Saturday, February 28, 2015

BPSPX Bullish Percent Index Daily Chart

The BPSPX remains on a double whammy market buy signal after reversing six percentage-points as February began and then crossing above 70%. The bulls are in charge in the stock market unless the bears can create a six percentage-point reversal. BPSPX topped at 76-ish so the math is simple for the bears; cross 70% to the downside and all Hades will break loose with the stock market selling off in force. If BPSPX remains above 70, the bulls remain in charge walking along easy street. 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.

Friday, February 27, 2015

SPX 2-Hour Chart

The SPX 2-hour chart motors along after the negative divergence smack down (red lines and red arrow). The rising wedge patterns and overbot conditions also created the downside move. The bears do not have much gusto, however, as bulls keep copper elevated and volatility low to prevent any downside traction. The SPX 30-minute chart shows a sideways dance currently. The indicators above show the MACD line with a negative cross and weak and bleak profile (the slope of the line is down). The stochastics and ROC are also weak and bleak over the last few hours. The RSI and histogram are flattening in concert with the sideways action shown on the 30-minute chart.

The weak and bleak indicators show that a lower low for price is likely after a bounce for a candlestick or two. So the expectation would be for price to move sideways to sideways lower until the indicators positively diverge. The stoch's are under 50% in bear territory. Watch the RSI to see if it goes sub 50% into bear territory since that will forecast further downside ahead for price. The longer that the RSI stays above 50% the more likely that bulls will take the stock market higher. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 4:35 PM: The SPX drops to 2104.49 at the closing bell a lower low. With t he lower low in price the indicators are all weak and bleak (sloping lower) and the RSI is down to 48% in bear territory. The weak and bleak  indicators want lower lows in price after any bounce occurs in this 2-hour candlestick time frame. Bears should be able to keep price weak for a few candlesticks which would take markets into Monday afternoon or Tuesday morning. Note how, as previously mentioned, February finished the month weak because the month was strongly up; you typically see this behavior after a very strong month. Also, February typically finishes weak, which it did. The monthly charts receive new prints today. A quick look at the SPX monthly shows the universal negative divergence remaining in place which predicts trouble ahead and would be in agreement with a multi-year top at hand. The Dow monthly chart is also the same set up with negative divergence, overbot conditions and a rising wedge. Ditto the RUT (Russell 2000). Ditto the Nasdaq, however, the pesky bulls are tough, and the MACD line squeezes out a slightly higher high. This may extend the top in the COMPQ for an additional one to three months. So those charts say down in March perhaps into April, then back up again in Apriil/May with the SPX, Dow and RUT not printing higher highs, but the Nasdaq will come back up to current price levels or more, then all four indexes should roll over for perhaps a muliti-year trend downwards beginning. Thus, a multi-year top may occur anytime now through May.

SPX 30-Minute 8/34 MA Cross

The 8 MA crossed under the 34 MA creating a bearish cross signaling selling for the hours ahead but the bears do not have a lot of downside juice. The bulls are keeping copper elevated and volatility low prohibiting the selling from gaining any traction. Bears are okay if the SPX stays under the 8 MA at 2110.44 moving sideways. If price moves above the 8 MA it will curl the moving average higher and chart the path to a positive 8/34 cross that would exalt the bulls to victory. Bears need to keep price under 2110 and start pushing lower.

The SPX receives the neggie d spankdown as shown by the red lines and red arrow. Price is moving sideways now. The SPX will have to make a decision within a few candlesticks which is anytime over the next couple or three hours, thus, since only 90 minutes of trading remains, equities may choose to slide out sideways into the weekend and make the decision on Monday morning. Whichever way price breaks from the blue trend lines identifies the winner.

Keybot the Quant algorithm remains long and is tracking JJC 31.98 as a key bull-bear line in the sand most influential to broad market direction currently. JJC is 32.16 which prevents the bears from making any downside progress. Market bears need JJC under 31.98 or they got nothing. Watch the SPX in relation to the 8 MA to see how the week finishes.

The algorithm also identifies UTIL 596 as a key metric for next week. UTIL is now printing 594 so bears receive a big feather for their caps come Monday morning if UTIL remains under 596. If UTIL finishes today above 596, the bulls are going to slap the bears silly on Monday. 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 2:36 PM: SPX 2109.31. The 8 MA on the 30-minute is 2110.10.  JJC 32.14. UTIL 593.80.

