TRAN, the Dow Jones Transportation Average, peaked at 10804-10880 in late July so a -10% pullback, which is a correction, would be 9724-9792. TRAN came down to the 9750's into correction territory but now prints 9805. The trannies are keeping their heads above water while teasing correction territory. TRAN fell into a correction in May but then recovered. Trannies at 9805 is a -9.9% drop off the July top. Note that TRAN may take out the June low which would obviously forecast trouble 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 6:04 PM EST: The trannies stumble and fall -0.8% to 9764 in the Monday session close enough to say that the Dow Jones Transportation Average is in a correction. Note the low intraday print, LOD, at 9695 takes out the early June low which is not good. RUT small caps did the same thing.
The banks sink into correction territory (-10% off their peaks) as the yield curve inverts. The regional banks, very susceptible to the yield curve, fall more than the large money center banks. The KRE, regional bank ETF, peaked at 55.8-ish and closed at a high at 55.4-ish in late July at the market top. A -10% correction is 50.22 and 49.86, respectively. Price remains at 49.28 in correction. A bear market will occur for the regional banks if a -20% drop off the top occurs which would be 44.64 and 44.32 price levels, respectively. KRE at 49.28 is a -11.7% loss off the late July top.
The KRE peaked at 64 in June 2018. KRE collapsed to sub 44, a -31% crash and more, to end the 2018 year, descending into a bear market (-20% off the top). KRE then rallied back to 57 a +30% pop returning into a bull market earlier this year. The regional's then roll back over to the downside into a correction after sideways choppiness.
XLF, the large investment banks, insurance companies and other financials, are teasing a correction for one day, on Wednesday 8/14/19, during the stock market collapse. The money center banks are popping this morning with price up to 26.20.
The XLF topped out at 28.70-28.73 so a -10% correction is 25.83-25.86 and lower. The XLF came down to 25.90 pennies away from a kiss. XLF at 26.20 is a -8.8% loss off the late July top. The KRE regional banks are mired in a correction while the money center banks and insurance companies are managing to keep their heads above the negative floodwaters. 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 US 30-year Treasury yield prints a record low below 2.08% on 8/14/19. Yield falls apart from there under 2.06% and then below 2% now trading at 2.00%. The global bond rally continues sending yields lower and the rally strengthens with each trade war tweet from President Trump or comment from the communist leadership in Beijing. 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 2-10 spread in US Treasury yields finally invert joining other spreads that have been inverted for months. Interestingly, the UK yield curve inverted 15 minutes before the US yield curve inversion. The 10-year printed at 1.61% to 1.62% yield while the 2-year yield was at 1.63% a 2 basis point, or bip, inversion. The yield curve inversion is a harbinger of recession for the months ahead. This is evidenced back in 2006 for that inversion.
Stocks peaked on October 2007 as the inversion faded and the spread increased. The stock market began crashing in the back half of 2008 into early 2009 when the Federal Reserve stepped in, Helicopter Ben, to save equities protecting the wealthy elite class that own large stock portfolios.
The big question mark is how one decade of central banker largess impacts the yield curve inversion? The inversion occurred each time prior to the last seven recessions. Interestingly, instead of months ahead, could the recession already be sitting on the front porch, tapping on the living room window, and no one realizes it yet? The start of recessions are never exactly identified until years later when all economic data is revised umpteen times. The worries over recession send the stock market lower. on 8/14/19 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.
Keybot the Quant flips negative yesterday at SPX 2879. The model is riding a roller coaster this week with an unprecedented triple-whipsaw that has never occurred in the over one-decade operation of the quant. The price action is historic. Bears will be rewarded with more stock market carnage if the SPX loses 2806. Bulls will stop the market mayhem if they move the NYA above 12538. More information is at Keybot's site;
Keybot the Quant
Note from 4 AM EST: S&P futures are up over +20. Treasury yields are; 2-year 1.57%, 5-year 1.50%, 10-year 1.59%, 30-year 2.01%. The 2-10 spread is 1.5 bips. The 2-10 spread inverted yesterday by a couple basis points for the first time since 2007 which is a harbinger of recession ahead. This concern, along with the US-China trade war, sends stocks south.
Note from 6:09 AM EST: The Chinese communists say they will retaliate against President Trump's tariffs harpooning the futures. S&P -5. Dow -68. Nasdaq -39. Russell flat. VIX 23.14. Gold 1521. Treasury yields are; 2-year 1.53%, 5-year 1.46%, 10-year 1.55%, 30-year 1.98%. The 2-10 spread is 1 bips. The 30 falls below 2%. The 2-5 spread is inverted by 7 bips.
Note Added 6:51 AM: S&P -16. Dow -178. Nasdaq -80. Russell -7. VIX 23.76. The Chinese are spewing more negative rhetoric concerning trade negotiations.
