Friday, January 30, 2015

SHAK Shake Shack IPO First Day of Trading

On Thursday evening, 1/29/15, the Shake Shack IPO prices at $21 far above the original 14-16 range and revised 17-19 range. The tiny burger chain trades under the symbol SHAK.

Today, Friday, 1/30/15, traders are tripping over each other to buy the burger-maker. As the fry cook behind the counter at the local greasy spoon quips, "You want some fries wit dat?"

The market makers took about an hour to zero in on an opening price; a lofty $46. More time goes by and then the SHAK IPO begins trading with loud cheers as the price opens at $49 well above the $21 offer a +130% gain. The chart says 47 for the open. The IPO has already doubled and more in price in the opening seconds (the 21 price serves as the base). The NYSE floor takes on a festive atmosphere despite the broad market weakness occurring. The euphoric celebration welcomes a blowout price debut for the tiny burger chain that only has 63 locations. Yes, comically, only 63 locations. That's funny.

Traders are tripping over each other to buy Shake Shack that is only predominant in New York City. The restaurant locations outside of New York are actually underperforming but investors are throwing their wallets at the market makers begging for shares. SHAK remains elevated all day long ending up +119% (more than a double) on its first day of trading.

Investors are throwing their money at a fry cook that promises to open new stores and compete with an already crowded fast food casual restaurant field. Shake Shack is a New York thing and the city is also the hub for the NYSE so the traders may be blinded from developing a subjective opinion. Investors think all the future Shake Shacks will be an instant success and the restaurateur may become another CMG. In these parts, many people will not be impressed. SHAK will blend in with the two dozen other fast food casual style restaurants popping up on each street corner. In some communities, knowing Shake Shack is a New York thing will only alienate the fledgling restaurateur. Time will tell.

As comedian Lesley Nielsen said when asked if he ever gambled or took chances, "Certainly, every time I order take out." 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.

AAPL Apple Daily Chart New All-Time Record High Sideways Channel Negative Divergence Developing

Apple prints a new all-time record intraday high today at 120.00 to the penny. Interestingly, AAPL then fell on its sword and retreated without printing a new all-time closing high. The 119.00 on 11/26/14 remains the all-time closing high. Last time the AAPL charts were posted sideways was the projection which occurs. Apple has moved through the 107-120 blue sideways channel for over three months.

The red lines show negative divergence in place now that price printed a higher high. The short green lines show some remaining long and strong juice for the near-term so the projection would be that price prints another high, probably a new all-time closing high, but the next price highs should serve as the top. The weekly chart is negatively diverged indicating a double top pattern as very likely. So price may bounce over 120 on Monday or pull back a couple more days then go back up to 120. The 120-130 area is in play for the few days ahead as it tops out. The approach to AAPL would be scaling out if you are long. Apple is not desirable as a long play due to the neggie d. A short would be possible but best to wait for a few days or week or two as described when price should top out.

Since the charts are hinting at topping behavior, the assumption is that the Apple Watch may end up as a dud. The nice thing about cell phones was being able to ditch the watch and gain freedom for your wrist. Who wants to go back to something strapped around your wrist? The Watch is Tim Cook's big initial technology product offering and if it fails confidence will be lost in his leadership. If the global economy continues to cool, folks will not have money to spend and all Apple product sales will suffer including the transactions on Apple Pay. The mobile payment technology is another unknown. Why would you add another level of complexity to your life with Apple Pay? The system cannot handle all transactions so you have to have a credit card anyway so what is the point of Apple Pay? Many early adopters want to be cool so the only folks using the system are the ones telling each other how cool they are using Apple Pay. Get the system working for 100% of transactions in a few years time and that is when Keystone will join the club.

So the projection is for AAPL to remain buoyant for a few days or week or two. Watch the RSI to see if it becomes overbot, or not. The short green lines need to turn red with negative divergence when price makes a new high and that will take a few days ahead. Once that occurs, the weekly chart should remain negatively diverged and the top should be in for Apple. From this 120-130 area the downside would be the lower channel rail at 106-107 for starters, then the gap fill at one hundo then 95 support then likely lower as the year ends and 2016 begins. The key to Apple will be the price action in February especially early February. With such a successful company it is hard to imagine an extended pull back will occur as described. After all, AAPL can increase the buyback and boom, price can bounce in a heartbeat. Or activist investor Carl Icahn may create drama boosting the price.

