The German bund performs a record selloff move over the last two weeks. Ever since last year the bund has been leaking lower and lower making lower lows and lower highs in yield as traders flock to safety buying bunds regardless of price (price higher yields lower). The German bund dropped to 0.049% and it looked like the 10-year will go negative in the days ahead joining the other short duration yields that are negative. But instead a rocket launch occurs in yield. Traders sell bunds in force sending yield from 0.049% to 0.450% in only a couple weeks time.; a huge 40 basis point move.
The positive divergence, oversold conditions, and mean reversion required (pink dots) created the bounce in yield. Indicators are now overbot with neggie d on the stochastics and Williams. Thus, yield may relax for a couple days but the RSI and MACD wants another higher high in yield. The 0.45% is resistance from January so perhaps a back kiss to the 0.30%-0.39% level is on tap then a move to 0.50%. For the weeks ahead, the bund may simply begin lining out sideways with a slight upward bias through 0.20%-0.60% the remainder of the year. Yield may spend a lot of time in the 0.30%-0.52% range 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.
The seesaw battle continues in markets with Keystone's trading algo, Keybot the Quant, flipping long at SPX 2106 on Friday afternoon. Financials and semi's boosted stocks. Stay alert for a whipsaw back to the short side as stocks cannot make up their mind this year on which way to go. More information is found at Keybot's site;
Keybot the Quant
GDX is the long gold miner ETF. GDXJ is long the junior gold miners which is prone to more dramatic moves and also allows exposure to any potential takeover spikes in the junior companies. There are many individual gold plays including NEM, GG, ABX, GOLD, RGLD, KGC, IAG and on and on. MUX remains a long-term favorite of Keystone's. NUGT is a 3x leveraged long gold miner ETF and DUST is the 3x leveraged short gold miner ETF but these and all 3x ETF's plays should be avoided as trades across the board.
NEM is enjoying a ride higher in April. GDX is up +4% this week and stringing together a respectable rally off the March low more than +10%. Price is fighting at the 20-week MA at 19.97 and the RSI is at the 50% pivot making a decision. Gold and the gold miners are not attractive currently due to their sideways choppiness and it is more prudent to wait for price extremes to ferret out a trade. Gold miner bulls win with price above 20 moving higher and the RSI above 50% moving higher. Gold miner bears win under 20 and with the RSI under 50% and heading lower. 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.
GLD is a long gold ETF. Ditto IAU. DGP is a double gold long ETN. Thus, the GLD, IAU and DGP and gold price charts and technical analysis are all the same. DGZ is a gold short ETF and DZZ is a double gold short ETF. Any triple ETF and ETN's should be avoided in trading.
The GLD weekly chart shows three positive divergence bounces occurring for gold since the beginning of the year (three arrows). Price cannot gain upside traction, however, and the money flow drifts lower for the latest price move over the last month. The lower green trend line is at 110 which remains in play.
The purple dots show price under the 20-week MA under the 50-week MA under the 200-week MA so a mean reversion higher occurs. This set-up is in play again now but price may want to slip a bit lower, even tag the 110 trend line, before it is over extended enough to the downside to create a bounce higher. Price may need a few days or week or so to settle in this 110.0-113.0 range
The GLD daily chart is the same as the previous gold chart. GLD drops under its lower band on the daily chart at 112.88 so the middle band at 115 is in play. GLD fills a gap at 112.50 from mid-March. Overall, the price action should favor the bulls moving forward for the weeks ahead although in the near term gold price may need a few days to settle at a bottom. Gold is in a choppy sideways pattern which makes it more important to try and wait for price extremes before placing a bet either long or short. Gold bears win under 110. Gold bulls win above 116. A move towards 110-ish with the indicators in positive divergence would set up a nice recovery bounce. GLD is currently at 112.63. 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.
A big move is coming for gold since the standard deviation bands (pink) are squeezing in tight. Like squeezing a tube of toothpaste the pressure builds then boom, the cap flies open and the contents fly across the room, the only question is which direction. Price is honoring the standard deviation limits since March moving from the low boundary to the upper boundary and back again (pink dots). Price has violated the lower band so a move back to the middle band, at a minimum, at 1199, is in play--unless a big whoosh down begins right away due to the tight squeeze.
