Saturday, June 30, 2012

SPX S/R Week of 7/2/12

SPX support, resistance, moving averages and other levels of interest are provided for the holiday-shortened trading week ahead.  The bullish move on Friday is leaving traders shell-shocked. The bulk of the move was short-sellers caught on the wrong side that quickly had to unload positions providing bull fuel all day long.  Major sectors such as financials, retail, volatility, semiconductors, copper and commodities all jumped higher.

In the final minutes of trading Friday, the SPX punched up thru the strong 1358 resistance to close at the high at 1362, above the 100-day and 20-week MA's. It is all coming up roses for the bulls. 1364, 1366 and 1370 are the next resistance levels above. 1360, 1358, 1356 and 1351 provide support below. The 50-day MA at 1340 may play a key role this week and moving forward.

For Monday, starting at 1362, the bulls only need to see a smidge of green in the futures overnight Sunday and the markets will accelerate higher for another bull leg upwards, likely to the 1370 and 1372 area. Bears will simply try to stop the upside momo by preventing the futures from printing green. A move thru 1331-1361 is sideways action. Note that the closing high print for 2011 is only one point higher at 1363.61; a print above here would be a significant development.

·        1408
·        1406 (5/29/08 HOD)
·        1404
·        1403
·        1402
·        1399
·        1398
·        1394
·        1391
·        1389
·        1388
·        1385
·        1378
·        1375
·        1372
·        1371(5/2/11 Intraday HOD for 2011: 1370.58)
·        1370
·        1369
·        1366
·        1364 (4/29/11 Closing High for 2011: 1363.61)
·        Friday HOD 1362.17
·        Friday Close 1362.16
·        20-week MA 1360.34
·        100-day MA 1359.57
·        1358
·        1356
·        1351
·        1347
·        1344
·        1343
·        1341
·        50-day MA 1340.21
·        1338
·        10-day MA 1337.57
·        1337
·        1336
·        1333
·        1332
·        1331
·        150-day MA 1330.38 (150-Day Slope is a Keystone Cyclical Signal)
·        Friday LOD 1330.12
·        1329
·        1326
·        20-day MA 1325.76
·        1324
·        1321
·        1319
·        1318
·        1316
·        1315
·        1314
·        1312
·        1310
·        1308
·        1307
·        1305
·        10-month MA 1304.62
·        1300
·        1298
·        1296
·        200-day MA 1299.58
·        12-month MA 1296.45 (a Keystone Cyclical Signal)
·        1295
·        1293 (10/27/11 Intraday High 1292.66)
·        1292
·        1289
·        1287
·        1286
·        50-week MA 1285.15
·        1285
·        1281
·        1278
·        1277
·        1275

Keystone's Trading Week in Review and Path Ahead 6/30/12

On 6/22/12, Friday, Asia falls overnight in sympathy to the U.S. markets. The request for bank aid for Spain is expected to occur by Monday with funds provided in July. Germany IFO business sentiment is weak, at a two-year low.  Italy sentiment is weak printing a record low. Oil and gold continue lower. Brent drops below 90. Oil in general is down about 25% from the top four months ago.  The ECB relaxes rules on the collateral that banks offer in exchange for the loans they receive. This provides increased availability of ECB liquidity but also increases the risk on the ECB’s balance sheet. To no surprise, Germany’s Bundesbank disagrees with this decision and says “We’re critical of this.” Keystone’s SPX:VIX Ratio Indicator jumps above 68 indicating a bullish day ahead.  Keystone’s SPX 60-Minute with 200 EMA Indicator turns bullish. The financials are on the positive side after the Moody’s downgrades and in the afternoon drive higher, only to tumble in the final minutes. The broad indexes gain from one-half to one percent today. Despite the large down day yesterday, the markets finish relatively flat on the week with the Nasdaq and tech sector actually finishing higher.

On 6/25/12, Monday, Storm Debby in the Gulf continues to dump several inches of rain over Florida and heads for the panhandle. Oil price flattens as worries that the storm will intensify and hit the Louisiana and Texas oil coasts diminishes.  The world finds out that China’s economic data may be highly manipulated and masking the true downturn now occurring. The data released by all countries is phony baloney it is only a matter of degree; the U.S. data to a lesser amount, China data to a greater amount.  Soros says “Europe risks Summit fiasco.” Spain formally requests a bailout but oddly enough, does not state the amount of money needed. A 100 billion euro sum is bandied about by news organizations. The euro breaks thru 1.25. Moody’s says that a downgrade of Spanish banks is coming today. U.S. futures are weak, the S&P’s down 11 and Dow Industrials off 90. Fitch downgrades Cyprus to junk status. The markets are on high alert for the U.S. Supreme Court ruling on Obamacare today but the decision will be on Thursday. The markets tumble all day long. U.S. banks are down from 2% to 5%. Keystone’s SPX:VIX Ratio Indicator drops under 68 signaling a large down day on tap and continued bearishness ahead. The European markets close with the Spain market down a huge 3.6%. Spanish and French banks are down from 5% to 6%; bank balance sheets are collapsing in Europe. The closing bell rings with the SPX down 21 points, -1.6%, to 1314. The Dow Industrials drop 138 points, -1.1%, to 12503.  The Nasdaq falls 56 points, -2%, to 2836. The RUT drops 13, -1.7%, to 762. After the bell, Moody’s downgrades 28 Spanish banks from one to four notches including Banco Santander and Bankia. WTIC oil closes at 79.

