Wednesday, September 17, 2014

Keybot the Quant Turns Bullish

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

Keybot the Quant

SPX 30-Minute Chart 8/34 MA Cross

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

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

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

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

XJY Japanese Yen Daily Chart Lower Band Violation Price Extended

Banzai!! BOJ Governor Kuroda has been working overtime printing yen like there is no tomorrow. The yen collapses as the money supply floods into markets sending the dollar/yen currency pair up through 107 and Japan and US stocks higher. The yen chart is a direct inverse of the SPX chart so make no mistake, a weaker yen fuels the stock market upside. The dollar/yen moves from 101 to 107 as the yen moves from 99 to 93.

The drastic drop in the yen basket is remarkable and definitely an infrequent event. Look at price sliding down the lower standard deviation band (pink) and only takes a dead-cat bounce three days ago (chart is not updated for today). The indicators are in the basement and still want another lower low. Price will want to seek the middle band now at 95.15 and falling. The pink dots show how price is far extended under the moving averages requiring a mean reversion. The stochastics are on the floor and helped price create the dead-cat bounce.

The yen will likely bounce around sideways from here and want to test the low again. The drop lower creates a gap at 95.4-96.2 and the yen now sits on an island. So when the yen recovers higher an island reversal pattern will be in play with a potential move back up through the gap but this may not develop for a couple weeks. It appears that much of the downside has played out but the yen should stabilize sideways for a few days or week or two before mounting a comeback. The weaker yen from early August exactly correlates and creates the stock market upside from the early August bottom. Banzai! When Kuroda stops or slows the BOJ money printing, the yen will recover and stocks will drop. The central bankers are the market. 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, September 16, 2014

Keystone's Midday Market Action 9/16/14

The markets stumble sideways into the Fed announcements tomorrow afternoon at 2 PM (7 PM London time) with the SPX threatening to squeeze out a strong move higher out of the tight standard deviation bands. The SPX 1988 resistance is holding price back for now. The 8 MA remains below the 34 MA on the SPX 30-minute chart forecasting bearishness for the hours ahead, however, the 8 MA is rising rapidly and should make a positive 8/34 bull cross over the next hour or so. The market bears must punch the SPX price lower right away to prevent the positive 8/34 cross otherwise they will fold like cheap tent. The SPX remains above the 200 EMA on the 60-minute chart at 1983.70 signaling bullish markets for the hours and days ahead. Bears got nothing until they break below the 200 EMA at 1984-ish.

Key S/R is 2011, 2007, 2005, 2002-2003, 1998, 1991, 1988, 1985-1986, 1973, 1968 and 1963. The market is staggering around in front of the Fed with utilities, semiconductors and volatility most affecting market direction. Keybot the Quant remains short but the algo is on the verge of flipping long. The bulls need VIX under 12.39 and Keybot will likely flip long. The bears need to push UTIL under 550 and/or SOX under 632.81 to get their mojo back. UTIL is 555.25 testing its 200-day MA at 555.02 from the underside. SOX is 636.13 also testing its 200-day MA at 636.72 from the underside.

VIX is 14.06 well above the 12.39 danger line identified by the quant creating negativity. VIX also remains above the critical 200-day MA bull-bear signal line at 13.58. Considering where the parameters mentioned above are trading, each well within their respective camps, the VIX 13.58 will provide important insight for today. Market bears are fine with VIX remaining above 13.58. If the VIX drops under 13.58, the bulls receive some juice, enough to push through SPX 1988 resistance and move towards 1991. The SPX is banging up against 1988 R as this is typed so the 1991 may come regardless then the lower volatility would create the move higher to 1998. Market bears will continue growling moving forward if the VIX moves above 14 and higher.

The tight bands on the SPX daily chart sets up high drama for the Fed announcements. The Scotland vote occurs Thursday as well as the important Housing Starts data in the States on Thursday that will move markets. The much-awaited and hyped BABA IPO will trade Friday morning. This is OpEx week so higher volume at the opening and close on Friday may create further volatility. Typically, stocks move higher from Tuesday into Wednesday during OpEx week and today is playing that pattern out with the SPX creating a low at 1979 and moving up ever since, so far. Congress is in session for another week or so until Rosh Hashanah next Thursday and markets are typically bearish when in session and bullish when not in session. Next week, the week after OpEx in October, the market are typically down 80% of the time so the bears are favored strongly for next week.

