Keystone's Midday Market Action 11-17-11

SPX took out the LOD yesterday as described so the indexes are dropping.  SPX:VIX ratio, however, remains above 35, so the down move may run out of gas. The S&P is down 0.80% with the Nasdaq down 0.74% thus the down move should moderate without the Nas leading down. Interestingly, NYAD did not spike lower so this opens the door to more slower-paced steady eddy selling. Semi's are weak helping the bear case today.  SOX is dropping 1.5%.  Watch SOX 378.65 that would indicate major trouble for the markets.  RTH is at 111, remaining above 109 so the bears cannot receive additional oomph from retail.

XLF is at 12.61, well under 13, banks no doubt getting sold due to global contagion worries.  Volatility remains elevated with a VIX at 34. So these two characters remain market bearish.  SPX support is at 1229, 1227, 1225, 1224 and 1220. The bears got nothing today if they cannot move the SPX:VIX ratio under 35. XLF and VIX remain in the bear camp while RTH and SOX are in the bull camp.

Note Added 11/17/11 at 11:15 AM:  The selling moderated as some of the tools above were showing.  SPX:VIX ratio only made it down to 36, remaining a full point above 35, and is now printing 36.83, so the market bulls are feeling good about that.  XLF is at 12.68 and VIX at 33.42 both helping market bears.  RTH is at 110.92 above the 109 danger level so retail remains bullish.  The semiconductors are the main cause of overall weakness today. Keystone's algorithm is constantly recalculating so the number to watch for SOX is now 377.70.  SOX last print is ......... whoa......it is failing as this is typed.  SOX now printing 377.86 and bouncing.  If SOX loses the 377.70 level, the indexes will take another leg down in favor of the market bears. TRIN at 1.39 represents orderly selling. Focus on SOX 377.70, this is key today.

Note Added 11/17/11 at 11:25 AM:  Big bounce for SOX, now printing 379.11. Focus on SOX 377.70 and SPX:VIX 35 for the remainder of the session, both remaining bullish, for now. If either one loses the level shown, the broad markets will tumble lower. Otherwise, the indexes will float along at current levels, the SPX between 1227-1239.

Note Added 11/17/11 at 11:31 AM:  Nasdaq is down 0.61% and S&P is down 0.29% so the Nas is leading the down side which is encouraging for market bears today. Gold is down 33 currently.

Note Added 11/17/11 at 7:52 PM:  SOX collapsed at 12:12 PM and SPX:VIX ratio fell under 35 at 12:30 PM ushering in the stronger selling today.