Keystone's Midday Market Action 12/28/11

A check on the SOX shows a 366.98 print now under 367, well below 368.60 and bearish.  XLF is hanging above 13. RTH remains with a 112 handle.  The Nasdaq is down -0.24% while the SPX is down less at -0.14% so the move down for the markets has street cred. NYHL drops big down to 63 currently. So the weak semiconductors are creating market weakness today but RTH and XLF are holding up fine. LOD for SPX is 1262.48 thus far, the market bears need to push lower to break under this print and move towards the low 1262's to initiate stronger selling.

Note Added 12/28/11 at 9:46 AM:  That did not take long, SPX came down to test the LOD and collapsed, now printing a 1259 handle. Price now only a smidge postive on the year. The semi's are creating the market weakness, the Nasdaq leading the downside helped create the push lower minutes ago, the RTH and XLF remain elevated, however, so the downside may be limited.

Note Added 12/28/11 at 10:01 AM:  SPX 200-day MA is 1258.91, the starting year number is 1257.64. The euro dropped under 130 helping accelerate this real-time selling. SPX is printing 1258, nestled in between the starting year number and the 200-day MA.

Note Added 12/28/11 at 10:26 AM:  The SPX is now negative on the year with a 1256 handle.  Nasdaq is leading down so this continues to maintain the market bearishness. RTH and XLF remain elevated, however, so significant downside would not be expected, at least not yet, but keep watching.

Note Added 12/28/11 at 11:35 AM:  The SPX now testing 1252 support and at 1251.41, the SPX stabbed down thru.  Support is 1252, 1249, 1247. Note the XLF now printing 12.89 edging closer to the 12.80 level which will verify big market trouble.  For now, RTH and XLF remain in the bull camp.

Note Added 12/28/11 at 11:49 AM:  The Nasdaq and SPX are both down about 1.2% today, thus, the Nasdaq is no longer leading the downside so the markets do not have the negative oomph anymore. The down move thus far today all occurred with the Nasdaq leading the down side.

Note Added 12/28/11 at 3:50 PM:  SPX at 1250 with a few minutes remaining.  RTH and XLF remain elevated at their bullish levels so that continues to dampen the downside and promote sideways movement for the broad markets.

Note Added 12/28/11 at 4:07 PM:  Traders are in a tizzy over the bond auctions in Italy tomorrow.  XLF and RTH prevented any serious downside today.  Typically, a down day on Wednesday like today leads into weakness on Thursday morning.  Seasonality-wise, markets are buoyant, or bullish, the two days in front of a three-day holiday weekend, which is tomorrow and Friday. Thus, based on seasonality alone, the assumption would be that the bond auctions wll go fine and markets will be buoyant into the Friday EOY close. More importantly, watch RTH and XLF, as long as they are in the bull camp, and they are right now, the indexes are fine.  If one of these crack, the market downside will then become real and Keystone's algo will probably flip to the short side as well. The SPX tested 1249 support successfully at 3:30 PM.  The 1252 support failed so it is now resistance.  1247 is sturdy support. Thus, 1249 and 1247 will try to support the market bulls.