Keystone's Midday Market Action 7/16/13

GS and JNJ earnings are happy time while KO earnings receive a KO (knockout). CTAS is taking the pipe, -4%, and is a key economic indicator due to the need, or lack thereof, for uniforms. CTAS says business is slow which means there is no hiring occurring and the 25 million unemployed and underemployed continue to suffer as the structural employment problem grows in America. Add this with UPS's dire guidance, and KO this morning that comments on a slower global economy, and the economic situation on the planet is far from joyous. However, the Fed drug-pushers pump the crack cocaine easy money into the market veins and all is fine for another day.

The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours and days ahead, however, the SPX is under the 8 MA curling it to the downside for a potential negative 8/34 cross today. The VIX is 13.86.  Bears got nothing unless they push VIX above 14.20. So, despite the early market weakness, the bears need to push far harder to reverse the ongoing bull rally. The bulls need to push the SPX above 1684.50 and an acceleration will occur to test the all-time intraday high at 1687.18 in quick order. If JJC (copper) moves above 39.35, now at 39.15, the bulls will be on their way to SPX 1700. The SPX HOD is 1683.73 about 75 cents short of today's bull goal to create an upside breakout. The bears need to push under 1678 to accelerate the downside to test support at 1677, 1672, 1669, 1666 and perhaps 1652. The donuts are getting stale at KKD, down about -3% today. GS slips on a banana peel and is now negative on the day.

Note Added 10:42 AM:  VIX 13.87. TRIN 0.88.  Say no more. The markets remain buoyant with lower volatility and TRIN. Watch VIX 14.20 and the 8/34 cross highlighted above and in this morning's chart as the day plays out. Bears got nothing without the VIX moving higher. SPX LOD is 1679.52 so the bears needed another couple points to start a downside acceleration under 1678. For now the markets dance along sideways.

Note Added 12:38 PM:  The 8 MA just stabbed down through the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours and days ahead, however, the bulls will likely fight back and try to send the SPX up right now to reverse the negative cross. VIX is 14.29, well look at that, above 14.20 so it is all systems go for bears. TRIN is 1.21 above one and favoring bears today. The SPX dropped under 1678 so a downside acceleration occurs to the LOD at 1673.15 a point shy of 1672 support.  There is support at both 1673 and 1672 and if that fails, the strong 1669 support will be tested. Watch the 8/34 MA cross described above and VIX 14.20 to determine if the bears can maintain today's selling pressure, or not. Keystone took profits on GDXJ exiting this long position, only enough to buy pizza's for this evening. Will look to reenter on a pull back.  Also bot SSG opening a new long position which is short semi's.

Note Added 1:18 PM:  Here's the test of SPX 1672 support so its bounce or die time. If this fails, the strong 1669 and equally strong 1666 support levels are next. A very short recovery move would drift price back up to 1675-1676. The bears are flexing their muscles and volatility is their fuel. VIX 14.34. TRIN 1.21.

Note Added 2:48 PM:  The SPX bounces off 1672 S to the 1675-1677 area. VIX is 14.26 above the 14.20 bull-bear line, identified by Keystone's algo, Keybot the Quant, which creates market bearishness, but the bears are only six pennies from folding like a cheap suit. TRIN is 0.86 so that is where the bulls receive the energy for the move higher over the last hour. The 8 MA remains under the 34 MA on the 30-minute signaling bearishness ahead, however, the 8 MA is 1675 and with price now printing at 1676 it will curl the 8 MA to the upside and the bulls will try to redeem themselves and reassume control with a positive 8/34 cross. Bears are fine as long as the 8/34 cross remains negative and the VIX stays above 14.20. The SPX 1 and 2-hour charts hint that lower prices should occur moving forward and the bounce over the last hour or two should be short-lived. Chairman Bernanke's comments are released at 8:30 AM EST tomorrow morning, instead of the typical release when his testimony begins at 10 AM, so traders must position now for what they think the notes will reveal before the opening bell. Then all traders, long or short, will receive a do-over and have another bite at the apple when the Q&A begins at 10 AM. Housing Starts, a critical monthly number, hits at 8:30 AM as well as more earnings, and reactions to this evening's earnings, so the markets will graduate from a small-town carnival into a full-fledged big-city circus as the week plays out.

Note Added 3:03 PM:  VIX 14.43 printing a HOD and TRIN back up to neutral 0.98 so the bears are smiling again and the SPX loses a couple handles.

Note Added 3:21 PM:  VIX 14.54.  TRIN 1.21.  The 8/34 MA cross on the 30-minute remains bearish. The 8 MA is 1674.76 so the bears need to keep price under this number. SPX is 1673.40 potentially headed for a test of the LOD at 1671.84, the important 1672 support.

Note Added 3:32 PM:  The bulls attack the TRIN dropping it from over 1.25 to 0.91 in ten minutes time to create lift in the SPX. VIX is 14.51 remaining thirty-one cents in the bear camp.