Wednesday, April 16, 2014

Keystone's Midday Market Action 4/16/14: BAC; Housing Starts; Fed Chair Yellen Speaks; AXP; GOOG; IBM

Another high drama day occurs as Fed Chair Yellen does a song and dance in front of a cheering crowd. She promises more sugar candy just as traders hope but equity markets stall at their highs. Keybot the Quant remains short but is champing at the bit to go long. If the SPX moves above 1858.45, and this level holds for several minutes, Keybot will likely flip long. The algorithm is tracking three key components that dictate market direction today; VIX 14.77, SOX 563.10 and XLF 21.77. Lower volatilty and higher semiconductors, respectively, pump the stock market higher today. Financials cannot yet develop the strength to move above XLF 21.77 remaining in the bear camp mainly due to BAC laying an earnings egg this morning. Thus, the bears can stop the market upside and prevent Keybot from going long the market if either VIX moves above 14.77 and/or SOX under 563.10. The bulls wil receive further upside fuel if XLF moves above 21.77.

Housing Starts are disappointing remaining under the one million mark and may be stalling moving forward. The markets exhibit more drama and theatrics than a Broadway production. VIX 14.77, SOX 563.10 and XLF 21.77 dictate market direction.

Note Added 1:01 PM: Chair Yellen is taking Q&A right now spinning yarns. SPX is 1854.05 about four points under the 1858.45 target the bulls need to pop the champagne corks. VIX is 14.63 fourteen pennies under the 14.77 bull-bear line in the sand causing market bullishness. SOX is 563.83 above the critical 563.10 bull-bear line causing market bullishness. XLF is 21.73 only four pennies on the bear side of the important 21.77 bull-bear level causing market negativity. The dollar/yen remains elevated today at 102.30 which easily allows bulls to keep the stock market elevated. The beat goes on.

Note Added 1:07 PM:  VIX 14.79. See if the bears can maintain the higher volatility, if so, markets should drift lower. SOX moves lower and bounces off the 563.10 level remaining in the bull camp.

Note Added 1:10 PM: VIX 14.71. The SPX is playing around at the S/R levels mentioned in the previous missive. Note how the 1859 resistance ceiling has held so far today. The 200 EMA on the 60-minute chart is 1853.94. The SPX is 1853.41. How about that? A dramatic bull-bear fight is occurring today. The SPX is smack-dab between the 20-day MA at 1858.42 above (another upside resistance level that has held today with HOD at 1858.45 almost to the penny back kissing this critical moving average) and the 50-day MA at 1848.72 below. The year began at 1848. Bulls win if price jumps up through the 20-day and upper resistance at 1858-1859 while bears win if price drops under the 50-day MA and starting year number at 1848-1849. The theatrics continue.

Note Added 1:20 PM: Yellen finishes the Q&A and is carried off on the shoulders of analysts, traders and journalists to resounding applause. SPX is 1854.77. Okay market, what is your decision?

Note Added 1:24 PM: VIX is 14.49. SOX is 565.66. XLF is 21.74. Dollar/yen 102.27. SPX 1855.95. So same-o same-o. Lower volatility, higher semi's and stable dollar/yen at elevated levels all create market lift todayFinancials create market weakness. The SPX must decide to poke above 1858-1859, or, collapse under 1848-1849. Flip a coin.

Note Added 7:44 PM: The XLF punched up through 21.77 creating the afternoon upside orgy. Keybot the Quant turns bullish at SPX 1859. The bulls win punching up through the critical upside resistance at 1858-1859 as highlighted above. This level remains key. Since tomorrow is the last day of trading for the week the bulls may simply try to slide the markets out sideways into the holiday weekend. Bears need to push the SPX back under 1858-1859 and their only chance is tomorrow. If the bulls remain above, the SPX will likely head another ten or twenty handles higher. OpEx may cause some craziness; volume at the open and close should be robust. The bulls came to play today. The bears put up a noble fight but once the financials turned bullish it was over. Interestingly, traders do not care about geopolitics. Ukraine, schmoocraine. Will they care if Putin takes over East Ukraine just like Crimea?.

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