Note Added 2:51 PM: SPX 2106.27. The 8 MA on the 30-minute is 2109.76.  JJC 32.15UTIL 592.83. VIX is 13.77 remaining subdued helping bulls. Copper is not dropping so any weakness in stocks right now will likely recover. Utes are a touch weaker and staying under 596 so that will be ammunition the bears are gathering to fight back hard come Monday morning.

Note Added 3:02 PM: SPX 2104.60. JJC 32.15. Copper is not dropping so despite the drop in stocks, the bears likely do not have downside juice. UTIL 592.62.

Note Added 4:15 PM: SPX 2104.50. JJC 32.19. UTIL 594.19. Copper would not yield. UTIL closes under 596 and will begin under that level for Monday which will create market negativity. Bears will need to push copper futures lower overnight Sunday as well to make sure they have enough downside juice to smack markets lower. Conversely, if copper futures trade higher going into Monday's opening, and UTIL bounces above 596 after the opening bell, the bulls will continue the upside rally. Equities may have weakened into the closing bell due to the Congress continuing to work towards averting a shutdown of the Department of Homeland Security. Bears should not get too excited since copper remains elevated. Yesterday and today, that strength in copper is a big time aid for the bulls; it prevented the downside selling and is keeping stocks elevated. For the 30-minute chart above, the SPX collapses below the blue trend line down to 2104 at the closing bell. The 8 MA is 2109 so the negative 8 /34 MA cross remains in play signaling bearish markets for the hours ahead.

Wednesday, February 25, 2015

SDS Ultra Short S&P 500 2-Hour Chart Oversold Falling Wedge Positive Divergence

The drama with the SPX 2-hour chart continues with the indicators negatively diverged except for the money flow over the last few hours. Therefore, another 1 to 3 hours may be needed to plant the market top. The SPX has been moving sideways at these levels for over one day.  For a different perspective, the SDS 2-hour is shown above. SDS is an ETF that is a double inverse for the S&P 500. In other words, if the SPX goes down -1%, the SDS goes up +2%. On the other side, if you own SDS and the SPX goes up +1% you are slapped silly -2%. SH is a single ETF inverse play that moves one to one rather than the two to one.

The SDS chart above is positively diverged across all indicators (green lines) which is not surprising since we see the S&P 500 (SPX) chart negatively diverged (except for money flow still wanting some upside). The charts are mirror images of each other since they move inversely. Price is extended below the moving averages requiring a mean reversion higher (higher SDS = lower stocks). The falling green wedge and oversold conditions are two more feathers for the market bear's hats (SDS bulls). The expectation would be for price to bounce from here beginning at any time over the coming hours; it has a strong chance of moving higher before the end of the session. That means stocks should sell off. It will be interesting to see what happens.

If stocks keep moving higher, the same analysis should hold. Stocks are typically bullish during the Fed testimony and this has come true. Interestingly, during last July's testimony, the day before, and both days of the two-day meeting, were all bullish, as would be expected, but the day after the two-day meeting  the SPX dropped 30 handles. February typically finishes weak which would be tomorrow and Friday. Typically when a month is up wall to wall, like this month, the last couple days are weaker.

A breakout is occurring to the upside for stocks as this is typed with SPX above 2118 at new all-time record highs. High print is 2119.02. The money flow indicator on the SPX 2-hour remains long and strong so the bulls keep finding a way to keep stocks afloat and inch out higher highs in price. The SPX bounces three points in fifteen minutes. WTIC leaps to 50.38 so the energy and oil stocks must be boosting the broad indexes. Keystone opens a long position in SDS looking for a pull back to begin for stocks. The spike move right now is impressive; the bulls are toasting Chair Yellen as they sip the Fed wine. 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 1:40 PM: SPX HOD and all-time high is 2119.59. Energy stocks, XLE, jump +0.7% intraday in only 10 minutes time so the oil move higher creates the broad-market spurt over the last one-half hour. WTIC oil 50.20. Brent oil 60.33. You can see that oil hit 50.50 and 60.60, respectively, minutes ago with the all-time high in stocks printing, so equities are moving with the oil price.

Tuesday, February 24, 2015

SPX S&P 500 2-Hour Chart Overbot Negative Divergence

The SPX 2-hour chart is experiencing lots of drama. The SPX prints new all-time highs today. All the negative divergence spankdowns are highlighted before they occur (red arrows) but he bears have no sustainable downside juice and the bulls reassert themselves. The red lines show the firm negative divergence remaining in place wanting to see lower lows in price going forward but the bulls keep finding a way to boost stocks higher. The three circles show the news event pops since last week. The green circle on the left is the Ukraine ceasefire agreement that launched stocks. Who cares that the ceasefire is a joke and people continue to die daily.