Note Added 7:14 AM EST: S&P -3. Dow -36. Nasdaq -30. Russell flat. VIX 22.78. Treasury yields are; 2-year 1.51%, 5-year 1.44%, 10-year 1.53%, 30-year 1.97%. The 2-10 spread is 1.8 bips. Yields keep slip-slidin' away as Paul Simon will sing.
Note Added 7:30 AM EST: The tape is going bonkers. There must be favorable news out there since futures bounce again. Perhaps the insider traders are told ahead of time that the Retail Sales data will be fine. This is the way the crony capitalism system works; there's always something shifty occurring under the surface that makes the rich richer. S&P futures are up +12 and bouncing back and forth to +24. Dow +109 also bouncing all over the place like a ping-pong ball. Nasdaq +26. Russell +8. VIX 22.96. Both futures and the VIX are higher so one of them is wrong.
Note Added 8:51 AM EST: Retail Sales blow past the estimates. Of course they do. The cronies dance with glee making millions without breaking a sweat. Filthy crooks. S&P +16. VIX 21.79. Volatility slips negative on the session so at this juncture, the bulls are correct. Folks are so enthusiastically happy about the beat in Retail Sales that they do not notice the 9K increase in Jobless Claims this week; 9,000 pink slips. Industrial Production is weak.
One of Keystone's key market signals is the 40-week MA on the NYA that determines the stock market's cyclical pattern ahead. Of course if NYA is above the 40-week, the bulls have their chests puffed out and all is rosy in the stock market. When the NYA drops below the 40-week MA, the bears are biting off chunks of bull flesh.
The NYA failed at the 40-week moving average last week ushering in a cyclical (weeks and months ahead) bear market but the bulls managed to push price back above the 40 maintaining the cyclical bull market, at least for now.
If the NYA loses the 40-week MA at 12532, the stock market is in a heap of trouble and will begin falling apart. The NYA begins the week of 8/12/19 at 12748 which is 216 points above the Armageddon line. Bears would need a -1.6% drop in the NYSE Composite to usher in a negative financial world ahead. US futures are down about -0.7% across the board with the VIX at the 19.91 palindrome three hours before the opening bell for the Monday regular trading session. That would take the bears halfway to their goal.
Price receives the spankdown due to the negative divergence (red lines), overbot conditions, rising wedge pattern and upper band violation. Note how price retreats to the middle band, which is also the 20 MA, and then travels to and violates the lower band at 12420. A bounce was in order, which occurs, and nearly takes price back to the middle band again.
The RSI is at 49% slipping into bear market territory below 50%. The MACD negative cross occurs and stochastics are looking weak and bleak. Ditto money flow that prints a new low going back to the beginning of the year.
The ADX shows a strong trend higher that petered out in mid-2018 (pink box). The Fall 2018 stock market crash occurs, the 40-week MA fails, and equities go into free fall. The ADX shows that this negative behavior was developing into a strong trend that would linger but as usual, the corrupt global central bankers step in to save the day in January protecting the wealthy elite class (that own large stock portfolios).
The Fed, ECB, BOJ and other global central bankers coordinated continuous jaw-boning and promises of easy money forever starting 1/3/19 when the stock market was about to crash. This is the way the crony capitalism system functions. Interestingly, as stocks recover, and move back above the 40-week MA ushering in the cyclical bull market ahead, the ADX trends lower!! The ADX firmly tells you that the move higher this year in equities is NOT a strong trend higher.
The move higher this year in equities is central banker driven. The world remains awash in liquidity and the central banks just added another foot of cash on top of the piles of cash already laying on the ground everywhere. That money has to go somewhere and folks pick it up and buy real estate, stocks, bonds antique cars, art, vineyards, all kinds of stuff, inflating asset prices in all classes; the bubble of all bubbles.
Watch the NYA 40-week MA cross going forward. Big trouble is waiting for anyone long the stock market if the 40 fails. Bulls will continue drinking Fed wine, ECB champagne and BOJ sake and buying stocks with reckless abandon as long as the NYA remains above the 40-week MA. 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 Thursday Morning 8/15/19 at 7:25 AM EST: Yesterday was market carnage. Futures are flat to negative this morning awaiting a barrage of data. Interstingly, the full moon peaks at 8:29 AM EST just as Retail Sales and other data hit the tape. Stocks are usually bullish moving through the full moon each month but all bets are off in this current crazy atmosphere. The NYA lost the 40-week MA at 12528 ushering in serious market negativity. The stock market has fallen into a cyclical bear market. Every day the NYA remains below 12528 is another nail in the bull coffin for months and perhaps a year or two ahead. Bulls must regain 12528 or they are toast. Another very important Keystone market signal, probably the most important, is the SPX 12-month MA cross. The 12-month is at 2806. If SPX 2806 fails, it is over for the stock market that may quickly descend into a crash scenario. The bulls will live to fight another day if they can hold the line at SPX 2806. Use NYA 12528 and SPX 2806 as your market direction guides ahead. One of them will flinch and tell you the true path ahead for equities. Housing Starts are critical tomorrow morning. Remember, Keystone proclaims that a housing recession began on 7/17/19 one month ago.
