Tuesday, November 25, 2014

SSEC Shanghai Index Weekly Chart 3-Year Record Highs

The Shanghai is printing at three-year highs entering the strong resistance zone from 2011 and 2010. Price breaks out of the downward-sloping channel this summer. The blue sideways triangle patterns are about 500 points on the vertical sides. Thus, with the break out occurring from the 2050-2150 area, adding five hundo yields a target at 2550-2650. Price at the lower part of this target range now. The RSI and MACD line are long and strong wanting to see higher highs in price. The stochastics are overbot and negatively diverged and the histogram is neggie d so price should pull back to take a breather for a week or three but the expectation is then for a continued push higher into the 2550-2650 area. Price may not peak out for a few weeks forward definitely not until the RSI and MACD line goes neggie d.

The pink boxes show the ADX above the mid-20's indicating strong trends. The tumble lower through late 2011, 2012 and into 2013 was a strong down trend. Then in late 2013 the down trend petered out (ADX drops to 10-ish). From this summer, as the SSEC breaks out to the upside, the ADX jumps higher indicating that the current uptrend is strong. Marrying a strong up trend and the long and strong RSI and MACD, higher highs in price are anticipated. Overall, for the weeks and months ahead, the expectation is that the 2550-2650 resistance area should hold. As soon as the RSI and MACD develop neggie d, probably in December-January, that will identify the top. 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 8:27 AM: The SSEC closed at 2567 for Tuesday. The chart is always a few hours behind. Price begins the battle in the 2550-2650 resistance zone.

Monday, November 24, 2014

TYX 30-Year Treasury Bond Yield Sideways Channels

The 30-year yield is moving sideways through a tight range like the 10-year yield and traders are awaiting the move out of the sideways channels to point the direction ahead. The TNX (10-year) wrestles through the 2.30%-2.38% and the lower 2.30% support is currently being tested. For the TYX chart above, the purple sideways range at 3.03%-3.09% has been in play for the 21 days. On Friday, the purple range failed and yield remains under the lower rail now at 3.01%. The purple range encompasses all the closing yields.

Broadening out with the black channel that encompasses nearly all intraday high and low yields a range through 3.01%-3.10% emerges and this is in play for the last 23 consecutive days. The 30-year yield is testing the lower 3.01% boundary right now. The 3.00% level is a psychological level. Thus, a failure here at 3.00%-3.01% will lead to a new lower range perhaps with initial support at 2.94%. Lower yields also indicate a further slippage into disinflation and deflation that the overwhelming consensus of traders say cannot occur moving forward.

A 30-year yield under 3%, with a flattening yield curve overall, indicates the ride to deflation town may not be as far away as everyone thinks. Of course the Fed and other central banker's have been printing money like madmen to prevent deflation thus, if the day of reckoning does arrive in the end, and deflation finally extracts its pound of flesh, it will prove that the Fed's grand Keynesian experiment, the brainchild of former Fed Chairman Bernanke and current Fed Chair Yellen, is a failure. 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 7:10 AM on Tuesday, 11/25/14: The 30-year yield sits at 3.00% making a bounce or die decision today.

Spanish 10-Year Yield Daily Chart Under 2% for First Time in History

The Spanish 10-year yield drops under 2% for the first time in history. ECB President Draghi promises sovereign (government) bond purchases which is no easy feat under the ECB that is an 18-member consortium. The Fed in the States can print money at will. Ditto the BOJ in Japan since their central banks are the sovereign government. The ECB will have to choose certain bond purchases in some countries at the expense of other countries. Good luck to Draghi herding those kittens. Nonetheless, European notes and bonds are well bid today (higher prices lower yields).

As long as the European yields are low, the US Treasury yields will likely stagger sideways and even perhaps leak lower. Global deflation is a concern although the near universal consensus by analysts and traders is that deflation is no worry whatsoever and instead it is simply a matter of if inflation occurs tomorrow or the next day.