The confessional season begins as Q2 earnings reports dwindle to an end. Companies that expect lower earnings will pre-announce to take some of the surprise out of the game when Q3 earnings hit in October and November. Of course the number of pre-announcements, or lack thereof, will provide insight into the intermediate trend for stocks. Other upcoming events are the European bank stress test results due in October where the ECB will throw a token handful of banks under the bus to create the illusion that the house is cleaned-up but in reality it is smoke and mirrors like the Fed stress tests in the States. The mid-term elections occur in the States the first week of November, now only 7 weeks away, where the Senate may turn to a republic majority that may lift stocks since republicans are perceived as more business-friendly. (The House already has a republican majority. There are two branches of Congress in the US; the Senate and the House).

The Fed circus is tomorrow. The two-day FOMC meeting begins today. The previous message describes the current market zeitgeist around the "considerable time" phrase so there is no use to beat that dead horse here. While everyone is thinking about a word change, the wind down of QE Infinity is very near and may create the actual surprise in its projected wind down. Fed Chair Yellen said that QE will end in October. The current rate of Fed money printing is $25 billion per month (these are the POMO pumps that occur each day between 10 AM and 11 AM that goose the stock market higher) and must go to zero by the end of October. Yellen previously said she would drop another $10 billion to bring QE down to $15 billion (tomorrows meeting) and this is the last $15 billion that will disappear in October-November ending QE Infinity forever. If Yellen wants to appease the hawks, she can always reduce QE by $15 billion instead, a simple token move but it would satisfy the hawkish narrative in the press over the last few days and allow only $10 billion in money printing to finish out October. The Fed can be tricky sometimes so everyone simply has to wait for Yellen to bring the tablets down from on high tomorrow and tell the markets which direction to go.

Stocks have rallied 5-1/2 years off the March 2009 bottom due to the pure belief in the Fed, like a cult following a charismatic leader. As long as traders believe in the Fed's easy money stocks go higher. Up through the present, the economic data keeps teasing that a recovery is in place, only to disappoint, and now it is at another inflection where the couple months of encouragement may be squashed again like an ant at a summer picnic. Keystone wrote at the start of the year that the end game occurs when confidence in the Fed is lost. How many more fits and starts in economic data can be tolerated before traders realize that if the recovery is not here after six years of money printing it is never coming? This realization would be devastating for stocks. Will this occur if Yellen remains dovish tomorrow and maintains the excessively accomodative and loose monetary policy? Will all confidence in the Fed finally be lost? She can keep printing money but if it has not worked in six years, it will not work, and at the same time the Fed has created a deep hole of debt. On top of that the rich have become wealthy beyond their wildest dreams by raping the stock market upside while the middle and lower class, and poor, suffer through structural unemployment watching their hopes and dreams squashed under the wealthy's expensive wingtip shoes.

The RUT small caps are threatening a death cross pattern where the 50-day stabs down through the 200-day MA indicating bearish markets for the weeks and months ahead. The death cross should occur tomorrow. The 150-day MA slope is far more important. The 150-day is at 1155 and flattening and moving sideways. If the 150-day MA continues to roll over to the downside a cyclical bear market in small caps is guaranteed and the broad indexes will likely follow suit. Thus, use 1155 on the RUT as a key indicator. Each day the RUT is under 1155 is another nail in the bulls coffin. If the RUT moves above 1155 going forward, the bears got nothing. The RUT is currently printing 1142. The death cross should be taken with a grain of salt; technicians do not pay it much attention. Typically price will actually bounce when a death cross occurs and drop when a golden cross occurs but overall, the crosses do point the path forward for the weeks and months ahead.

So bulls want to maintain UTIL above 550 and SOX above 632.81 while pushing VIX under 12.39. Bears need to push UTIL under 550 and SOX under 632.81 while maintaining high volatility with VIX above 12.39. The VIX 13.58 is also a key bull-bear gauge. The direction forward the remainder of the week is key since it will verify the direction out of the tight standard deviation bands on the SPX daily chart and equities will likely continue in that direction for 80 or 90 handles.

