Keystone's Trading Week in Review and Path Ahead 4/27/13

On Friday, 4/19/13, OpEx. All eyes in the States are riveted to the news coverage of the Boston Marathon terrorism manhunt. One suspect is shot dead and the other is on the run.  The BOJ increases the money pumping talk ahead of the G20 meetings so the yen weakens, dollar/yen rises to over 99, and the equity futures markets move higher. The dollar/yen was under 98 yesterday afternoon and now over 99. GE earnings are weak and the stock sells off pre-market. After the opening bell, the markets are mixed with the Dow weak but the SPX is up. This is due to weakness in the IBM, GE and MCD components today.  The financial sector recovers and helps elevate markets. Copper is now down 20% off its top and in a bear market. The SPX moves back above the 50-day MA. Crude oil lingers at 88 and gold at 1400. The markets move higher into the closing bell and print a strong up day. Higher financials and lower volatility help create the upside as well as the BOJ easing.  Keystone’s 30-minute chart shows the 8 MA crossing above the 34 MA signaling bullish markets for the hours and days ahead. The SPX gains 14 points, +0.9%, to 1555, but is down -2.1% for the week. The Dow is flat today and down -2.1% on the week. The Nasdaq is down -2.7% this week and the RUT is off -3.2%, clearly tech and small caps leading lower the opposite of what should occur for a strong economic recovery. IBM drops over -8% today. The utilities sector continues an obscene parabolic move higher with UTIL now above 528 as investors chase dividend stocks and perceived safety stocks creating new asset bubbles. At about 9 PM, the second Boston Marathon terrorist suspect is cornered in a back yard and taken into custody. Fitch downgrades the U.K.

On Saturday, 4/20/13, Baron’s magazine newspaper cover proclaims; “Dow 16,000.”  Many times the headlines help identify tops and bottoms in markets from a contrarian perspective.  The G-20 is unconcerned about the BOJ yen devaluation so the equity markets will rally on a weaker yen as they did on Friday (weaker yen creates a higher dollar/yen pair and higher equity markets). The politicians instead choose to label Japan’s currency debasement as a program that is addressing deflation and targeting 2% inflation. The futures climb higher. Chairman Bernanke will not attend the Jackson Hole conference this year due to a scheduling conflict. Each summer traders look forward to Jackson Hole since the Fed always announces a new QE program in this time period. Is Bernanke signaling the markets to not expect further QE? The Fed is likely worried about the new asset bubbles created in the dividend and perceived safe haven stocks due to the current easing.

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On Monday, 4/22/13, Nikkei and Japan auto manufacturers bounce strongly on the weaker yen. The dollar/yen moves higher to tease the 100 level again.  Fitch downgrades the U.K. following along after Moody’s downgrade last week. The Italy election drama continues with the reelection of the aging president and hopes continue that a government can be formed. Europe remains surprisingly resilient as recession and depression continues. The S&P futures are up nine on the weaker yen.  Crude oil moves up from the sticky 88 level.  Brent briefly moves up over 100.  CAT earnings cough up a hair ball missing on both the top and bottom lines and guidance is reduced moving forward.  CAT is a key proxy for China and trades flat since the bad news was expected. GE is downgraded.  China says that some short term pain may be required to set up a stronger future. The broad indexes trade sideways after the opening bell and then drop on the disappointing Existing Home Sales. Interestingly, a few minutes after the open, GOOG experiences a mini flash crash, dropping -3.5% in one minute’s time then recovering.  These mini flash crash events are becoming more and more common.  Putin says that Russia’s economy will likely remain in a malaise moving forward.  Crude oil continues to fight at the 88 level and Brent at the 100 level. Copper continues to collapse.  As the day moves along, Keystone’s 60-minute chart shows the SPX moving above the 200 EMA signaling bullish markets for the hours and days ahead. At 2:50 PM, a moment of silence is observed in Boston and at the exchanges in honor of the three deaths and the many wounded in the terrorism attack last week at this time. Into the closing bell, the SPX fights to regain the 20-day MA at 1564 but closes below at 1562.  Tech is strong today while small caps are weak. Canada thwarts a terrorist attack, that was planned against a passenger train, but the markets do not react negatively on the news. After the bell, NFLX earnings beat estimates and the stock soars higher. TXN earnings are in line and it receives a lift. The U.S. airplane traffic is snarled with delay’s due to the sequestration cuts.  Customer complaints are increasing.

