TRIN Arms Index SPX Daily Charts

The TRIN collapsed to 0.31 after the opening bell Friday morning verifying the uber bullishness and euphoric stock market sentiment. There are no bears remaining; everyone is bullish. The TRIN closes at 0.90 but the uber low 0.31 print is more important. As the 0.31 printed that marked the exact top in stocks shortly after the opening bell on Friday. The Arms Index is a contrarian indicator. 1.00 is the neutral line. Bulls are in control of markets below one and bears are in control above one. When the TRIN moves too high especially at, near or above 2.00, folks are panicking and worrying about a continued market selling event. Instead, the stock market will bottom and a rally will begin. This is because traders are too pessimistic. When the TRIN collapses under 0.60 and lower, the bullish euphoria is off the charts and stocks will top out and sell off, like Friday. This is because traders are too optimistic.

You want to be nibbling long at 1.6-1.8 and higher and become far more bullish above 2.00. You want to be nibbling short under 0.7 and lower and become far more bearish below 0.60. The green and red circles ebb and flow like the waves on the ocean, crests and valleys, peaks and bottoms. With the uber low 0.31 print occurring on Friday, what do you think will happen going 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.

SPX S/R Support, Resistance, Moving Averages and Other Important Levels for Trading the Week of 9/22/14

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for trading the week of 9/22/14. Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and important S/R. The SPX all-time intraday high is 2019.26 on 9/19/14 and the SPX all-time closing high is 2011.17 on 9/18/14. The bulls are relentless and merciless against the bears. The non-stop stock market upside is fueled by perpetual central banker easy money. ECB President Draghi announces a European-style QE program two weeks ago and promises far more QE in 2015, the Fed is dovish last week with Chair Yellen promising ZIRP Forever, the PBOC pumps the Chinese banks and economy with stimulus late last week and of course BOJ Governor Kuroda works overtime each day printing yen. The weak yen sends the dollar/yen pair above 109 and creates continued highs in Japan and US stock markets.

For Monday with the SPX starting at 2010, the bulls need to move above 2019 to create an upside acceleration that will quickly tag 2022. The bears need to push under the 2007 support to accelerate the downside. A move through 2008-2018 is sideways action to begin the new week of trading.

There are seven days remaining in September trading so keep an eye on 2003.37 as the month draws to a close. Seasonality-wise, the week after OpEx in September is down 80% of the time so the bears are salivating for some revenge in the week ahead. The new moon hits about 1:15 PM EST on Tuesday afternoon and equities are typically bearish moving through the new moon. So the bears are grabbing for any straws to help claw their way back and stop the unstoppable market upside. Volatility is very important. Bears need VIX above 12.38 to create market weakness, otherwise, they got nothing. Bulls will send equities higher if VIX stays under 12.38.

The 2002-2003 support level is very strong so bulls are fine above this level. The 1988 support is very strong since it forms a confluence with important moving averages. The 1985-1986 support is formidable. This is a strong barricade and even if the bears punch down through 2002-2003 and 1988 the 1985-1986 level will put up a big fight. In general, bulls are fine above 1988. Bears will growl strongly and create market mayhem under 1985.

2019 (9/19/14 All-Time Intraday High: 2019.26) (9/19/14 Intraday High for 2014: 2019.26)

2019.26 Previous Week’s High

2019.26 Friday HOD

2013

2012

2011 (9/18/14 All-Time Closing High: 2011.36) (9/18/14 Closing High for 2014: 2011.36) (9/4/14 Intraday High: 2011.17)

2010.40 Friday Close – Monday Starts Here

2010

2009

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

2006.59 Friday LOD

2006

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

2004

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

2003.37 September Begins Here

2002

1999

1998

1997

1995

1993

1991 (7/24/14 Intraday Top: 1991.39)

1988.50 (20-day MA)

1988.30 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)

1988 (7/24/14 Closing High: 1987.98)

1987

1986 (7/3/14 Intraday Top: 1985.59)

1985 (7/3/14 Closing High: 1985.44)

1982

1980

1978.48 Previous Week’s Low

1978

1976

1975.43 (50-day MA)

1973

1970

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

1964

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

1961

1960

1959

1958

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

1955.33 (20-week MA)

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

1950.42 (100-day MA)