On the esoteric side, yesterday was a key date for Keystone's Eclipse Indicator that is used to forecast potential major sell off windows. Over the next couple weeks, a window is open for a major market sell off to begin. If the bears are unable to move lower as October begins then the next eclipse sell off window is between late October and late November. Although esoteric in nature, the eclipse indicator has quite a good track record. The forecast jives with the 80% down week seasonality projected for next week. With volatility hinting that it wants to start moving higher, the markets may take on larger and larger intraday and day to day point swings going forward. All eyes and ears are waiting for the Fed circus to come to town tomorrow.

Note Added 11:38 AM: Utilities and semi's are catapulting higher sending equities higher. VIX is 13.71 teasing the 13.58 support and bull-bear line explained above. The SPX keeps running higher with its OpEx Tuesday to Wednesday rally move with price piercing through the 1991 R to 1993 so 1998 resistance is on the table. If the VIX loses 13.58, the SPX will likely print and test the 1998. If VIX bounces and refuses to give up the 13.58, stocks should drift lower. Traders are pricing in the thought that Keystone has discussed this morning that the Fed will likely not change the "considerable time" wording in the statement. The strong pop in the stock market over the last one-half hour is due to Jon Hilsenrath, a journalist at the WSJ that is perceived to be a mouth-piece of the Fed, saying the Fed statement will likely stay as is. By Hilsenrath providing his blessing, the stock market is off and running higher. The thought of continuing easy money policy and ZIRP Forever creates the stock market bounce and joy. The central bankers are the market. Watch the VIX 13.58 level as a key market metric today.

Note Added 11:50 AM:  VIX 13.60 only pennies from the 200-day MA bull-bear line in the sand now at 13.57. VIX must bounce or die and whichever way it goes the SPX will move opposite. What say you VIX? Bounce or die.

Note Added 11:52 AM: VIX collapses to 13.41. Boiiiinnnggg. The SPX launches to towards the 1998 R. So the VIX 13.57 remains key. Bears must focus on pushing VIX above 13.57 as soon as possible. Each minute that goes by with the VIX under 13.57 hurts the bear case. Bingo. The 8 MA crosses above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Everything is going the bulls way ahead of the Fed announcements. The thought of the Fed changing the "considerable time" phrase is tossed out the window as traders drink from the Fed punch bowl staggering around buying stocks and singing songs. The bond market remains calm, steady and flat through all this circus-like action at 2.58%.

Note Added 12:01 PM: The SPX breaks above the 20-day MA at 1995.24 another feather for the bull's cap. HOD is 1997.44 stopping at the 1998 resistance, for now. All Hail the Fed and Hilsenrath! All Hail the Fed and Hilsenrath!! Shamefully, the Fed and other central bankers remain in full control of the non-free markets pumping stocks higher for nearly six years. Watch the 20-day into the closing bell.

Note Added 12:17 PM:  VIX 13.50. SPX 1996.46. 20-day MA 1995.24. The TRIN is bullish under one by a wide margin down at an uber low at 0.60 fueling the upside.

Note Added 12:17 PM:  VIX 13.34. SPX 1998.34 so the door is open to the 2002-2003 R. The bears are falling down the steps and need to push the VIX above 13.57 to fight back. The Dow is up 110 points. Today is a wild bull party with Hilsenrath handing out the Fed booze to everyone.

SPX Daily Chart Downward-Sloping Channel Tight Bands Squeezing Out Huge Move Ahead

The negative divergence (red lines) and overbot conditions highlighted a few days ago forecasted a spank down which occurs. The bears are having difficulty pushing lower as the overwhelming consensus of traders remain bullish overall. Selling volume is edging out buying volume by a hair. The downward-sloping channel is in play. Price is at 1984 directly in the middle of the 20-day MA resistance above at 1994 and 50-day MA support at 1973 below. The 1973 is very strong price support so a confluence forms at this level that acts as a magnet and price would be expected to test this level. Bulls win big above 1994. Bears win big under 1973.