Even though a stock is a great company that fact can be detached from stock price. The PE remains low but buybacks have a way of distorting these values; the PE of 9 to 12 is 12 to 15 without the buybacks and obviously not as cheap. Apple will be interesting to watch going forward. Keystone does not have a position long or short and does not plan to trade Apple. If long take the money and move on. If thinking about going long AAPL it is likely best you don't. 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 Daily Chart Moving Average Ribbon

The SPX logs a strong down day thus far but overall staggers sideways. The 20 MA crosses down through the 50 MA which is bearish so next watch to see if the 20 MA can stab down through the 100-day MA, or not, and if the 50-day MA rolls over and heads down for a cross of the 100. The 150-day MA at 1997 is critical since it has provided the support for the SPX since Fall. Yesterday price stabbed below as the long lower shadow line of the candlestick shows but the bulls staged a strong recovery when Fed Chair Yellen started promising Senators that she would not raise rates for a long time.

Watch the pink 150-day MA at 1997 since bad things will happen below here. Price is now between the 100-day MA at 2010.19 offering resistance and the 150 offering support. Bulls win above 2010. Bears win big under 1997. Other key moving averages are; the 20-week MA at 2017.70 (that created a ceiling this morning), 10-month MA at 1982.23, 12-month MA at 1962.84 and 50-week MA 1957.59.

The lower standard deviation band is 1987.11 and price teased here yesterday but has not yet made a strong touch. When price violates the bottom band it will want to recover to the middle band currently at 2029 and falling. The indicators are indicating sideways action. Use the RSI 50% level to see which side is winning. The money flow is trading lower and may act as a weight to drag prices 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.

Note Added 12:11 PM: Here is the test of the 100-day MA at 2010.25. Price is 2010.28. You know the drill. Bounce or die time. If the bulls push higher stocks will likely remain buoyant into the weekend. If the bears hold the line at the 100-day MA resistance, price will start lower towards the 150-day MA at 1997. What say you bulls and bears? Price is at 2010 and must decide a path forward. Who will run with the ball?

Note Added 12:16 PM: Bounce. The bulls take the ball and run higher. The SPX is at 2014.40 so it will test the 20-week MA at 2017.70 for a bounce or die decision. There is strong horizontal price S/R at 2040, 2038, 2032, 2018-2019, 2011 and 2002-2003. Thus, a strong resistance gauntlet is at 2018-2019. Bulls win big above here and will have further legs higher. Bears should be fine if they hold the 2018-2019 resistance. The 2011 price S/R level lines up with the 100-day MA at 2010 forming a strong 2010-2011 support gauntlet so bears will win big under 2010-2011 and will send price back down to 2002-2003 S and potentially a test of the critical 150-day MA at 1997.

Note Added 12:24 PM:  The SPX is at 2015. Bulls win above 2018-2019. Bears win under 2010-2011. The battle lines are drawn.

Note Added 7:41 PM:  Well look at that. After a wild ride today, the SPX drops to close at 1994.99. The 150-day MA is 1996.94. Failure. The bulls will receive daily beatings as long as the bears keep the SPX under 1997. The 150-day MA has served as strong support so it is no mistake that price stopped here. You know what happens on Monday first thing. Yes, price must decide to bounce or die from 1995-1997.

Thursday, January 29, 2015

SPX 2-Hour Chart Sideways Channel

Stocks fell out of bed yesterday. Note the last four candles which takes the price action back to this time yesterday at 2042-ish. The sideways blue channel at 2002-2061 is in play thus far this year and price sits at the bottom support at 2002-2003 deciding to bounce, or die. Key SPX S/R is 2018-2019, 2011, 2002-2003, 1998, 1996.52 (key 150-day MA), 1993 (this year's closing low), 1988, 1985-1986, 1982, 1981.82 (key 10-month MA), and 1978. The importance of the 150-day MA cannot be overstated. Look at a daily chart with the 150 MA and you will see important price touches in October and important support levels in December and two weeks ago. The stock market goes down the rabbit hole if the 150-day MA at 1996.52 fails.

