke has not been finalized and the selection will not be until the Fall.  S&P futures steadily drift lower all morning long to -7 one hour before the opening bell.  Equities sell off at the opening bell.  Consumer Sentiment is better than expected at a six-year high.  Markets drift lower but at 11 AM, just like yesterday, recover and move higher into the closing bell. The Fed POMO pumps kick in at that time. The Fed is the market. Semiconductors and copper are very weak today. Europe approves 4 billion more in aid for Greece which will keep them afloat until Fall when they will need more money.  Today is the one-year anniversary of Draghi’s famous statement that he “will support the euro by all means necessary, and believe me, it will be enough.”  This historic statement has catapulted equities to new highs (European stock markets are up 20 to 30%) and created calm in the European bond markets ever since. The SPX finishes at 1692 and Dow at 15559, flat on the week. The Nasdaq (tech) is up +0.6% for the week. Trannies (TRAN), RUT (small caps) and financials (XLF) are all down on the week from -0.6% to -1.8% and should be up like the Nasdaq for a robust market rally. Equities are now rallying for about 1600 days, almost 4 ½ years, the fifth longest bull market in history. At 6 PM EST, midnight Cairo time, riots continue in Egypt.  The streets are filled with protestors, both for and against Mursi, and vehicle traffic is unable to move. The army continues to detain Mursi and is on the side of the anti-Mursi protestors. Many street battles develop with the pro and anti-Mursi protestors fighting one another setting the stage for a civil war. The army drops leaflets on the pro-Mursi protestors requesting restraint from any violence and states a deadline for tomorrow evening where these protestors must ‘calm down, or else’. Oil price has dropped in recent days. JPM announces plan to sell its commodity business as regulators scrutinize the operation. Detroit retirees request help from the president but any city bailout or aid package will set a precedent for all the other cities facing bankruptcy.

On Saturday, 7/27/13, Egypt violence turns ugly overnight with dozens killed as the army fires into a crowd of Morsi-supporters brandishing weapons; the country is deteriorating into chaos. The IRS union does not want to enroll in Obamacare and these are the very people responsible for enforcing the new health care program. The new healthcare law would not have passed without the support of the unions but now that they understand the program they do not want it. President Obama and his spokespeople call the ongoing Whitehouse scandals (Fast and Furious cover-up, Bengazi cover-up, IRS targeting, NSA spying, journalist targeting, etc…) ‘phony’ and ‘fake’ scandals.

----------------------------------------------------------

On Sunday, 7/28/13, Fed’s Lacker calls for an end to QE since it is not helping the economy in any significant way. Earnings season thus far shows the lowest amount of beat’s and positive surprises in 4 years. The lowered bar is not low enough. Top line revenue growth remains challenged. Steven Cohen (SAC Capital) throws a lavish party despite the indictment last week. Detroit dominates the weekend news since the decisions made here, bailout or not bailout, will ripple through to all the other U.S. cities facing high debt and bankruptcy including Chicago and many California cities such as Oakland and San Bernardino.

On Monday, 7/29/13, the dollar/yen falls below 98 so the stronger yen sends the Nikkei lower. More economists are questioning China’s lofty growth numbers. BKS book seller says recent financials are not correct and revised numbers will follow.  SKS is purchased by Hudson Bay.  Traders have waited five years for an SKS takeover but the stock only pops a paltry 3%. S&P futures are -4 all morning long before the opening bell.  Pending Home Sales are weak as expected. The broad indexes drop at the opening bell then travel flat the remainder of the day contemplating the busy economic data, earnings and central banker week ahead. The SPX closes at 1685. The Dow is 15522. After the closing bell, EMN (chemicals) beats on earnings which is encouraging for the economy. In the evening, JPM is exposed for manipulating the energy markets in 2010 and 2011 and is working on a settlement with the Fed of 400 million dollars. Same old story. No one ever goes to jail. JPM makes billions by the misdeeds but pay a paltry fine and move on without prosecution. For those of you wondering if the markets are rigged, of course they are. The bankers are always saved and protected and the general population suffers.

On Tuesday, 7/30/13, Australia will offer stimulus moving forward so the Aussie dollar drops. China pumps 3 billion dollars into the floundering money markets to create liquidity. This action was last performed early February resulting in weaker equity markets. Commodities are very weak today with copper, oil, gold and silver all tumbling lower. Berlesconi faces a court decision which may affect Italy’s shaky politics and economy.  The FOMC Two-Day Meeting begins. MRK and PFE both beat by a penny but top line revenue is unimpressive as well as lackluster guidance. Nonetheless, the markets receive a slight lift from the pharma sector.  Equities move higher at the opening bell with the SPX jumping to 1693. Consumer Confidence is above 80 for two months in a row at 5-year highs.  Markets sell off as the day proceeds but the semiconductors move higher and volatility drops to keep equities elevated. Markets are simply idling sideways awaiting the GDP and Fed tomorrow.  The Nasdaq outperforms to the upside today mainly due to strong moves higher in AAPL and FB.  FaceBook is now moving towards its IPO price at 38, catapulting from 26 to 38, 46%, in only four days time, after the earnings release showed increased revenue from mobile ads.

