Tuesday, April 22, 2014

Keystone's Midday Market Action 4/22/14; YUM; T; GILD

The bulls create another up day drinking the Fed's booze and staggering higher. The dollar/yen remains elevated at 102.60 so the weaker yen provides bull fuel. The VIX fell under 13 adding more bull fuel but is now recovering back above 13. The retail sector provides bull juice with RTH moving above the 58.97 critical line in the sand. RTH sneaks above 59 but is tentative so watch it closely. Bears need RTH under 58.97 as soon as possible which will stop the market upside. Bulls will continue moving higher if RTH stays above 58.97. XLF 21.77 remains a key bull-bear line in the sand. XLF is 22.03 moving higher today so that adds bull fuel as well.

Trannies print new highs and the Dow Industrials continue to try and print new highs to confirm the rally from a Dow Theory perspective. The Dow is coming off the highs as VIX moves back above 13 now at 16555. The Dow Theorists need closing prints above 16580 and higher to receive a confirmation for the rally. The BPSPX remains on a market sell signal but is up to 68.40 today only needing a one and one-half point more to receive a market buy signal. The put/call ratio's signal rampant complacency remaining in markets the typical behavior seen at market tops.  TRIN is 0.97 dead flat at the 1.00-ish level. For such a robust up day the TRIN should be down at 0.7 or 0.8 or lower. Interestingly, the 10-year yield is steady at 2.73% so money is not moving out of bonds into stocks; money is simply moving into stocks. Perhaps traders are buying equities with money received inside the Easter card on the weekend.

The SPX punched through the strong 1874 resistance so price immediately catpulted above 1880. Watch the SPX S/R at 1874, 1878, 1882, 1884, 1891 and 1897. The SPX all-time closing high is 1890.90 and all-time intraday high 1897.28. The SPX 2-hour chart is set up with negative divergence except for the MACD line so price should peak out and roll over to the downside at any time today and into tomorrow. YUM earnings are key after the bell since it is a global bellwether especially as a gauge for China since the Chinese are big fans of the Colonel's Kentucky Fried Chicken (KFC). T and GILD earnings are also important after the bell.

Keystone took profits on the ARO and FUEL launches today exiting both long positions. Rocket Fuel received its rocket fuel as discussed the other day. Both look good moving forward. Will look to reenter both. Also bot WLT opening a new long position. Walter has been bludgeoned but it has attractive positive divergence. Considering the market complacency think long and hard about any long position held. At least if a quick and sudden downdraft occurs in markets stocks such as ARO, FUEL and WLT should weather the storm better since they have already been beaten down.

Note Added 2:56 PM:  TRIN 0.97. VIX 12.92 under 13 helping bulls. RTH is 58.98 one single hair above danger creating market bullishness, nope, check that, RTH now sitting exactly on the critical 58.97 bull-bear line in the sand. Whichever way retail stocks pivot the broad market will follow. XLF 22.04. SPX HOD at 1884.89 holds for now. SPX is printing 1883.90 so the bears are trying to keep price under the strong 1884 S/R highlighted above.

Note Added 3:07 PM: RTH 58.91 so the pivot was lower. Bears are not going down without a fight. Some market weakness enters as retail loses the coveted RTH 58.97 level. VIX 12.96. Markets will drop more if VIX moves above 13 but will remain elevated into the close if volatility remains under 13. TRIN 0.98. XLF 22.00.

Note Added 3:13 PM: Whoa, Nellie. VIX catapults to 13.23 in an instant. RTH 58.90. XLF 22.01. TRIN 1.02 remaining flat but now favoring bears by two pennies. SPX drops under 1882 due to the weaker retail stocks and higher volatility over the last few minutes.

Note Added 4:03 PM: RTH is 58.86 finishing on the bear side creating market weakness under the 58.97 bull-bear line in the sand. XLF is 21.96 creating market bullishness above the important 21.77 level. VIX is 13.21 under 14.50 bull-bear line creating market bullishness. Watch these three stooges tomorrow. 

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