The standard deviation lines (pink) are squeezing in super tight so a huge move is coming any day now a la the May and late July squeezes. Those moves, one up and one down, result in 80 to 90 handle moves in price over only 2 or 3 weeks time. Thus, one side is going to be very happy and the other very sad a couple weeks from now once history is written. The standard deviation band squeeze simply predicts the large point move but does not predict direction. Price is near the lower band at 1977 and if price violates the lower band a move back to the middle band, at 1994, would be expected at a minimum. Note the prior fractal behavior for late July where price collapsed when it was at this same juncture near the lower band.

As fate would have it, however, the Fed decision, forecasts and press conference is tomorrow afternoon, so stocks may slide sideways until then when Fed Chair Yellen will stand on the stage, extend here right arm and thumb, and turn the thumb up or down like Caesar dictating which direction the price break occurs. The central bankers control the market. Many think that the term "considerable time" will be removed from the Fed statement and say the weakness in stocks this week is attributable to the expected slightly more hawkish tone. 'Considerable time' refers to the time until the first rate hike (when ZIRP will end) now slated for next summer. However, GS this morning says do not expect the change to wording. Also, Yellen is Queen of the Doves and will likely not want to make the change and instead prefer to continue printing easy money.

The 10-year yield pulls back overnight from 2.62% to 2.56% so the bond market is not expecting the change. The change to Fed wording diatribe may be more of a media hype event than what actually occurs. If the Fed statement remains unchanged, now that all this talk has occurred to change the wording, then stocks will probably pop wildly higher. This may be in concert with the band squeeze in the chart above and create the 80 or 90 point upside rally. However, after six years of obscene central banker intervention, you would think the light would go off in trader's minds that the Fed's grand experiment is failing. Hence, a continued dovish tone, may indicate that the Fed is floundering and clueless, and traders begin losing confidence in the Fed, and it is time to jump ship from stocks, thus, the squeeze would be down. But more directly related to the change in wording, if the "considerable time" is changed, then stocks should move sideways to sideways lower as the end to all the Fed's easy money is seen as occurring sooner rather than later. Flip a coin.

If the Fed was not in play, the technicals on the chart say down. The downward channel is in play and the indicators are all weak and bleak wanting lower lows in price going forward. The RSI, stochstics and money flow are all under 50% in bear territory. The stochastics are not yet oversold to indicate a bounce. The 1985-1986 support has been violated so the door has been open for a couple days to show respect to the next strong support level at 1973. So the chart and technicals say down and a test of 1973 should occur where price can decide to bounce or die.

Get set for a wild ride beginning tomorrow afternoon through the end of the week. Once price begins to commit from the band squeeze for a few days the larger directional move should become obvious. The bears have the upper hand but if Yellen flaps her dovish wings hinting that the first rate hike may not occur until late summer or Fall 2015, or simply say nothing, the bulls will likely run. 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 12:05 PM:  The move begins today instead of tomorrow. The SPX prints a low at 1979 then launches higher to 1998 intraday, a 19-point turnaround, after Jon Hilsenrath at the WSJ says the Fed will maintain the current language in the statement. The bulls may be launching the band squeeze higher but the Fed will have to speak tomorrow afternoon to verify the big directional move ahead.

Monday, September 15, 2014

SPX 60-Minute Chart 200 EMA Cross

The SPX is above the 200 EMA on the 60-minute at 1982.77 signaling bullish markets for the hours and days ahead, however, note that there is an intense fight occurring for this critical level. Very bad things will happen to the stock market if the 200 EMA fails. The bulls keep finding a way to keep their heads above water and today they are floating pennies above danger.

The  lower lows in price are met with positive divergence so a sideways to sideways higher path ahead is a reasonable expectation. The Fed announcements and circus is Wednesday afternoon less than two days away so markets may float sideways until then.

Reference the previous chart where the 8 MA remains under the 34 MA on the SPX 30-minute chart signaliing bearish markets for the hours ahead so one of these two charts will flinch. Either the 30-minute 8/34 MA cross will turn bullish verifying market upside ahead, or, the 60-minute 200 EMA cross will turn bearish with the SPX falling through 1982.77 signaling big trouble ahead.