Traders are anticipating Draghi to announce a sovereign bond buying program as soon as next Thursday, 12/4/14, hence the run-up in prices and drop in yields today. The German bund yield is near historic lows at 0.78%. The France 10-year is 1.12% teasing down towards the 1% level. The US 10-year yield slips under 2.31%. 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 30-Minute Chart 8/34 MA Cross

The 8 MA remains above the 34 MA on the 30-minute so the bulls are in charge for the hours ahead and continues slapping the bears around. Last Friday at the lows, 10 or 12 candlesticks ago (5 or 6 hours), the long and strong indicators were highlighted (green lines) so price wanted to come back up for another look at the highs and prints above 2070 today but not yet at the prior all-time high at 2071.46, but very close.

The Friday spank down is created by the overbot stochastics (red line) and negative divergence with the stoch's but the other indicators wanted higher highs. Price is now trying to hold the bottom rail of the red rising channel at 2068. Price should continue higher to print the 2071-2072 level which would actually help the bears since if price came up for this matching or higher high with the indicators negatively diverged (as the thin red lines show) that would identify the near term top. For now, the bulls are in charge. Bears need the SPX under the 8 MA at 2067 to curl the 8 MA lower for a potential negative 8/34 cross, otherwise, bears got nothing. Bears will rejoice if the negative MACD cross occurs. 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 7:20 AM on Tuesday, 11/25/14: The SPX prints another new all-time closing high at 2069.41. HOD for Monday is 2070.17.

BPSPX Bullish Percent Index Daily Chart Double Whammy Market Buy Signal

The six percentage-point reversals and the 70% level are key signals for the BPSPX and the stock market. The bears were happy after the September top since the BPSPX reversed six points creating a market sell signal. Then when price fell under 70 in late September the markets fell out of bed with the double whammy sell signal. Bears were celebrating and had success in creating technical damage to markets. The RUT small caps were in correction mode down more than -10% as the broad indexes were just approaching this level.

The Fed knew the stock market was going down the rabbit hole so they had to intevene to save the day as they have for the last six years. Fed's Bullard was sent out in mid-October to pump up the idea of more QE even though the Fed was set to end the QE program. Voila. That was music to traders ears that more easy money was on the way so long traders jump in to rape the upside in stocks and the one-month rally begins.

Other dovish Fed members chimed in, the BOE hinted at more stimulus, the BOJ continues bludgeoning the yen to send Japan and US stocks higher, the PBOC chimes in with both liquidity injections in late October and also rate cuts last Friday. The ECB announces plans to buy sovereign bonds. The central bankers are the market. This is how an epic one-month rally occurs, unprecedented in economic history not seen since the Gret Depression created by the central banker intervention. The Dow Industrials are now above the 5-day MA for 26 consecutive days!

So the bulls are in clover but remember the BPSPX is more of a coincidental and lagging indicator used more to verify market moves rather than predict market direction. The BPSPX confirms that the bulls remain in firm control of the stock market. Interestingly, the bears can quickly turn the tables with a drop under 70, then a failure at 67.60 (73.60-6) which would create a double whammy sell signal. Watch the BPSPX into the end of the year as a key tool. Bears got nothing until they push the BPSPX back under 70. 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 7:12 AM on Tuesday, 11/25/14: The BPSPX continues higher after a Monday rally now up to 74.20. Thus, the bulls are creating more upside juice with each tick higher in BPSPX. The bears need to reverse under 70 then under 68.20 to receive a double whammy sell signal.

SPX Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 11/24/14

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for trading the week of 11/24/14. Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and important S/R. The SPX all-time intraday high is 2071.46 on 11/21/14 and the SPX all-time closing high is 2063.50 on 11/21/14.

For Monday with the SPX starting at the all-time closing high at 2064, the bulls need 7 points of upside to print above 2071.50 and an upside acceleration will occur towards 2080. The market bears need to push 7 points lower under 2057 to accelerate the downside. A move through 2058-2071 is sideways action to begin the week. S&P futures are +5 a couple hours before the opening bell.