Another key level the old-timer's follow is the 10-month MA at 1981.82. The 1982 support level is the 'last chance corral' for bulls. If 1982 fails the SPX is likely headed to the low 1900's next. The indicators are weak and bleak (red lines over the last few hours) wanting to see lower lows after any bounces occur. Price may place a near-term bottom in the 1988-1998 area. The SPX will bounce or die from this 2002 level. 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 9:48 AM: It died. The SPX drops to 1993; this is the closing low of the year thus far so time to bounce or die again.

Note Added 9:59 AM: SPX prints a LOD at 1992.53 and bounces displaying the strength of the 150-day MA support. As mentioned above, the game changes if the 150-day MA fails; markets will turn very ugly quickly. The bulls send price back up to 2001 so the SPX will back kiss the 2002-2003 resistance for a bounce or die decision. Watch the support/resistance levels listed above to gauge the strength of the price move in either direction.

Note Added 10:05 AM: Here is the back kiss of 2002-2003 resistance with price at 2002. Bounce or die. If price dies, a retest of the critical 150-day MA at 1996.54 is likely on tap. Did Keystone mention how critically important the 150-day MA is? Also watch the LOD at 1992.53; note how price bounced off the 1993 which is the closing low for the SPX thus far this year. Of course more negativity would be expected if the 1993 fails. Failure at 1993-1997 will create market mayhem. Bulls must keep the SPX above 1997 or they are in serious trouble.

Note Added 7:53 AM on Friday morning, 1/30/15: The bulls started pushing lower but could not produce a sustainable breach of the lower levels discussed above. Just when the markets were going down the rabbit hole, as usual, the Fed steps in with jaw-boning. Fed Chair Yellen was speaking to Senators, providing a wink and a nod, nudge, nudge, know what I mean, know what I mean, where she said intrest rate hikes are a long way off. Bingo. Instant market recovery. The central bankers are the market. Stocks also continue to move in sync with the dollar/yen and oil. Oil dropped midday taking stocks lower and then late-day oil recovers providing the boost in stocks into the closing bell. The SPX ends at 2021 with a HOD at 2024.64. Key S/R is 2061, 2046, 2040, 2038, 2032, 2018-2019, 2011, and 2002-2003. So price is playing around between the 2032 resistance and 2018-2019 support, thus, bulls win above 2032 and bears win below 2018-2019. S&P futures are weak in the overnight session projecting a loss at the open for the SPX of 6 to 12 handles. Price should fall through the 2018-2019 S so watch to see if the 2011 support holds, or not. The SPX 2-hour chart above wanted another price low yesterday due to the indicators remaining weak and bleak as price printed the low candlestick, however, Yellen's dovish talk created the big bounce as always overriding technicals and fundamentals. The chart is not tipping its hand now and needs to print a couple candlesticks to provide hints. The SPX looks set to explore the 2011 S and perhaps 2002-2003 support so there will be bounce or die decisions needed at these levels.

BDI and SOX Print 666

Cue the Twilight Zone music after yesterday's trading since both the BDI and SOX print the mark of the beast "666." Is it a simple coincidence or a signal from the world beyond? Interestingly, the SPX bottomed at 666 in March 2009. The Fed has created a wondrous world of boundless imagination. Where's Rod Serling when you need him? 

Twilight Zone Theme

BDI Baltic Dry Index Weekly Chart Collapses to 666

The Baltic Dry Index plummets to an ominous 666 in recent weeks reflecting a sick ocean shipping environment. The BDI is a key global economic bellwether since ships transport coal, coke, iron ore, steel, cement, powders, resins, grains and many other cargo's that grease the wheels of the global economy. If the global economy was strong, the BDI would be far higher. Shipping rates are negatively impacted by an over-capacity of ships (shippers purchased many new ships over the last three years) but a bludgeoning down to 666 is clearly reflective of an extremely sick global economy. The weakness also highlights the impact from China's economic activity falling off a cliff.

