Keystone's Midday Market Action 2/20/13; FOMC Minutes

The Housing Starts are 890K well below expected numbers. The 954K last month was revised higher to 973K. So the one million level is not achieved and now the 900K level is lost. TOL missed on the top and bottom line. The housing sector appears lackluster, however, markets continue higher. Yesterday was a surprising day considering the weakness in copper. Copper leaking lower hints that its two main industries, auto's and housing, are trailing off. European car sales are in the tank and the housing sector is showing some signs of at least a sideways move. The FOMC Minutes this afternoon will create a market pivot point at 2 PM.

Watch UTIL 468, now bullish, JJC 46.50, now bearish, and GTX 4930, now bullish. The moves in these three sectors will move the broad indexes in the same direction. The bulls only need a smidge of green to continue the upside run. The next SPX resistance after 1531 is 1540, then stronger R at 1548, then 1553. The bears need to push under 1520 to regain their mojo. A move through 1521-1530 is sideways action. Markets may want to stutter sideways until the FOMC minutes this afternoon.

Note Added 2/20/13 at 9:58 AM:  The opening bell rings. Markets are flat. SPX testing 1528 support now and perhaps slipping through. The 10-year yield remains elevated at 2.03%.  Oil is 96.60.  Brent is under 117.  Euro is down to 1.3370.  VIX is up to 12.51.  TRIN is 1.30 so the bears are favored today. UTIL is 476.74. JJC 45.58 is a big collapse over the last few days, but, markets do not care about weak housing and auto's, don't worry, be happy. Sequestration, no worries there either.  The politico's will kick the can so traders are not pricing any market downside for the sequestration cuts, now only nine days away.

Note Added 2/20/13 at 11:18 AM:  Note the TRIN climbing all morning long now over 2, uber bearish. The broad indexes should be down far more but the bulls are strong. SPX has a 1524 handle but would need another four points to do any downside damage. Crude oil collapses to 94.75, -2%, down through the important 95.50 support we have been watching for over a week now. Down oil = down markets. The plot thickens.

Note Added 2/20/13 at 12:31 PM:  Markets stumbling sideways now waiting on the FOMC Minutes. UTIL is 478 as traders seek some safety. Watch to see if GTX loses 5000 today, or not. TRIN is 2.14 printing another high for today. The 8 MA is moving downwards towards the 34 MA on the SPX 30-minute chart. The Minutes will decide if the 8 stabs down through the 34 to signal bearishness ahead, or not. Markets tend to never bottom on a Wednesday, so if the SPX finishes today down 7 to 10 handles or more, this should lead to lower numbers tomorrow morning. The euro is weaker now at 1.3340.

Note Added 2/20/13 at 3:21 PM:  FOMC Minutes resulted in a muddled response, looking like a non-event, then the broad indexes started trailing lower, the SPX is now tumbling lower to the strong 1514-1515 support. FOMC members are getting nervous about the easing and how it may be destabilizing the markets now with traders simply pumping up stock prices with the money but the economy remains stalled. In the search for yield, since the Fed keeps rates too low, Aunt Agnes and other investing novices are placing their life savings in the stock market, probably at the wrong time. The Fed policies are encouraging risk taking and perhaps creating more problems. There is also Fed thinking that they may vary the ongoing purchases which means less QE. The markets need their crack cocaine QE. The bears came to play today, with TRIN now 2.73, and pushed the SPX down through 1520 accelerating the move to a LOD at 1513.95. GTX 5020. UTIL hit 479 today but is falling like a stone now with a 475 handle. VIX 14.40 starting to receive that positive divergence launch discussed a couple days ago. Type 'VIX' into the search box and the charts will come up.  The 8 MA stabbed down through the 34 MA on the 30-minute chart signalling bearish markets for the hours and days ahead. Are the bears going to finally make a move lower?  This 1514-1515 is key and the first test for the bears.

Note Added 2/20/13 at 3:43 PM:  SPX loses 1514 support. TICK logged a -1200 tick a short time ago corresponding to the LOD at 1512.50. XLF (financials) puking today down 1.4% outpacing the broad indexes to the downside. Many charts highlighted over the last month have rising wedge patterns (a bearish pattern) so perhaps the moves from these patterns are beginning, kicked into gear to the downside with the negative divergence and overbot conditions.

Note Added 2/20/13 at 4:03 PM:  The RUT is down -2% today and Nasdaq -1.5%. Small caps and tech led the broad markets lower today, a bearish undertone.  The volume is much stronger than yesterday, above a days average expected volume, call it 110% of a typical days volume, yesterday was scraping together to end up less than a days average volume. Volatility is likely the bears best friend now.  VIX is 14.63. If VIX can move above 15.70 tomorrow, one point higher, the market downside is going to begin in force. If the bulls prevent 15.70, the bears will go home empty-handed once again. The 10-year yield is 2.01% so bonds did trickle back in yield, up in price, which is the expected move if equities sell off. The 10-year Treasury note price is 99.906, for purposes of updating Keystone's Inflation-Deflation Indicator that was posted last evening. The euro is 1.3279 losing the 1.33 level and now playing around with the neckline discussed in this morning's XEU charts at 1.3250-ish.