The middle pink circle is the Greece bailout agreement rally. The current blue circle is the expected Federal Reserve Congressional Testimony rally as explained in a prior article. The CPC and CPCE put/calls signal complacency in markets and a near-term top likely at any time any day ahead. The VIX drops to a 13-handle further verifying market complacency and lack of fear. Traders are not worried since they know the central bankers will push stocks higher forever. Every day is a party. Offer a toast to Fed Chair Yellen as you sip the easy money wine.

The overbot conditions and neggie d should spank price down here and this one should have some legs due to the low put/calls. Price is extended above the moving averages and needs to receive a smack down. The tiny bit of juice with RSI and the MACD line may push the top out for one or two candlesticks which is 2 to 4 hours so that would be any time from now through the closing bell for the market top. This is so close to the bell that you have to leave the door open for the top to occur after the opening bell tomorrow as well, but it should be coming anytime ove the coming hours.

Watch the MACD cross that is currently negative. If the cross stays negative (red circle) then the top will occur sooner rather than in a few hours. If the MACD cross turns positive (black line above red line) the near term top probably does not occur until tomorrow or Thursday. 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 12:15 PM: Boom. The MACD lines cross forming a positive cross; black line 8.207 and red line 8.180. This indicates the bulls have more juice for higher prices in the SPX, however, the latest candlestick now printing comes with a flat RSI and lower stochastics. Thus, despite the positive MACD cross, the market top likely remains very near and it will not be surprising to see stocks roll over from here to the downside during the afternoon.

Note Added 12:19 PM: SPX 2113.31. JJC 31.48. VIX 14.15.

Note Added 2:36 PM: SPX 2113.42. JJC 31.52. VIX 13.86. Stocks take a dip lower but recover. Note the lower volatility that creates the market buoyancy.. Copper is flat. For the 2-hour chart above price has printed matching or higher highs for the third consecutive candlestick (the last 5 hours), and negative divergence is in place over the multi-day and multi-hour period. The money flow has a smidge of long and strong juice that may create another one to three hours of buoyancy but the top appears at hand. The MACD cross turns negative which may help roll things over to the downside. Once the downside begins it should get going quickly. Fed Chair Yellen testifies before the House tomorrow so long traders are weighing if they should stick around one more day since equities are usually higher when the Fed provides testimony. The SPX 1-hour chart is negatively diverged across all indicators so its ready to spank price lower now. The bears have it served up on a platter if they want it, if so they have to start pushing volatility higher and copper and financials lower.

Note Added 2:53 PM: SPX 2114.78. JJC 31.52. VIX 13.76. The bulls are stepping on the throat of volatility the VIX now down to 13.76 sending stocks higher. Whoa, big push higher with VIX down to 13.71.... 13.66.  SPX leaps to 2115.23. Dow is up 100 points. Wild stuff. Comically, the MACD cross on the 2-hour chart above turns positive again so the sideways battle continues. Bulls may be pushing for one more up into Yellen tomorrow then give up the ghost.

Note Added 3:41 PM: SPX 2117.82. JJC 31.52. VIX 13.58. Copper is not moving. The bulls are squashing volatility sending stocks to new all-time highs. The RSI and MACD and ROC are now sloping higher in the very short term, long and strong, on the 2-hour chart so another one to 3 hours are needed to top out. So the bulls will push it into Yellen's testimony before the House tomorrow.

VIX Daily Chart Pivot at 200-Day MA

The VIX ends yesterday at 14.56 at the important 200-day MA at 14.66. The 200-day MA is a critical bull-bear signal for the stock market. Thus, bulls win big with VIX under 14.66; the SPX will be running to 2120. The bears win big above 14.66 as the stock market sells off.

Keystone's proprietary algorithm, Keybot the Quant, identifies VIX 16.25 as a key bull-bear level affecting broad market direction. So the algo will not be impressed, from a bearish perspective, unless VIX moves above 16.25.