The BDI is in the cellar so there is no where to go but up. The weakness, however, indicates that a global economic malaise would be expected to continue for a very long time. The red lines show how the drops in shipping rates correlated to stock market pull backs. Note how over the last two years the charts strongly diverge with the BDI predicting market weakness but the stock market remains buoyant and prints new all-time highs; clear evidence of the power of the central bankers especially the Fed and BOJ. Banks and companies are using the liquidity to buy stocks and perform financial engineering such as buyback programs to pump stock prices higher. Sadly, the easy money is not used to buy equipment, expand factories or hire workers. The central banker money is making the wealthy and elite classes, that own stocks, filthy rich. The stock market is due for a large pull back a la the 2008-2009, 2010 and 2011 selloffs and the BDI is cheering for this outcome. 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.

Tuesday, January 27, 2015

SPX 60-Minute Chart 200 EMA Cross

The drama in the prior 60-minute chart played out with the SPX coming up ready to pierce up through the critical 200 EMA at 2038.17, however, price receives a spank down. The move is a textbook back kiss and should make the bears smile since it opens the door for lower prices. The MACD line is weak and bleak wanting a lower low in price for the one-hour time frame after any bounce would occur. The price action through the 2002-2061 channel continues for 2015.

So the table is set for Wednesday. Bulls win big if the SPX moves above 2038. Bears win big if price remains under 2038 signaling bearish markets for the hours and days ahead. Watch the cross closely since it determines the very near term market direction (in the hourly, minute and perhaps daily time frame). Bulls got nothing unless they push the SPX above 2038. There is also strong horizontal price resistance at 2038. Also, the 20-day MA is 2038.75 so the 2038-2039 gauntlet carries weight. Good things happen to market bulls above SPX 2038-2039. The bears rule the markets as long as the SPX remains below 2038-2039. 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 before the opening bell, 1/29/15: The bears win the day yesterday. The bulls attacked the 2038-2039 gauntlet after the opening bell but could not overcome the resistance level. Price drops down to the bottom blue line, the lower rail of the one-month sideways channel at 2001-2002.

NYA NYSE Composite Weekly Chart 40-Week MA Cross

This is one of Keystone's key cyclical market signals that is creating daily drama. Plain and simple, if the NYA is below the 40-week MA this year the stock market will be down on the year. If the NYA recovers above the 40-week MA and stays there, stocks will have a shot at printing a positive year. So the stakes are high and price moves above and below the key 40-week MA at 10812 today ending under the 40-week MA at 10812 signaling a cyclical bear market ahead (for weeks and months).

Keep watching it to see who ultimately wins. Once the NYA moves about 100 or 200 points away from the 40-week MA that will identify the direction ahead so bulls win above 10900 and 11000 and bears win under 10700 and 10600. The diamond pattern may be a continuation pattern where price breaks out to the upside or a trend change pattern where price may break down. The sideways nature of the chart is not tipping its hand. The RSI is sitting exactly on the bull-bear fence at 50. Diamond patterns are not reliable patterns to make a projection but the pattern does show a decision is at hand since the shape has played out. So within a couple weeks the winner should be identified. For now, the bears own the markets for the weeks and months ahead through 2015. This can quickly change to the bull camp if the NYA bounces only 30 points.  The drama continues. 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 on Thursday morning, 1/29/15: The NYA finishes yesterday's trade collapsing -1.7% to 10604. The market bears are drunk as skunks partying the night away as the path for 2015 becomes bleaker.

SPX 60-Minute Chart 200 EMA Cross Sideways Channels

The fight for the 200 EMA on the SPX 60-minute chart at 2038.37 continues. The SPX is at 2030 under the critical bull-bear deciding line signaling bearish markets for the hours and days ahead. Bulls need SPX above 2038.37 or they got nothing. The critical 20-day MA is also at 2038.69.

