Interesting start to the day. UTIL collapses under 482.19 so market weakness on par with yesterday is anticipated, however, the bulls are jamming volatility lower to prevent the market move lower. UTIL is 481.71. VIX is 13.94 under the 14.12 bull-bear line so this enables bulls to hang on and move equities sideways with a slight upward bias. If VIX moves above 14.12, and UTIL remains under 482, and perhaps under 480-482, markets should have another big down day like yesterday. If UTIL begins moving higher to 483, 484, 485 and higher, equities will run higher into the weekend.
Chairman Bernanke speaks at 2:30 PM so that may cause a market stutter step. Knowing that Yellen is on deck, Bernanke will likely not make any waves. He wants to sneak out the back door as soon as possible, like Greenspan did. Other Fed heads speak as well today so the market cheer leading begins anew for 2014. Use VIX 14.12 (now bullish) and UTIL 482.19 (now bearish) to gauge market direction today. Bulls need higher utes and bears need higher volatility. Markets are at a stand still until one of these 2 parameters flinch.
Note Added 9:36 AM on 1/4/14: The SPX fell through lunch time on Friday from 1837 to 1830 as the VIX moved above 14.12 but alas, Chairman Bernanke cheer leads the markets again promising continued easy accommodation and ZIRP Forever. VIX drops under 14.12 and markets catapult higher to 1837. The Fed is the markets. Going into the close, however, traders must be second-guessing all these Fed shenanigans since the SPX dropped back down to 1831. UTIL closing under 482.19 is very significant and hints at market weakness come Monday morning. If VIX moves above 14.12, equities will take another leg lower. The lower volatility enabled the long traders to defeat the UTIL trap-door, for now. Monday is another day.
Friday, January 3, 2014
UTIL Weekly Chart Sideways Symmetrical Triangle
Perhaps the effects from weaker utes, which should have been felt last year, will now occur this year. The 20 MA slipped under the 50 MA which is bearish. Bulls can recover and push equities higher if they push price above the 50-day MA at 493.29. Remember, the ute numbers from 15 weeks prior are very important to determine if the weekly trend is up or down, and the broad markets will follow this trend. This week was an odd holiday week since New Year's occurs mid-week. Watch 482.19 through next Friday, 1/10/14, and then 480.00 between 1/13/14 and 1/17/14. Thus, to make it all very simple, consider the 480-482 area as a trap-door and if price falls through, the markets will see carnage that will have all analysts and traders rethinking their 2014 prognostications. However, if UTIL moves above 493, the market bulls will be in clover again. Watch this chart very closely during January. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
UTIL Utilities 15-Minute Chart
VIX Volatility Daily Chart
Keystone's 2014 Predictions
Reference Keystone's 2015 Predictions from the Page Menu in the right margin.
Keystone's 2014 Predictions
Keystone's 2014 Predictions
It’s time for another year of predictions that will provide for
laughs in December 2014. Analyst and
trader consensus is expecting the SPX
to move above 2000 in 2014.
Perhaps they will prove correct, perhaps not. The power of the central
bankers, especially the Fed and BOJ, can never be underestimated. Keystone’s
prognostications this year is for the broad indexes to place a multi-year
top a la 2000 and 2007, either in January, or in April-May.
Keybot the Quant, Keystone’s trading algorithm,
navigates successfully through each year so simply reference Keybot’s status
in the left margin if you ever want to know the current market direction. Keystone
continues to hold short positions and inverse ETF’s betting against the markets
but those trades are under water to begin the new year. Market bears should receive
a turn at bat in 2014.
The consensus expects
Treasury yields to move higher and inflation to rear its head in 2014. Keystone continues to consider the
disinflationary and deflationary scenario as far more likely. All of 2013
was disinflationary and deflationary despite the bullish stock market. Keystone’s
prognostications for 2014 are provided in greater detail below. The predictions
circle the globe from Japan to China to Europe, and then back to the States.
Many of the predictions go against the main stream consensus. The predictions
make for great bedtime reading—guaranteed to put you to sleep.