1949

1947

1942

1940

1937

1936

1931

1929

1928

1925

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

1923

1920.26 (150-day MA; the Slope is a Keystone Cyclical Signal)

1920

1917

1912

1910

1907.49 (10-month MA; a major market warning signal)

1907

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

1901

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

1894

1893.01 (200-day MA; not tested for 22 months extremely odd behavior)

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

1889

1886.44 (12-month MA; a Keystone Cyclical Signal) (the cliff)

1886

1885

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

1882

1880

1879

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

1877

1874

1872.91 (50-week MA)

1872

1871

1868

1867

1865

1862

1859

1855

1853

1852

1851 (1/15/14 Intraday Top: 1850.84)

1849 (12/31/13 Intraday High Top for 2013: 1849.44)

1848.36 Trading for 2014 Begins Here

1848 (1/15/14 Closing High: 1848.38) (12/31/13 Closing High for 2013: 1848.36)

1846

1845

1843

1842

1841

BABA Alibaba 2-Minute and 5-Minute Charts Largest IPO in History Begins Trading on NYSE Price Action is Explained

At 8:30 AM, US futures trade higher. S&P +5. Dow +65. Nasdaq +13. Dollar/yen 108.76. The 10-year yield relaxes to 2.61% and lower and the 2-year yield softens to 0.57%. The early buzz on the NYSE trading floor says the BABA IPO may not begin trading until one or two hours after the opening bell (the trading day begins at 9:30 AM EST).

The trading session begins with equities jumping strongly higher on the PBOC stimulus announcement last evening (more central banker easy money) and Scotland no vote. Volume is robust. The SPX trades at a new all-time high at 2019.26. The Dow prints a new all-time high at 17350.64. TRAN prints a new all-time high at 8713.27. The Nasdaq prints a new 14-1/2 year high at 4610.57.

The TRIN prints an uber multi-year low at 0.31 verifying the euphoric and ecstatic stock market sentiment. The VIX collapses to 11.52 showing a complete lack of fear in the markets. Complacency rules the markets since stocks will go up forever with unlimited central banker money. Traders are drunk off the Fed wine staggering around and raping stocks on the long side enjoying the never-ending Fed-fueled 5-1/2 year stock market rally.

The NYSE trading floor is one big party with the BABA IPO the next joyous offering on tap for the bulls. Jack Ma the CEO rockstar of Alibaba says, “I am honored and excited for the Alibaba IPO. I want out shareholders to make money.” SoftBank CEO and Alibaba Director Masayoshi Son is on the floor of the NYSE (Softbank owns about one-third of Alibaba) and says, “We will hold Alibaba as a core company and would like to own more.”

Equities remain at the highs for the first one-half hour of trading. Dollar/yen 108.87. The 10-year yield pops higher to 2.63%. The party atmosphere continues as traders await the initial pricing range for BABA. Folks are taking selfies and high-fiving each other already planning how to spend their new-found wealth. The first initial pricing indication for BABA should have occurred by now. NYSE officials say there are tens of millions wanting to buy shares. It is odd that the market makers have not at least provided a price range for BABA even if it is a wide range.

The first indication of BABA price occurs at 10:07 AM a bit later than expected and the range is set at 80 to 83. The market makers say it is too early to project when the opening print will occur. It is not surprising for an IPO of this magnitude to take an hour or more to zero in on the opening price. The 80-83 range will narrow down to a firm dollar handle then narrow down to identify the cents level as buyers and sellers are registered in the books. The funds and banks are providing strong support for the 68 price level for Alibaba and the initial expectations are that BABA will begin trading in the 80’s.

At 10:11 AM, equities remain elevated and the market tone remains optimistic and euphorically bullish. A few minutes ago, there was some anxiousness developing since an initial BABA price took a bit long to identify but traders and market participants are back on the party wagon with smiles all around and expectations high for a flawless start to the IPO’s trading. At 10:25 AM, the price range is bumped higher to 82-85 as the market makers are teasing out the sellers. If BABA prints at 90, that reflects a $222 billion market value. The pricing in the 80’s will already make BABA a larger company than FB.