Price is moving through the 2002-2061 sideways channel for this year. Looking at the big picture the strongest S/R is 2094, 2091, 2088, 2082, 2079, 2075-2076, 2067, 2061, 2046, 2040, 2038, 2032, 2018-2019, 2011, 2002-2003, 1998, 1988, 1985-1986 and 1982. Narrowing down to the tighter ranges, price is at 2030 between the 2032 overhead resistance and 2018-2019 support. Bulls win above 2032 since price will run to 2038 to retest the critical 200 EMA decider line. Bears win under 2018-2019 since price will next drop to 2011 for support.

The MACD line and stochastics are weak and bleak so a recovery move may occur for a candlestick or two (one or two hours) but weakness would be expected to reemerge until positive divergence can develop for all indicators. The 2018-2019 support may serve as a magnet for price to decide if it wants to base there, or fail there. The SPX dropped to a LOD at 2019.91 after the opening bell and bounced. 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 12:39 PM: The SPX is 2034 overtaking the 2032 S/R. If price stays above 2032, it will set its sights on the 2038 horizontal resistance which is also at the 20-day MA at 2038.69 and the 200 EMA on the 60-minute at 2038.37. This 2038-2039 resistance gauntlet carries serious street cred. Bulls win big above 2039. Bears remain in great shape if the SPX remains under 2038.

Note Added 1:28 PM: Whoa. Ho, ho, ho. The jump to test 2038-2039 occurs quickly. Here it is; for all the marbles. The 200 EMA on the 60-minute is 2038.30. The SPX is at 2038.15. It is time to bounce or die and the decision controls the markets for the hours ahead. Keybot the Quant algo is tracking NYA 10812 and SOX 673.82 as the two key market directional parameters. So bulls win with the SPX above 2038, NYA above 10812 and SOX above 673.82. Bears win with SPX under 2038, NYA under 10812 and SOX under 673.82. The table is set. Who will emerge victorious?

Note Added 1:31 PM:  SPX 2039.11. NYA 10811.18. SOX 673.48. A decision is needed; the parameters are at inflection points. What say you markets? Bounce or die?

Note Added 1:36 PM: The bears repel the first attack. SPX 2037.73. NYA 10806. SOX 672.84. The bulls will probably mount another run at the critical 2038-2039 level. The stakes are high.

Note Added 1:42 PM: The 200 EMA is 2038.30. The SPX is 2038.30. Do you have a coin to flip?

Note Added 6:32 PM:  Sideways choppiness continues. The SOX and NYA turn bullish creating the early afternoon rally in stocks then both slip back into the bear camp creating the weakness into the closing bell. SPX 2030. NYA 10782. SOX 669.79.

SPX Daily Chart Moving Average Ribbon

The SPX daily chart shows the interplay of price versus moving average levels. Three days ago the bears were punched in the face with price catapulting up through the 20 and 50-day MA's after ECB President Draghi fired the QE money bazooka. The central bankers are the market. Markets have typically rallied after the big central bank announcements but then sell off just like the current pattern. The chart maintains a sideways nature shown especially by the RSI. The FOMC announcement is tomorrow afternoon creating continued market drama. 

The chart is not tipping its hand and is open to coming back up to test 2057-2067 again. The bracket formed by the 20-day MA ceiling at 2039 and 100-day MA floor at 2010 serves as a sideways range. Ditto the sideways triangle trend lines at 2048 for a break out and 2000 for a break down. The 50-day MA is 2047. The 150-day MA is 1996 and the 200-day MA is 1992. The 150-day MA continues to slope upwards which is bullish on the intermediate and long term basis; watch this closely since if the 150-day MA line flattens and rolls over sloping downwards that guarantees a cyclical bear market going forward. Note how the 150-day MA slope failed in December but the Federal Reserve pumped the markets with Chair Yellen's dovish talk to save the day. Two weeks ago the 150-day MA was threatening to roll over again.

Markets stagger sideways like drunk in Times Square on Saturday night. Bulls win above 2039. Bears win under 2010. Price is at 2030 and rising. 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.