SPX High for 2014: 1880 (current 1850-ish high may serve as the
top)
SPX Closing Price for 2014 (SPX Begins at 1848): 1575 ($105x15)
SPX Low for 2014: 1480
Dollar Range ($USD): 77-85
Dollar Closing Price
($USD): 83.50
Dollar/Yen Range
(USD/JPY): 94-107
Dollar/Yen Closing Price
(USD/JPY): 97
Euro Range ($XEU):
1.24-1.38
Euro Closing Price ($XEU):
1.28
10-Year Note Yield Range
($TNX): 2.05%-3.05%
10-Year Note Closing Yield
($TNX): 2.50%
30-Year Note Yield Range
($TYX): 3.25%-4.00%
30-Year Note Closing Yield
($TYX): 3.50%
Unemployment Rate %
Range: 6.1-8.0%
Unemployment Rate % December
2014: 7.8%
GDP Average During 2014: 1.5%
WTIC Oil Range ($WTIC): 70-105
WTIC Oil Closing Price
($WTIC): 83
Brent Oil Range: 98-118
Brent Oil Closing Price: 103
Natty Gas Closing Price
($NATGAS): 3.10-4.50
Gold Range ($GOLD): 1050-1550
Gold Closing Price ($GOLD): 1250
Copper Range ($COPPER): 2.3-3.7
Copper Closing Price
($COPPER): 2.75
Commodities Range
($CRB): 220-300
Commodities Closing Price
($CRB): 275
China Growth Rate % Average for 2014: 6.7% and weakness will be
evident
The universal consensus by analysts is that about 117 in earnings and a 17
multiple will yield a SPX 1990 and higher. The earnings are pumped higher by buybacks reducing the number of
shares rather than healthy earnings,
therefore, earnings should be 10% to 30% lower. Adjusting the numbers would
be an SPX of 1390-1790. Lack of proper earnings will be an issue in
2014. Keystone’s target for 2014 is
SPX 1575, 105x15, and 2015 should be much lower numbers for the SPX. How
about that? You are getting 2015 predictions already as well. Keystone is obviously the only analyst
calling for weaker markets in 2014.
The path of the SPX this year is based on the weekly and monthly charts.
The weekly chart is content with never
seeing another price high here on out, however, the monthly chart wants to see the SPX come back up after a sell off occurs
to begin the year in January-February. The price
behavior in the first half of 2014 may be similar to the 2007 top from the
summer time into the market top at October 2007. This was a 5-month event. Thus, the SPX will top out with a multi-year top
during the first-half of 2014 either in January, or April-May.
SPX drops to the 1550-1680 area January-March, a quick drop of -5%
to -15%, then a V bottom and spike back up to 1750-1850 in April-May, then down
for more extended correction of -10% and more, potentially -20% or more, into
summer time, with a multi-year top occurring for equities either in
January-February or April-May. The behavior during 2014 should
mimic the behavior during the Fall 2008 and August 2011 crashes. Equities
will then move sideways with a downward bias through the back half of the year
and finish lower on the year, down about
-15%, about 275 handles, to end the year at 1575.
Volatility (VIX) will run consistently higher in 2014.
The 18-year cycle is the most reliable stock cycle and markets remain in
the secular bear until 2018 give or take a year or two. Sharp and strong
countertrend cyclical rallies usually occur within the secular bears; the
2003-2007 and 2009-2013 rallies are examples. The secular bear will start to reexert itself in 2014. Equities will finish
lower on the year.
Traders will be disappointed that the January seasonality does not
point to a bullish year ahead (first day of January, the first week, the month of January, and
the year will all be down).
Traders will realize that the central banker easy money is no longer
helping since
the economy is not improving and the massive debt is hurting the country. This creates a bit of a panic upon realization
that the Fed is between a rock and a hard place, like a deer in the
headlights. Markets will move sideways to sideways lower for the remainder of
the year.
Treasury yields will not move higher as everyone expects. The 10-year yield may
move to 3.25%, 3.05% is called out as the top above, but that would be as high
as it goes. The expectation is for the 10-year
yield to move sideways to sideways lower all year long. Traders will realize
the scenario about yields moving higher due to a stronger economy is not
occurring. Traders will buy Treasuries as the year moves along, sending yields
lower, as the global economy weakens and deflation takes control. Global
traders will seek Treasuries as a safe haven keeping yields in check.