In summary, VIX under 14.66 and the bulls are the clear winner going forward. Between 14.66 and 16.25 the stock market will leak lower but it will be questionable how much juice the bears have. Above 16.25 the stock market will be selling off in force. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 11:38 AM:  The VIX collapsed to a 13 handle handing the bulls the victory. The SPX (S&P 500), INDU (Dow Industrials) and RUT (Russell 2000) print new all-time highs. Higher financials, lower volatility and higher copper are fueling the upside. Fed Chair Yellen is flapping her dovish wings in front of the Senate Banking Committee creating market joy and the Europgroup approves the Greece reforms. The future is so bright you gotta where shades; everyone is donning the Fed's rose-colored glasses. Watch JJC 31.97 identified by the Keystone the Quant algorithm. The upside stock market rally is real and has legs if JJC moves above 31.97. If JJC stays under 31.97 the upside in stocks is limited and should stall. Remember, the CPC and CPCE put/calls are signaling a near-term market top any day. The VIX dropped to a 13-handle further verifying a lack of fear that markets will ever go down, thus, they will go down. So a near-term top is expected today or tomorrow and the bears should receive a turn at bat. Use JJC 31.97 as a major guide. JJC is at 31.70 on the bear side so the bulls cannot receive further upside stock market juice.

Note Added 12:08 PM:  The VIX collapses to 14.12 keeping stocks higher. Interestingly, the JJC loses ground to 31.53 a distance away from the JJC 31.97 the bulls need. Stocks are receiving lift from the lower volatility but the much needed strength from copper is petering out.

Note Added 2:45 PM: The VIX drops to 13.76 the lows of the day; the bulls are punching the bears in the face.

Sunday, February 22, 2015

Keystone's FOMC Congressional Oversight (Humphrey-Hawkins) Twice-Yearly Bullish Market Indicator

The Federal Reserve must testify before Congress semi-annually (twice per year), typically in late February and also in July. The two-day stints in testimony typically result in bullish days for the markets, especially the last few years with former Chairman Bernanke and now current Fed Chair Yellen promising to drop money from helicopters indefinitely. The stock market is typically bullish moving through the two-day Congressional testimony.

The idea is to enter the market long the day before the first day of testimony and then exit the long trade the day after the second day of testimony. This results in an 80% success rate. The period from the day before the testimony to the second day of testimony is typically up strongly as well, and also the two-day testimony itself typically results in an up move from the first day to the second day, but the period that bookends the overall testimony from the day before, to the day after is the highest percentage move.

Note that the incorrect July 2007 number occurred just before the October 2007 market top, and the incorrect read in February 2008 is when the financial sector bubble popped so the markets were not in a good mood back then. The incorrect read March 2012 was exactly as the markets were topping and rolling over.

The February 2014 testimony receives a rare split of the two day meeting due to a snowstorm in Washington, DC, so the individual dates are used to assess the indicator and each testimony results in up days for stocks as Yellen flaps her dovish wings. Last July, the same pattern occurs with a nice up move in stocks into the second day, a 12-point gain, but the day after the meetings ended, 7/17/14, the SPX fell from 1982 to 1955, a 27-point dump, so the indicator is given an incorrect rating. If this fractal repeats in the week ahead the SPX would dump 30 handles on Thursday, 2/26/15.

The indicator favors the bulls so stocks are expected to be buoyant early in the trading week especially as Yellen coo's dovish sounds on Tuesday and Wednesday. Over the last seven years, the indicator is correct 13 times that bullish rallies did occur while wrong 4 times; the indicator is correct 76% of the time over the last seven years. Interestingly, all four incorrect signals, where stocks were weak through the Congressional testimony, resulted in a weaker stock market period for the days, weeks or months after.

2/24/15 -- 2/25/15; 
7/15/14 --7/16/15; 1970/1958 (but up 1970/1982 for two days; the day after the meetings was a huge 27-point selloff); Markets are Down; Incorrect
2/27/14 (snowstorm rescheduled); 1844/1860; Markets are Up; Correct
2/11/14; 1796/1820; Markets are Up; Correct
7/17/13 -- 7/18/13; 1671/1684; Markets are Up; Correct
2/26/13 -- 2/27/13; 1488/1515; Markets are Up; Correct
7/17/12 -- 7/18/12; 1354/1377; Markets are Up; Correct
2/29/12 -- 3/1/12; 1372/1370; Markets are Down; Incorrect
7/13/11 -- 7/14/11; 1314/1316; Markets are Up; Correct
3/1/11 -- 3/2/11; 1327/1331; Markets are up; Correct
7/21/10 -- 7/22/10; 1083/1103; Markets are Up; Correct
2/24/10 -- 2/25/10; 1095/1104; Markets are Up; Correct
7/21/09 -- 7/22/09; 951/976; Markets are Up; Correct
2/24/09 -- 2/25/09; 743/753; Markets are Up; Correct
7/15/08 -- 7/16/08; 1228/1260; Markets are Up; Correct
2/27/08 -- 2/28/08; 1381/331; Markets are Down; Incorrect
7/18/07 -- 7/19/07; 1549/1534; Markets are Down; Incorrect
2/14/07 -- 2/15/07; 1444/1456; Markets are Up; Correct