On Tuesday, 4/23/13, China PMI data is weaker than expected.  Copper, commodities and materials markets are sold off.  France PMI comes in better than expected but Germany, and Europe in general, is worse.  The euro drops under 1.30.  Europe warns the U.S. about banking regulations. The BOJ easy money is chasing European bonds with the Germany 10-year yield briefly dropping under 1.20%, a historic low.  The 10-year Treasury drops to 1.66% not seen since December 2012. DD, UTX, TRV and other earnings reports all beat their lowered EPS estimates but the trend continues with weak top line revenues. Companies are meeting EPS due to laying off or beating existing employees, not by growing the top line sales.  The S&P futures are all over the map, down seven early this morning, then up seven, now up about four.  The opening bell rings and the broad markets launch higher. The dollar/yen is moving higher to 99.40 and the weaker yen takes equity markets higher. The SPX tests the key 1576 resistance level and moves up through to print a HOD at 1579. New Home Sales are lackluster and manufacturing data is weak but traders do not care since the Fed and BOJ are pumping the markets higher with easy money.  YUM is downgraded ahead of its earnings later today. Keybot the Quant algorithm flips to the long side at SPX 1569. At 1:07 PM EST, the AP’s Twitter account is hacked and a message is released on Twitter saying the Whitehouse is under attack and Barack Obama is injured. Within a couple minutes, the Whitehouse rebuffs the story and in quick order it is exposed as a hoax and fake tweet. One tip-off was that the President’s tweet would not say Barack, it should say President Obama if legitimate.  However, the broad indexes experience a mini flash-crash dropping -1.1% in a few minutes time. The whole flash crash event took about ten to fifteen minutes from where prices fell and then recovered back to the levels prior to the flash crash. The SPX dropped 16 handles and the Dow dropped 151 handles. The mini flash crashes are now occurring across indexes and individual stocks, such as GOOG, with a frequency of every few days (type ‘mini flash crash’ into the search box to the right to view the charts). The bulls enjoy a strong start to the week, fake tweet and all, with the SPX up well over 20 handles in two days time. Strong financials and semiconductors and lower volatility provides the bull fuel. After the bell, T earnings beat bottom line but miss on the top line revenue as does most other company these days. Companies are meeting EPS not due to robust sales but rather due to cutting expenses and employees and whipping the current employees to produce more with less. AAPL reports earnings that are in-line and announce an increase in buybacks which launches the stock after hours.  Interestingly, in the conference call, Apple admits that sales estimates will be lowered moving forward and also that a wider Smartphone screen, that would be more in line with Droid Smartphones, is not in the works for the iPhone and Apple is sticking with the skinnier iPhone screen. AAPL was up over 420 AH’s and immediately plummets to the closing price at 406 on this news.

On Wednesday, 4/24/13, German sentiment is weaker than expected.  Earnings continue to show beats for the bottom line EPS but miss on the top line revenues.  The weakening yen has a direct impact on the equities markets these days. As the dollar/yen goes, so goes the equity markets.  The high-yield investment instruments are in bubble territory. All the folks chasing yield will likely experience a rude awakening moving forward. The markets open and travel flat all day long.  Dividend stocks are slapped perhaps as traders realize these stocks are pumped far too high on central banker easy money.  T is down -6% today, PG down -5% and LLY down -3%. Interestingly, the drop in these stocks wipe out the yield in only one day.  The 3 to 7% yield on dividend stocks will not appear attractive if the price of the stock is 20% lower a few months from now. Durable Goods Orders are weaker than expected. The CPC put/call ratio is in the 0.7’s again signaling complacency and a market top occurring.

On Thursday, 4/25/13, China banks are negatively impacted by bad real estate loans. U.K. GDP is a smidge positive so a triple-dip recession is avoided. Spain unemployment rate is 27.2%, the highest in 37 years, at the same levels of the Great Depression in the U.S. in the 1930’s. Spain is now in seven quarters of recession. Bellwether UPS earnings are in line which provides a boost to equities. The markets open but a software glitch occurs shutting down the CBOE options trading for three and one-half hours. The flash crashes and exchange outages are occurring far too often these days. The CBOE is back on line after lunch but the reason for the outage is not clear. The markets leap higher regardless of the CBOE outage with the SPX testing the 1593 all-time closing high but unable to push above.  At about 2 PM, Germany’s Bundesbank voices concern over the ECB’s OMT bond-buying program. This is no surprise since Germany has always held this position, but the stock market sells off and trails lower into the closing bell. The SPX prints the highs for the week at 1593 and closes at 1585.  The 10-year Treasury yield continues to travel through a tight two-week sideways range of 1.68%-1.72%. The sequester cuts at the airports are causing multi-hour delay’s with the flying public now voicing anger over the political games. Folks are mad at Congress’s incompetence rather than the FAA. After the bell, AMZN and SBUX beat on EPS but both miss on top line revenue, again repeating the ongoing weak sales theme. The Nikkei charts are topping out showing that the yen debasement may need to take a rest. The NYMO chart signals a market top in place now.