Inflation will remain on a milk carton in 2014. Wages will remain flat and inflation cannot exist without wages rising.
The current ongoing disinflationary
and deflationary period, that the Fed continues to desperately try and prevent,
will remain in place. The Fed will ultimately fail with their Keynesian policies.
The arguments over whether or not higher rates mean a healthier economy
will be moot since the economic data
will weaken in Q1 and yields will
not rise. Since rates will remain subdued, traders and analysts will be
surprised that stocks actually sell off. Yields
and stocks will move in the same direction in 2014, both up together, and both
down together, with down experiencing a healthier portion of the attention during
2014. Down stocks and down yields
are reflective of disinflation and deflation. The concept that the economy remains in a disinflationary and deflationary
funk will become more obvious to everyone. Cash is king in deflation. This
behavior means that the grand 5-year
experiment by the Fed with easy money Keynesian policies will be a failure.
Yellen will pause the tapering of stimulus very early in the year
since economic data will weaken in Q1. At the least she will hint that she will stop the tapering in the
near future. Her dovishness will help stocks
recover from the initial sell off in January-March. She will try to time her
money pumping with the BOJ pumping that will occur in April. As time moves
along, traders will begin to worry since tapering
is on standby and everyone starts to
realize the Fed is not helping the economy anymore and only hurting the country. The move to pause or increase QE will signal that the Fed has gotten it wrong, just like during the Great Depression, and then the real trouble begins.
Yellen will be tested early in the year as all new Fed heads are
tested. This will coincide with the markets selling off in January-March and
her dovish deeds will help create a market bottom in March-April.
Those waiting for all the money on the sidelines to come into the
market will continue waiting. The reason the money is not put to use in the stock market is
that people are using it to live on,
perhaps plan for a child’s college education and other living expenses. The wealthy have become wealthier courtesy
of Chairman Bernanke but the average
person is struggling. Joe Sixpack was stuck paying the bill to bailout the
banksters and the Fed, that consists of ex-GS employees (it is all incestuous),
is only concerned about making their wealthy friends wealthier. Folks sitting
in leather chairs each day behind mahogany desks are very out of touch with the
common person. Money sits on the
sidelines since folks need that money to live on.
Social unrest will increase in the US as the gap between rich and
poor expands due to the Fed’s policy of protecting the rich.
Markets will be weak in 2014 since the main drivers in the market peter
out. The Fed and BOJ easy money will lose its
luster. The ECB will have trouble
implementing stimulus. China’s
economy will finally decelerate. The buybacks
that pumped stocks in 2014 will fade. The Russian and Chinese wealthy that have pumped asset bubbles in art,
collectibles, vintage cars, real estate, vineyards, etc…, are all in.
Traders realize that there are no more
buyers remaining to push markets or asset bubbles any higher, and the money on
the sidelines stays on the sidelines. Down is the path of least resistance
for stocks.
A lock limit down or flash crash event will occur in equities this
year on
par with the 5/6/10 Flash Crash.
A major geopolitical event/s such as war, terrorism, and/or a pandemic
will occur this year. Traders and analysts will
comment on how the economy was doing well until the event happens and blame the event for the failure of the
economy even though the global economy is already weak under the surface.
A dirty (nuclear radiation) bomb will be detonated somewhere in the world,
possibly France or the US.
Congress and the President will play their baby games during February
with the debt ceiling limit creating angst in markets and contributing to the
market sell off early in the year during January-March.
Japan will try and create ‘shock and awe redux’ in April 2014 weakening
the yen to pump Japan and US markets. It is only briefly successful helping the Japan and US
stock markets move higher from mid-March
into May where another market top occurs that may or may not be above the top
in January-February. Markets will not see these highs again for months and
years.
Japan is a troubled nation due to the ongoing Fukishima nuclear
disaster, the worst environmental disaster in the history of the world. Japan
stocks should be avoided. The country will be
labeled as radioactive and its products, food, etc… will not be trusted by its
own citizens as well as other countries (like China is labeled as placing
lead in all their products). This negative connotation will greatly hurt Japan.
