Keystone's Midday Market Action 8/29/12

Same drama on tap today, markets are moving sideways, watch JJC 43.65, UTIL 464, SOX 391 and NYA 7737.  The dollar is buoyant today sending copper and commodities lower. JJC appears to want to make a run lower at the 43.65.  The futures have recovered back to the flat line after the GDP number, which was 1.7%, what the consensus expected. If one of the four parameters above fail, perhaps JJC, the markets will be selling off. If two of the four fail, Keystone's algorithm, Keybot the Quant, will likely flip to the bear camp. For the SPX today beginning at 1409, the bulls need to touch 1414 which will accelerate a move higher to test 1419.  The bears need to stab thru the strong 1406 support to accelerate a downside move that will fall thru the strong 1403 and continue along to 1400 and 1399.  A move thru 1407-1412 is sideways action today. The 8 MA fallilng thru the 34 MA on the SPX 30-minute chart yesterday says the bears will rule for the hours and days ahead. The only way the bulls can turn the tables is to spike the indexes higher after the opening bell. Watch the Nasdaq versus SPX percentage relationship, tech versus the broad markets, respectively, tech will lead and tell you the favored direction.

Pending Home Sales are at 10 AM so markets may pivot. Oil Inventories are 10:30 AM. 5-Year Note auction at 1 PM. The Beige Book is at 2 PM which should result in a market pivot point. Hurricane Isaac is spewing chilly air while the political convention spews hot air, and the markets remain suspended in air, for now.

Note Added 8/29/12 at 9:41 AM:  JJC is teasing 43.65 but remaining a nickel or more above. UTIL now has a 470 handle. Semiconductors, SOX, jumped higher. The 8 MA remains under the 34 MA on the SPX 30-minute chart so the bears have a feather in their cap.  Tech, however, is leading the broad market higher, as the SOX shows, so this is a feather in the bulls cap.  The beat goes on. If JJC loses 43.65, markets will sell off, but, barring that, more sideways stuff is on tap. Whoa....JJC 43.66.....it's teasing......this is looking good for bears....if JJC stays under this 43.70-ish for the next few minutes you will notice the broad markets selling off, if not, the bulls will float the markets sideways to sideways up today.

Note Added 8/29/12 at 10:28 AM:  The 10 AM data resulted in an intraday bottom and markets pivoted upwards.  JJC is 43.66, consider this bearish and use the 43.70 here forward for today.  Markets will weaken and sell off if JJC stays under 43.70.  VIX is positive on the day which is bear friendly. The 8 MA remains under the 34 MA as discussed above, bear friendly, but the 8 MA  may be wanting to curl upwards.  Tech is leading to the upside of the broad markets so this helps the bulls hold back a big sell off due to weaker copper. SOX is now printing the lows for the day. Whoa....the COMPQ is now leading the SPX a hair to the downside making market bears happy. The drama continues.

Note Added 8/29/12 at 12:07 PM:  JJC 43.63. The 8 MA remains under the 34 MA on the SPX 30-minute chart. The SPX is up 0.06% and the Nasdaq is down 0.01%, thus tech is leading the broad indexes on the downside. All systems go for the bears, but, only one thing, the markets are not selling off. Perhaps some more time will help.  VIX 50-day MA is 16.92 and has been tested three times in the last few hours, perhaps the fourth time is the charm. A VIX move over the 50-day MA would seal the deal for bears.  Watch the SPX 20-day MA at 1404.88. The 5-year auction is at 1 PM then the Beige Book at 2 PM. Markets may want to extend the clock until 2 PM to see what the Fed is thinking, then react. The bears have the ball, and they are running with it, but they are running cross-field instead of down field.

Note Added 8/29/12 at 12:50 PM:  Keystone sold the APKT position which will result in a loss; it's all in the timing and Keystone was too early on this one, now taking advantage of the two-day pop in APKT to exit.  Also bot UVXY opening up a new long position.  Also bot more RETS.

Note Added 8/29/12 at 1:00 PM:  Staus quo, the bears have all systems go but the markets travel sideways.  JJC is printing 43.65 remaining under 43.70 and contributing to bearishness for the makets. This will be the first tell if the bulls are gaining strength. 5-year note auction is uneventful. Beige Book in less than an hour.

Note Added 8/29/12 at 2:16 PM:  The Beige Book comes and goes with little fanfare. The SPX is moving along the strong 1413 S/R, the bulls are pushing higher despite the underlying negativity today. JJC is 43.60 remaining in the bear camp.  The 8 MA remains below the 34 MA as per above, also remaining a bearish influence.  Tech, however, has gained ground and is now moving coincidentally with the broad indexes, so tech is neither leading down or leading up.  Nonetheless, the bulls keep pushing. Perhaps touch them with a feather and see if they fall over. Bulls are going nowhere without pushing the JJC back above 43.70, pushing the 8 MA back above the 34 MA on the 30-minute chart, and pushing the SPX over 1414 to launch the upside (HOD is 1413.95). Watch to see if they can do it into the close, or not. Referencing this morning's chart, the SPX collapsed thru the sideways triangle to start the day, then returned back inside, then broke out the top side of the triangle, where price now sits pondering which side to favor.

Note Added 8/29/12 at 3:30 PM:  The 8 MA is poking back up thru the 34 MA on the 30-minute chart so the fight continues. JJC is 43.57 showing that copper likes the bear camp and will continue to effect markets negatively despite any buoyancy seen today. Tech is not leading the upside so the up move does not have any oomph, but, at the same time, with the 8 MA above the 34 MA, the bulls continue to push hard. Keystone took profits on UVXY, using it as a day trade, nice upside move over the last half hour, it remains attractive moving forward, will look to reenter.

Note Added 8/29/12 at 3:38 PM:  Keystone shorted more RTH.  Shares were available today. Perhaps shorts are giving up on this sector, it is riddled with corpses trying to fade the great American consumer.

Note Added 8/29/12 at 4:05 PM:  Bulls succeeded in keeping the 8 MA back above the 34 MA.  JJC is well under 43.70 closing at 43.57.  The sideways drama with wishy-washy mixed signals continues. Markets are stumbling into the Bernanke finish line on Friday.  Bernanke will then decide if the markets cross over the line and claim bullish victory, or, if they collapse on the finish line falling to the pavement, signaling that the party is over. It is interesting that the SPX threatened the important 1414 for today but could not push above. VIX closes above 17 (now up thru the 50-day MA) signaling that the ride is going to become far more turbulent with larger point swings in the indexes. Keystone shorted more RTH into the close.