On Wednesday, 7/31/13, EOM. China states that they want to maintain the 7% plus growth rate for this year.  Copper and other commodities move higher recovering from yesterday’s selloff. The dollar/yen wrestles with 98 yesterday and fails today printing at 97.63. The 10-year yield is 2.62%. Bayer, the large chemical producer, says demand for polymers is falling, China demand is weak and the economic environment ahead is challenging. BNP Paribas, France’s largest bank, reports lower profits with a clear lack of demand for loans.  ADP Jobs Report is 200K jobs so this will bump up the consensus to 200K jobs for the Friday Jobs Report. The 10-year yield jumps through 2.63%-2.64% resistance and leaps to 2.70%.  The initial number for Q2 GDP is 1.7% beating expectations, however, the Fed has changed the way the data is calculated, and oddly, Q1’s GDP is revised down from 1.8% to 1.1%. IBM is down -1% pre-market on accounting issues.  MA is up +3% on an earnings beat. The broad indexes move higher after the opening bell and then leak lower into the 2 PM Fed statement. The FOMC remains accomodative and continues the 85 billion per month purchase program.  The Fed comments on persistent low inflation (a political way of saying that disinflation and deflation remains a worry which is pro-QE) and says growth is ‘modest’ rather than ‘moderate’ in the last statement (more pro-QE talk). Fed’s George is the lone dissenter (hawkish). Traders view the news as dovish so the markets move higher after erratic behavior for the first few minutes following the news. The SPX reaches a HOD at 1698.43 at 3 PM and then tumbles lower into the closing bell to 1686 giving up all the gains from 2 PM then some. Equities finish flat on the day overall. The 10-year yield drops to 2.58%. JCP is beaten down -10% and more on reports that suppliers are pulling back support for the troubled retailer. FB breaks up through the 38 IPO price but closes under. WFM (dubbed ‘Whole Paycheck’ since only the affluent can afford to eat healthy) earnings are in line but guidance is weak so the stock is sold off -6%. YELP beats and jumps higher in AH’s trading.

On Thursday, 8/1/13, the Aussie dollar drops to 0.8979 on an expected rate cut coming from the RBA. China PMI is 50.3 better than expected indicating slight expansion but the HSBC PMI, a reflection of smaller companies and believed to be a slightly better indicator, prints another low at 47.7 indicating contraction. China vows to maintain reasonable growth moving forward and this causes commodities, oil and copper to move higher overnight.  Russia manufacturing numbers are weak. The euro popped to 1.3345 yesterday but retreats to 1.3243 overnight on belief that the ECB will remain dovish.  Poland manufacturing expands. Royal Dutch Shell profits drop -20%. Arcelor-Mittal steel manufacturer says demand remains low. European PMI’s are better than expected so the banks rally. BOE leaves rates on hold with no change to monetary policy. S&P futures are +11. JCP recovers +7% pre-market after CIT Group says there is not a problem with suppliers. PG beats on earnings which sends the Dow futures to +112 and S&P’s +12.  XOM earnings miss and CVX also guides lower but the futures are unaffected. Don Kohn is added to the list of Fed Chairman candidates along with Yellen and Summers. Kohn was Greenspan’s first-choice recommendation for his replacement a few years ago. The ECB leaves rates on hold and the press conference is benign. Draghi says labor conditions remain weak.  Jobless Claims are at lowest levels in 5 years continuing to show layoffs moderating. The broad indexes are set for a very strong open with the Dow +125, S&P’s + 15 and Nasdaq +25, on Fed dovishness and China’s promise to maintain strong growth.  The 10-year yield is moving up to 2.64% so money is moving out of bonds and into stocks. The markets jump higher at the bell and the SPX moves above 1700 for the first time in history.  The ISM Mfg Index is 55.4 blowing out estimates to the upside. Construction Spending, a great indicator for jobs, is weaker than expected. The SPX prints a new intraday all-time high at 1704.57 and continues moving higher.  Copper strength helps the bulls but as the day proceeds, copper leaks lower. The TRIN plummets to an uber euphoric 0.48. This verifies the over-the-top bullishness shown in today’s markets. Markets are not climbing a wall of worry but instead are climbing a wall of bullish euphoria and central banker easy money. The dollar/yen pair jumps to 99.32 reflecting the weaker yen which creates market bull fuel.  WTIC crude oil is up +2.5% to 108. The broad indexes are strong all day long with stocks and Treasury yields both moving up, so money is flowing from notes and bonds into equities. The 10-year yield moves higher to 2.72%. The SPX finishes up +1.3% to a new all-time closing high at 1706.87 and new all-time intraday high at 1707.85.  The Dow lags, up +0.8% to a new all-time closing high at 15628.02 and new all-time intraday high at 15650.69. The Nasdaq is up +1.4% to 13-year highs at 3676. The RUT is up +1.4% to a new all-time closing high at 1059.88 and new all-time intraday high at 1060.96. Tech, small caps and the SPX move higher in sync with the Dow blue chips lagging, perhaps the large players are distributing stock to Ma, Pa and Joe Sixpack caught up in the bullish push higher.  The Dividend Stock Bubble is clearly in place as evidenced by SDY and DVY. The dollar/yen is at 99.61 moving up two big figures over the last day. The financials, XLF, gain +1.6%. Trannies explode higher today, the big outperformer, with TRAN catapulting +3.2%, even as oil climbed higher, to end at 6670. Dow Theory is in sync again with the Dow Transports now confirming the new highs in the Dow Industrials and visa versa. FDX is up +3.8%. After the close, LNKD reports strong earnings and the stock pops over +6% despite the company lowering forward guidance. Fabrice Tourre, the ‘Fabulous Fab’, former GS employee, is found liable for defrauding investors. Tourre’s defense is paid by GS that loses the case. Tourre is chewed up in the Wall Street casino machine and no one who actually designed the investment products, the higher-ups, will ever face charges.  The U.S. is closing embassies in several Muslim nations due to threats of terrorism imminent.  Snowden, the whistleblower viewed as a hero by many Americans since he exposed the government’s spying on all citizens’ cell phone calls, emails and Internet usage, is given asylum in Russia to freely move about the country. Putin views President Obama as a weak leader. The Whitehouse is considering cancelling the upcoming meeting between these two politico’s because of the Snowden affair but surely Putin will not lose any sleep if that occurs. Berlesconi’s jail term is upheld by Italy courts which may negatively impact the fragile political environment.