On 6/26/12, Tuesday, Germany says that the other Euro nations are talking about Eurobonds but no one is talking about giving up sovereignty.  The Euro Summit this week must address the Eurobond versus Sovereignty issue.  The markets open and head higher. Consumer Confidence is weaker than expected but markets maintain an upwards buoyancy all day long. Egan-Jones downgrades Germany since they are going to be left holding the European bag. The retail sector supports the markets with WMT making another 52-week high. During the trading day, Merkel says that “Europe will not have shared liability for debt as long as she lives.” The news wires report her as saying ‘over my dead body’ but questions arise as to what she was exactly referencing, she may have been talking about ‘partial’ shared liability in the Eurozone, not complete shared liability, and ‘partial’ remains undefined as well. The bulls try to move Keystone’s SPX:VIX Ratio Indicator above 68 in the afternoon but the day ends with this tool remaining in the bear camp forecasting bearishness ahead. Keystone’s 30-Minute 8 MA and 34 MA Cross Indicator, however, turns bullish in the final half hour of trading.  Markets finish the day up but on vapor volume. Traders are simply waiting for the Euro Summit on Thursday.

On 6/27/12, Wednesday, Stockton, California prepares to file for Chapter 9 bankruptcy as early as today. If so, it will be the largest city to go bankrupt in the U.S. Markets jump higher at the open. Keystone’s SPX:VIX ratio, 30-minute and 60-minute charts all turn bullish.  The markets continue to throw off mixed signals, a few hours moving in the bulls direction only for the bears to push it the other way. Markets are in waiting mode for the Euro Summit.

On 6/28/12, Thursday, JPM’s trading loss from the recent debacle may approach 10 billion dollars far above original estimates; JPM drops over 5% pre-market and will obviously impact the financial sector. Germany’s jobless rate is 6.8%, worse than expected and proves that the Euro crisis is impacting Germany’s economy. The Spain 10-year yield moves above 7% increasing the tension as the Euro Summit begins. Spain-Germany spread is blowing out. U.S. GDP is unchanged at 1.9%. Markets tumble lower at the opening bell and weaken further at 10 AM EST as the Supreme Court ruling on the Affordable Healthcare Act is announced. Keystone’s SPX:VIX Ratio Indicator drops under 68 and other indicators turn bearish. The session remains weak until the news wires say that a break thru at the Euro Summit may be occurring. The equity markets catapult higher late day mounting nearly a complete comeback. The SPX had dropped to 1313 intraday and then moved up to 1332 finishing flatish at 1329. The Dow Industrials dropped to 12450 intraday and then up to 12626 before closing at 12602. After the close, NKE earnings disappoint sending the stock lower.

On 6/29/12, Friday, EOM, EOQ2, EOH1. News from the Euro Summit, where banks may be allowed to recapitalize directly from the bailout funds, and Merkel is shown to comply and compromise, sends global equity markets catapulting higher. Spain and Italy teamed up to form a strong alliance and Merkel folded. Italy’s Monti gave Merkel the full monty. Spain 10-year yield falls under 6.7% heading lower. Italy drops under 6%. The euro jumps large. Spain indexes are up over 3%. U.S. futures show S&P’s up 17 handles and the Dow Industrials up 126 handles. The opening bell rings and the markets move up all day long into the close. Keystone’s SPX:VIX Ratio Indicator jumps over 68 and other indicators turn bullish. Keystone’s NYA 40-Week MA Cross Indicator turns bullish indicating a bull market moving forward.  A historic up move occurs to end the month, quarter and first half of 2012. The SPX closes up 33 points, 2.5%, to 1362.  The Dow Industrials are up 278 points, 2.2%, to 12880.  The Nasdaq is up 86 points, 3.0%, to 2935. The Dow moved from a low on Thursday at 12450 to a high at 12880 today, a whopping 430 points in only two days time. The SPX moved from a low on Thursday at 1313 to a closing and intraday high today at 1362, almost 50 S&P handles in only two days time. Obviously the bulk of the move today is short-covering as the short-sellers got caught off base. For the quarter, Q2, the SPX lost 3.3%, the Dow lost 2.2%, and Nasdaq lost over 5%. Gold gained 48 bucks moving back towards the 1600 level. Oil ends over 9% higher today to 85 per barrel. F is weak due to growing losses from overseas.

