Keystone's Midday Market Action 6/5/12

Poor ole Facebook is now recruiting grade schoolers to join the social folly. What does that say about the business? The best thing going for FB is that the technical analysis shows a short term pop is likely due to positive divergence (see last evening's chart). Euro news is mixed this morning so futures markets stumble sideways as traders watch and wait for European tape bombs to come across the wires.

For today, you know the drill. The fight continues for the SPX 1277-1278 support and resistance zone and today begins at 1278. The bears need to push down to 1267 if they want to accelerate the market downside towards the starting year number at 1258. The bulls need about four points higher to touch 1282.50 and the upside will accelerate sending the SPX up to back test the 12-month MA at 1290-ish. A move thru 1269-1281 is sideways action. The 1277-1278 S/R is important. SPX support below is 1277, 1275, 1272, 1270 and 1268. A failure at 1267-1268 will lead to 1258. Resistance above is 1278, 1281, 1282.50 (today only), 1283.39 (50-week MA), 1284.95 (200-day MA), 1285, 1286, 1287, 1289, 1289.45 (12-month MA), and 1292. The open is minutes away.

Note Added 6/5/12 at 9:37 AM: SPX collapses thru the 1277-1278 gauntlet at the open, now coming back up for a back test. Price either moves back above 1278, or fails, and heads lower to test the 1267-1268 support. Bounce or die.

Note Added 6/5/12 at 9:49 AM:  Bounce. Watch the resistance above starting with 1281 and then the 1282.50 that will create a market launch. See if 1278 support holds moving forward. Keystone took profits on TYH will look to reload. Keystone bot TLAB opening up a new long position.

Note Added 6/5/12 at 10:01 AM:  ISM Non-Mfg data is better than expected, the SPX runs higher to test 1281 R, punches thru, now 1282.50, punches thru, this opens up the upside for a market acceleration several handles higher for the SPX. The 1285 is strong R and the 200-day MA so this level may try to put up a fight. SPX is now fighting the 50-week MA.

Note Added 6/5/12 at 10:50 AM:  Markets stumble sideways.  Keystone bot TYH reopening a long position.

Note Added 6/5/12 at 12:36 PM:  SPX 200-day MA is 1285.66. The HOD is 1285.10 falling fifty-six pennies short of this vital moving average. This behavior attaches street cred to the 200-day MA so the broad indexes will receive strong upside if this MA is taken out to the upside. The SPX is up +0.33% but the COMPQ is up +0.25% so tech is not leading the broad markets higher today, thus, markets languish. The SPX 30-minute chart is high drama now with the 8 MA now piercing the 34 MA to the upside, this favors the bulls moving forward in the hours and days ahead. Watch to see if the 8 MA stays above the 34 MA, if so, the markets are headed sideways to sideways up. Today is another great day for gardening work since the markets are meandering flat, flatter than the half full can of soda sitting on the patio table from Memorial Day. Markets meander while Europe stumbles in the dark looking for the light switch.

Note Added 6/5/12 at 2:13 PM:  Looks like the markets are content with sideways action into the ECB Rate Decision and Press Conference tomorrow. Keep watching the 200-day MA.  Keystone took profits on the TYH three-hour trade, will consider a reentry.

Note Added 6/5/12 at 2:22 PM: The 200-day MA is 1285.68. Price just tested this resistance minutes ago and received a spank down, it should come up for another try. The 8 MA is above the 34 MA on the 30-minute chart which is bullish for the indexes. Look at that, tech is now leading the broad markets higher (COMPQ up more than SPX), this should start to add upside fuel. Here she comes for another test of the 200-day MA......

Note Added 6/5/12 at 3:25 PM:  Ole Nellie is coming up to test the 200-day MA once again; the fourth time since 2:15 PM. Is the fourth time the charm for bulls or do the sellers come in and drive things lower playing the bear side ahead of the ECB tomorrow? It's deciding. 1285.68 remains the magic number. URI is up over 6% today; this one was mentioned as a potential hurricane play in Keystone's June Seasonality missive a couple days ago. RFMD is up over 13%, another one on the watch list on the Positions and Picks page. Well, the large moves do not mean bupkis if not in the trade. Utilities remain elevated, this is bullish for markets in the short term.

Note Added 6/5/12 at 3:34 PM:  SPX is printing 1285.67 kissing the 200-day MA, here it is, bounce or die.

Note Added 6/5/12 at 3:38 PM:  Bounce.  Boooiiiinnnng. SPX printing HOD near 1287. Keystone's important 12-month MA is 1290.16 only a whisker away now. FB (Faceplant) continues to embarass itself, now under 26, but the minute charts are positively diverged so price should receive a bounce from these levels.

Note Added 6/5/12 at 3:48 PM:  SPX just came down to back test the 200-day MA to make sure that up was the correct decision. If price bounces again the broad indexes should keep running higher thru the close.

Note Added 6/5/12 at 4:01 PM:  SPX slipped on a banana peel in the final five minutes, falling under the 200-day MA by eighteen cents as the session closes out. At least we know what to watch tomorrow.