At 10:32 AM, a third indication occurs with the price range bumped higher to 84-87 as the buyers are reduced from 40 million down to 28 million. The price range is jumping in three-dollar increments. BABA should be trading within about one-half hour as the range narrows. The smaller brokers are disappointed since the big boys kept most of the Alibaba allocation for themselves. Wall Street is a “big club and you ain’t in it” to paraphrase comedian George Carlin and sometimes the players in the regular big club are not even big enough to play in the top-tier big club. Traders that sold stocks early in the week to free up cash to buy Alibaba realized they would not receive an attractive entry price for BABA so they returned to the broad indexes which helped fuel yesterday’s stock rally and today’s upside joy. YHOO is up +1.2%. AMZN +2%.

At 10:44 AM, the BABA range is 86 to 88 now at a two-dollar range representing a $217 billion market cap. The market makers almost seem like they are targeting a 88.88 number since the Chinese love the 8’s as a good luck number. The 8’s would be icing on the cake for Jack Ma’s happy day. The broad indexes are retreating off the highs but remain positive on the session.

At 10:53 AM, a fifth indication sets the BABA price range at 87 to 89 but 15 million buyers continue to look for sellers so the price range keeps floating higher. The market makers say there is likely another one-half hour required to settle the price and allow BABA to begin trading. The broad indexes are leaking lower with the RUT small caps turning negative as the VIX recovers moving higher towards 12. WTIC crude oil drops under 92. Copper turns negative. Gold drops to 1217.

At 11:01 AM, the BABA pricing process continues with a new range of 88-90 with 10 million to buy. NYSE officials brag that the Alibaba pricing process is continuing smoothly and orderly. BABA CEO Jack Ma credits the NYSE with conducting a smooth process. At 11:08 AM, a seventh indication sets the BABA price at 89 to 91. Alibaba investors, traders and market participants are becoming nervous as the wait continues and the broad markets are already trading over one and one-half hours. Jack Ma is ushered off the NYSE trading floor temporarily as everyone awaits for the final opening price for BABA.

At 11:12 AM, the eighth BABA price indication is 90-91 now down to a one-dollar range. The market makers are identifying the cents range so Alibaba is very close to trading and will open between 90 and 91 at a market cap exceeding $220 billion on par with huge companies such as WMT. The tension mounts. At 11:21 AM, the ninth price indication for BABA is 91-92 so the cents level will be identified within this new one-dollar range. People are willing to buy at any price sending the stock higher. The valuation of Alibaba is becoming very rich above 90. The market makers would like to open the stock as soon as possible to leave room for an upside pop in BABA. NYSE officials say BABA should begin trading in 10 to 15 minutes.

At 11:28 AM, the tenth BABA price indication occurs at 92-93 zeroing in on 92.50. Jack Ma is returning to the trading floor so the opening for Alibaba is only minutes away. YHOO retreats from earlier gains and trades flat on the session. The Nadsaq turns negative joining the RUT. The VIX is above 12 creating selling pressure in equities and the 10-year Treasury yield is barely hanging on to 2.60%. The Dow is testing 17.3K support. At 11:42 AM EST, BABA is very close with buyers and sellers paired off at 93. The pricing process is taking longer than expected but the NYSE obviously does not want to drop the ball. Trading in Alibaba is imminent. The excitement reaches a crescendo as price zeroes in on 92.60-93.00. Here she goes. The price is frozen. “Open Sesame.”

At 11:53 AM, BABA, the largest IPO in history, begins trading with the opening print at 92.75 (the NYSE identifies 92.70 as the official opening price). Price rockets higher and is above 97 at 11:57 AM. The 98 level is hit at 11:57 AM with BABA up +45% (remember the base price is 68). Price hits 99 at 11:58 AM. Price hits 99.50 at 11:59 AM. The SPX and Dow remain a hair positive on the day while the Nasdaq and RUT indexes are negative. BABA prints a HOD at 99.68 at 12 noon (midnight time in China where Alibaba is based). The initial sellers come in and slap BABA lower to a 93 handle at 12:02 PM. BABA does not yet achieve the coveted 100 print in the opening minutes.

At 12:05 PM, BABA price drops to back kiss the opening price level. Boom. At 12:06 PM, price drops under the opening price at 92.75. BABA is trying to establish the 92 level as support. 100 million shares are traded within the first 10 minutes. The SPX turns negative joining the COMPQ and RUT. The Dow drops under 17.3K. Dollar/yen 108.97. The 10-year yield drops to 2.59%. The VIX climbs higher to 12.28 creating additional broad market selling pressure. Trannies turn negative. YHOO is tanking -2.7% now nearly a -5% turnaround off the intraday top.