Keybot the Quant remains short and the algo is active today printing four numbers thus far. Utilities and semiconductors are the two major parameters effecting market direction currently. Watch UTIL 550 and SOX 632.85. Both turned bearish a couple hours ago creating the market negativity but then turn bullish again creating the come back in the stock market today. VIX 12.37 is another important level and volatility is far higher which provides the bear's a large feather for their caps moving forward. Remember, the VIX 200-day MA is another important market signal level and with VIX currently  printing 13.88, bears are comfortable seeing price remain above the 200-day at 13.57. If VIX drops under 13.57 this afternoon, the bulls will be mounting a strong move higher in stocks into the closing bell.

So watch the 30-minute and 60-minute charts as describved above to see who flinches and which side wins. Use UTIL 550, SOX 632.85 and VIX 13.57 and 12.37 as your key levels to gauge market direction. Key S/R is 1991, 1988, 1985-1986 and 1973. 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 1:30 PM: SPX 1982.45. As the astronauts proclaim decades ago, "Houston, we have a problem." It is odd to see price sneaking under the 200 EMA since UTIL and SOX are remaining bullish and well bid above their critical levels identified by the Keybot the Quant algorithm.

Note Added 1:35 PM:  The SPX is above 1983 again. Bears need weaker utes and semi's to create the next strong leg lower for stocks, otherwise, markets may stagger sideways until Fed Chair Yellen tap dances on Wednesday. If SPX loses the 200 EMA at 1982.77 and remains under it is curtains for equities. Bulls are fine as long as they do not permit 1982.77 to fail.

Note Added 1:41 PM: The SPX is 1982.34 as Keystone sings, "You put your right foot in, you put your right foot out, you put your...." The bulls and bears are pushing and pulling the SPX along the key 1982.77 each side realizing the critical importance of this level. Ute and semicondutors are holding up on the bull side so a failure of the 200 EMA would not be anticipated, for now.

Note Added 1:50 PM: SPX 1982.77. You cannot make this stuff up; price is balancing directly on the tight rope. If 1982.77 fails, bears need to hold the failure for 7 to 10 minutes, if that occurs, the SPX should be at 1973 support in a heartbeat.

Thursday, September 11, 2014

SPX 30-Minute Chart 8/34 MA Cross

At 2 PM Thursday, 9/11/14, the bulls punch the bears in the face with the 8 MA crossing above the 34 MA signaling bullish markets for the hours ahead (green circle). The tight standard deviation bands are squeezing out a big move that appears to be up already bouncing from the 1990-1991 support to 1998. Price has already tagged the upper band so if the bears want to make a stand and stop the upside they need to come to play immediately from the opening bell on Friday. The histogram and stochasics want to see weakness for a candlestick or two (30 minutes or one hour) but then the green lines for the RSI, MACD line and money flow want to see higher highs, thus, the chart is set up well for the bulls to squeeze out some upside juice.

The key S/R is 2011, 2007, 2005, 2002-2003, 1998, 1995, 1990-1991, 1988 and 1985-1986. Price is  held in check late day today at the 1998 resistance. Considering the neggie d on the histogram, the 2002-2003 area may serve as a topside target for price. That would provide time for the other indicators to negatively diverge, however, if the RSI keeps moving higher and into the overbot area above 70, the SPX will be moving higher to 2005 and 2007.

The bulls are in the driver's seat in the VST. Bears got nothing without the negative 8/34 cross so price will need to print at 1994 and lower to curl the 8 MA downwards. Bears will need negative geopolitical news overnight to create a sour mood, otherwise, the bulls appear ready to move above 1998 R, then attack 2002-2003 R to contemplate a move to 2005 R.