The parabolic move higher in stocks continues fueled by the global central banker collusion. Last Friday, the ECB and PBOC performed a tag-team approach to further goose the global stock markets. The central bankers are the market. The bullish seasonality factors such as the third year of the presidential cycle and years ending in ‘5’ are encouraging the bulls to chase prices higher. In addition, a major percentage of the stock buybacks occur in the last two months of the year, November and December, so this further boosts stocks.

The 2071.50 is the magic number for bulls that will send price to 2080. If 2080 is taken out, Keystone’s 80/20 rule says 8’s typically lead to 2’s, and 2120 would be on the table. The stock market euphoria is at fevers pitch with the VIX under 13, the put/call ratio’s printing multi-week and month lows and the CBOE SKEW high (think of these indicators from a contrarian perspective). The BPSPX is well above 70% now so the upside rally is confirmed with a double whammy buy signal (which is more of a coincidental and lagging indicator). The low put/call ratios and high SKEW are flashing caution signs.

Price needs to back kiss the 20 and 50-day MA’s moving forward; especially the 20. The 20-day MA is 2026 and 50-day MA 1980. November begins at 2018 so this level is key come Friday and determines if another positive month prints, or not. The monthly charts receive new prints on Friday; EOM.

2071.46 Previous Week’s High
2071.46 Friday HOD
2071 (11/21/14 All-Time Intraday High: 2071.46) (11/21/14 Intraday High for 2014: 2071.46)
2064 (11/21/14 All-Time Closing High: 2063.50) (11/21/14 Closing High for 2014: 2063.50)
2063.50 Friday Close – Monday Starts Here
2056.75 Friday LOD
2046 (11/13/14 Intraday High: 2046.18)
2040 (11/14/14 Closing High: 2039.82)
2034.46 Previous Week’s Low
2025.59 (20-day MA)
2019 (9/19/14 Intraday High: 2019.26)
2018.05 November Begins Here
2011 (9/18/14 Closing High: 2011.36) (9/4/14 Intraday High: 2011.17)
2009.93 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2007 (9/5/14 Closing High: 2007.71)
2005 (8/26/14 Intraday High: 2005.04)
2003 (8/29/14 Closing High: 2003.37)
1991 (7/24/14 Intraday Top: 1991.39)
1988 (7/24/14 Closing High: 1987.98)
1986 (7/3/14 Intraday Top: 1985.59)
1985 (7/3/14 Closing High: 1985.44)
1980.16 (50-day MA)
1979.64 (20-week MA)
1976.37 (100-day MA)
1968 (6/24/14 Intraday Top: 1968.17)
1963 (6/20/14 Closing High: 1962.87)
1956.06(150-day MA; the Slope is a Keystone Cyclical Signal)
1956 (6/9/14 Intraday Top: 1955.55)
1951 (6/9/14 Closing High: 1951.27)
1948.74 (10-month MA; a major market warning signal)
1930.74 (200-day MA)
1926.53 (12-month MA; a Keystone Cyclical Signal) (the cliff)
1924 (5/30/14 Intraday Top: 1924.03) (5/13/14 Closing High: 1923.57)
1911.07 (50-week MA)
1902 (5/13/14 Intraday Top: 1902.17)
1897 (5/13/14 Closing High: 1897.45) (4/4/14 Intraday Top: 1897.28)
1891 (4/2/14 Closing High: 1890.90)
1884 (3/21/14 Intraday Top: 1883.97) (3/7/14 Intraday Top: 1883.57)
1878 (3/7/14 Closing High: 1878.04)
1851 (1/15/14 Intraday Top: 1850.84)
1849 (12/31/13 Intraday High Top for 2013: 1849.44)
1848.36 Trading for 2014 Begins Here
1848 (1/15/14 Closing High: 1848.38) (12/31/13 Closing High for 2013: 1848.36)


