Keystone's Evening Nightcap 5/22/12; Facebook Faceless Fearless Leader

The finger-pointing stage began today concerning the ongoing FB debacle.  No one is happy looking at a 31 closing price seven bucks below the issue price at 38, falling 18% from the Friday open. MS blames Nasdaq who blames the software who blames the analysts who blames the SEC who blames MS.  All this goes on as Joe Sucka holds the bag. Ma and Pa were told that they are allowed into the hot action this time, the brokers hugged Ma with one hand and pulled Pa's wallet with the other. Younger folks have not experienced the hype and euphoria preceding the dotcom crash 12 years ago so they rushed into the 'sure-deal', and were mowed down like cannon fodder. Many now learn what it means to have your head handed to you on a platter, or, to have your face ripped off. But Ma and Pa sucka aside, where's the fearless faceless Facebook leader, CEO Zuckerberg?

Last word is that he is hiding under the bed and this is especially sad, perhaps worrisome, since it is his honeymooon.  FB needs to release more direct material information on the company and meet this stock slide head on. Zuckerberg needs to communicate, isn't this what Facebook does? What happened to all the talk about how vital and key it is too be in touch with everyone all the time.  If Zuckerberg believes all this dribble, he should have sent clarification messages and correspondence via Facebook and especially made an appearance to address the stock slide, assuring investors that he is on the job. This, afterall, is now his job. He sold his soul to the company store. Instead, perhaps a beach volleyball photo or a pic with him wearing a shark hat seems more likely as Marky Mark treats the IPO as the last college final that once finished, a party vacation begins to reward oneself. What a mess. The FB brand is damaged goods.

Today was an uneventful tading day until late afternoon when word hit that Greece was in discussions concerning an exit from the euro union.  Markets sold off on the news with the SPX dropping 14 handles from 2:30 PM into the close. SPX 1326 is very strong resistance.  The elevated utilities continue to hint that price wants to come up to back test the 1340 H&S neckline.  The 150-day MA is 1315.00.  Price closed at 1316.63.  And the Grand Daddy of importance, the 12-month MA, the bull-bear line in the sand, where bad things happen to the markets, is 1293.52. The 1292-1295 area is uber important.

The high print on the NYAD helped usher in that market pull back today; it was interesting how it unfolded considering the slow lull well into the afternoon.  If markets are down about 8 or 10 spoo handles or more for Wednesday, chances are that there will be a lower print to exit shorts on Thursday morning. Markets tend not to bottom on a Wednesday. The pre-holiday seasonality says Thursday and Friday should be bullish. So a down day tomorrow into the Thursday open then up into the weekend would be the path forward for the easy going markets years ago but not so much nowadays.  The Euro Summit will provide early morning direction tomorrow with the Merkel-Hollande match the marque event. The other market mover is Wednesday overnight, the Flash China and Euro PMI's. All this drama will be played out over the next day.

DELL laid an egg this evening with earnings.  This places added pressure on HPQ tomorrow. TOL earnings will add fuel to the housing drama. Keystone would like to get back into SRS. New Home Sales are 10 AM so watch for a market pivot point and the 5-Year Note Auction is at 1 PM. For the SPX for Wednesday's trade, starting at 1317, the bulls need to touch 1328 to regain upside momo.  The bears need to drop under 1310 and the selling will accelerate no doubt heading for the 1290's once again.  A move thru 1311-1327 is sideways action. Interestingly, Keybot the Quant (upper left margin on this site) remains on the short side for over two weeks and counting.

Keystone's Inflation-Deflation Indicator remains mired in Deflation, under the 2.90 level (CRB/10-yr price = 286.50/99.8438 = 2.87), and, with the CRB sporting a 286 handle, QE 3 and more likely, a coordinated intervention with LTRO3 and others, is not far away. QE3 should occur in the CRB 250-280 range so trading may become intense during the remainder of May into and thru June. The markets will fall into the QE3 scenario when the SPX 1292-1295 level fails.

Keystone jumped into the mosh pit of market excitment during the last half hour of trading today. Profits were taken on one-day trades with TZA and TWM.  Also, the T short was covered to lock in profit, will look to reload.  Also bot SVU as a long position, remember when Keystone played this one a while back? Also bot RIMM reestablishing a long position. Also bot TZA reestablishing this position in the final minutes reentering at a lower price. GNOM bounced nicely today due to the positive divergence. BBY reported the great earnings to start the day and finished up. Note how the market action is assuming more jagged big up and big down day moves due to the higher volatilty. Trader's heaven. Cycling in and out of positions is important since if you wait, the whipsaw move hits quickly turning profits into losses, sending you from hero to zero, resulting in a dinner of franks and beans instead of tenderloin.