Friday, December 6, 2013

Keystone's Midday Market Action 12/6/13

After one month's worth of intense market drama, the bulls push higher by sending volatility and the TRIN lower. Price was fighting at last week's low at 1800.58 and the bulls won out. Both of the upside gaps at 1793-1795 and 1800-ish are filled. VIX losing the 200-day MA at 14.38 was an early tell today of bullishness ahead. Bulls need higher utilities and copper to push markets to new all-time highs; watch UTIL 491.25 and JJC 39.68. UTIL is now printing 489.09 and JJC is 39.52. If utilities and/or copper do not take out the levels listed, this will hint that the market upside is limited. Bears simply need higher volatility, pushing VIX above the bull-bear line in the sand at 13.95, to put the kabash on the market upside. VIX is now printing at the lows at 13.65.

The Monthly Jobs Report was bullish across all the indicators. Jobs hit 203K, the unemployment rate dropped to 7.0%, average hours and wages both rise, and the labor participation rate even edged up. The 7% rate is the lowest since December 2008 and January 2009, 5 years ago in the midst of the market crash. The bulls ran the board, however, the response was muted initially; markets continue to appear confused. The 10-year yield jumped to 2.93% but retreated to 2.87% now, dead flat where it was at before the jobs number. Equities, however, are launching, the SPX and Dow leading higher at +1.2% while the Nasdaq is up +0.8% and RUT +1.0% lagging the broader market. So the 200K plus jobs number occurs but rates do not stay higher pushing equities lower, instead, yields are flat and equities bounce higher. Seasonality-wise, when a month begins with 4 down days, the 5th day is virtually guaranteed to be bullish, and many traders are riding this statistic. If markets move in the mode of up equities and up yields, that means in reverse they will move with lower equities and lower yields; the former is inflationary behavior, the latter deflationary.

Consumer Sentiment was a blowout number at 82.5, the highest since the summer time. Folks went from being down in the dumps last month to bullish exaltation this month. Everything, including humans, is behaving strangely. The market action over the last month is the oddest price action seen in years. There are likely many more shenanigans ahead. The SPX is back above 1800 and Dow above 16K. Keybot the Quant is on the long side now but who knows how long this may last in these markets? The upside will have legs if copper and/or utilities move higher. The downside will reassert itself with higher volatility and/or lower commodities. Watch VIX 13.95, UTIL 491.25, JJC 39.68 and GTX 4809 to determine market direction. SPX is near the highs today at 1805.44. VIX 13.65 and GTX 4826 are causing bullishness right now. UTIL 489.14 and JJC 39.54 are causing bearishness.

Note Added 3:20 PM: VIX is 13.86 remaining bullish but moving higher towards the 13.95 bear level. UTIL at 489.10. GTX 4828. JJC 39.53. So status quo with SPX at 1803.35. Perhaps last week's low at 1800.58 may be teased again? TRIN 0.98 dead flat surprisingly not favoring the bulls any longer after the uber low 0.40 today. Keystone exited the long URA position; this results in a flat trade. Will look to reenter since URA appears to have based and should have further upside ahead (similar action as the coal stocks over the last few months like WLT). Also bot GDXJ opening a new long position.

Note Added 3:39 PM:  VIX 13.94 one penny from the bear danger line at 13.95. Market shenanigans continue. SPX 1801.49 less than one point away from last week's low.

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