At 12:13 PM, BABA holds the 92 support and stabilizes through 92-94. At 12:17 PM, BABA prints at the opening price at 92.60-92.75 deciding to bounce or die. The NYSE takes a bow saying that trading in BABA is orderly and all systems are fully operational. The shares traded in BABA already surpass TWTR’s entire opening day volume. At 12:23 PM, now trading for one-half hour, BABA is in a very narrow 92-93 range deciding whether to bounce or die from this support area.

Whoopsies daisies. At 12:28 PM, BABA loses the 92 support. Price loses the 91 and uses 90 as support. The yen is beaten lower sending the dollar/yen pair above 109 preventing the broad indexes from falling. At 12:38 PM, BABA prints the LOD at 90.04. The official opening print is 92.70 at 11:53 AM at 48.09 million shares. At 12:45 PM, BABA holds the 90 support level. YHOO is collapsing down -6%. The first hour of trading is complete for Alibaba at 12:53 PM with BABA using the 90 level as support. The IPO trades up +33% on its debut so far. The HOD is 99.70 and LOD 90.04. The day is young.

Note Added at 1:16 PM:  BABA falls through 90 support and prints an 89 handle with a LOD at 89.95. Price continue to fight to hold the 90 support.

Note Added 1:36 PM: BABA bounces off the 90 support and runs higher bumping up against the 92 resistance ceiling. Price is 91.27.

Note Added 2:00 PM:  BABA trades sideways supported by 90 below and resisted by 92 above. Price is 91.83 near the top of this range. The sideways 90-92 channel is key. BABA bulls win above 92. Bears win below 90. Price now at 91.98 testing 92 R so it is time to bounce or die.

Note Added 3:00 PM: Bounce. Price moves above the 92 resistance at 2:05 PM that now becomes support. Price back tests the 92.70 opening price resistance and rolls over to the downside. At 2:47 PM, whoopsies daisies. BABA loses the 92 support that now becomes resistance again. Price is 91.32. Key S/R is 92.70, 92.00 and 90.00.

Note Added 3:45 PM:  BABA breaks up through 92 and runs higher to try and punch through the 92.70 resistance. Price is 92.81. BABA wants to end the first day of trading strong and on an up note so price is pushing higher to print above the opening bell price at 92.70. The market makers will likely keep the price above 92.70 through the closing bell to avoid any embarassment.

Note Added 3:51 PM: Bingo. Price moves above 93 to 93.50.

Note Added 3:54 PM: The Alibaba magic carpet ride continues into the closing bell with price running towards 94.

Note Added 4:02 PM: Alibaba survives the first day of trading. The market genie fulfills Jack Ma's wish. BABA settles out ending the day at 93.17. The starting IPO price is 68 and the opening price is 92.70. HOD is 99.70 that occurred in the opening minutes. BABA fell 30 cents short of the 100 price level. LOD is 89.95 so BABA printed an 89 handle and the overall range is 89-100 today. BABA gains +38% on its first day of trading. YHOO tumbles nearly -3%. AMZN +2%. GOOGL +1.3%. FB +1.1%. AAPL -0.6%. BIDU -1.5%. EBAY -0.6%. Alibaba is valued at over $230 billion market cap. The chart is only trading for a few hours so using technical's may seem like folly but in the 5-minute time frame a few interesting ideas surface. The BABA key S/R is 99.70, 99.0, 95.0, 94.0, 93.0, 92.70, 92.0 and 90.0. The 90 support held today. The blue lines on the 5-minute chart show a C&H (cup & handle) pattern so the base of the cup at 90 and breakout level at 92.70 targets the 95.0-95.4 area. The stochastics (overbot) are negatively diverged and content with seeing price move lower going forward and wants to create a spank down. The other indicators are long and strong (green lines) wanting to see higher highs in price after any pull back in this 5-minute time frame and the RSI has not reached overbot territory. So the projection is for a continued sideways up move likely to the 95-ish C&H target in early Monday trading. At that time the neggie d should form for the indicators to create a roll over to the downside. Remember, these are only 5-minute candlesticks so the thought is that the 95+ may print on Monday morning followed by a topping out and roll over. Price may simply stumble through 93-95 in the early going. A break up through 95.0-95.4 would send price to 99 so BABA bears will need to hold the line at 95 and BABA bulls will want to break up through 95. Bears win under 90. The Alibaba IPO is successful after its first day of trading.

