Keystone's Morning Wake-Up 7/19/13; Detroit Belly-Up; GE; HON

Futures are challenged by the GOOG and MSFT earnings misses last evening but China is changing policy to allow banks to set lending rates which immediately creates a market bounce. Detroit is going into Chapter 9 bankruptcy due to massive debt. This once great automobile and Motown city, Motorcity, is now a dump due to political incompetence. Leaders are elected to chart the future path but all politicians care about is kick-backs and getting re-elected. Promises are made without care since the politico's know they will be out of office when it hits the fan. Detroit is a microcosm for the U.S.

GE earnings beat on EPS but miss on top line. GE is trading at 23.94 pre-market inside the red circle on this mornings chart and a viable short candidate moving forward. HON beat on earnings and increases guidance so it moves sharply higher, despite their beacons likely causing fires on the new 787's. Volatility remains the key element dictating broad market direction these days. Watch VIX 14.19. Bulls will rule if VIX stays under 14.19. Bears will growl strongly if the VIX moves above 14.19.

The 8 MA remains above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours and days ahead, however, the 8 MA is starting to curl to the downside for a potential negative 8/34 cross today.  The SPX begins at a new all-time closing high at 1689.37 and the bulls need to push above the all-time intraday high at 1693.12 to create an upside acceleration that will tag the psychological 1700 in quick order. The bears need to push under 1681 to gain downside mojo. A move through 1682-1692 is sideways action today. Watch to see if the descending triangle highlighted last evening on the SPX 10-minute chart (and corresponding ascending triangle on the VIX) play out today, or not. Today is OpEx so markets will likely see stronger volume on the open and on the close. The CPC and CPCE put/call ratio charts provided this morning clearly show that the markets are likely creating a significant top right now and should begin selling off at anytime in the days ahead. The Open Championship continues in Scotland with some golfers complaining about unfair greens and pin placements; of course these are the same golfers that hacked all day long. Zach Johnson, U.S.A., is the leader at -5 and tees off at 10 AM EST, one and one-half hour from now. Tiger is on the back side.

Note Added 9:38 AM:  SPX drops at the opening bell but the VIX is 13.87 remaining well under 14.19 so the bulls have no worries. TRIN 0.75 favoring bulls for today so far. Keystone took profits on SSG and will look to reenter. SSG is an inverse ETF against semiconductors that should have plenty of upside ahead. Also bot more SCO increasing this ongoing long position which is a short ETF against crude oil.

Note Added 10:11 AM:  SPX 1686.95 down a couple today. VIX 13.53 at the lows. TRIN 0.73. Low volatility and low TRIN makes for happy bulls despite the negative markets. WTIC crude oil hit 109, actually moving above Brent for first time in three years. WTI and Brent were trading in parity at 108.65 and 108.77, respectively, a short time ago. Save your money for the gasoline station. GOOG -3.3%.  MSFT -8.6% needing some aspirin tablets to counteract the ill effects of surface tablets. GE +5.0%.  HON flat as traders must have remembered that beacon-thingy, to paraphrase Sarah Palin. Market bears got nothing unless volatility moves higher.

Note Added 2:28 PM:  Look at the VIX collapse under 13 so the market bears do not have a chance today.  The Fed is stepping on the neck of volatility. Chairman Bernanke referenced the need for lower volatility in his testimony this week. Perhaps they can keep the VIX beach ball underwater long enough to position the offshore accounts short and then Bernanke will lift his Thom McAn so volatility can launch and markets can drop. For now, the VIX is at the lows at 12.88 far from the 14.19 bull-bear line in the sand and easily forecasting that the markets would recover today from earlier lows. TRIN is 0.86 remaining on the bull side so that keeps the market bears at bay as well. RUT, Dow and Nasdaq are negative and the SPX is a hair positive at 1690.22. Bulls need higher utilities and/or copper but both remain challenged which will make the market upside a harder trek. Bulls must punch up through the all-time high at 1693.12 to start running to 1700.

Note Added 2:38 PM:  The 8 MA on the SPX 30-minute chart was dropping to create a negative 8/34 cross and then whammo, after the opening bell, the VIX was crushed, exactly at 9:39 AM EST from VIX 13.97. This is the stick-save for equities after the opening bell to counteract the GOOG and MSFT negativity. The market recovery turned the 8 MA to the upside to avoid the negative 8/34 cross on the 30-minute chart and maintain the bullish signal for the hours ahead. The China bank policy change helps maintain equity buoyancy as well since the futures immediately popped on that news this morning before the day's regular trading session began. The VIX minute charts up through the 30-minute and 1-hour chart are positively diverged with falling wedges so VIX should recover higher into the close and place some pressure on the SPX again, however, the 2-hour chart is developing positive divergence more slowly, so the market bulls can maintain buoyancy in the broad indexes into next week. The SPX is moving sideways through the tight 8-point 1684-1693 range for the last two days. Thus, bulls win above 1693 and bears win below 1682-1684.

Note Added 3:37 PM:  SPX 1690.27.  VIX 12.86. TRIN 0.89.

Note Added 3:51 PM:  SPX 1691.19.  VIX 12.82. TRIN 0.88. A hair lower VIX and TRIN and a hair higher SPX.

Note Added 4:02 PM:  VIX was crushed from start to finish today which kept the broad indexes buoyant. VIX closes at the lows. SPX could not print a new all-time intraday high today although it did print a new all-time closing high at 1692.09. Tonight is Friday so over the next four or five hours is when companies or nations release bad news, under the cover of darkness. The newspaper headline writer's are joyous since they can pump the new all-time high theme again.