The chart indicators are squeezing in sideways not tipping their hand on direction. Gold bulls are happy with the RSI and stochatics above 50% while gold bears are happy under the 50% levels. Gold bears win big under 1181. Gold bulls win above 1217. Price staggers sideways through 1180-1215.
As this is typed, gold drops 8 bucks to 1175 so the move out of the tight bands may be a flush lower. Gold is currently not attractive as a long or short. If the move is lower now then it would be prudent to wait for a near-term bottom to go long. At the same time an upside breakout is not in play until price moves above 1217. 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.
The COT Report chart shows the peaks in gold price with red circles and the bottoms in gold price with the green circles. COT data typically lags by a few days or week or two but it is clearly evident how the COT sync's up perfectly with the gold price chart. The last three weeks the COT is stumbling sideways refusing to show its hand. This is reflective of the ongoing sideways blue channel in the gold price chart through the 1180-1215 range for the last six weeks.
When the bars on the COT chart exceed the outer boundary of the red lines that indicates gold price becoming too extended to the upside. If the COT bars are contracting down to the green lines then gold price is placing a bottom. Note how the bars on the COT chart move through the channel created by the green and red line indicating sideways behavior. If the bars move towards the green lines again then that will be in concert with price dropping and setting up a bottom for a recovery rally. If the bars move outward past the red lines then a price top is occurring in gold. Check the next COT chart to see what direction the next bars favor. 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.
The COT chart is courtesy of the COT Price Charts site, a very useful reference site and annotated by Keystone.
The utilities are playing with fire approaching the critical 50-week MA at 581. Price drops to a 582 handle yesterday and closes at 587. The bulls realize the seriousness of the 50-week MA so they rallied utes hard yesterday to try and create more distance above and away from this "trap-door." The 50-week MA cross on the utilities have been followed in markets for decades. If utes are in a weekly uptrend and above the 50-week MA, stocks are in a bull market. The weekly uptrend is no longer the case; the utilities are in a weekly downtrend which is an omnous sign for stocks, however, the bulls are holding price above the 50-week MA.
If UTIL drops under the 581, stocks will likely go into free fall within about one-half hour's time after the rupture occurs. This scenario remains in play moving forward so continue to monitor the 50-week MA for the days and weeks ahead. S&P futures are running higher pre-market so the bulls will float the indexes higher to begin the day.
The weekly trend is determined by looking back 15 weeks and comparing the closes. The thick neon blue line at the peak is 15 weeks ago and that 650 comparison level is in play all next week. Then for the couple weeks after the 640 and 613-ish levels are key. Thus, with UTIL down in the 580's it is likely the utes will remain in a weekly downtrend for another two to three weeks at least. This is an advantage for the market bears but they must take advantage of the weakness and push UTIL under the 50-week MA to open the trap-door and begin significant broad market selling. Bulls are fine if they can keep price above the 50-week MA and then in a few weeks regain the weekly uptrend. UTIL is moving through the sideways blue channel and was rejected at the top rail so perhaps it will move to the lower blue rail again. The chart also displays a H&S pattern. 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 11:24 AM: UTIL is at 587 as Friday trading is underway.
The market bears receive a big feather for their caps yesterday with price falling under the critical 200 EMA at 2095 signaling bearish markets for the hours and days ahead. The bears are on easy street and will continue creating market weakness as long as price stays under 2095. Bulls will rule above 2095.
Stochastics are oversold wanting to see a bounce which occurs off the intraday bottom yesterday. Other indicators are positively diverged (green lines) creating a bounce. The MACD line, however, remains weak and bleak so a lower low in price is desired, at least a visit to the 2077-2083 area again. Watch to see if the MACD line curls higher. Keep an eye on money flow since if it falls much further with a lower low as compared to a couple days ago then price should print another lower low going forward.
The low prints at 2076 and 2073 occur a week and one-half ago when the PBOC (China's central bank) stepped in to goose the markets with the lower triple R's for banks. The central bankers are the market. Note the huge central banker-produced spike in stocks sending price back above the 200 EMA creating another bull party.