On Friday, 4/26/13, BOJ maintains the pledge for stimulus but data shows the deflation continues.  The yen actually strengthens on the news, so the dollar/yen drops to 98.64 from well over 99 yesterday and equity futures move lower. Analysts are now questioning if the dollar/yen will reach the psychological 100 level. The Nikkei is up an obscene 35% this year purely due to money-printing. The Japanese banks and auto manufacturers benefit from the weaker yen created by ‘Abenomics’. Spain protests flare-up with rioters clashing with police over the austerity and 27% unemployment rate.  Portugal protests heat up as well. Two million households in Spain have no one in the family working.  Protestors are now targeting individual politicians and others perceived to have created the current fiscal mess; a new and troubling twist in the debt saga.  All politicians, bankers and other power brokers around the globe are watching this new societal development with grave concern. Perhaps pitchfork and torch stores will open up on city street corners. The general public is up in arms since the bankers that created all the economic problems were bailed out and are now wealthier than ever, and the too-big-to-fail banks are larger than ever, while individual citizens are struggling each day mired in unemployment with taxes and other expenses increasing daily. The ECB says the bond-buying program may not be needed going forward since yields have calmed.  The BOJ easy money is finding its way to European bonds causing the drop in yields so the reason for calmer yields is not due to a recovering Europe, but rather more central banker intervention in markets continuing to distort price discovery. About 4% of Cyprus’s money deposited in banks was pulled over the last month, perhaps a bit under what would be expected since money is no longer truly safe in banks.  Of great interest is that the other European nations do not show significant outflows from bank deposits so folks do not appear worried about losing money when a bailout occurs. Go figure. Gucci reports the weakest sales in three years indicating that the wealthy continue to cut back on spending.  Merkel softens the rhetoric from the Bundesbank comments yesterday.   The initial read on Q1 GDP is 2.5%, weaker than the expected 3.2%. The markets open and sell off. The Consumer Sentiment is in line with estimates but markets sell off further with the SPX at 1578 at lunch time. Volatility moves strongly higher signaling trouble for markets but then trails off lower into the closing bell allowing the broad indexes to recover. The flat day ends with the SPX at 1582 failing to print all-time highs this week.  The Dow closes at 14713. For the week, the SPX is up 1.7%, the Dow up +1.1%, the Nasdaq up +2.3% and RUT up +2.5%.  Tech and small caps led higher which is a plus for the bulls.  Semiconductor’s are up 4.4% this week.  The parabolic move in utilities continues as traders use the Fed and BOJ easy money to fuel new asset bubbles in dividend stocks, utes, REIT’s, high-yield instruments, healthcare and other perceived safe havens.  Congress passes stop-gap measures to remedy the airport problems caused by the sequester cuts; of course just in time for themselves to fly home for a short recess.

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On Monday, 4/29/13, Personal Income and Outlays. Pending Home Sales.

On Tuesday, 4/30/13, EOM. Chicago PMI. Consumer Confidence. FOMC two-day meeting begins.

On Wednesday, 5/1/13, ADP Jobs Report. PMI Mfg Index. ISM Mfg Index. Construction Spending. FOMC Meeting Announcement.

On Thursday, 5/2/13, ECB Rate Decision and Press Conference. Jobless Claims. International Trade. Productivity and Costs.

On Friday, 5/3/13, Monthly Jobs Report. Factory Orders. ISM Non-Mfg Index.

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On Tuesday, 5/7/13, 3-Year Note Auction.

On Wednesday, 5/8/13, 10-Year Note Auction.

On Thursday, 5/9/13, Jobless Claims. Wholesale Trade. 30-Year Bond Auction.

On Friday, 5/10/13, Treasury Budget.

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On Monday, 5/13/13, Retail Sales. Business Inventories.

On Tuesday, 5/14/13, Import and Export Prices.

On Wednesday, 5/15/13, PPI.  Industrial Production.

On Thursday, 5/16/13, Jobless Claims, CPI and Housing Starts. Philly Fed.

On Friday, 5/17/13, Consumer Sentiment. Leading Indicators.

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On Wednesday, 5/22/13, Existing Home Sales. FOMC Meeting Minutes.

On Thursday, 5/23/13, Jobless Claims, PMI Mfg Index. New Home Sales. 10-Year TIPS Auciton.

On Friday, 5/24/13, Durable Goods Orders.

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On Monday, 5/27/13, U.S. Markets are Closed in Observance of Memorial Day.

On Tuesday, 5/28/13, U.S. Markets Open for Trading.  Consumer Confidence. 2-Year Note Auction. The 16.4 trillion Debt Ceiling limit is hit, however, the government is taking in more revenue than expected, the sequester cuts are in place, and Congress is developing a plan to extend the Debt Ceiling deadline to August or September, so this can will likely be kicked about three months into the future. The politicians are trying to line up all the problems, debt ceiling, fiscal cliff, and CR resolution to fund the government, for a combined August-September deadline thus providing this summer as the time to conduct a knock-down drag out political fight to set the U.S. on the correct fiscal path forward. This political behavior is similar to the summer of 2011 which did not receive a happy ending.

On Wednesday, 5/29/13, 5-Year Note Auction.

On Thursday, 5/30/13, Jobless Claims, GDP. 7-Year Note Auction.

On Friday, 5/31/13, EOM. Personal Income and Outlays. Chicago PMI. Consumer Sentiment.  Farm Prices.

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On Monday, 6/3/13, PMI Mfg Index. ISM Mfg Index. Construction Spending.

On Tuesday, 6/4/13, International Trade.

