Keystone's Morning Wake-Up and Midday Market Action 8/21/13; LOW; TGT; TOL; Existing Home Sales; FOMC Minutes; HPQ

The drama at the 50-day MA at 1657.65 yesterday resulted in failure. This remains a key resistance level with bears winning under 1658 and bulls winning above 1658. The SPX remains under the 200 EMA on the 60-minute chart at 1674.32 signaling bearish markets for the hours and days ahead. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets ahead, however, the 8 MA is curling to the downside and a negative 8/34 cross may reoccur today. Existing Home Sales at 10 AM will create a market pivot point as well as the FOMC Minutes at 2 PM. LOW earnings beat just like HD yesterday. HD ended the day down -1.2% after their joyous earnings. TGT beat on EPS but is light on top line revenue and guidance. TOL earnings are lackluster. SPLS earnings are lousy which says small business is not doing well. HPQ earnings are after the bell.

Watch UTIL 483.16, RTH 53.97, XLF 20.12 and VIX 14.21. These levels are identified by Keybot the Quant algo, that remains short. All four parameters are causing market negativity. If any one turns bullish, the broad indexes will move higher. If any two turn bullish, and the SPX moves above 1659, Keybot will likely flip long. If all four parameters remain bearish, and the 8/34 negative cross occurs, as described above, markets will take another leg lower.

For the SPX starting at 1652, the bulls need to touch 1659 to create an upside acceleration. The bears need to push under 1646 to create a downside acceleration.  A move through 1647-1658 is sideways action today. The full moon occurred last evening and markets tend to be bullish through the full moon although the futures point to a couple point drop on tap for the SPX. Markets may idle flat today between the 10 AM pivot and 2 PM pivot. The dollar is up so commodities, copper, oil, gold and silver are down. Watch the VIX 200-day MA at 14.67 as a key metric. If the VIX stays above 14.67, the bears will rule the markets moving forward. If VIX falls under 14.67 it tells you a recovery rally may be on tap. There should be lots of action around UTIL 483.16, RTH 53.97 and XLF 20.12 which will dictate the strength, or lack thereof, of any relief rally.

Note Added 9:50 AM: VIX shot up like a rocket at the open to 16.29, now at 15.72. UTIL 478.10. RTH 53.66. XLF 19.85. TRIN 0.88, bullish for today. The 8 MA is about to slice down through the 34 MA on the 30-minute chart, however, markets will pivot in 10 minutes on Existing Home Sales, so either the bulls save the day maintaining the positive 8/34 cross, or, the bears will start to run after 10 AM taking markets far lower.

Note Added 10:32 AM:  Markets meander sideways without much reaction on the housing data but the 8 MA stabs down through the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead, agreeing with the negative signal with the 200 EMA cross on the 60-minute. UTIL, RTH, XLF and VIX all continue to create negativity. VIX 16.12. TRIN 1.06.  Markets would be expected to leak lower moving forward. FOMC Minutes are at 2 PM.

Note Added 1:55 PM:  Before the FOMC Minutes; SPX 1648.64, UTIL 477.69, XLF 19.86, RTH 53.53, VIX 15.82, TRIN 1.30. The 8 MA remains under the 34 MA on the 30-minute.  The 8 MA is 1647 so bulls need to move above 1647 and higher. Bears need 1647 and lower. Dow is under 15K.

Note Added 2:05 PM:  After the FOMC Minutes; SPX 1643.68, UTIL 475.81, XLF 19.81, RTH 53.40, VIX 16.09, TRIN 1.59. Analysts and pundits say there is no additional clarity in the minutes, in other words, traders wanted to hear more dovish talk, but did not receive it, the comments appear same-o, same-o. The 10-year yield is 2.86%. Equities are losing altitude quickly. SPX 1642 handle ........ knocking on the 1641 door ....... 10-year yield now 2.88% .......

Note Added 2:17 PM:  Drop, then a pop. SPX tumbles to LOD 1639.43, piercing the 1630's, bouncing exactly off the 20-week MA at 1639.44. The computers are trading. The 20-week MA now carries a lot of clout moving forward. The SPX bounces to 1647, now at 1645 continuing to sort things out.

Note Added 2:35 PM:  Bulls are fighting back with SPX up to 1652 now 13 handles off the low. Bulls play the same trump card once again by pushing volatility lower, the VIX plummets from 16.30 to under 15.00 in the last 28 minutes. TRIN 0.97 back to the bull side. UTIL, XLF, RTH and VIX all remain bearish. VIX 200-day MA is 14.66 now only 24 pennies below the current 14.90 print which would provide the bulls further oomph.

Note Added 7:59 PM:  Note how the VIX dropped and popped directly off the 200-day MA at 14.66 to signal the start of the late afternoon collapse. The bulls needed the VIX under the 200-day MA to signal the start of a relief rally; they failed. The higher VIX is creating the larger intraday point swings. The SPX traveled a distance of 56 SPX handles today starting at 1651 and ending at 1642. The 20-week MA is 1639.33. The 100-day MA is 1633.84. PMI's are important overnight tonight and stay on watch for India, Indonesia, Brazil, and emerging market contagion in general. HPQ earnings miss and it is puking as much as -8% in the AH's and will create negativity in tech and the Nasdaq tomorrow.