On  Friday, 8/2/13, gold drops under 1300. Debt-to-GDP ratio’s continue to increase around the world, non-stop higher year after year, despite the rosy stock markets, indicating that further global deleveraging is likely required moving forward. CVX misses on earnings. The consensus for the Monthly Jobs Report is 183K, but 200K is expected due to the ADP Report, with a slight downtick in the unemployment rate from 7.6% to 7.5%.  At the CME, Treasury futures stop trading for 5 seconds just before the Jobs number is released at 8:30 AM. Circuit breakers kick in as a large buyer enters the market likely via HFT (the trade was on the correct side so obviously the jobs number was known ahead of time with two sets of rules occurring at the Wall Street casino, one for the insiders who receive data releases ahead of time, and one for everyone else). The Jobs numbers miss at 162K jobs well under the 200K expected. In addition, the May and June jobs numbers are reduced, but, the broad indexes already enjoyed upside off that prior happiness. The labor participation rate drops again as folks give up on finding a job. The unemployment rate drops to 7.4% (lowest in 4 ½ years) from 7.6%. The average hourly earnings are down one-tenth percent. Wage deflation means that overall inflation does not exist. Obamacare is causing an increase in part-time jobs as companies seek to avoid the higher costs of the new law.  Sequester furloughs create weak job numbers and many jobs created lately are of low quality.  One-third of the jobs created in the last few weeks are in the retail, food and restaurant areas. 77% of the jobs created this year are part-time jobs.  One in every three young people are living at home with their parents, mainly due to the structural employment problem growing in the U.S. The 10-year yield collapses on the news from 2.74%, on the verge of breaking out to the upside, down to 2.61%, a huge 13 basis point drop in a heartbeat. The dollar weakens. Futures drift flat to lower. The markets sell off slightly at the opening bell. Copper is strong today and gold rebounds as traders think the Fed will continue QE forever with the weak job news. European stocks close at 2-month highs. The markets are weak but volatility is crushed lower and Fed’s Bullard pumps the QE talk so equities recover. Copper weakens as the day continues but the bulls run into the closing bell creating a new all-time closing high and intraday high for the SPX at 1709.67. The Dow closes at a new all-time high at 15658.36 and new all-time intraday high at 15658.68. The Nasdaq prints a new 13-year closing and intraday high at 3689.59. The RUT does not print new all-time highs. For the week, tech is the big winner with traders tripping over themselves to buy the Nasdaq up 2.1%. The Dow Transports are up+2.8% this week which is positive for markets from a Dow Theory perspective. The SPX and RUT are up 1.1% on the week and the Dow is the laggard up +0.6%.  The Dividend Stock Bubble is at a new peak as evidenced by SDY and DVY. After the close, BRKA and BRKB earnings beat so Berkshire (Warren Buffett) stock rises.  Ralph Acampora, a notable technical analyst, says to buy the stock market now with both hands. The SEC brings insider trading charges against a former GMCR employee and a cohort. S&P cuts the RSH rating so the stock is sold off.