On Wednesday, 6/5/13, ADP Employment Report. Productivity and Costs. Factory Orders. ISM Non-Mfg Index. Beige Book.

On Thursday, 6/6/13, Jobless Claims.

On Friday, 6/7/13, Monthly Jobs Report.

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In September, Merkel (Germany) seeks re-election and will not want to see Greece or other nations exit the euro before the election but will not care afterwards. Perhaps Greece and others, or Germany, may exit the euro in the future.

In Q4 2013, European bank stress tests will occur.

On Friday, 1/31/14, Chairman Bernanke’s term ends at the Fed, unless there is news during Q4 2013 that he will stay on. Will Yellen, even more dovish, likely wanting to see QE Infinity and Beyond placed on steroids, take the reins?

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

Keystone's Morning Wake-Up 4/26/13; GDP; Consumer Sentiment

The BOJ pledges continued monetary easing moving forward but instead of fanfare, traders were asking for more, like Oliver Twist pleading, "Please sir, I want some more."  Once traders become addicted to the crack cocaine stimulus, they need more and more to keep the party going. The Fed boosts markets strongly in January and February and the BOJ chimes in to continue the equity push higher in March and April.  The Nikkei charts posted this morning, however, show that the majority of the move higher in equities (weakening yen and higher dollar/yen) waning. Watch dollar/yen today which dropped from over 99 yesterday to 98.60-ish this morning and 98.20 now.  As dollar/yen drifts lower, so will equities (yen strengthens); as dollar/yen drifts higher, so will equities (yen weakening).

The GDP data, first read on Q1, is 2.5% well below the 3.2% consensus.  The consumption data is strong as the cash society in America grows. As discussed previously, Greece crumbled as its society was operating at about a 25% to 30% cash transaction level.  When governments raise taxes, people simply find ways to avoid the paper work and avoid paying taxes all together (a cash society where employees work 'under-the-table' and bartering and other cash methods are used resulting in zero tax income for the government--raising taxes will lower the money coming into government coffers, not raise it).  The U.S. is likely operating around an 8%-ish level of cash transactions and this is increasing. Considering the GDP data perhaps the U.S. is already moving up through 10% as citizens use cash and find other imaginative ways to pay for goods and services and avoid paying taxes. In Keystone's youth, the 1960's and 1970's were very much a cash society, as a teenager, most kids worked under the table in one capacity or another. As credit card use increased, and the great secular bull ran from August 1982 to March 2000 (18-year cycle), the wine flowed like water, and the cash society shrank. No one minds paying taxes when the good times are rolling along. But, as Bob Dylan sings, the times are a changin', and society will now shift back to using cash more to avoid paying taxes. This is America's path forward.  The GDP number keeps the futures on the negative side.

The NYMO chart this morning shows that a market top is at hand, or near.  The TRIN prints two days of uber low numbers, even though it recovered to near one at 0.94 as the day ended yesterday, so it is reasonable to expect the TRIN to print above one today which would be in concert with equities selling off. The CPC put/call ratio signals topping action as well, with complacency in place. The negative divergence in the SPX hourly and daily charts rolled price over to the downside into the closing bell. Of interest on the SPX daily chart is the doji candlestick from Wednesday, that indicates a trend change (top), but, alas, for bears, yesterday resulted in another upside orgy on news that central bankers have gone completely bonkers now buying equities as part of their obscene money-pumping programs. Price discovery is lost at this point, the mystery remains as to just how much air does exist under the markets and when will it be exposed? The 10-year yield started at 1.72% yesterday and remained flat, even falling to 1.71%. This told you that the markets would weaken into the closing bell. The 10-year yield has a 1.67% handle this morning, folks want the perceived safety of the U.S. Treasury.

It was interesting to see the SPX fill the tiny one-penny gap at 1588-1589 from 4/12/13 and 4/13/13 yesterday. That action actually helps the market bears since it sealed up all loose ends above; there are no further gaps above, so price has no reason to go higher for any gap fills. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead, however, the 8 MA is curling over to the downside now, and the futures indicate a weaker open, so watch to see if the bears can regain control of the markets if the 8 stabs down through the 34 MA.  Consumer Sentiment hits at 9:55 AM so a market pivot point will occur. VIX 14.15 remains the key. If VIX stays under 14.15, the bull party continues; if the VIX moves above 14.15, it is time for the bears to growl.  For the SPX starting at 1585, the bulls need to touch the all-time closing high at 1593.37, the key resistance level, which would lead the way to a test of the all-time high at 1597.35. Above there is the 1600 psychological level that would occur quickly and then the trek upwards to the 1620's. Therefore, the markets are at a critical juncture. The bears must push under 1579 to accelerate a downside move that will test the strong 1576 support in quick order, and then lead to lower prices.  A move through 1580-1592 is sideways action today.