TNX 10-Year Treasury Note Yield Negative Divergence Developing

Similar to the USD dollar chart, the yield is moving higher with negative divergence (red lines) creating an initial pull back. Overnight, the yield has dropped from 2.64% down to 2.60% currently. The 200-day MA at 2.65% creates overhead resistance. The MACD line remains long and strong so yield will want to print another higher high before the MACD goes neggie d and the firm near-term top in yield occurs.

Keystone highlighted the TNX daily chart with the green falling wedge, oversold conditions and positive divergence (green lines) three weeks ago forecasting the up in yields, which occurs. The pink dots show how yield is extended to the downside with the moving average ribbon indicating that price is overextended to the downside requiring a mean reversion, which occurs. The 20-day MA is crossing above the 50-day MA which is bullish for yields (bearish for note and bond prices) but as often occurs with moving average crosses, they by nature lag, so yield is actually topping out in the near term.

Into early next week the expectation is that yield will come back up and attack the 2.65% resistance level which is both the 200-day MA and strong overhead horizontal resistance over the last few months. The yield should stall at 2.65%-2.67% and then trail lower for a few days or week or two. The TNX weekly chart continues to show some long and strong juice, like the weekly dollar chart, so after a near term pull back in yields, the yield should venture higher again in the weeks ahead. The 2.75%-2.80% resistance level is very important where the game would change and the 3% and higher yields will be on the way as the inflationists have projected for the last few years. The disinflationary and deflationary funk remains as long as the 10-year yield remains under the 2.65%-2.80% area. Yields may move higher to test the 2.75%-2.80% area into the end of the year but the current expectation is that the higher resistance levels will hold and then yield will resume the sideways to sideways lower path ahead for 2015.

The 50-week MA is also at 2.65% so in the very near term this is an important land in the sand. The expectation is that 2.65% will be tested early next week and hold with yields dropping back to 2.50%-2.55% but then for the weeks ahead more upside in yields should occur with the 2.65% level giving way to set up the test of the 2.75%-2.80% as the year moves towards an end. 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 5:02 PM:  TNX drops today to 2.59% but the MACD line remains long and strong so the anticipation remains that yield should move back up to test the 2.65% resistance so the MACD line can negatively diverge.

USD US Dollar Weekly Chart Sideways Symmetrical Triangle

The dollar spike since May is remarkable. The thick green lines show a sideways symmetrical triangle pattern with vertical side of about 16 handles. Price breaks up and out of the triangle at 80 so 96 is the upside target. The stochastics are overbot and will help create a near-term pull back in concert with the dollar daily chart (see previous chart). The green lines show a long and strong profile wanting to see higher highs for the dollar after any pull back occurs and the dollar desperately needs to take a breather from the obscene spike higher. The 10-year yield has been moving up with the higher dollar so any dollar softness in the near term would send the yield slightly lower. The 10-year yield drops from 2.64% to 2.60% over the last few hours.

The RSI and stochastics are in overbot territory. The move has such strength that the dollar would be expected to remain elevated in the 83-87 area for the months ahead. Moving into the end of the year and start of 2015, the 85.5-86.0 area is targeted. The dollar may spend many weeks and months moving sideways with the sideways up bias and ultimately target the 88 resistance in 2015 and 2016, or far sooner if a negative market event occurs. If 88 is taken out then the path to the 96 triangle target will be firmly in play.

For the weeks forward the dollar will likely trade sideways choppy with higher highs expected. A more extended pull back and softness and sideways to sideways lower bias may occur moving towards the end of the year and into early 2015 but the chart is very favorable for the dollar bulls in the intermediate and longer terms. If deflation bites the US as it is biting Europe and infecting other parts of the globe, the dollar move higher would occur in concert with deflation but the yields would not be expected to rise as traders and analysts expect. The path will need to be reassessed every couple weeks. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

USD US Dollar Daily Chart Overbot Rising Wedge Negative Divergence

The explosive move higher in the dollar basket is astounding. ECB President Draghi is starting to fire the QE money bazooka and is promising big stimulus in 2015 which beats the euro lower and provides more dollar upside fuel. The dollar moves from 79 to 85, +7.6%, in only 18 weeks time; a pace of +0.4% per week. From the 79.7 low in early July, the dollar leaps +6.7% in only 11 weeks; a pace of +0.6% per week. The stronger dollar is pounding oil, gold, silver, platinum, copper and commodities lower.