The maroon lines show the top on Monday occurring due to the negative divergence, rising wedge and overbot conditions. Price is dropping through the falling wedge pattern (green). The bears are happy but can they keep the SPX under 2095 into the weekend? It is prudent to expect a back kiss of this critical 2095 level and with the S&P futures up +7 the bulls are likely pushing for a test and showdown early in the day. The SPX appears set to run higher to test 2095 where a critical bounce or die decision will occur determining market direction for the next few 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 11:26 AM: The bears are punched in the face with the SPX running higher to 2098 above the 200 EMA on the 60-minute at 2095.03 signaling bullish markets for the hours and days ahead. This drama will continue into Monday. The bears need to find a way to erase three points quickly and push the SPX back under the 200 EMA.
The low CPC put/call ratios (red circle) call the top in stocks as expected. It was tricky since there is a triple-low print with the CPC that does not typically occur. The first low number in mid-April was the first warning sign that markets are topping out due to excessive complacency. Shorts can be scaled into to anticipate the coming move lower in stocks, which occurs. The bulls throw a curve ball and end up creating choppy trading and sending the SPX above 2100 and even above 2120 for a new all-time record high while printing two more low CPC prints. However, if scaling in as SPX price ran higher, the trade works out fine and the SPX is now below the 2100-ish level from when the first CPC low print occurred. The buoyancy in the stock market is credited to how firmly the vast majority of traders believe in central banker easy money and how the stock market can remain elevated a long time as bankers keep printing money.
The CPC under 0.80, in the 0.7's and lower, signals complacency and a stock market top while the 1.20 and higher level indicates fear and panic entering markets where a market bottom will typically occur. The CPC is up to 1.05 not yet above 1.20 so the market selling should continue a while longer. S&P futures are up strongly +9 as this is typed Friday morning but since the CPC did not spike higher any bounce in stocks is likely going to give way to more weakness next week. Can a rally begin from here? Sure it can and traders may become more complacent again and send the CPC back down to the lows but that only signals that a market top is again at hand. Markets need to continue selling off until traders throw up their arms and profess that the end of the world is near (CPC above1.20) which will actually create a bottom and bounce stocks.
If you want to bring on longs it is prudent to probably wait until the CPC moves above 1.20 and the CPCE moves above 0.80. A full moon occurs late Sunday evening EST time and stocks are typically buoyant moving through the full moon. So perhaps the bulls stage a comeback rally into early next week, and it may be fueled by a Greece deal on Sunday, but again, the CPC needs to show fear so a proper near-term bottom will only take place when the CPC moves above 1.20. 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.
The euro is moving strongly higher off the 1.05-ish bottom only 13 days ago. The euro jumps to 1.1220 and as this is typed the euro is up to 1.1276. Price was extended below the moving averages requiring a mean reversion (blue dots). The green lines show the positive divergence that creates the price bounce and the indicators remain long and strong wanting further highs after any pullbacks.
The W pattern bottom is one of the most powerful formations in technicals. The W pattern is most powerful when it forms under both the 50 and 200-day MA's, as is the case above. The euro broke up through the 50-day MA at 108.87 a couple days ago. As a rule of thumb, the W pattern can be doubled to forecast a target; this would be at 119-ish an area of congestion at the beginning of the year.
The trend lower in the euro over the last year (with US dollar index moving higher) was a strong trend as shown by the ADX pink box, however, the strong downtrend ended as April began (the black ADX line falls below the mid-20's). With the euro now moving higher the ADX is perking up and if the ADX enters the pink box in the right margin the trend upwards for the euro will be dubbed a strong uptrend and expected to continue for a few months. For now, the trend higher in the euro should continue a few weeks. This will frustrate the huge consensus of traders that expect parity in the months ahead (euro 1.00).
The move higher in the euro will cause many sleepless nights for ECB President Draghi that is printing money to decrease the value of the euro to spur exports and manufacturing activity across Europe. The global central bankers have been playing games for the last six years colluding to drive global stock prices higher and inflate all asset classes. Perhaps the wheels are beginning to fall off the cart?
The euro should back kiss the 50-day MA at 1.09-ish but a sideways to sideways higher euro would be expected for the weeks ahead. Europe's economy was beginning to show slight signs of life due to the stimulus but a higher euro may choke off this little bit of happiness and create problems in the euro zone. 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.