On 6/30/12, Saturday, analysts are parsing thru the Affordable Healthcare Act decision to understand the market ramifications.  More importantly, Merkel has to sell her decision to the German people that will not be happy to hear what she has to say.  The weekend provides time to sort thru the Euro Summit decision and determine exactly what was said and what the plan is for Europe moving forward.


On 7/2/12, Monday, ISM Manufacturing Index-will impact energy markets and pivot markets at 10 AM EST.

On 7/3/12, Tuesday, markets close early due to the July 4th Independence Day holiday tomorrow.

On 7/4/12, Wednesday, markets are closed in Observance of July 4th Independence Day holiday.

On 7/5/12, Thursday, BOE and ECB Rate Decisions and Press Conferences. U.S. markets reopen for trading.

On 7/6/12, Friday, Jobs Report-3 weak reports in a row-5 reports remain, including this one, until the presidential election.


On 7/11/12, Wednesday, 10-Year Note Auction. FOMC Minutes.

On 7/12/12, Thursday, 30-Year Bond Auction.

On 7/13/12, Friday the 13th, PPI. Consumer Sentiment.


On 7/16/12, Monday, Retail Sales.

On 7/17/12, Tuesday, China GDP.

On 7/18/12, Wednesday, Housing Starts.


On 7/26/12, Thursday, FB earnings.

On 7/27/12, Friday, GDP. Consumer Sentiment.     


On 7/31/12, Tuesday, EOM. FOMC Meeting Begins.

On 8/1/12, Wednesday, ISM Mfg Index. FOMC Rate Decision.

Friday, June 29, 2012

Keystone's Midday Market Action 6/29/12

The bulls are throwing a big party today ahead of the weekend. The July 4th holiday is Wednesday so it may not be difficult for the bulls to maintain the buoyancy into late next week. The markets were shot out of the circus cannon today, straight up. Keystone's SPX:VIX ratio jumped above 68 and is now printing 75, bullish for markets moving forward. Keystone's short term signals, the 30-minute SPX chart with 8 MA and 34 MA cross, and 60-minute SPX chart with 200 EMA cross, jumped to the bullish side as well. The four key parameters laid out this morning immediately gave way to the upside at the opening bell.  RTH jumped higher, XLF, VIX fell below 18, and NYA is over 7700, all bullish. The confetti is in the air and the wine is flowing like water for the bulls. Merkel was so resolute in her position that when she softened and agreed to this new European TARP-like solution, the markets launched and are not looking back.

For further upside, watch to see if the semiconductors, SOX, move above 383, they are almost there. Above 383 will add more bull fuel for markets.  Watch JJC 44.35, now at 44.21. JJC moving over 44.35 will launch markets higher. Watch CRB 280.65, only a hair away from here as well, where more bull fuel will create more market upside.

Note Added 6/29/12 at 11:30 AM:  European markets are closing strong, they are a sea of green, Spain and Italy 10-year yields fall, Germany's yields rise. There is already confusion on the agreement between the Spain-Italy alliance and Germany. The market does not care, it is in the middle of a party. The details will sort out on the weekend.  Note the SOX coming up for a look at 383, now printing 382.73. And here comes JJC, now at 44.24, approaching 44.35. If semi's and copper now join the party, this move will erupt into a full-fledged upside orgy.

Note Added 6/29/12 at 11:36 AM:  SPX S/R is 1372, 1370.58, 1370, 1369, 1366, 1363.61, 1363, 1361, 1360 (20-week MA), 1359.50 (100-day MA), 1359, 1358, 1356, 1351, 1347, 1344 and 1343. Price is currently printing 1355.18 with a HOD today at 1355.90. Thus, the 1356 R is holding for now. Note the strong resistance cluster at 1358-1361. If bears prevent this area from giving way that will say a lot. If bulls punch up thru this 1358-1361 gauntlet that will say a lot.

Note Added 6/29/12 at 11:55 AM:  Note the slap down from 383 the SOX just received. This is key to the bulls moving higher so pay close attention to SOX the remainder of the session. This will give you an early indication that markets are moving towards the 1358-1361 gauntlet if SOX 383 gives way to the upside. Markets are robbing from the start of Q3 buoyancy that would be expected for Monday and Tuesday.