The overbot conditions, rising wedge pattern and negative divergence create the initial spank down. Price is now at 84.56 (brown dot). The MACD line is rolling over and watch for the negative cross (red circle) to verify an ongoing pull back in the dollar. The ROC is already printing a weak and bleak profile wanting to see lower lows for the dollar after any bounce occurs. The blue channel is in play and a move back to 84-ish is a reasonable expectation over the near term. The 10-year yield, TNX, is rising with the rising dollar so a near-term pull back in the dollar may soften the yield rise.

The channel lines show the wild move occurring in the dollar with a sideways channel in play in May-June, then the launch develops legs in June-July with a breakout in late July. Then the dollar runs up an even steeper channel during July-August and starting late August goes parabolic running vertically higher to the current top.

The weekly chart is topping out but it still has some long and strong strength in the indicators so the daily chart should keep the dollar in check at 84.0-84.5 for a few days or week or two, then the upside should continue to print new highs, albeit not continuing the parabolic run, and then roll over in the weeks ahead. There remains dollar strength on the weekly basis but as the chart above shows, the dollar should pull back and digest the obscene move higher in the near term. 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 5:04 PM:  USD comes up today to print at 84.86 another equal or higher price with all indicators negatively diverged so the dollar would be expected to pull back for a much needed rest.

SPX Daily Chart New All-Time Record Highs Tight Band Squeeze Bull Flag Pattern Negative Divergence Developing

The central banks are relentless beating the bears senseless day after day. The PBOC announces more China stimulus this evening adding to the liquidity injections announced earlier this week. Global markets are floating in a sea of free and easy money courtesy of the PBPC, BOJ, Fed and ECB. US futures are strongly higher. Copper is higher. The broad indexes are already champing at the bit to explode higher in Friday trading. The SPX prints a new all-time high at 2012.34 and new all-time closing high at 2011.36.

Placing this central bank money pumping aside for a second, let's assess the technicals. The previous daily chart shows the tight standard deviation bands (pink arrows) squeezing out a huge move ahead. We identified the prior moves of from 80 to 90 handles and from the bottom in the 1970's, the SPX would target 2050 and higher if the upside squeeze continues. Note that price is exactly at the top band and the bands are moving out locking in the upside move, however, the bears have a tiny window tomorrow to pull a hard reversal. If the markets continue higher as futures indicate the bulls are going to target the 2050.

The blue lines show a potential bull flag pattern. The first leg is from 1910 to 2000-ish, call it 90 points, then a sideways to sideways lower consolidation occurs, then the second leg begins from the 1970's also targeting the 2050-2070 area. Volume should be a bit more robust to confirm the bullish rally. It looks like nothing but blue skies for the market bulls. Are there any flies in the ointment?

The indicators are not enthusiastic at all about the market rally. The red and maroon lines show universal negative divergence across all time frames except the VST where the bulls are creating energy. The Fed dovishness and Chinese stimulus are creating one heck of a party the last three days. Price would be expected to bump along the upper trend line until the very short term indicators negatively diverge.

The purple boxes for the ADX are interesting since the last strong trend for the SPX was actually the downtrend in late July and early August which ended not due to technicals but due to news; just like this week's rally is caused by all the central banker easy money news. President Putin announced a desire to calm the Ukraine civil war which created the early August bottom. The move up for six weeks, as impressive as it is, only results in an ADX of 17 which indicates that the move up is surprisingly not a strong trend at all. If the tight bands were not squeezing out a strong move, the projection would be a topping out at 2010-2015 in the coming days and a roll over to the downside.

Tomorrow is an important day since it will provide further insight concerning the tight band squeeze. Considering the Chinese stimulus orgy occurring tonight (Thursday evening), the bulls have to be given the upper hand with the 2020-2070 area targeted. If the Scotland vote surprises, that would help the bears but that is unlikely. If the bears are going to stop the upside they have to make a stand on Friday. Otherwise, the bulls will run strongly higher through next week. 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 2-Hour Chart New All-Time Record High Sideways Channels Expansion Pattern Negative Divergence Developing

The SPX runs higher this week fueled by the Fed, China stimulus, the BABA hype and the Scotland vote that appears to be maintaining the UK union. The SPX prints a new all-time high never seen before in history at 2011.79.

