Thursday, January 2, 2014

Keystone's Midday Market Action 1/2/14; Happy New Year; ISM

Happy New Year everyone. Best of luck and good health to all. The China PMI was weak. Eurozone in general and Germany PMI's were encouraging. Other European countries, like France, are contracting further; call it the sick man of Europe. ISM Mfg Index is better than expected and very encouraging but the stock market did not respond positive to the positive economic news. Keybot the Quant flipped short this morning to begin the new year of trading. The VIX moving above 14.12 and GTX below 4820 cause the market negativity today. Watch these closely. In addition, UTIL is falling like a stone, now at 453.56, at the lows. UTIL 482.19 is the trap-door. Remember in recent weeks and months as the UTIL trap-door would open, the bulls always found a way to close it. If UTIL falls through 482.19, only a point lower, the SPX will likely flush lower by 20 to 30 handles in relatively quick order. Bulls need to push utilities higher with all they got.

The SPX came down to tease the gap at 1833-1835, and bounced from 1835, but then came down for a second look and collapsed down through. The SPX drop was straight to sub 1833 so it can be called an island reversal pattern (the gap-up occurred on 12/26/13 creating the island). The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead. Pay attention to VIX 14.12 and UTIL 482.19 to determine market direction. The 20-day MA is 1809.90 and rising. Note the dollar/yen at 104.67 (collapsing from over 105.37 a few hours ago) indicating a stronger yen so equities sell off. The Fed's POMO pumping starts Monday, 1/6/14, for January (see link in lower right margin) so this is not occurring to help the bulls. The central bankers are the markets, plain and simple. BOJ's Kuroda slipped on a banana peel before he could yell Banzai! today so the printing presses are not running, hence, the bears take a turn.

Note Added 2:12 PM:  UTIL 483.13 now less than one tick from the 482.19 trap-door. Time to return the seats to the upright position and attach the safety harness, just in case. VIX is at 14.20 creating drama again with the bulls gunning for sub 14.12. SPX at 1833. This is all inflection point stuff again. Bounce or die. The bears have it on a silver platter only needing to push volatility higher and jam utilities lower to unleash market mayhem.

Note Added 2:17 PM:  UTIL 482.83 ..... 482.80 ... She's going in for a look. Buckle-up. As legendary actress Betty Davis would say, "Fasten your seat belts. It's going to be a bumpy ride (night)." Whoa, ... 482.44. You have it in your hands bears. Do you have what it takes?

Note Added 2:24 PM:  Bounce. UTIL above 483. UTIL should come back down again for another look once it regroups. VIX jumped now at 14.44.

Note Added 7:54 AM on 1/3/14: The bulls perform a stick-save again. Bears did not have enough juice to open the trap-door at UTIL 482.19 but came within 13 cents. Perhaps today? Watch UTIL 482.19 (now at 482.88) and VIX 14.12 (now at 14.23) to determine market direction. It's smoth sailing lower for bears if UTIL 482.19 fails. Bulls will recover and send equities higher if VIX drops under 14.12.

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