The Japan government is preventing any
negative news from Fukishima hitting the main stream press but this media blackout wall will crumble
as the year moves along. Everyone will
realize that Japan and the Pacific Ocean is being poisoned daily by radiation
from Fukishima. Radiation effects will also impact the west coasts of
Alaska, Canada, Washington State, Oregon, California and Mexico’s Baja
peninsula. The nuclear disaster and
radiation contamination sours the mood of all global citizens as reality
sets in over the severe gravity of the situation.
Japan’s JGB’s explode higher in yield signaling the BOJ losing
control.
JGBS is a potential play.
China’s long-awaited hard landing finally arrives in the first
half of 2014 and shock waves are felt around the world.
China-Japan relations will continue to strain over the Japan
islands dispute but China will be preoccupied by the hard landing occurring and
Japan will have trouble handling Fukishima. The island dispute will continue, however, since China wants the oil in that region, but somewhat calmer heads will
prevail in 2014 concernign the island dispute since both will have other
fish to fry.
North Korea will not be an issue although they will continue to
rattle their saber.
The ECB becomes much more active and innovative pursuing QE type stimulus
measures which will weaken the euro but Draghi and European markets will face
difficult challenges.
Emerging markets will languish all year long due to the China
slowdown
but in general, some emerging markets
will fare better by the end of the year than the developed equity markets.
France, Italy, Greece, Portugal and Spain will all drag Europe
lower and maintain the ongoing recession and depression across the continent.
Germany will experience sluggish and slower growth. Once this main driver of
Europe weakens, fear will grow.
European stress tests will linger on all year long and become more
stink-laden over time. The ECB, EU and IMF will
try to sugar-coat the stress tests but the stink of perhaps as many as 10% of
the banks in serious financial trouble will hurt global markets.
The German High Court will accept the constitutionality of the OMT
as the politico’s
ram it down the German’s throats. This will cause social unrest in Germany.
Europe will have great trouble and angst finalizing the banking
union. A
framework will be finalized and the facility opened in the back half of the
year but it will have operational problems.
France will be in the spotlight for much of the year. Their economy is a mess and their high Muslim population will lead to social
unrest and terrorism in France.
The Middle East turmoil will continue. All countries and regions
are dead-set on hating the US and killing each other so conditions will
deteriorate likely leading to a larger conflict.
Syria will be exposed for playing games with the chemical weapons
agreement.
The country will fall into further
chaos, Asaad will not make it though the year, and Syria will be a worse mess
with warloads fighting to take over
regions of the country. The Middle
East will deteriorate into many regional wars.
Israel will strike Iran to destroy nuclear enrichment facilities.
Russia, the Saudi’s and other Middle East nations will complain
that the US shale oil is hurting prices and their economies. The lower oil prices will destabilize the Russia and the Middle East
economies.
Protectionism will increase as the slowing global economy causes
countries to start slitting each other’s throats.
The Obamacare health insurance law will continue to create headaches and
the uncertainty and hassle will hurt the US economy and jobs and weaken the GDP.
The GDP in the US will be lower than consensus estimates as the year moves
along and the global slowdown takes hold. The inventory build, which
created the higher 2013 Q4 GDP, will be exposed since the higher channel stuffing did not lead to more sales and instead
businesses must lower prices to unload inventory.
Asia loves their gambling casino’s and considering that on-line gambling is on the increase companies
like WYNN should do well.
The housing recovery will stall. Chinese and Russian investors as well
as hedge funds have been buying all the real estate bloating prices into a
bubble.
Housing starts will average below one million per month.
The cash society will continue to increase as more and more folks work
‘under-the-table’ for cash as well as pay for goods and services with cash to
avoid paying any government taxes. This behavior will hurt local, State and Federal government budgets. Politicians will
respond by trying to raise taxes even higher which will only create a weaker US
economy moving forward.
Violence along the Mexican border will decrease now that marijuana
is legalized. Other States will approve
pot for recreational use as they see the big windfall profits that Colorado gains without any significant
downside as many fear-mongers projected.
The Dividend Stock Bubble will burst sending SDY and DVY lower during
2014. Folks will regret that they did not sell long positions. Keystone is shorting the broad indexes.
The Biotech Bubble will burst sending IBB and biotech stocks lower. Keystone is short MYL. The biotech warriors CELG, GILD, BIIB and REGN are all shortable.