Note Added 6/29/12 at 1:09 PM:  Note the SOX piercing 383. See if it holds, if so, the attack of the 1358-1361 resistance gauntlet would begin. JJC just jumped higher, this should send the markets another leg higher. CRB punching up thru. Markets should take another leg higher now that these new levels are falling by the wasteside. Tech is leading the broad markets higher today as well, providing more bull street cred.

Note Added 6/29/12 at 2:32 PM: It is a full-fledged bull orgy today. A remarkable day. The semiconductors, copper and commodities now providing the additional bullish thrust which pushes the SPX to now attack the 1358-1361 resistance gauntlet. The first thrust up in price receives a smack down from 1358 R. Another test will follow.

Note Added 6/29/12 at 3:28 PM: The bear fortress at 1358-1361 provided a strong wall of resistance at 1358. The importance of this R level and the 1358-1361 gauntlet is now cast in stone. Semi's, SOX, are losing their grasp of 383.

Note Added 6/29/12 at 3:50 PM: SOX came down for a look at 383 and it turned out to be a simple back test, a successful test, and price catapulted upwards again. This enables the bulls to charge at the 1358 wall once again. Boom. Price punches thru the 1358 R, and is now up and over 1360 trying to run straight thru the 1358-1361 gauntlet. The bulls brought game today.

Note Added 6/29/12 at 3:53 PM:  Here it is SPX 1361; for the bulls to get thru here would truly be a remarkable achievement.

Note Added 6/29/12 at 3:57 PM:  SPX 1361.01 ... 1361.02 ....

Note Added 6/29/12 at 4:00 PM:  Booiiiinnnnng. SPX 1362.15, holy smokes. Gauntlet, schmauntlet. The bulls ran thru 1358-1361 like a hot knife thru butter. What an ending to the quarter and H1. Quick, are there any doctors in the house?  Grab your satchel and head over to the bear camp.  Triage is already underway and surgeries will be required well into the evening. The bear carnage is serious.

SPX Daily Chart Showing Keybot the Quant Algorithm Turns

Current signal remains valid until a change occurs.
6/29/12: Keybot the Quant flipped to the long side at 9:59 AM EST at SPX 1351; for the year thus far SPX Benchmark is up 7.4%; Keybot algo is up 8.1%; Keybot actual trading is up 6.4%. Stay alert for a whipsaw.
6/21/12: Keybot the Quant flipped to the short side at 1:39 PM EST at SPX 1334; for the year thus far SPX Benchmark is up 6.0%; Keybot algo is up 9.4%; Keybot actual trading is up 9.2%.
6/6/12: Keybot the Quant flipped to the long side at 11:02 AM EST at SPX 1305; for the year thus far SPX Benchmark is up 3.7%; Keybot algo is up 7.2%; Keybot actual trading is up 7.4%.
5/4/12: Keybot the Quant flipped to the short side at 9:55 AM EST at SPX 1382; for the year thus far SPX Benchmark is up 9.9%; Keybot algo is up 1.6%; Keybot actual trading is up 2.0%.
4/25/12: Keybot the Quant flipped to the long side at 11:29 AM EST at SPX 1387; for the year thus far SPX Benchmark is up 10.3%; Keybot algo is up 2.0%; Keybot actual trading is up 3.0%.
4/23/12: Keybot the Quant flipped to the short side at 9:57 AM EST at SPX 1362; for the year thus far SPX Benchmark is up 8.3%; Keybot algo is up 3.8%; Keybot actual trading is up 5.1%.
4/12/12: Keybot the Quant flipped to the long side at 12:30 PM EST at SPX 1384; for the year thus far SPX Benchmark is up 10.0%; Keybot algo is up 5.4%; Keybot actual trading is up 6.7%.
3/28/12: Keybot the Quant flipped to the short side at 10:33 AM EST at SPX 1409, whipsaw occurs; for the year thus far SPX Benchmark is up 12.0%; Keybot algo is up 3.6%; Keybot actual trading is up 5.2%.
3/26/12: Keybot the Quant flipped to the long side at 2:18 PM EST at SPX 1412; for the year thus far SPX Benchmark is up 12.2%; Keybot algo is up 3.8%; Keybot actual trading is up 5.5%.
3/22/12: Keybot the Quant flipped to the short side at 10:51 AM EST at SPX 1392; for the year thus far SPX Benchmark is up 10.7%; Keybot algo is up 5.2%; Keybot actual trading is up 6.8%.

Keybot the Quant Turns Bullish

Keystone's proprietary algorithm, Keybot the Quant, flipped to the long side at 10 AM at SPX 1351. The status of the algo is always displayed in the left margin on this site. The up move pounded the retail, financial and basic materials sectors higher. Copper and commodities are very strong.  As always, stay alert for a whipsaw today or Monday.

