Wednesday, April 30, 2014

Keystone's Midday Market Action 4/30/14; EOM; FOMC Rate Decision; YELP

Fed Chair Yellen has received the tablets down from on high and the FOMC rate decision answer is about to be distributed to the minions at 2 PM within the hour. The expectation is for the Fed to continue with an additional $10 billion taper of QE moving forward. No surprises are anticipated. The comments on how winter weather may have effected the economy will be key. Today is EOM. April began at 1872.34 so the bulls have another positive month planned unless the bears growl over the next couple hours. SPX is currently printing at 1880.

Keybot the Quant is long. The algo identifies copper and financials as the two key market drivers moving into today. JJC 37.50 is key and price stays under and collapses under 37 showing copper in clear retreat making bears very happy. This action helps create a lid on the market upside. XLF is 21.91 remaining elevated above the key 21.80 level the algo identifies as the bull-bear line in the sand. Equity markets will sell off if XLF drops under 21.80. Market bulls are fine if XLF stays above 21.80. The banks will respond to the FOMC decision. The dollar/yen is 102.12 and the euro is running strongly higher at 1.3866. Thus, the dollar/yen currency pair would be expected to cause weaker equities but it is not since the dollar is weaker due to the stronger euro and the weaker dollar is creating the bulk of the move lower in the dollar/yen rather than a stronger yen that would create more market weakness. WTIC crude drops under 100 to 99.59. The 10-year yield is 2.666%. The VIX is under 14 helping bulls.

Note Added 1:37 PM:  The standard deviation bands on the SPX 30-minute chart are squeezing in real tight now (reference previous chart) building to a crescendo as the scroll is unrolled and the masses receive the Fed answer in 20 minutes time. The tension mounts. SPX 1881. XLF 21.93 bulls are keeping the banks well bid. VIX 13.66. TRIN 1.04 neutral at 1.00 not knowing which side to choose.

Note Added 2:10 PM:  At 2 PM, the FOMC Rate Decision is to continue with an additional $10 billion QE taper as expected. The decision was unanimous and the Fed says economic conditions are picking up after the winter slowdown. The Fed is quick to say that low rates will continue as far as the eye can see after QE ends. The Fed remains on target to end QE in the September-November time frame. The Fed has gone to great lengths to back track on Yellen’s mistake about the first rate hike occurring six months after QE ends so targeting eight or more months would point to May-July 2015 for the first rate hike; about one year or so from now. Equities take the data in stride and are unresponsive, just like Bruce the bloodhound that lays on the living room floor. SPX 1881. Gold is flat at 1294. VIX up a touch to 13.78. The 10-year yield does not move at all at 2.664%. XLF 21.96 so banks remain strong keeping equities elevated. TRIN falls to 0.96 four pennies on the bull side but call it neutral. Dollar/yen dead flat at 102.18.

Note Added 2:16 PM:  Markets are exactly where they were before the Fed announcement. Everyone is standing around looking at each other. Now what? The tight bands on the 30-minute charts for SPX, VIX and XLF are squeezing in tighter and tighter. The 15-minute and 10-minute charts have tight bands as well. Equities may decide on a move in the coming minutes, over the next one-half hour, and run with this directional move for the next day or so. The session may end with a wild finish.

Note Added 2:34 PM: The SPX price is testing the 1882 resistance so bounce or die. Next resistance above is 1884 and it is stronger resistance than the 1882. The 1878 is strong support. The Nasdaq turns positive.

Note Added 2:54 PM:  Bulls are pushing higher with XLF moving towards 22 and VIX printing the lows at 13.35. SPX is attacking the 1884 resistance; the bears last stand. Oddly, the TRIN is 1.06 on the bear side; bulls will need to see the TRIN fall under 1.00 and drop lower.

Note Added 2:57 PM:  Bulls overtake the strong SPX 1884 resistance so next target resistance is 1891. Bears will need to push price under 1884 immediately, now, or they are going to sit back and watch more upside occur into the 1890's.

Note Added 3:07 PM:  TRIN 1.21 now firmly in the sell camp despite the move higher in equities. XLF 21.95. VIX 13.47. SPX 1882 so the bears are mustering up all courage possible to hold the 1884 resistance at all costs. SPX 1900 is likely on tap if bulls close above 1884.

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