Note Added 10:17 AM:  Markets pivot lower on the Consumer Sentiment number even though it was a better than expected. Note the VIX is 14.07 teasing the 14.15 level which would set the market bears loose.  VIX 14.15 and SPX 1579 are two very important numbers today. Keybot the Quant will likely flip short if both of these numbers are hit. Dollar/yen leaks down under 98.10 but recovers. If the dollar/yen drops under 98 that would be another signal that equity markets are selling off. The 10-year yield is 1.68% remaining lower showing a demand for bonds instead of equities.  Whoa, look at volatility, VIX 14.14.....what will happen? Bounce or die.  This is very important for markets; VIX either shoots higher above 14.15 taking the stock market lower, or VIX collapses lower under 14.15 again and allows the broad indexes to recover. TRIN is 0.94 neutral today.

Note Added 10:43 AM:  VIX 14.02.  SPX 1581.  TRIN 0.97.  The 8 MA is running lower towards the 34 MA on the SPX 30-minute chart. The bulls have to reverse the broad indexes here and now and send them sharply higher to stop the 8 MA from crossing down through the 34 MA.  Thus, the Fed and BOJ mid-morning money-pumping is important today to see if it has the juice to push equities higher. The dollar/yen falls under 98 now at 97.78.  It is surprising that equities are not selling off more. Perhaps the yen effects are waning now. The 10-year yield remains at 1.68%. Markets are tentative but must make a decision. The next hour or so of trading is important. The drama continues. VIX 14.15-14.16 is the bull-bear line in the sand and will tell you everything today.

Note Added 10:51 AM:  Dollar/yen 97.66 two points lower than yesterday (yen strengthening). VIX 14.06.  SPX 1580 handle. TRIN 0.98, check that, now 1.01 on the bear side.

Note Added 11:03 AM:  Dollar/yen 97.75. VIX 14.11. SPX 1580 handle. TRIN 0.97. The 10-year yield 1.67%. Markets are dancing along a tightrope right now but must choose a side. Bounce or die.

Note Added 4/27/13 at 5:23 AM:  Friday was a paint-drying session with the SPX stumbling sideways.  The market bears were given the markets on a silver platter, only needing to move the VIX above 14.16 to create a down leg in the broad indexes, but, the bears did not eat their morning Wheaties and did not have the energy to get the job done. Therefore, the markets recovered, the dollar/yen moved back above 98, the VIX dropped under 14.  During the last fifteen minutes of trading, the TRIN leaped higher to close at 1.31 creating the drop into the closing bell.  All in all, an uneventful day once it was obvious the bears did not have the oomph to overtake VIX 14.16.  The 8 MA stabbed under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours and days ahead, however, the recovery Friday afternoon has curled the 8 MA upwards and the 8 MA, 34 MA and SPX all sit at 1582-1584. The price move from this 1582-1584 cluster at Monday's opening bell, along with VIX 14.15, will dictate market direction. Monday's opening bell is very important and the initial market move will likely set the tone for the week ahead; bulls win above 1584, bears win below 1582. Interestingly, the Monthly Job Report Market Indicator (on the Other Signals page), says April should log a down month. April began at 1569 and is now at 1582. There are two trading days remaining in April. So add this to the drama list for early next week.

NYMO NYSE McClellan Oscillator Daily Chart Signals Market Top

The red circles show the market tops and green circles show market bottoms. The double circles are key reversals.  What do you think will happen?  Market bottoms occur when the NYMO drops under -40. The important mid-November bottom occurred at -90, once that hit it was a key indicator to feel comfortable buying the market long. Likewise the other green circles.  Market tops are signaled when NYMO moves above the +30 or +40 level, however, the tops have gotten sloppy over the last months.  Note that tops are now occurring from about +10 and higher. The central banker intervention creates distortions in all markets these days and may be the cause of tops occurring at lower NYMO levels.

Nonetheless, at +36 now, and close enough for government work, a market top is occurring right now.  Sure a spurt higher can occur, especially if the GDP number this morning is happy, but this will only send the NYMO higher to bring it closer to reversing. Projection is a market top is forming now and a reversal in the broad indexes should occur moving 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.

Note Added 4/27/13 at 5:55 AM:  The NYMO prints 18.49 on Friday, dropping lower from the 36-ish high shown in the chart above.  Therefore, the market top may have been identified on Friday. Monday will tell the tale and is shaping up to be a key market day. Even if the bulls run higher early next week, and the NYMO prints a day or two of higher prints at 40-ish, this only sets in motion a new market top to reverse.  If long the markets, caution is warranted and downside protection should already be in place.

NIKK Tokyo Nikkei Weekly and Daily Charts Overbot Rising Wedges Negative Divegence

Everybody and his bro has ran into the Japanese stock market this year. The BOJ easing trains trader's to become junkies and buy the Nikkei with blinders on, just like trader's buying the U.S. equity markets due to the Fed's crack cocaine easy money. The Nikkei moves from 8500 to 14K in less than six months, 5500 points, +65%. Wow.  It is amazing how high something can become when main-lining the drugs, in this case easy money. The brown bars show the move from 10500 to 14K this year alone, a +35% increase for 2013. This is not due to improved economic conditions; it is purely due to the BOJ easing and weakening the yen.  The Japanese banks, manufacturer's and auto companies are all benefiting the most. The easy money is floating overseas pumping the U.S. equity markets higher and also pumping the European bond markets which is helping create the lower yields in that neck of the woods.