Keystone's Morning Wake-Up 6/29/12

Today is EOM, EOQ2 and EOH1. The monthly charts receive final prints today. A huge spike skyward in the euro early this morning is catapulting global markets higher. The Euro Summit produces positive results over recapitalization of the Spanish and Italian banks as well as Merkel showing she can bend and compromise, albeit slightly. The U.S futures show the S&P's up about 15 currently, they were up higher a short time ago, and the Dow Industrials up 112 points. The recent pattern shows that happy Euro news announcements result in market bounces, but after a day or two the joy fades away. The TICK printed +1500 yesterday afternoon, an obscenely high TICK number that is rarely seen, testimony to the uber bullish euphoria once trader's learned that Merkel softened her stance.

Spain 10-year yield fell back under 7% relieving stress. Italy 10-year yield is back under 6%. The Spain indexes were up well over 3% a short while ago but have pared back those gains. Keystone's algorithm, Keybot the Quant, will likely flip to the long side after the opening bell today if the current market positivity stays in place. Watch the same four key parameters as yesterday; RTH 41.29, XLF 14.35, VIX 18.90 and NYA 7688.  RTH turned bullish in the final minutes of trading yesterday. The other three are bearish to start today so their behavior in the opening minutes is very important. The extent of how many of the remaining three turn bullish will dictate the strength of the bullish move projected for the broad indexes. If all four of these parameters are bullish after the open, the bulls will be moving higher and not looking back.

The SPX only needed to touch the 1332 handle today to accelerate the upside and the futures show that this level should immediately give way at the open. Personal Income and Outlays are released 8:30 AM. Chicago PMI is at 9:45 AM, a vital gauge for employment. Consumer Sentiment is 9:55 AM which should result in a market pivot point. KBH earnings will provide more insight into the housing sector. In a nutshell, if the XLF overtakes 14.35, the VIX drops under 18.90 and the NYA moves above 7688, the market bulls will be running strong and Keybot the Quant will likely flip to the long side. Watch Keystone's SPX:VIX Ratio Indicator now a touch under 68; the 68 level should give way to the upside which would verify a large up day for markets on tap, and continued bullishness ahead, as long as the ratio stays above 68. An active morning is anticipated.

Note Added 6/29/12 at 8:15 AM: S&P's are up 20 handles now. RTH and XLF are going to jump higher. KBH earnings even surprise better than expected. It's all coming up roses for the bulls today. SRS continues to be an attractive long, with a developing inverted H&S, which is short real estate, and the positive housing news this week may provide a nice entry. Keystone is not in it currently. Note that the large opening on tap shows the S&P's up 1.58% with the Nasdaq up 1.61%, tech only leading the broad market by a hair to the upside and a few minutes ago tech was actually lagging. Without strong and robust tech leadership today, the market move after the opening pop may be muted.

Thursday, June 28, 2012

Keystone's Midday Market Action 6/28/12

The bears are growling today. The RTH 41.29, XLF 14.35, VIX 18.90 and NYA 7688 parameters all remain bearish creating market negativity. SPX:VIX ratio is under 68 indicating that a large down day should occur, as long as the ratio stays under 68SPX 60-minute chart turned bearish dropping under the 200 EMA.  SPX 30-minute chart shows the 8 MA curling down, watch to see if it crosses down thru the 34 MA, in the hour or two ahead, to place a final nail in the bull coffin. The SPX is fighting to keep its head above the 1321 water line, it drowns underneath. Keystone took profits on the BGZ trade, and has already turned around and reentered opening up a new position in BGZ. The Supreme Court decision on the Affordable Helathcare Act is expected within the hour.

Note Added 6/28/12 at 10:09 AM:  SPX drops under 1321 after Supreme Court news but quickly recovers back above two minutes later. The ruling is confusing, the networks are sorting it all out. SPX is coming back up now. Where's that dramamine? Watch SPX 1321.

Note Added 6/28/12 at 10:17 AM:  SPX is hanging on to 1321 by a fingernail, if it ruptures, she's going down hard. The market reaction remains somewhat muted after the Court decision. As the cops will say down on the local beat, 'move along here, move along, nothing to see here, move along'. SPX now printing a 1324 handle, but the 1321 ledge remains nearby.

Note Added 6/28/12 at 10:26 AM:  Here we go 1321.18. 1321.03 ......rupture ....1320.88...... 1320.89 ... see if the SPX remains under 1321 for 7 to 10 minutes, if so, markets are toast today.