On Saturday, 8/3/13, 21 U.S. embassies in 12 Muslim nations are closed due to a terrorism threat that is supposed to occur tomorrow (on President Obama’s birthday); looks like the terrorists win.  Perhaps the focus should be on properly protecting the embassies instead?  A travel warning is issued for all Americans in Northern Africa and Middle East. Sunday is a work day in these nations. Violence typically increases after Ramadan. Egypt violence continues as the army contemplates encircling Morsi-supporter encampments to disperse the crowds. In the afternoon, the U.K., France and Germany decide to close their Yemen embassies.  The First Community Bank of Southwest Florida is raided and shut down by the Fed’s, the seventeenth bank failure this year. The Indian embassy in Jalalabad is attacked by a suicide bomber that kills nine people, six are children. The Benghazi scandal grows as it comes to light that dozens of CIA operatives were on the ground during the attack and it may have been an arms deal gone bad where weapons in Libya were supposed to be acquired and then shipped to Syria rebels via Turkey. The Whitehouse appears to be prohibiting the Benghazi survivors from talking to the press and are changing the names of witnesses so they cannot be tracked and asked questions. For the IRS scandal, the House subpoenas Treasury Secretary Lew for IRS documents since Whitehouse officials appear to be obstructing the investigation.

---------------------------------------------------------

On Sunday, 8/4/13, ..terrorism…Egypt…oil… China…..Japan……copper…….

On Monday, 8/5/13, Congress adjourns for August recess ignoring the fiscal problems until after Labor Day. ISM Non-Mfg Index. New response rules are brought on line for the exchanges to help prevent future flash crashes. TSN. VNO.

On Tuesday, 8/6/13, International Trade. JOLTS Report. 3-Year Note Auction. DIS. KORS. D. Z.

On Wednesday, 8/7/13, Ramadan ends. Oil Inventories. 10-Year Note Auction. DRYS. DUK. EGLE. RL. TSLA. YRCW.

On Thursday, 8/8/13, Jobless Claims.  Natty Gas Inventories. 30-Year Bond Auction. CLNE. GERN. PCLN.

On Friday, 8/9/13, Wholesale Trade. CPK.

---------------------------------------------------------

On Monday, 8/12/13, Treasury Budget.

On Tuesday, 8/13/13, Retail Sales. Import and Export Prices. Business Inventories.

On Wednesday, 8/14/13, PPI. Oil Inventories.

On Thursday, 8/15/13, CPI. Jobless Claims. Industrial Production. Natty Gas Inventories.

On Friday, 8/16/13, Opex. Housing Starts. Productivity and Costs. Consumer Sentiment.

---------------------------------------------------------

On Monday, 8/19/13, ….

On Tuesday, 8/20/13, …

On Wednesday, 8/21/13, Existing Home Sales. Oil Inventories. FOMC Minutes.

On Thursday, 8/22/13, PMI Manufacturing Indexes. Jobless Claims. Natty Gas Inventories.

On Friday, 8/23/13, New Home Sales.

---------------------------------------------------------

On Monday, 8/26/13, Durable Goods.

On Tuesday, 8/27/13, Consumer Confidence. 2-Year Note Auction.

On Wednesday, 8/28/13, Oil Inventories. 5-Year Note Auction.

On Thursday, 8/29/13, Jackson Hole Economic Summit begins with a focus on Yellen. Jobless Claims. GDP. Natty Gas Inventories.

On Friday, 8/30/13, EOM. Chicago PMI. Consumer Sentiment.

On Saturday, 8/31/13, Jackson Hole Summit ends.

---------------------------------------------------------

On Monday, 9/2/13, Markets are Closed in Observance of Labor Day. China and Asia PMI’s.  European PMI’s. 

On Tuesday, 9/3/13, Markets Reopen for trading. Congress returns from August recess to address the fiscal problems within the next 4 weeks. ISM Mfg Index.

On Wednesday, 9/4/13, Beige Book.

On Thursday, 9/5/13, Jobless Claims. Factory Orders. Natty Gas Inventories. Oil Inventories.

On Friday, 9/6/13, Monthly Jobs Report.

---------------------------------------------------------

On Monday, 9/9/13, …

On Tuesday, 9/10/13, …

On Wednesday, 9/11/13, Anniversary of 911. Wholesale Trade. Oil Inventories. 10-Year Note Auction.

On Thursday, 9/12/13, Jobless Claims. Natty Gas Inventories. 30-Year Bond Auction.

On Friday, 9/13/13, PPI. Retail Sales. Consumer Sentiment. Business Inventories.

---------------------------------------------------------

On Monday, 9/16/13, Industrial Production.

On Tuesday, 9/17/13, FOMC meeting begins as traders listen for ‘QE taper’. CPI.