Financials will underperform in 2014. Keystone is long FAZ.
A major bank will experience a significant security breach from
computer hackers which will hurt the banks and markets in general.
Young folks will become disillusioned and discouraged with
America.
The college debt issue will continue to
intensify since young folks cannot find proper employment, and must now
also support older folks with Obamacare, while they try to pay off student
loans. Young folks will drop-out and tune-in, so to speak, like the 1960’s and
1970’s.
Congress will make an attempt at repatriating multi-national funds
abroad so they can be put to use in the US but the move will have little impact
on the economy. Many companies are already using this cash as collateral for
loans so the positive effects of
repatriation will be limited.
Deflation will finally receive the respect it deserves and the Keynesian policies by the Fed and other
central bankers will be exposed as doing major harm over the last few
years. Inflation will remain on a milk
carton and not appear for a year or two or more away. Keystone believes the
onset of inflation will begin and likely align with the end of the secular bear
stock market in 2016-2020. Thus, inflationist proponents may have to wait at
least another couple years.
Commodities will be flat in 2014 due to the disinflationary and
deflationary global economy. Traders will wish they had hung out in the flat commodities by
year end, however, since the broad
indexes will all correct far lower off their bloated tops than commodities
which have been beaten down. Keysotne is long SMN (inverse basic materials).
Copper will drop and finish weaker this year.
Gold miners should be top performers through 2014 although the
outlook for physical gold is sketchier. Companies like NEM, MUX, IAG, KGC, ABX,
etc… are favorites. Keystone is long MUX, IAG and NUGT to begin the year.
High-yield will be in trouble this year and HYG will sell off.
Telecom will be weak this year even though Treasury yields will
not move significantly higher.
Coffee will be the best performing commodity this year. Do not play
SBUX or DNKN. Play CAFE or JO. Keystone is long JO.
HLF prints a multi-month or multi-year top at 79.8-82.3 in Q1 and will sell off for the
bulk of the year.
Coal stocks may be a buy mid-year or later.
Air pollution stocks will run higher as China seeks to fix
their horrible environment.
Global auto sales will be weaker than expected. Luxury car sales
will disappoint in 2014.
Retail sales in the US were pulled forward from 2014 into 2013 so the retail sector will experience lackluster
behavior in 2014, finally receiving a pull back from the obscene run higher
over the last couple years. XRT and RTH will stumble lower during 2014. Keystone is short RTH and long SZK (SZK is too thinly traded so use caution).
Solar stocks will move sideways to sideways lower all year long.
Shippers such as DRYS, DSX, GNK, FRO, etc…, may be a buy about
mid-year but not in the first half despite everyone running to buy them to
begin the year. The Baltic Dry Index will
move lower and then travel sideways. Treasury yields will remain flat to
lower verifying the weakness in the shippers. Mid-year, however, the shippers
may be a buy into the holiday season.
AMZN will have a successful launch of its cell phone. AMZN stock will stay
under 400 for the bulk of the year.
PCLN and GOOG will both fall back below 1000.
Defensive consumer staples companies such as PG, CLX, K, etc..
will outperform the broad indexes but this is not saying much. Most every sector will be
beaten as the general equity markets weaken in 2014.
The healthcare sector XLV will underperform in 2014. Keystone is short XLV.
Solar flares will increase and coincide with the market tops in
January and in April-May. The solar maximus in 2013 was a dud but early in 2014 the sun will
make up for lost time. Communications
will be affected by the X-class flares and plasma ejections early in the
year.
Thursday, January 2, 2014
Keystone's Midday Market Action 1/2/14; Happy New Year; ISM
Happy New Year everyone. Best of luck and good health to all. The China PMI was weak. Eurozone in general and Germany PMI's were encouraging. Other European countries, like France, are contracting further; call it the sick man of Europe. ISM Mfg Index is better than expected and very encouraging but the stock market did not respond positive to the positive economic news. Keybot the Quant flipped short this morning to begin the new year of trading. The VIX moving above 14.12 and GTX below 4820 cause the market negativity today. Watch these closely. In addition, UTIL is falling like a stone, now at 453.56, at the lows. UTIL 482.19 is the trap-door. Remember in recent weeks and months as the UTIL trap-door would open, the bulls always found a way to close it. If UTIL falls through 482.19, only a point lower, the SPX will likely flush lower by 20 to 30 handles in relatively quick order. Bulls need to push utilities higher with all they got.