Brent crude oil falls into a bear market. WTIC crude oil dips into a bear market. Analysts consider a -10% pullback off a top a correction and a -20% drop is a bear market. A +20% rise off a bottom is then a bull market.
Brent oil fell into a bear market in late 2018 during the stock market crash but then exploded higher back into a bull market, courtesy of global central banker largess, the first half of this year. Brent tops out at a 72.6 closing price and 74.7 intraweek high. Thus, a -20% drop from the top is 58.1 and 59.8, respectively. Price is below both levels and Brent is in a bear market.
WTIC oil falls into a bear market this week but manages to temporarily fight-off the pending negativity. West Texas fell into a bear market in late 2018 during the stock market crash but then exploded higher back into a bull market the first half of this year. WTIC tops out at a 64.3 closing price and 66.5 intraweek high. Thus, a -20% drop into a bear market is 51.4 and 53.2, respectively. Price fell below both levels this week ushering in a bear market for West Texas Crude, however, price has managed to move back above the key 51.4 level. Keep watching the 51.4 level. WTIC oil is currently trading at 52.77 and Brent oil is at 57.77. The spread is at 5 bucks.
The global economy is slowing. Oil demand is slowing. This is evidenced by the 20-week MA and 50-week MA cross (red circles). This is a very negative signal for oil over the intermediate and longer term. WTIC is desperately trying to create a positive 20/50 cross but both moving averages are starting to roll over. Ditto Brent.
This morning, the IEA (International Energy Association) lowers its oil growth forecasts calling the oil demand "fragile." 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 Sunday, 8/11/19: WTIC oil rallies up to 54.50 avoiding the bear market, for now. Brent oil rallies to 58.53 trying to recover from its bear market.
The rally in chips creates the up move in the stock market in the Thursday session. During the last half-hour of trading in the regular session, the VIX collapsed below the 200-day MA at 17.18. This action triggered algorithms to execute large-block orders and created the big pop higher going into the closing bell.
The stock market trouble started as July ended. The VIX jumped above the 200-day so it was over for equities. The VIX and SPX (broad stock market) move inversely 90% or more of the time.
The Keybot the Quant algorithm flipped long yesterday due to the strength in semi's which will again tell the story today. S&P futures are down -16 with the VIX popping to 18.27 (red cross) about 5 hours before the Friday morning opening bell for the US regular trading session. Thus, the bull joy at the end of the day yesterday did not last long.
Note that Keybot is tracking VIX 14.56 as the key bull-bear line in the sand. The algorithm is telling you that volatility remains elevated and continues creating market negativity. The VIX 200-day MA is a key technical indicator that simply separates a short-term bull market from a short-term bear.
SOX 1478.25 and VIX 17.18 rule the roost for Friday trading and will dictate stock market direction. The VIX is above 17.18 so the bears are growling.
If the VIX remains above 17.18, and the SOX loses the 1478.25 level, the stock market is in trouble. If the VIX remains above 17.18, but the SOX does not fall below 1478.25, stocks will chop along sideways into the weekend and will have to resolve on Monday morning.
If the VIX drops below 17.18, creating joy, but the SOX loses the 1478.25 level, stocks will chop sideways and have to resolve on Monday. If the VIX drops under 17.18, and the SOX remains bullish, stocks will be marching higher. 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 5:05 AM EST: VIX is trading for a couple hours and sits at 18.16 with S&P futures -14.
Note Added 5:23 AM EST: VIX is at 17.99 with S&P futures -11.
Note Added 5:48 AM EST: VIX is at 18.28 with S&P futures -16.
Note Added 6:41 AM EST: VIX is at 18.46 with S&P futures -19.
Note Added 7:19 AM EST: VIX is at 18.55 with S&P futures -21.
Note Added Sunday, 8/11/19: The SPX drops 19 points on Friday, -0.666%, to 2919. VIX finishes the week at 17.97 above the 200-day MA so the bears are growling.
Keybot the Quant algorithm flips to the bull side today at SPX 2924 just before lunch time. Stay alert for a potential whipsaw back to the short side in these unstable markets. Chips are giving the bulls the upper hand. SOX 1478.25 is the bull-bear line in the sand. More information is found at Keybot's site;
Keybot the Quant
The 30-year yield is in retreat, like all other yields in the US and around the world, as the global economy stutters. Global growth is questionable going forward. Falling oil prices have a lot to do with lack of demand. The 30-year yield drops to 2.12% at the low yesterday.
US Treasury notes and bonds are in a 3-decade rally (higher bond and note prices and lower yields). The Treasury action has moved sideways the last three years, however, the collapse in the 30-year yield teases the all-time record low at 2.102% and all-time record closing low at 2.11% both on 7/8/16 about 3 years ago. The globe is falling into a disinflationary and deflationary funk after the central banks spent 11 years making the wealthy privileged class, that own large stock portfolios, filthy rich. 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 Friday Morning, 8/9/19: The 30-year yield is at 2.23%.