The BOJ meeting wraps up this morning and Japan says the money printing presses will run full steam ahead, however, there is no turning up of the printing presses, and trader's like junkies, now need more and more stimulus to keep moving equities higher, so the news actually causes the yen to strengthen this morning. The dollar/yen drops to 98.60 after printing well above 99 the last few days. Hence, the U.S. futures this morning are lower; the S&P's down about 4 or 5. If the dollar/yen drifts higher to 98.70, 98.80 and higher, the futures will move higher and the equity markets will move higher today. If the dollar/yen drops further, 98.50, 98.40 and lower, the broad indexes will sell off today. The Nikkei weekly chart shows the inverted H&S pattern with the blue lines; head at 8100, neck line at 10300, so target is 12500, easily achieved. Note the gap (green circle) that was filled after two years time.  If price would have hopped from 10.0K to 10.5K, that would have been an island reversal pattern but instead, price simply crept higher filling the gap from 2011. The large up candle in March shows you where BOJ made their voice loud and clear that they will start printing money like madmen. This sends the NIKK vertical.

The weekly chart is negatively diverged (red lines) except for the MACD line but that is in such nose-bleed territory it cannot go any higher. Ditto on the daily chart negatively diverged across all indicators. This is a price top right now fo rthe Nikkei.  When both the weekly and daily charts agree with negative divergence, it is an ominous combo.  This is interesting since the charts hint that the BOJ easing is already running out of gas.  The Fed pumped the equity markets January and February, the BOJ supplied the supercharger March and April. Perhaps the money bazooka's are starting to spit blanks. The Nikkei dropping would be in concert with the yen strengthening, dollar/yen dropping and U.S. equities dropping.  This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Midday Market Action 4/25/13

The VIX is 13.36, say no more, under the 14.15 bull-bear line so the bulls stage a big party today with the Fed and BOJ supplying the booze. But, hold the horses, there is an outage at the CBOE affecting the VIX and other options. They are working to fix the problem.  The SPX touched the 1583 handle so the upside acceleration occurs, and the SPX comes up to fill that little one penny gap from 4/12 and 4/13 at 1588-1589.  Last week's high is 1588.84 and that is a big win for bulls punching through. Pay attention to 1588.84 today to see if price closes above, or below.  The 1588-1589 is strong horizontal resistance and price continues to more across this level right now.  If the bulls can keep things elevated, the next resistance is the all-time closing high at 1593.37 and then the all-time high at 1597.35.

The 8 MA remains above the 34 MA on the SPX 30-minute chart so the bulls are driving the bus.  Crude oil is at 92.  The 10-year yield is at the top of the recent sideways range at 1.72%. Euro is stuck at 1.30 waiting for Draghi next week.  The dollar/yen was buoyant at 99.50-ish but is now leaking lower to 99.37. TRIN is 0.70 providing smooth trading for the bulls today. This is two days in a row of uber low TRIN's so the markets will likely need to sell off in the hours or day or so ahead so the TRIN can recover to print back above one. The semiconductors are straight vertical now with SOX over 442, moving from 410 to almost 443 in less than five days, +8%.  The SOX is moving up at a rate of almost +1.5% per day. Things are getting out of control. On the earnings front, the top line misses continue along but traders are only focusing on the positive news. Companies squeeze out profits on the backs of the remaining workers.  UPS is up 2% today, a big win for bulls. Watch SPX 1588.84 and 1593.37 as described above.

Note Added 11:45 AM:  The outage at the CBOE continues.  The 'technical glitch' reason is given.  Between flash crashes, exchange outages, potential cyber attacks to the technical infrastructure, and markets running higher on companies printing lower top line sales, the markets should be viewed as erratic and unstable, and caution is required moving forward.

Note Added 2:17 PM:  The SPX is testing the 1593.37 all-time closing high with a HOD at 1592.64 thus far. The CBOE is trading again. The technical glitch will fade into the background like all the other recent shenanigans. TRIN is 0.74 so the bulls are motoring along today without a care in the world, worry-free. The CPC put/call ratio print will be interesting tonight to see if it prints under 0.79 indicating increased complacency (see this morning's chart).

Note Added 2:39 PM:  The lift in the broad indexes today likely has lots to do with the news that central bankers are buying stocks in record amounts. This is very scary and concerning. In the very short term, equities run higher, however, the boat is all loaded on the buy side due to the ongoing money-printing orgy. The SPX keeps fighting through the 1588-1593 range for the last four hours.

Note Added 3:11 PM:  SPX drops through the 1588-1593 range. The negative divergence mentioned on the hourly and minute charts creating the seven-handle spanking over the last hour. S/R is 1593, 1588-1589, 1586, 1580 and 1575-1576.  Price is now at 1584.86 so a move back up to back kiss the 1586 or 1588 would be in order.  TRIN is 0.80 so bulls remain in firm control today. Look at the VIX go, now at 13.80, the highs for the day, only 35 cents from the 14.15 bull-bear line in the sand, however, with all the shenanigans today, the volatility pricing may need a day to settle.