Note Added 6/28/12 at 10:36 AM:  SPX is printing a 1316 handle. Keystone took profits on the BGZ day trade exiting the position.

Note Added 6/28/12 at 10:41 AM:  VIX is over 21. SPX is 1315. Keystone bot HPQ opening up a new long position.

Note Added 6/28/12 at 11:31 AM:  SPX is coming back up to take a look at the 1321 level that failed. The 20-day MA is 1321.06 so use this as a decision level, above is market bullish, below bearish. SPX S/R is 1321, 1319, 1318, 1316, 1315, 1314, 1312, 1310, 1308, 1307, 1305, 1300, 1298, 1296 and 1295. The 1314-1319 zone is a strong gauntlet of support, under that and price goes to 1307-1308, under that and 1295-1296 comes, then a test of the critical 1292-ish which is the 12-month MA, representing the edge of the cliff.

Note Added 6/28/12 at 12:24 PM:  The 8 MA stabbed down thru the 34 MA on the SPX 30-minute chart, bearish. Keystone bot BGZ opening a new long position.

Note Added 6/28/12 at 1:31 PM: SPX is respecting the following S/R levels today; 1324, 1321, 1319 and 1315. The bears are driving the bus today.

Note Added 6/28/12 at 1:40 PM: SPX is coming down for a look at 1315 S again. Let's see wha thte bears got. Failure of 1315 leads to the test of hte bottom of the strong gauntlet of support 1314-1319. If 1314 is lost, 1307-1308 will be in sight next.

Note Added 6/28/12 at 1:52 PM:  Tech is leading the broad markets lower today which is another feather in the bear's cap, a cap already jam-packed full of feathers. The bulls have placed fortifications at 1315, they must hold it and prevent lower lows from printing today with all their might.  1315.52 .... 1315.48 ... 1315.59 ... she's slipping ......

Note Added 6/28/12 at 2:17 PM:  Whoopsies daisies. 1315 failure, 1314 ruptured but price is now bouncing. Failure of 1314 will lead to 1307-1308 if not today than in the day or two ahead.

Note Added 6/28/12 at 2:22 PM:  Hello. 1314 failure. Bears are pushing now. Keystone took profits on the BGZ day trade exiting the position. Note the -1000 TICK minutes ago.

Note Added 6/28/12 at 3:20 PM:  Keystone bot RIMM, a highly dangerous and speculative trade, opening up a new long position. It is beaten down and showing positive divergence on the charts so Keystone will give it a whirl.  Earnings are after the bell and RIMM can easily explode higher 10 or 20% or implode lower 10 or 20%.

Note Added 6/28/12 at 3:41 PM:  Wild pop higher. Keystone took profits on HPQ and RIMM day trades, will look to reenter before the close.

Note Added 6/28/12 at 3:52 PM:  Keystone bot RIMM opening up a new long position. Also buying all EXM under 0.55 the last half hour.  This is the dangerous shipping sector, this is a hitghly speculative penny stock trade. Many shippers are on the verge of bankruptcy but Keystone likes the chart set-up so he will give it a whirl.

Note Added 6/28/12 at 3:56 PM:  Rumors out of Europe that some progress is being made at the Euro Summit. This popped the markets over the last half hour.  Note that Keystone's SPX:VIX ratio is at 67 remaining under 68. Keystone added more RIMM.

Note Added 6/28/12 at 4:00 PM:  Time to let the smoke clear as Keystone lays his head on the stump and awaits RIMM news.......

Note Added 6/29/12 at 6:08 AM:  The RIMM man in the black robe walked by with the scythe and lopped Keystone's noggin off into the basket below. RIMM tumbled after announcing job cuts, delays, all the usual stuff from management.  In the pre-market, RIMM is down 15% looking to start a little more than a buck lower than yesterday's close. Best to let the dust clear on this one for a few days and reassess. Keystone will probably add to the position in the days ahead and will likely stick with the trade despite the drop. NKE disappointed as well which was actually the big surprise last evening.

Keystone's Morning Wake-Up 6/28/12

How lucky we all are! As children, everyone wanted to go to the circus each day, and now, as trader's, we get to do just that. The main events today, under the Big Top, are the Euro Summit, where Merkel has Holande in a head lock in the back room of the hotel as this missive is written, and the Affordable Healthcare Act decision by the U.S. High Court. In addition, Congress will vote on a contempt charge for Attorney General Holder. The Middle East is a mess with Syria, Egypt and Iran, and on and on. If you are a person who likes to worry, you are in heaven.