VIX 12.35, identified by the Keybot the Quant algo remains key to market direction. Overall, market bears are fine as long as the VIX remains above 12.35. If the VIX drops under 12.35, the SPX is going to explode higher to the all-time highs again and Keybot will likely flip long. If the markets rally higher but the VIX remains bearish above 12.35, the bulls got nothing and markets will reverse off the highs and begin selling off in earnest again. 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 Saturday 9/13/14: The bears came to play on Friday smacking the markets lower with the higher volatility. VIX jumped above 14 but retreated to 13.31 at the closing bell so the bears need to push VIX above 13.56 (200-day MA) on Monday to receive more downside juice. The bears sent price lower in concert with the new sanctions against Russia and the non-stop move higher with the US dollar that is hammering commodities, oil and gold. The 10-year yield sneaks above 2.60% but financials did not run higher. Utilities are beaten with the higher yields. For the 30-minute chart above, the 8 MA crossed down through the 34 MA signaling bearish markets for the hours ahead. The tight standard deviation band squeeze highlighted in the chart above quickly reversed the up move that was at the top band and squeezed the price move strongly lower from 1997 to 1980 a squeeze lower of 17 handles. The last hour of trading sent markets up as the indicators on the chart developed positive divergence with the low in price at 3 PM EST. The RSI never reached oversold territory. Note how the SPX violated the 200 EMA on the 60-minute chart at 1982.80 which would guarantee lower equities but price recovered to 1985.54 at the closing bell keeping the bulls in this driver's seat with this critical 200 EMA cross signal on the 60-minute. Pay attention to the 1983-ish level for the 200 EMA as a key market metric for next week. Very bad things will happen to the stock market if SPX loses the 1980-1983 area. Market bulls will be able to recover and push stocks higher if they can maintain price above 1983. Note how price parked itself directly on the strong 1985-1986 S/R as identified in Keystone's SPX S/R missive last weekend. There is an air pocket to 1973 support so since the 1985-1986 was violated, the door is open to 1973. If the 200 EMA on the 60-minute fails, the SPX will be at 1973 in a heartbeat and that will fail with price moving to 1968 and 1963 support levels.

VIX Volatility Daily Chart

Volatility provided drama yesterday with the VIX taking out the 200-day MA which will usher in significant equity market downside. The VIX ran above 14 as the bears popped the champagne corks but as the session played out the VIX collapsed to 12.88 so the bears were frantically trying to place the corks back in the bottles as equities recovered.

Two levels are key; 13.56 and 12.35. The 13.56 is the 200-day MA which signals a bull versus bear market (currently bullish under 13.56). The 12.35 is the current level identified by the Keybot the Quant algorithm as a key bull-bear line in the sand affecting stock market direction. In other words, below 12.35 and the bulls are on easy street with the SPX back above 2000 and rising. Between 12.35 and 13.56, the stock market will move sideways but continue a weak overall profile. Above 13.56 and the stock market will collapse. The VIX begins at 12.88 so market bears are fine as long as price stays above 12.35. Bulls win below 12.35. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 9:39 AM: The bears push the VIX higher after the opening bell spiking to 13.53 but then receiving a spank down from the 200-day MA at 13.56. The bears are trying to punch up through 13.56 to create market carnage but fall flat on the first try. VIX is printing at 13.23.

Note Added 11:10 AM: The bears push VIX above 13.56 to usher in the market weakness and send the SPX down over 9 points, however, the VIX falls back below the 200-day MA so stocks recover once again. The ebb and flow continues. VIX is now printing 13.17.

Note Added 7:52 PM: The bears fold like cheap suit with volatility collapsing again like yesterday intraday. The VIX drops to 12.80 providing bull fuel into the closing bell. Keybot the Quant continues to track VIX 12.35 as the key market directional driver so the market bears are fine with VIX above 12.35 but bulls will rule the stock market if VIX drops under 12.35. Friday's opening bell should prove dramatic.

AAPL Apple Weekly Chart Bull Flag and Cup & Handle Patterns Overbot Negative Divergence

Apple is receiving lots of attention with the new product launches this week. Technically, the chart is setting up for the bears. The thin blue lines show a bull flag pattern already played out with the first leg from 55 to 80, then sideways consolidation, then the second leg begins at 70-75 which targets 95-100, achieved. The purple cup and handle pattern is also in play with break out line at 80 and base of cup at 55 so the target is 105. Thus, the patterns target 95-105 and price has printed above 103; close enough for government work so a few more potential points of upside is not worth chasing.

The red lines show universal negative divergence across all indicators as compared to the last price peak in 2012 as well as over the shorter term few-month time frame. The stochastics and RSI are overbot and price moves up through a rising wedge; both bearish. The neggie d creates an initial slapdown and there is no reason for price to print another high from here. The negative divergence is firmly in place and the RSI, stochastics and money flow are all weak and bleak starting to print lower lows.