The neon blue expansion pattern is in play with the upper rail targeting 2020-2030 but the current status of the chart indicators are not enthusiastic for this level. The red lines show universal negative divergence across all indicators for the last month. The very near term RSI, histogram and stochastics are in negative divergence but the RSI can easily poke above the high from three candlesticks ago and also has not yet printed in overbot territory. The MACD line and money flow are long and strong in the VST so a higher high is desired after any pull back. Thus, 1 to 4 candlesticks are likely required to create the neggie d in the very short term (2 to 8 hours trading time; today or tomorrow) which will create the near term top.

Key S/R is 2011, 2007, 2005, 2002-2003, 1998, 1991, 1988, 1985-1986 and 1973. Price is currently favoring the sideways channel through 1985-2011. The expectation would be for the SPX to top out in the current 2010-2015 area and roll over to the downside either this afternoon or tomorrow. If price overtakes the all-time high at 2011.79 extra upside juice will help the bulls.

Bring up the SPX daily chart and study the tight standard deviation bands previously mentioned. The SPX is exactly at the upper band at 2011 so this is the last chance for bears. Either price has to reverse hard today or tomorrow, otherwise, the SPX is going to likely target 2050. The trading action is very important today and tomorrow. The firm result of the Scotland vote should be known around midnight or 1 AM EST. The BABA IPO prices this evening and begins trading tomorrow. OpEx Quadruple Witching occurs tomorrow so volume will be very high at the market open and at the close. 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 10:03 PM:  The bulls are running for another day with the SPX printing new all-time highs. The futures are higher this evening after China adds more stimulus hours ago. So the bears are smacked in the face again today and perhaps tomorrow. The RSI is up a touch higher and the MACD line and money flow are long and strong so price will want to make another higher high after any pull back so the chart still needs 1 to 4 candlesticks to roll over, about 2 to 8 hours, which is tomorrow or Monday. The 1-hour and 30-minute charts are already agreeable to rolling over.

Note Added 10:15 AM EST on Friday, 9/19/14: The stock market pops higher on the China stimulus and Scotland no vote. The SPX hits 2018 the top rail of the expansion pattern highlighted above.

Keybot the Quant Turns Bullish

Keystone's proprietary trading algorithm, Keybot the Quant, flips to the bull side at SPX 2005 this afternoon as Fed Chair Yellen creates the typical upside rally. VIX 12.37 is the key tomorrow. Bulls cleverly used a drop in volatility to pump the stock market higher but into the close the VIX regains 12.37 closing at 12.65 back in the bear camp so a bull-bear fight continues. Stay alert for a potential whipsaw tomorrow. Watch VIX 12.37. More information is found at Keybot's site;

Keybot the Quant

SPX 30-Minute Chart 8/34 MA Cross

The 8 MA remains above the 34 MA signaling bullish markets for the hours ahead. The 8 MA is at 1999-2000 so bears need to keep price below this level to curl the 8 MA downwards for a potential negative 8/34 cross either late today or tomorrow. If Fed Chair Yellen speaks dovishly this afternoon the bulls will likely keep running higher. The stochastics and ROC are negatively diverged creating the spank down in this 30-minute time frame but price will likely want to come back up again to the strong 2002-2003 zone to take another look. When that occurs watch to see if negative divergence forms as the thin lines in the right margin illustrate.

The brown lines show key S/R at 2011, 2007, 2005, 2002-2003, 1998, 1991, 1988 and 1985-1986. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 9:39 AM: SPX above 2003 threatening a break out and next target is 2005 R.

Note Added 9:40 AM:  Bring up the 30-minute chart; price prints a HOD at 2003.47 thus far. So 2005 is on the table. With the new price high, all indicators are negatively diverged except for the MACD line squeezing out some more juice so another higher high is likely in this time frame. Thus, perhaps a half hour or hour sideways, then half hour or hour down, then back up for a half hour or hour to satisfy the MACD long and strong profile, then potential roll over. You get the picture. Markets will probably play around and simply stagger into the Fed drama beginning at 2 PM EST (7 PM London time) when the story will be written.