The retail sector provided the upside juice yesterday and this was odd since many retailers were smacked. As soon as the RTH jumped above 58.63, equities thrust higher. The bulls need further upside juice from lower volatility but the VIX would not move sub 14 yesterday afternoon so the bears returned late day and pushed equities lower. Bulls need VIX under 13.92 to continue the market rally.
The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead but the 8 MA is curled over to the downside and may create a negative cross today. Bears need the negative 8/34 MA cross on the 30-minute or they got nothing. The SPX all-time intraday high is 1858.71 so the 1859 is strong overhead resistance. The all-time closing high remains at 1848.38. The strongest S/R is 1859, 1851, 1848, 1843, 1841, 1839, 1828, 1815.25 (50-day MA), 1808, 1803 and 1800.
Consumer Confidence is 10 AM and will create a market pivot point. Richmond Fed Mfg data is also at 10 AM. Fed's Tarullo spins a yarn at 10:10 AM. The 2-Year Note Auction is 1 PM. Housing data including the S&P Case-Shiller House Price Index hit before the bell. Watch RTH 58.63 and VIX 13.92 today. Also the 8/34 MA cross on the SPX 30-minute and VIX 200-day MA cross. These four will tell the market story.
Updating the housekeeping on ongoing trades, all shorts are hammered as the indexes run higher. Keystone exited JCP as a flat trade last week which appears to be sheer dumb luck. JCP slipped -7.2% yesterday ahead of earnings tomorrow. It makes you wonder if insiders have already received the word ahead of time. A move lower would be expected to fill the gap at 5.7-ish but price has now dropped to 5.23. Everyday someone is bashing JCP and yelling the bankruptcy word to keep the fear elevated and that occurs again this morning. The bottoms in NFLX, BBRY, BBY, WLT and others followed the same dramatic path although the retail sector is more worrisome. Five is an important level since the funds are typically obligated by their by-laws to not own a stock that is priced under five bucks. That is why garbage C did the reverse split a few years ago. C is 48.98 so taking away the 10:1 reverse split means the piece of garbage (from a price perspective) is 4.90, a sub 5-dollar stock in drag. It would be negative if JCP chooses the reverse stock split route. As a rule, a reverse split simply indicates further trouble ahead; C is a very good example. JCP's charts remain attractive from a bottom-picking and positive divergence perspective. Anything can happen with earnings but the thought would be a bounce since the news has been all negative for weeks. The charts did not require price to drop lower again but the recent negativity may cause further sideways basing. Keystone will look to reenter JCP and it remains an attractive, albeit highly speculative and dangerous, stock to play on the long side. The prior customers of JCP are likely far more loyal than everyone thinks and may return to the stores a lot faster now that the Ron Johnson debacle is flushing out.
The FB short trade is getting killed because of the slap from the WhatApp acquisition; that entry short was unfortunate timing. You win some and lose some. The FB short trade will remain in place for now. The price action adds some oomph to the charts for Facebook but a top is expected in here at 71-73, then potential move down to 56-60. Biotech and pharma stocks are parabolic. MYL takes another jump higher so this short trade may have to be taken as a loss since shorting it appears futile. For now it will remain on. Keystone still likes shorting high-yield. Most all stocks benefited from the upside thrust in equities yesterday which creates more oomph that may need a couple few days to play out. Shorting HYG or longing SJB (thinly traded) are possibilities to scale into. JGBS will be added to as time moves along, also the micro cap MGPHF. SMN is in an inverse against basic materials and was enjoying upside despite the higher equity markets yesterday. Other assorted inverse ETF's are held that short the broad market but all are underwater as equities keep printing new all-time highs. Keybot, that handles two-thirds of the overall portfolio, is on the long side currently.