Let's stick to the technicals since the responses to those events will display in the numbers in real-time moving forward. Keystone's algorithm identifies the key areas of interest that most impact the broad markets. Currently, four areas require attention; retail, financials, volatilty and the NYA Index. All four are bearish, retail and financials only marginally, so if any one or more flip bullish it will add buoyancy to the broad markets. If all stay bearish, the markets head lower. The four parameters are RTH 41.29, XLF 14.35, VIX 18.90 and NYA7688. Interestingly, the New York Times reports that JPM's trading loss may be larger than originally anticipated due to their trading debacle, and the stock is getting hit hard pre-market, down over 3%, was down over 5%; this behavior will taint the financials today, the XLF may want to now stay in the bear camp all day long.

In addition, the drama with Keystone's SPX:VIX Ratio Indicator is important. If the ratio drops under 68, now at 68.48, and stays under 68, the markets will drop large today, the Dow Industrials likely down triple digits. Watch the 8 MA and 34 MA cross on the SPX 30-minute chart, now bullish. Watch the SPX 60-minute chart to see if price drops under the 200 EMA; currently price is above this number (1330.27) and bulllish.

For the SPX, starting at 1332, the bulls only need three points, to touch the 1335 handle and a big upside party will result.  But the futures have something different in store to start the session. The bears need to push the SPX under 1321, if so, the downside will accelerate. A move thru 1322-1333 is sideways action. GDP is coming across the wires now........1.9%. No big surprise. Futures travel sideways with S&P's down 7 or 8.

European Bond Yield Summary 6/28/12 Spain Hits 7%

As mentioned yesterday, listen for the bell to ring when Spain hits 7% yield on the 10-year. Do you hear it ringing?

10-Year Yields:
Greece 26.51%
Portugal 10.14%
Spain 7.00%
Italy 6.27%
Belgium 3.22%
France 2.63%
Austria 2.37%
Netherlands 2.05%
Finland 1.87%
U.K. 1.63%
U.S. 1.59%
Germany 1.50%

Spain at 7% signals increased turmoil and negativity in Europe. Spain will need a sovereign bailout. The peak in the Spain 10-year occurred on 6/18/12 with a high of 7.285% and close at 7.158% Thus, use these two numbers as further danger signals; hitting 7.16% would signal that the Spanish boat is going over the falls and if the prior intrasession high at 7.285% is taken out, the boat will be crashed upon the rocks below. The Italy 10-year yield is well over 6% now also signaling danger. Use the 6.5% level as a sign that Italy is in serious trouble. Italy has not seen this 6.27% area since January, five months ago.

Looking at the spreads, the Spain-Germany spread is 550 well over our danger level of interest at 520 and higher. The Italy-Germany spread is 477 above our danger level of interest at 470 and higher. The France-Germany spread, a useful tool to gauge the status of the overall European debt crisis, is 113, remaining below our level of interest at 125 and higher, for now.

Germany is at 1.50% for the 10-year. Employment data minutes ago was worse than expected, Germany's jobless rate moves up to 6.8% indicating that the European debt crisis is having an impact on the German economy. The much-awaited Euro Summit is in progress. It was all smiles for the cameras last night. Angela Merkel is now the most powerful person on the planet, holding the fate of global markets in her hands. The European Club Med countries were playing pass the lotion on the beach while Germany kept their nose to the grindstone, now Germany is expected to bailout these profligate-spending countries, like Daddy Warbucks always there to save Little Orpan Annie. U.S. futures were flat one-half hour ago but are deteriorating, the S&P's now down over eight points. Focus on Spain; watch the 7.00%, 7.16% and 7.29% levels moving forward which correspond to trouble, serious trouble, and it may be too late, respectively.

Wednesday, June 27, 2012

Keystone's Midday Market Action 6/27/12

The SPX sliced up thru 1324 at the opening bell and runs higher now testing the critical 1326 resistance highlighted in this morning's charts. The RTH is 41.39 above the 41.27 which adds market positivity. The VIX, however, is 19.63 maintaining above the 18.90 level, bearish. This is interesting since the SPX:VIX ratio is printing 67.41 not above the 68 level, thus, the upside move is in question. The 8 MA is above the 34 MA on the 30-minute chart, bullish, but keep an eye on it thru the 10 AM and 10:30 AM pivot points. Remember, these are 30-minute candles so give the markets a couple hours to sort themselves out.

Very interesting start to the day. The jury remains out.  The SPX:VIX not moving above 68 is a very big deal and very bear-friendly. Keystone took profits on the WMT short at the opening bell, will look to reenter.

Note Added 6/27/12 at 9:52 AM:  RTH failed at 41.27 ushering in the bear leg lower for the markets. VIX and SPX:VIX remain bearish. So watch to see if the 8 MA curls over and rolls back down thru the 34 MA on the 30-minute chart, if so, that tells you markets are headed firmly lower. For now, there remains more of the sideways slop occurring. Keystone always references that when a key level is breached, give it 7 to 10 minutes to make sure it is locked in. The 1326 was pierced and six minutes later price was already back down thru unable to change this critical resistance into support, at least so far today.