The Lines of Data are;
Congressional Testimony Two-Day Meeting Date; SPX price the day before the two-day meeting/SPX price the day after the meeting; Are markets up or down?; Is the indicator correct or incorrect in predicting a bullish stock market for the Fed testimony?

CPC and CPCE Put/Call Ratios and SPX S&P 500 Daily Charts Signal Market Top At Hand

The CPC and CPCE put/call ratios indicate a significant top at hand (red circles). It should manifest at anytime over the coming days. The low put/calls under the red line indicate rampant trader complacency and no worry or fear that markets will go down. Friday was a euphoric party atmosphere after the Greece bailout deal. The cab driver, Aunt Agnes, Uncle John and all the blue-haired gals from the bingo hall each took their entire life saving and placed it in dividend stocks and AAPL stock last Friday at the peak of the bullishness. Complacency rules the day. No one is worried about the stock market ever going down again since ECB President Draghi fired the QE money bazooka and the obscene Keynesian bond-buying will pump stocks higher.

The market bottoms (green circles) are cheesy over the last few months since traders fully believe in the power of the ECB and fully expect higher stocks in 2015. The CPC should print above 1.20 and CPCE above 0.80 to signify enough panic and fear to begin a recovery rally but recently the bottoms are more shallow since traders are quick to buy as the ECB plans to drop money from helicopters to boost stocks. This behavior illustrates the fluff that is continually being placed underneath the stock market as price continues higher.

If the put/calls drop further, that simply means the market top is coming even faster and you want to place trades on the short side. The previous SPX chart wants another price high and markets are typically bullish for the Fed's Congressional testimony early in the week, so perhaps equities float along sideways to sideways higher into Wednesday and then the boom is lowered with a market selloff after Fed Chair Yellen leaves the building. The expectation is that a market sell off will begin any day ahead but the market top appears to be more likely mid week say Tuesday-Thursday. 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 S&P 500 Daily Chart Triangle Breakout Overbot Negative Divergence Developing

The SPX breaks up and out of the blue sideways triangle pattern. Note the fake-out move lower in late January with price dropping below the blue trend line creating cheers from bears then whammo, price quickly reverses to the upside, returns to the safety of the inside of the triangle then boom, explodes out the top side creating a bull victory. The triangle targets 2150-ish which would be the upper red trend line.

The SPX will want to back kiss the 20-day MA at 2058 and rising at some point forward. The red lines show universal neggie d across all indicators but in the very near term (last few days) price has some long and strong momentum (green lines). The pink box shows the ADX indicating a strong trend higher for price but that petered out as the new year began. Even though stocks are printing new highs the ADX is at 18; it needs to move above 25 to prove there is a new strong uptrend in place paving the way to a happy bullish year ahead. If the ADX remains stalled, bulls got nothing.

The short term momo wants a higher high or highs in price over the few days ahead after any short pull back occurs. That momo must burn off before price can roll over to the downside; it will only take a couple days or so. Projection is sideways to sideways higher into mid-week then a pull back begins.

Stocks are almost always bullish during the Fed's congressional testimony on Tuesday and Wednesday. The month of February typically ends down and also when a month is all up, like February, the last couple days will tend to be down. Thus, mixing all this up and sprinkling some magic voodoo dust on top, the SPX may stay buoyant into Wednesday then sell off moving into March. Congress has to agree to fund the Department of Homeland Security this week or the DHS will receive a partial shutdown come Saturday so this may create market angst. 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 S&P 500 Weekly Chart Overbot Negative Divergence Price Extended

The weekly chart remains negatively diverged over the several month time frame after price prints new all-time highs. The short green lines show a hair of momentum available so price may float higher for one to three weeks before dropping. The purple dots show price extended needing a mean reversion (lower prices). The projection would be a couple weeks or so of sideways then lower. The monthly chart is negatively diverged so the two charts jive together hinting at a potential multi-year market top printing in March. 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.