On Wednesday, 9/18/13, Housing Starts. Oil Inventories. FOMC Meeting Announcement, Forecasts and Chairman Bernanke Press Conference.

On Thursday, 9/19/13, Jobless Claims. Philly Fed. Leading Indicators. Existing Home Sales. Natty Gas Inventories.

On Friday, 9/20/13, OpEx Quadruple Witching.

---------------------------------------------------------

On Sunday, 9/22/13, Germany reelects Merkel and now there is no longer a need to keep countries like Greece or Cyprus in the euro, or even Germany itself.

On Monday, 9/23/13, Flash PMI’s.

On Tuesday, 9/24/13, Consumer Confidence. 2-Year Note Auction.

On Wednesday, 9/25/13, Durable Goods Orders. New Home Sales. Oil Inventories. 5-Year Note Auction.

On Thursday, 9/26/13, Jobless Claims. GDP. Natty Gas Inventories.

On Friday, 9/27/13, Consumer Sentiment.

---------------------------------------------------------

On Sunday, 9/29/13, the Debt Ceiling Limit and CR Continuing Resolution to fund the U.S. government deadlines occur. Perhaps last minute antics occur today which is typical for the politicians. The Whitehouse scandals are distracting politicians from addressing the fiscal problems.

On Monday, 9/30/13, EOM. EOQ3.

On Tuesday, 10/1/13, Q4 begins. China and Asia PMI’s.  European PMI’s. Construction Spending. ISM Mfg Index.

On Wednesday, 10/2/13, ADP Jobs Report. Oil Inventories.

On Thursday, 10/3/13, Jobless Claims. Factory Orders. Natty Gas Inventories.

On Friday, 10/4/13, Monthly Jobs Report. European bank stress tests will occur in Q4.

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

On Friday, 1/31/14, Chairman Bernanke’s term ends at the Fed. Yellen, Summers and Kohn are candidates. Yellen is the front runner, very dovish and will likely continue QE indefinitely which is happy news for stock market bulls.

On Friday, 2/7/14, Winter Olympics begin in Sochi, Russia, through 2/23/14.

In February/March 2014, the new Fed Head testifies before Congress.

In March 2014, the ESM is officially “fully operational.” The banking union schedule has been delayed from January 2013 to January 2014 and now to March 2014.

Keystone's Morning Wake-Up and Midday Market Action 8/2/13; Monthly Jobs Report

The Jobs numbers are imminent. Consensus is 183K but everyone expects 200K or more due to the ADP Report. The unemployment rate is expected to drop a tick to 7.5% from 7.6% last month. Watch the hours worked, wages and the labor participation rate. The Personal Income and Spending data is equally important but takes second billing compared to the jobs circus. The 10-year Treasury yield popped higher on the happy ADP number on Wednesday so the anticipation would be for yields to pop again if jobs are over 200K. The interesting aspect is that the 10-year yield is at the 2.74% level on the verge of a breakout so the jobs report will either cause yield to bounce, or die. The dollar and gold, as well as the U.S. futures, will move on the data. S&P's are +3, Dow +22 and Nasdaq +13.

Note Added 8:52 AM:  S&P's -3.50, Dow -28 and Nasdaq +4.5. The 10-year yield collapses to 2.61%, 13 basis points, now printing at 2.62%.  Dollar/yen 99.11. Euro 1.3267. The dollar weakens and gold and silver pop on the Jobs Report. Gold moves up since traders think that more Fed QE is on the way. Copper is up strongly this morning and will help the bull case for equities today.  The Jobs number is 162K jobs created far under the consensus. The unemployment rate drops to 7.4% from 7.6%. Average hourly earnings dropped one-tenth of a percent. For those looking for jobs, this news is bad since if wages are not rising, there is no need for new employees. Wage deflation is also a key metric for the inflation-deflation debates. If there is wage deflation occurring, inflation overall is not an issue and cannot exist. Companies are simply whipping workers to work harder for the same or less and if they do not like it they are told that ten other people want to sit in their chair. Not exactly the sign of a robust economy. May and June jobs numbers were revised lower, however, the stock market enjoyed all the gains from all those happy reports already. Labor participation rate drops as folks simply give up at finding a job. If you find a job, it requires you to say "Do you want fries wit dat?" all day long. Obamacare is turning many workers into part-time employees since employers want to avoid the cumbersome regulations and costs of the new law. The sequester furloughs are likely biting as well.

Note Added 9:04 AM:  Copper and volatility remain the battle zone today. Bulls need JJC 39.02 and the bears need VIX 14.26.  Copper is up today so the 39.02+ number should print and this provides the bulls the upper hand. Keybot the Quant remains long but is on the edge of wanting to go short, but probably not until perhaps next week; copper and volatility will tell the tale. JJC above 39.02 will move the SPX higher. For today, the SPX begins at 1707 and all the bulls need is one-point higher, to touch the 1708 handle, and it is off to the races higher for equities. Bears need to retrace yesterday's move and push under 1690 to regain mojo, a lofty goal, but anything is on the table in these erratic, unstable and indecisive markets. A move through 1691-1707 is sideways action today. The TRIN prints an uber low 0.49 that provided bull fuel yesterday, that also now begs for a snap-back to 1.00 and higher, corresponding to market selling, either today or Monday.