INDU Dow Industrials Daily Chart Historic 26-Day Run Above the 5-Day MA

The power of the central bankers is impressive continuing to pump global stock markets higher for six years. The one-month rally ignited in mid-October when Fed's Bullard promised to keep quantitiative easing on the table which means QE 4 is coming some day forward. Stocks never looked back. The Fed, BOE, BOJ, ECB and PBOC all join in to create the robust upside market orgy. Just when you thought the market was running out of gas, bingo, last Friday, 11/21/14, the PBOC and ECB collude firing money bazooka's that extend the buying frenzy creating more all-time record highs. The central bankers are the market.

The Dow is above the 5-day MA for 26 consecutive days an unprecedented run. This shows robust buying in the stock market with traders euphorically buying any stock with a heart beat. Many investors are plowing into dividend stocks for the last few months boosting the Dirty 30 thinking the blue chips will provide safety if the market turns south. Since the central bankers have destroyed price discovery the last few years, all asset classes are in new bubbles with prices bloated to lofty heights. When the market pull back occurs it will likely take everything with it to the downside including consumer staples, defensive, blue chip and dividend stocks.

For now, the stock market is in full party mode with low volatility, low put/call ratios and a high SKEW. There are no bears remaining. Everyone is long and simply buying and selling to other long players taking equity prices higher. The central bankers plan on supporting the stock market forever so there is no reason to worry. 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 7:16 AM on Tuesday, 11/25/14: The Dow prints another new all-time closing high at 17818 and logs the 27th consecutive day above the 5-day MA.

RUT Russell 2000 Daily Chart 150-Day MA Slope Determining Either Cyclical Bull or Cyclical Bear Market Ahead

The 150-day MA slope determines if a stock or index is in a longer-term cyclical bull or bear market. A cyclical market pattern can be a few weeks, months or even a few years. The RUT small caps were in happy multi-year cyclical bull market since 2011 until this summer when the slope turned negative. The slope oscillates ever since.

Bulls win for the months ahead if the slope of the 150-day continues higher. Bears win if the slope of the 150-day moving average is down. Watch this closely into year end. The ramifications are huge. Not only for the small caps but since they typically lead the broad market, a positive slope will point the way to further upside market joy with the central banker party continuing. A drop in the slope, and note the 150-day is well off the September high for the slope, indicates that the small caps are going down the rabbit hole and the broad market will follow. 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 7:14 AM on Tuesday, 11/25/14: The RUT closes smack-dab at 1187 so a critical bounce or die decision is on tap for today. RUT will either pivot higher or pivot lower from 1187 identifying the market winner going forward.

Sunday, November 23, 2014

CPC Put/Call Ratio and SPX Weekly Charts Significant Market Top At Hand

The other day the CPCE put/call daily chart was posted showing a low number like the CPC above indicating complacency rampant in markets again. Traders are staggering around each day drinking the Fed, PBOC, BOJ and ECB wine, now all mixed together in the same sacred chalice, buying any stock with a heart beat without regard for price. AAPL gaps higher. Even beaten-down garbage stocks catch a bid as the global liquidity continues to distort markets creating huge asset bubbles in all areas.

In early October there were lots of worries with the stock market plummeting and Ebola at peak concern so the fear created a bottom then the central bankers pump markets higher ever since. That sea of liquidity has now created lazy traders, blindly buying any stock that the dart lands on without fear or worry. Markets should top out at any day forward. Considering the Thanksgiving holiday, the top should be in before mid-December so anytime over the coming three weeks; maybe this week. Everyone expects nothing but up into year end especially with the obscene buybacks occurring at year-end, however, what better time to throw a curve ball? Watch your wallet. 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.

CBOE SKEW Daily Chart

The SKEW is back up to lofty levels near 140 consistent with where another significant stock market top will occur just like the top at the start of this year, the top in March-early April, the July top and the September top. Watch your wallet. 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.