The SPX came down to tease the gap at 1833-1835, and bounced from 1835, but then came down for a second look and collapsed down through. The SPX drop was straight to sub 1833 so it can be called an island reversal pattern (the gap-up occurred on 12/26/13 creating the island). The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead. Pay attention to VIX 14.12 and UTIL 482.19 to determine market direction. The 20-day MA is 1809.90 and rising. Note the dollar/yen at 104.67 (collapsing from over 105.37 a few hours ago) indicating a stronger yen so equities sell off. The Fed's POMO pumping starts Monday, 1/6/14, for January (see link in lower right margin) so this is not occurring to help the bulls. The central bankers are the markets, plain and simple. BOJ's Kuroda slipped on a banana peel before he could yell Banzai! today so the printing presses are not running, hence, the bears take a turn.
Note Added 2:12 PM: UTIL 483.13 now less than one tick from the 482.19 trap-door. Time to return the seats to the upright position and attach the safety harness, just in case. VIX is at 14.20 creating drama again with the bulls gunning for sub 14.12. SPX at 1833. This is all inflection point stuff again. Bounce or die. The bears have it on a silver platter only needing to push volatility higher and jam utilities lower to unleash market mayhem.
Note Added 2:17 PM: UTIL 482.83 ..... 482.80 ... She's going in for a look. Buckle-up. As legendary actress Betty Davis would say, "Fasten your seat belts. It's going to be a bumpy ride (night)." Whoa, ... 482.44. You have it in your hands bears. Do you have what it takes?
Note Added 2:24 PM: Bounce. UTIL above 483. UTIL should come back down again for another look once it regroups. VIX jumped now at 14.44.
Note Added 7:54 AM on 1/3/14: The bulls perform a stick-save again. Bears did not have enough juice to open the trap-door at UTIL 482.19 but came within 13 cents. Perhaps today? Watch UTIL 482.19 (now at 482.88) and VIX 14.12 (now at 14.23) to determine market direction. It's smoth sailing lower for bears if UTIL 482.19 fails. Bulls will recover and send equities higher if VIX drops under 14.12.
The SPX came down to tease the gap at 1833-1835, and bounced from 1835, but then came down for a second look and collapsed down through. The SPX drop was straight to sub 1833 so it can be called an island reversal pattern (the gap-up occurred on 12/26/13 creating the island). The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead. Pay attention to VIX 14.12 and UTIL 482.19 to determine market direction. The 20-day MA is 1809.90 and rising. Note the dollar/yen at 104.67 (collapsing from over 105.37 a few hours ago) indicating a stronger yen so equities sell off. The Fed's POMO pumping starts Monday, 1/6/14, for January (see link in lower right margin) so this is not occurring to help the bulls. The central bankers are the markets, plain and simple. BOJ's Kuroda slipped on a banana peel before he could yell Banzai! today so the printing presses are not running, hence, the bears take a turn.
Note Added 2:12 PM: UTIL 483.13 now less than one tick from the 482.19 trap-door. Time to return the seats to the upright position and attach the safety harness, just in case. VIX is at 14.20 creating drama again with the bulls gunning for sub 14.12. SPX at 1833. This is all inflection point stuff again. Bounce or die. The bears have it on a silver platter only needing to push volatility higher and jam utilities lower to unleash market mayhem.
Note Added 2:17 PM: UTIL 482.83 ..... 482.80 ... She's going in for a look. Buckle-up. As legendary actress Betty Davis would say, "Fasten your seat belts. It's going to be a bumpy ride (night)." Whoa, ... 482.44. You have it in your hands bears. Do you have what it takes?
Note Added 2:24 PM: Bounce. UTIL above 483. UTIL should come back down again for another look once it regroups. VIX jumped now at 14.44.