Note Added 9:48 AM:  SPX 1701.46.  Both SPX and VIX are lower so one of them is wrong. JJC is 39.27 well above the bull-bear danger line favoring bulls moving forward. TRIN 0.91 in the bull camp after a brief pop above one after the opening bell.  10-year yield 2.63%. Dollar/yen 99.20. Euro 1.3266. The bulls are unconcerned today since copper will provide bull fuel. Intermittent Internet outages and technical issues are occurring today in southwest Pennsylvania.

Note Added 10:32 AM:  JJC 39.30 going higher, VIX 12.47 going lower, TRIN at 0.83, so the bulls scoff at any initial downside action today. Equities are recovering.  Dollar/yen 99.02 slightly lower in concert with the lower equities. The 8 MA on the 30-minute is 1705 so bears can stay in the game today if they keep the SPX under 1705 and heading lower but if price moves above 1705 and higher, the bears will fold like a cheap suit and the SPX will head towards 1710+.

Note Added 3:07 PM:  Copper leaks lower today and JJC is 38.86 dropping under 39.02 so the bears are fighting back. Markets are back to a standoff. Either JJC 39.02 takes markets higher or VIX 14.26 takes markets lower.  Volatility is crushed today with VIX down to 12.11. TRIN 1.00 dead neutral not picking a side today reinforcing the sideways theme. SPX is 1706.03. Markets are typically bouyant for the first few days of a new month that would end on Tuesday. On Friday afternoon's, markets tend to float higher as short sellers pare back positions in front of the weekend. The new moon is Tuesday and markets are typically weak through the new moon. So the bulls are favored, based on seasonality factors only, into Monday afternoon.

Note Added 3:42 PM:  SPX, Dow and Nasdaq all positive. RUT negative. VIX 12.07 as the Fed members take turns beating volatility with a baseball bat. JJC 38.86. TRIN 0.98. Markets are stumbling into the closing bell with an upward bias.

SPX 30-Minute Chart 8 and 34 MA Cross Inverted H&S Negative Divergence Developing Potential Rising Wedge

The inverted H&S pattern (blue lines) with head at 1677 and neck line at 1692 targets 1707 which prints yesterday so the pattern is satisfied. The red lines show negative divergence in place and overbot stochastics preferring to see some price weakness, however, RSI is not overbot and the money flow has some near-term momo. The red lines for price show a potential rising wedge in play that would top out at 1710-ish. The 1-hour and 2-hour charts are agreeable to another day of SPX buoyancy so even if the price is spanked down a little in the 30-minute time frame, it looks good for the bulls moving into the weekend at this juncture, only minutes from the Jobs Report.

The 8 MA is above the 34 MA signaling bullish markets for the hours ahead. The 8 MA is 1704.82 so the bears need to move under this level to curl the 8 MA to the downside. Projection is for price to roll over and head lower moving forward but the bulls may maintain buoyancy into early next week to allow time for the 1-hour and 2-hour charts to set up for the downside. 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 Negative Divergence

The bulls ran strongly higher yesterday printing above 1700 for the first time in history. The maroon lines show the negative divergence in place as the new high prints. The RSI is trying to squeeze out further upside juice but overall, the indicators are drastically lagging the big up in price, not what is expected for a strong rally. The indicators should all be printing higher highs. If the SPX continues higher today that should simply extend the topping process a few days longer. After such a large up day, markets tend to move flat the day after to absorb the energy. The bulls are at an advantage since the first few days of a new month are typically bullish as new money enters the markets. Projection is for price to top out again and roll over at any time forward with the SPX moving sideways to sideways lower for the days, 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.

SPX Weekly Chart Upward-Sloping Channel Rising Wedges Overbot Negative Divergence Price Extension

The weekly chart shows the red upward-sloping two-year channel in play with price liking the top half of the channel for all of this year. The maroon lines show rising wedge behavior for price over the last few months. The indicators are overbot and negatively diverged. As price continues to make new all-time highs, the indicators are less enthusiastic. The negative divergence spank down in May occurred with the RSI hinting that it may want to see another high in price again. With the help of the Fed and BOJ easy money, price creates the June bottom and comes up to print that higher high. The central banker pumping over the last month, in both actions and lip service, creates the near-term (last couple weeks) momo shown by the short green lines for MACD line and RSI. Therefore, the bulls may be able to squeeze out a week or two more of bullish fun but the chart is very over extended.