Note Added 3:42 PM:  SPX recovers from 1583, moving back up to 1586 resistance, and punching up through, so price may want to test 1588 again as well, if 1586 holds. VIX 13.71. TRIN 0.76, firmly bullish.

Note Added 3:58 PM:  TRIN popping now 0.93 turning neutral. VIX 13.83 climbing again. SPX at 1584.

Note Added 4:03 PM: AMZN beats on EPS but misses on top line revenue, same-o story with companies coming up short on sales. The stock is all over the map after hours, up big, down big, now up, flat, bouncing like a ping pong ball. AMZN at 276-282 so the bulls are winning the day in a jumpy tape. So tech receives another feather for its cap. SBUX meets EPS and misses on top line; it sells off on the knee-jerk reaction, slipping on a spilled latte.

SPX 30-Minute Chart 8 and 34 MA Cross H&S Pattern

The bulls are running again today. The 8 MA was converging towards the 34 MA then whammo, big up this morning in the broad indexes so the 8 MA moves higher and remains above the 34 MA signaling bullish markets for the hours and days ahead.  The indicators are negatively diverged wanting to see a pull back.  The RSI on the 2-hour chart is in the overbot territory now so some flattening of price should occur then a roll over to the downside.  Now that last week's high at 1589 is taken out, the next resistance is the all-time closing high at 1593.37 then the all-time high at 1597.35.  The purple H&S remains in play but the bulls are trying to negate the pattern, and will, if price moves above 1597. Projection is flat move through 1586-1593 then roll over. The 8/34 MA cross is what matters on this 30-minute chart and the bulls are driving the bus right now. 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 2:47 PM:  The SPX floats higher to a HOD at 1592.64 a short time ago, testing the 1593.37 resistance area. The 8 MA is 1589.94 right now and the SPX price is 1589.67. Watch to see if the SPX stays under 1589.94 and heads lower, if so, this will curl the 8 MA to the downside and move it towards a potential cross of the 34 MA. If the SPX stays above 1589.94 and heads higher the bulls remain in full control. The negative divergence highlighted above and now in place should help kick in a downside move.

Keystone's Morning Wake-Up 4/25/13; UPS

The bulls continue the rally. Today is a large and busy earnings day with several companies beating, however, heavy-hitters DOW and MMM miss. Futures are positive perhaps anticipating a large beat by UPS which is easily the major earnings release today and for the week. UPS is a key global economic bellwether since shipping directly equates to the health of a recovery.  MO and XOM also important.  Jobless Claims are released at 8:30 AM.  Natty Gas Inventories 10:30 AM.  Manufacturing data is released, which has been weak, at 11 AM.  Markets are typically bullish around the full moon and that is certainly the case yesterday into this morning.

Higher semi's and financials, and lower volatility, drive markets higher. The bulls will remain in the driver's seat with VIX below 14.15.  Bears need the VIX to move above 14.15 to regain their mojo.  For the SPX today, starting at 1579, the bulls need to touch 1583 and an upside acceleration should occur to fill the tiny one penny gap at 1588-1589, which is also last week's high.  The bears need to push under the strong 1576 support and the downside will accelerate. A move through 1577-1582 is sideways action today. UPS earnings are key. Also watch VIX 14.15 as the main rudder for broad market direction today.

CPC Put/Call Ratio Daily Chart

CPC drops into the 0.7's again signaling continued market complacency. In fact, Baron's cover last weekend announced Dow 16,000 around the corner.  The central banker's (CB) continue to pump the equities markets.  CPC numbers in the 0.7's and lower signal complacency and complete lack of fear (created by the CB's) and when market tops occur. CPC numbers above 1.20 and higher signal fear and panic and the time to go long the markets. The previous CPC chart highlighted the low print at 0.68 a couple weeks ago which projected a market top and a sell off from 20 to 100 or more handles in the SPX on tap. The SPX dropped from 1597 to 1538, about 60 handles, not too shabby.  Type 'CPC' in the search box in the right margin to bring up that chart for further study.

So the markets sold off down to SPX 1538 where the bulls staged a recovery rally for the last four days. The green circle on the right at 1.18 identified the market bottom.  The markets have been weighted to the complacency side for the last year with many prints sub 0.75 but on the fear side, not so much. No one is fearful since the CB's pump the markets and will always be there to save the day, therefore, there is no fear or worry about market downside. The CPC printed a hair above 1.20 which marked the mid-November market bottom, however, that is the only print above 1.20 since the large market sell off in May of last year.  The market low a few days ago is cheesy as well with the rally occurring from a CPC that did not even move above 1.20.  This behavior will have to rectify as the days and weeks play out and much higher numbers for the CPC will be needed, 1.2, 1.3, 1.4 and higher, to ring in the fear and panic, and properly identify a more substantive market bottom.