Note Added 7:54 AM on 1/3/14: The bulls perform a stick-save again. Bears did not have enough juice to open the trap-door at UTIL 482.19 but came within 13 cents. Perhaps today? Watch UTIL 482.19 (now at 482.88) and VIX 14.12 (now at 14.23) to determine market direction. It's smoth sailing lower for bears if UTIL 482.19 fails. Bulls will recover and send equities higher if VIX drops under 14.12.
SPX 30-Minute Chart 8/34 MA Cross Gap Potential Island Reversal
The bears are making some noise but today needs to play out to determine if the bears got game, or, if they fold like a cheap suit. Watch the 8/34 cross. Bulls got nothing unless they create a positive cross. A higher VIX above 14.12 creates market negativity today and now the VIX drops back under on the bull side. Thus, the bulls may be launching an attack to push equities higher and win back the 8/34 cross. The next hour or two is important. For now, the bears are driving the bus, but they desperately need the VIX back above 14.12 pronto. Bulls will stop the market downside if they keep VIX under 14.12. 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 11:38 AM: VIX 14.12 so it is time to bounce or die and take the markets in the inverse direction. What say you, volatility? SPX taking a look at the 1835 support again, bounce, or die.
Keybot the Quant Turns Bearish
Keystone's trading algorithm, Keybot the Quant, flips to the bear side at SPX 1841 to begin the new year of trading. That did not take long. Higher volatility (VIX above 14.11) and lower commodities (GTX sub 4820) are causing the market weakness so keep a close eye on these 2 characters. As always, stay alert for a potential whipsaw back to the long side either today or tomorrow. The market bears grab the steering wheel to begin the year. More information is found at Keybot's site;
Keybot the Quant
Keybot the Quant
SPX Monthly Chart Overbot Rising Wedge Negative Divergence Developing Price Extended
The fractal from the 2007 top may repeat here forward with the first peak of an M Top occurring now, with a substantial drop of 100 to 200 handles, but then a wild vertical recovery spike higher above 1800 again, then the more permanent roll over. The SPX market highs that are anticipated in the days ahead may mark THE top with these numbers holding for months and years forward. The pink dots show how price is extended above the moving averages. Note in the late summer of 2007 before the October 2007 top, price dropped to test the 20-week MA and bounced. If the fractal behavior repeats, the SPX is anticipated to drop to 1650-1750 in February-March where the wild recovery spike would occur back to 1800 or higher. Note that the 20-week MA will likely be around 1600-ish when February-March rolls around.
The SPX weekly chart has been highlighted the last couple weeks or so noting how firm negative divergence is remaining across all indicators. This sets up the SPX to drop now, or starting this month. Then the near term long and strong behavior shown above can be resolved once price comes back up for the potential M Top. Bears are favored to begin the new year despite the vertical euphoric move in the SPX over the last few months. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
CPCE Put/Call Ratio Weekly Chart Signals Significant Market Top
By now, all long positions should be exited that you are not willing to hold for a few years. This is a broad brush approach aimed at helping novice traders since the professionals will obviously employ other more complicated strategies in the options and other markets. Short or in cash is the place to be right now. There are a few exceptions. Gold miners look good going forward and coffee should outperform as a commodity this year so these are acceptable long plays. Just about any gold miner as well as the ETF's should be fine going forward. For coffee, do not play SBUX, DNKN and this type of thing. CAFE and JO would be the only two attractive long plays for coffee in 2014.
The red circles show the significant market tops. Green circles are significant market bottoms. What do you think will happen? Note that the SPX placed a key bottom at 1080 in late 2011. Since then, the obscene central banker money printing pumps markets vertically higher, from SPX 1080 to 1850, 770 handles, +71%, in only 2 years time. Send this post to Chairman Bernanke and future Chair Yellen since they say a +71% jump in asset prices in a couple years does not constitute a bubble. To them, this is regular market behavior. The Fed has greatly destroyed price discovery and the low put/call says the time of reckoning is approaching very quickly. Equities are at a significant market top currently. Watch your wallet. Markets are expected to sell off at any time moving forward and the current highs may remain in place for months if not years. Keystone is finishing the 2014 predictions and thinking that THE top occurs either now, in January, or perhaps May, after a market drop and recovery may occur. More information to follow. 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.
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