The projection is for lower prices ahead for the weeks and months to come. Perhaps a couple-few more bucks to 105-106 may print but this would likely be a gift for shorts if it occurs and is akin to picking up nickels in front of a bulldozer. Price never back kissed the 80 breakout level so it would be prudent to visit this area and the last large volume candle at the start of the year at the 70-80 range is a realistic target for the months ahead in 2015. A short position in AAPL can be developed here forward. Keystone has no current position in AAPL. 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 9:42 AM: AAPL immediately drops to test the 20-day MA at 100.21 and bounces slightly. Use this 100.20-ish level as an important indicator for Apple strength, or lack thereof. AAPL is printing 100.53. The 50-day MA is 97.26 and rising.

Wednesday, September 10, 2014

SPX 60-Minute Chart 200 EMA Cross Sideways Channels Lower Band Violation

The SPX remains above the 200 EMA at 1981.10 on the one-hour chart signaling bullish markets for the hours and days ahead. Bad things will happen to the stock market if the 1981 fails. Yesterday's low bounced off the strong 1985-1986 support. Key S/R is 2005, 2002-2003, 1998, 1991, 1988, 1985-1986 and 1973. The 1980 and 1982 levels are support levels within the stronger structure listed and considering the 200 EMA is 1981.10, the 1980-1982 level takes on significant support importance as well.

Price has violated the lower standard deviation band so a bounce would be expected like the prior violations within a day or three. The green lines show positive divergence for the histogram and stochastics which want to bounce price in this one-hour time frame. The other indicators are more open to lower lows in price so a test of the strong 1985-1986 is likely and if that fails, the big enchilada test occurs at the 200 EMA which will dramatically affect the stock market moving forward.

Three weeks ago the bears tried to stab down through the 200 EMA but instead they were slapped in the face and the bulls continued higher. The chart hints at sideways ahead perhaps through a 1985-1998 sideways channel. Since the Fed is on tap next Wednesday, and there is now talk about a rate hike sooner rather than later, the stock market may start to line out sideways into that drama. Fed Chair Yellen will extend her arm next Wednesday and point up or down with her thumb determining the fate of the markets. Bulls are fine if they stay above 1981. Bears will begin biting off chunks of bull meat with blood and carnage accelerating if the 1981 fails. 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 12:06 PM: Lots of price drama today using the S/R levels above. Note that VIX has moved above the 200-day MA at 13.56 a very bearish signal. Markets will deteriorate if the VIX stays above 13.56. The bears cannot make headway lower since the bulls are maintaining buoyancy in the financials with XLF a touch positive. The TRIN sits at dead neutral at 1.00 unable to choose a winner in today's trading. SPX LOD 1982.99 so a 1982 handle prints teasing the 200 EMA described above now at 1981.33. Bears will win big if they keep the VIX above 13.56The bulls must send volatility lower immediately or they will lose today. The beat goes on.

Note Added 12:29 PM: VIX falls through the 200-day MA at 13.56 so the bulls push the SPX up through the strong 1990-1991 resistance and the path in the chart above is playing out. Watch the VIX 13.56 level today as the main rudder steering the market ship. Bears will receive lower equities with VIX above 13.56. If VIX stays under 13.56, then equities stumble sideways with an upward bias.

Note Added 12:32 PM: SPX 1992.19. VIX 13.47. Bears need VIX above 13.56 to receive extra juice. XLF 23.32. TRIN 0.93. The lower VIX and TRIN off of today's intraday highs drives the stock market higher.

Note Added 7:08 PM:  The SPX plays out as the lines in the right margin of the chart showed this morning. Indicators have recovered and are long and strong in the short term so more upside for a few hours is a reasonable expectation. The bears made a run lower by pushing the VIX above the 200-day MA at 13.56 creating excitement in the morning but then VIX collapses down to 12.88 providing bull fuel all day long. A VIX above 13.56 will signal market carnage ahead. The VIX remains above the critical 12.34 level identified by the Keybot the Quant algorithm so market bears are fine. The bears have not yet tested the 200 EMA now at 1981.73. The 20-day MA is 1988.49. The SPX may stagger sideways. The Fed decision is now only 4-1/2 trading days away. Financials helped the bulls today.