The red dots show price above the 20 MA above the 50 above the 200 verifying the over extension and a need for price to revert to the mean (drop down to test the MA support levels). The 50-week MA has only been tested twice in the last 1 1/2 years and not since 9 months ago. The 200-week MA has not been tested for two years. If price is topping, this is an ideal time with the SPX at the top rail of the channel and negative divergence in place. Projection is for a roll over to occur at any time and for the SPX to move sideways to sideways lower for 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.

SPX Monthly Chart Rising Wedge Overbot Negative Divergence

The monthly charts receive new prints with July ending. The broad indexes post large gains leaving June's negativity in the dust. The power of the central bankers easy money policies are relentless driving markets to new all-time highs. The BOJ weakening the yen (higher dollar/yen) is a major bull fuel for markets this year. Yesterday's thrust higher in equities, to begin August, are in a large part due to the dollar/yen moving up two large handles (weaker yen), from 97.50 to 99.61 in one day's time; that's a lot of bull juice. The maroon lines and arrows on the chart show the prior tops, easy enough to identify as they occurred due to the negative divergence, but markets are not permitted to correct properly due to the central banker easy money. The Fed's central mandate is no longer employment and rates but rather keeping the stock market elevated at all costs. And they are succeeding.

The red lines show the 4 1/2 year rising wedge in play with price in the apex now. The collapses from rising wedges can be quite dramatic. This rally is the fifth longest in the history of the stock market and would be expected to peter out at any time. The red lines for the indicators show negative divergence across the board and in different time frames. Price is above both the 2007 and 2000 highs but the indicators are negatively diverged and overbot. Drilling down to the near term, the two short green lines for MACD line and money flow show short term momo (one to three months) in play so the Fed, BOJ and other central banker easy money creates upward thrust. This remaining momo can string the top along for another one to three months into the infamous October time frame. The markets are driven higher on central banker liquidity. Projection is for markets to top out at any time and move sideways to sideways lower for the months forward. 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 Morning Wake-Up 8/1/13; August Begins; BOE; ECB; ISM Mfg

Today is the first day of August trading and markets are typically bullish from the last day of the month through the first four days of the new month (see the Other Market Signals page). China PMI is a touch better than expected indicating expansion but the HSBC print is weak indicating contraction. China vows to maintain a high growth rate so this statement sends commodities, oil and copper higher, as well as S&P futures now up +12. The yen weakens pumping the dollar/yen pair up to 98.80 and sending the Nikkei and Shanghai markets up about +3%. The weak yen pumps U.S. stocks higher. The SPX rallied after the Fed announcement yesterday afternoon from 2 PM to 3 PM but then fell on its sword into the closing bell ending at 1686 under the Fed announcement level. For today, the bulls need to push above 1698.50 and the upside will accelerate to 1700-1710. Futures are set to make a run for this resistance.  The bears need to push under 1685, only one-point lower, to accelerate the downside, but this is not on tap at the open. A move through 1686-1698 is sideways action today.

BOE and ECB leaves rates unchanged and the meetings go without incident. The Fed dovishness along with the China promise of high growth are providing the global lift in equities. ISM Mfg Index is important at 10 AM and will create a market pivot point. PG beats on earnings but XOM misses. Markets can be boiled down to a fight between copper and volatility. Bulls win with higher copper and bears win with higher volatility. Watch JJC 38.95 and VIX 14.26. These numbers may adjust slightly as the day proceeds. If JJC moves above 38.95, the SPX is headed above 1700+. If VIX moves above 14.26, the markets will sell off. If JJC stays under 38.95 and VIX under 14.26, the broad indexes will continue sideways with a slight upward bias. Bulls win with JJC 39 and bears win with VIX 14. Copper is up strongly this morning and JJC will attack 39 at the opening bell. The session is starting off very bull favorable. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Watch JJC 38.95, VIX 14.26 and SPX 1698.50 to determine market direction.

Note Added 10:04 AM:  ISM Mfg Index is far stronger than expected at 55.4 compared to the 52.0 consensus estimate. Equities are moving wildly higher today with the central bankers in the rear view mirror and China promising to goose their economy. The markets continue to print new highs today so the good news is acting as good news for markets even though the stronger ISM should place the Fed taper talk back on the table. Copper jumps higher with JJC at 39.15 above the 39.01 bull-bear line in the sand. The 10-year yield is up to 2.68% so money is leaving bonds and moving into stocks. The bulls have the advantage that a new month begins and new money typically enters the markets creating upside lift.

Note Added 10:10 AM: The SPX prints above 1700 for the first time in history with a new all-time intraday high at 1704.57 moving higher. Oddly, copper is leaking lower with JJC at 38.94 losing the 39 level.