The 20 and 50 MA crosses are interesting since the 20 moving above the 50 identified the September-October top, and the February market top, and now? The blue boxes show the fractals from where the 20/50 MA cross occurs to the high CPC print that signals a market bottom. The left blue box shows the Fall sell off into the November market bottom. The middle blue box shows the February market sell off. Note how when the 20 crosses above the 50 a large drop in CPC occurs, but it is then followed by a large up move for a couple weeks that represents the markets selling off until the 1.2-ish or higher is printed to identify the market bottom.

With the 20/50 cross that just ocurred over the last few days, yesterday results in the large spike downwards, so the coming days and week or two should prove interesting for the stock market. The expectation would be for the CPC to jump higher in the coming days and print above 1.2 in the coming week or two, which means the SPX can be substantially lower, from 20 to 150 handles lower, or more. The markets have not felt fear and panic for about one year's time, which is a long time for markets. As noted by the fake tweet two days ago and over -1% collapse in markets instantaneously, there is not enough geopolitical risk priced into markets. Complacency lulls everyone into a sleepy relaxed outlook on markets, a belief that all dips should be bought and markets will continue higher indefinitely, exactly when they reverse to the downside. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Midday Market Action 4/24/13

SOX is 433.12 well above 424.15, bullish.  VIX is 13.56 well below 14.15, bullish. XLF 18.55 well above 17.98, bullish.  TRIN is 0.87, under one today, favoring bulls, however, it is trying to push higher s the day proceeds.  The 8 MA is above the 34 MA on the SPX 30-minute chart and the SPX is above the 200 EMA on the 60-minute chart signaling bullish markets for the hours and days ahead.  The full moon and eclipse is approaching. Markets are typically bullish through the full moon. There are three eclipses occurring over the next month which makes for interesting skies. The SPX popped above 1579 so a move to the low 1580's would be expected but price has only made it up to a HOD at 1581.34. That number is important today. Resistance is 1580, 1582, 1586, 1588, 1589 (last week's high), and 1593. Support is 1576, 1575, 1569, 1566.49 (20-day MA), and 1565.

The SPX hourly and minute charts are agreeable to price rolling over today, however, the 2-hour SPX chart shows the RSI never reaching overbot territory. The RUT (small caps) and SPX are leading the upside today while the Nadaq (tech) and the Dow Industrials are lagging.  Dividend stocks such as T (-6%), PG (-5%) and LLY (-3%) are slapped today. Perhaps a rotation out of the dividend bubble stocks is beginning? Anyone that went long these three divvy stocks over the last few days had their entire yield for the year wiped out in one single day, then some. Folks chasing a 3 to 7% yield in a perceived safe haven stock may be disappointed when the stock is down 10% or 20% as the weeks play out. At that point, the yield would look paltry and the safe haven thesis would evaporate. The broad indexes are flat to weak today.  The dollar/yen leaked lower, now at 99.42, creating a weight on the markets today. VIX 14.15 is likely the key metric to watch to see if the bears can start flexing their muscles again.

Note Added 12:38 PM:  The dollar/yen is 99.42. Crude oil 90.79 after hitting 91.  The 10-year is flat at 1.70%.  VIX is 13.58. TRIN is 0.83.  No flash crashes today, so far.  Markets are uninspiring today, traveling along flat. Watch dollar/yen, VIX and TRIN.

Note Added 3:09 PM:  Dollar/yen 99.48. VIX 13.38.  TRIN 0.78. So dollar/yen is a touch up, VIX remaining at lows, and TRIN remaining at lows, so SPX gains two or three handles to print a HOD at 1583.00. Crude 91.51. The 10-year yield sits at 1.70%.  Price continues to move through the low 1580's area which serves as a right shoulder for the H&S pattern highlighted this morning. If the SPX squeezes out any more juice, it may want to fill a tiny one penny gap between the 4/12/13 close and the 4/13/13 open at 1588-1589. SPX hourly and minute charts remain agreeable to rolling over from here due to negative divergence.

Note Added 3:39 PM:  Dollar/yen 99.47.  VIX 13.62.  TRIN 0.74. Markets move sideways into the closing bell.

JNK High-Yield Bond ETF Weekly and Daily Charts Overbot Rising Wedges Negative Divergence

Folks are chasing yield as evidenced by the dividend stock bubble, utilities bubble, REIT's bubble and bubbles in high-yield instruments. The pull back in JNK in January was forecasted with the rising purple wedge and negative divergence but the bulls return and pushed JNK to new highs once again. Same dealio now.  On both weekly and daily charts, all indicators are negatively diverged, rising wedges, overbot conditions, all say down. JNK is trying to squeeze out some further juice. Keystone's 80/20 rule says that 8's lead to 2-s many times, so 38 would lead to 42, however, the move is very long in the tooth.  These current highs may very well place a substantial long multi-month or multi-year top, so moves like this may take another few weeks to roll over. These charts say take the money and don't look back. Projection is for sideways to sideways lower prices for the days, weeks, months and perhaps years 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.