Note Added 6/27/12 at 10:10 AM:  Big fight at the SPX:VIX ratio 68 level now, huge market direction decision now occurring.  Keystone exited the long oil USO position taking profits.

Note Added 6/27/12 at 10:36 AM:  Keystone bot BGZ (3x ETF short large caps) opening up a new long position. The SPX:VIX battle at 68 continues. If the ratio moves above 68, the BGZ entry will be unfortunate. RTH is 41.36 pennies above 41.27.

Note Added 6/27/12 at 11:46 AM:  SPX:VIX ratio is testing 68 again, the drama continues, this will tell you market direction, once it decides which side of 68 it favors. RTH is at 41.33 a hair on the bull side. A new feather in the bull's cap is the SPX 60-minute chart where the SPX has moved above the 200 EMA, bullish; SPX has to stay above 1330.24 to maintain this bullish signal.

Note Added 6/27/12 at 12:18 PM:  The TICK logged uber bullish +1200 and +1000 TICK's over the last half hour.  The SPX is testing 1333 R. The SPX:VIX ratio is 68.55 and now bullish, but, stay tuned since the markets appear to be blowing where the wind blows today. News out of Europe says the ECB may provide a rate cut at the meeting next week so that is providing the happy market bump. The VIX remains well above 18.90 in the bear camp. The RTH is at 41.33 hanging on by a fingernail on the bull side. The SPX 30-minute 8 MA and 34 MA cross and 60-minute 200 EMA tools are both bullish.

Note Added 6/27/12 at 12:43 PM: The bulls have the upper hand today but it is not decisive as yet. Pay attention to RTH now at 41.32, if it loses a few pennies it will drag everything down. Other than that, the beat goes on. The SPX 1333 resistance has held so far. RTH now printing 41.31.... 41.30 ....a retail analyst is on the business cable news television as this is typed slapping the retailers with downgrades, that was good for a couple pennies lower in RTH. What a circus. The markets are completely news-driven nowadays. RTH now printing 41.29......

Note Added 6/27/12 at 1:41 PM: Keystone had to search for the dramamine to handle the up and down drama. SPX:VIX ratio is back below 68, bearish. RTH is under 41.27, bearish, creating the market negativity over the last one-half hour. The 8 MA on the 30-minute chart is starting to curl so keep an eye on that; the chart remains bullish. Watch the 200 EMA on the 60-minute chart now at 1330.26 so price is battling this level right now. A drop under 1330.26 indicates further bearishness ahead, if price stays above, market buoyancy.

Note Added 6/27/12 at 3:00 PM:  The dance across the ragged edge continues. Neither side wants to firmly assume command, today is very much an ebb and flow day. The Euro Summit and Affordable Healthcare Act decision tomorrow will light the way. RTH is at 41.16 under the 41.27, bearish. VIX is 19.90 over the 18.90, bearish. XLF is 14.26 under the 14.35, bearish. Keystone's SPX:VIX Ratio Indicator is 66.89, under the 68 level, bearish. SPX is under the 60-minute 200 EMA at 1330.25, bearish. The 8 MA remains above the 34 MA on the 30-minute chart, bullish, two more candles will print today on this chart. The SPX is 1329 four points from the intraday high and nine points from the intraday low. Utilities, UTIL, are up over five points today.

Note Added 6/27/12 at 3:19 PM: RTH is at 41.24 coming back up for another look. SPX 60-minute chart now back above the 200 EMA, bullish. The theatrics continue. Watch RTH, now 41.26... there's 41.27, see if it holds, 41.28..... SPX:VIX 67.66.

Note Added 6/27/12 at 3:28 PM:  Three +1000 TICK's in the last few minutes with the high of the day printing.

Note Added 6/27/12 at 4:00 PM:  RTH closes at 41.27 with numbers still settling out. How does Keystone know these numbers ahead of time? RTH is bearish. VIX bearish. XLF bearish. SPX:VIX 67.71, bearish. SPX 30-minute and 60-minute charts are bullish. Something for everyone going into tomorrow's main events. It is interesting that Merkel, Germany's leader, probably is the single most person now that holds the fate of world markets in her hands.

Note Added 6/27/12 at 9:05 PM:  SPX:VIX ratio needed another minute or two to settle out, it is at 68.48, in the bull camp overnight. Bears need to push it back under 68 otherwise more upside tomorrow. RTH direction will dictate market direction at the opening bell.