Note Added 10:37 AM:  The SPX prints a new all-time intraday high at 1704.97. JJC is 39.09 moving back to the bull camp above the 39.02 danger line. VIX 12.90. TRIN 0.69. The low volatility and low TRIN day after day provides the market upside. Bears got nothing unless they push JJC back under 39.02. The dollar/yen is 99.32 far higher than the sub 98 numbers a few hours yesterday.  The weakening yen (BOJ QE) creates the higher dollar/yen pair and provides bull juice for markets. The weaker yen was the main market driver for the new all-time highs in equities in February through May and today creates new all-time highs again.

Note Added 11:13 AM:  JJC at 39.03 testing the 39.02 bull-bear line. Bulls have to hold this support, otherwise, equities will sell off if JJC 39.02 fails.

Note Added 11:21 AM:  JJC 38.99 now under the 39.02. The next few minutes are key. Bears are trying to keep JJC under 39.02 for 7 to 10 minutes to lock it in. Bears will place a top in equities for today if they keep JJC under 39.02. Bulls need to move back above 39.02 to restart the upside move.

Note Added 11:39 AM:  TRIN 0.48!! Uber bullish. The Arms Index shows that the bulls rule the roost and there are no bears to be found anywhere. Traders are 100% convinced that markets will go up forever now. When the TRIN prints this low it desperately needs a snap-back within one-day's time to levels above 1.00 to relieve this bullish euphoria. The put/call ratio's will be interesting tonight to see if very low numbers are printed for CPC and CPCE to verify this complacency and lack of fear. Markets are not moving up on a wall of worry but instead are moving up on a wall of euphoria and central banker stimulus. JJC 38.99. Dollar/yen 99.24. Market bulls need to see the dollar/yen moving higher while bears need to move this pair under 99.

Note Added 11:53 AM:  SPX 1703. HOD 1704.97.  VIX 12.90. TRIN 0.49. JJC 38.91 leaking lower. Dollar/yen 99.29. 10-year yield 2.69%.

Note Added 12 Noon:  TRIN 0.45!! showing uber bullish euphoria.

Note Added 1:57 PM:  SPX 1703. Dollar/yen 99.43. VIX 12.98. TRIN 0.54. JJC 38.85. 10-year yield 2.70%. Copper continues to leak lower so it is surprising that more air is not coming out of the markets, however  the weaker yen (dollar/yen moving higher), as well as low volatility and low TRIN keep equities elevated.

Note Added 2:06 PM: A whoosh higher occurs with SPX printing a new all-time high at 1705.70 as the fifth 65-minute trading segment begins for today from 1:50 PM through 2:55 PM. Volatility is pushed lower.

Note Added 2:16 PM:  SPX prints a new all-time high at 1706.45. SPX jumps 4 handles in fifteen minutes time. This is in sync with the Berlesconi decision in Italy but unknown if it is the reason for the jump higher in equities. Volatility is pushed lower.

Note Added 2:55 PM:  The 10-year yield is 2.72% at the early July high and high going back to July 2011, bounce or die. SPX is 1705.68. VIX 13.07 inching upwards. TRIN 0.55 keeps the bulls in control today.  JJC 38.84 just printing a low at 38.81 minutes ago. Dollar/yen 99.51 so the weaker yen pumps equities higher.

SPX 30-Minute Chart 8/34 MA Cross Inverted H&S and Expansion Patterns

Each day a new pattern appears. The red lines show an expansion pattern now in play which targets 1700.  The blue lines show an inverted H&S with head at 1677, neck at 1690, and target at 1703. With yesterday's high print at 3 PM, the indicators were negatively diverged, sans money flow, creating the sell off into the closing bell. The chart is leaning more bearish rather than bullish but the futures are goosed this morning and the SPX is set to launch over 10 handles at the open, straight higher to yesterday's high at the opening bell. Watch the indicators to see if negative divergence occurs for the bounce higher today. Note the maroon lines where price has exceeded the levels from 7 days ago but the indicators are lined up with negative divergence for the higher print yesterday.

Note the 8 and 34 MA crosses occurring with frequency; 6 crosses over the last 6 days, 5 crosses over the last 4 days. This is unprecedented behavior very rarely seen. It verifies the sideways indecision in the markets and the ongoing struggle for control. The 8 MA is sloping down but the bounce at the opening bell will stick-save the markets once again and curl the 8 MA to the upside. The bulls will make a  run at 1700 at the opening bell. Overall, the anticipation is that markets will level off and roll over again moving forward, however, the action is very susceptible to central banker and other news, as well as earnings. The tape is jumpy and that may continue today. Watch the 8/34 cross since that tells you who is winning moving forward and for now the 8 is above the 34 signaling bullish markets for the hours and days 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.

Note Added 10:46 AM:  The SPX explodes higher at the opening bell and prints a new all-time high at 1704.97 curling the 8 MA upwards to verify the bull path forward. The 8 MA is 1696-1697 so the bears must push price under this level to curl the 8 MA back to the downside. If the SPX stays above 1697 all day long, the bulls will throw a party.