Monday, May 12, 2014

Keystone's Midday Market Action 5/12/14

The bulls are printing new highs. Copper is up strongly today providing more bull fuel. VIX drops. The retail sector is recovering which is the jet fuel the bulls need the most. Watch RTH 58.68, price is printing here now. If RTH moves above, the equity markets will remain elevated and moving higher. Market bears need to knock RTH down right here right now or they are in big trouble since the SPX will move above 1900 fueled by stronger retail sector stocks. Retail is the key right now.

Key S/R is 1878, 1884, 1891, 1894, 1897 and 1900. The HOD is 1893.81 so the 1894 R is holding for now. The SPX all-time closing high is 1890.90 and the all-time intraday high is 1897.28 so watch these numbers today.

Note Added 10:49 AM: RTH is 58.72. The bulls are relentless and will have no trouble maintaining elevated stock markets as long as RTH stays above 58.68. Dollar/yen 102.11. Banzai!

Note Added 10:51 AM: Whoopsies daisies. RTH 58.67. So there may be another roller coaster ride on tap for today. Use RTH 58.68 as the directional rudder for the market ship today and monitor the SPX 1884, 1891, 1894 and 1897 S/R levels.

Note Added 12:23 PM: RTH 58.72. Bulls push SPX above 1894 resistance--the fight is continuing but the bulls will succeed if the RTH continues higher. The retail, copper and financial sectors are most influential on market direction currently and the bulls own all three. The dollar/yen moves higher today to 102.13 (weaker yen) creating bull fuel. VIX collapses to 12.24 with a low at 11.88, an eleven handle. The bears are beaten day after day. Bears got nothing unless they push RTH under 58.68. Current print for RTH is 58.74.

Note Added 12:44 PM: Whoopsies daisies. RTH 58.67 so the SPX stalls at 1894 R. HOD 1894.78. To add to this retail drama, monthly Retail Sales data are released in the morning at 8:30 AM EST. So a big thumbs up or thumbs down will occur for markets tomorrow depending on the Retail Sales results. Later in the week, KSS, WMT, JCP and M report earnings which would be a second bite at the apple for bears if the retail sales data is great, or, for bulls if the retail sales data is crap and creates broad market negativity for Tuesday. RTH 58.68 is the arbiter that decides.

Note Added 12:51 PM:  RTH 58.68 unable to decide which way. TRIN is 0.74 with an uber low print at 0.43, obscenely low, indicating that the bulls are strongly favored today. Uber lows in the 0.4's for TRIN indicate excessive bullishness which typically creates a near-term top. The low VIX with an eleven handle today confirms the ongoing complacency and lack of fear in markets. Why would anyone worry with central banker easy money printing continuing? Remember, QE is being tapered but the net positive QE stimulus continues week after week month after month until it officially ends in the Fall. BOJ's Kuroda is out back beating the yen with a baseball bat and Fed's Yellen is in the garage bludgeoning the dollar with a pipe wrench as they collude to send the stock market higher. ECB's Draghi wants in on the action and is dragging the euro out back asking for advice on how best to begin the beatings.

Note Added 1:21 PM: RTH 58.71.

Note Added 4:44 AM on 5/13/14: RTH 58.83. The bulls won out. The elevated copper and financials sectors, along with the thrust higher in the retail sector, create the market momo to the upside. Traders remain very bullish with optimism fueled by the M&A activity and the ongoing orgy of buybacks. RTH 58.68-58.69 remains the key bull-bear level as identified by Keystone's trading algo, Keybot the Quant. Stocks will continue higher if RTH remains above 58.69 but stocks will sell off sub 58.68. Retail Sales are released at 8:30 AM less than four hours away so the story will be told shortly. Whichever way retail goes, the market goes. The SPX, Dow and TRAN all print new all-time closing highs. The SPX came up for the HOD at 1897.13 but fell 15 pennies short of the all-time high at 1897.28. The retail sales data will determine if SPX 1900+ prints this morning, or not. The low TRIN today and the drops in CPC and CPCE put/call ratios, and lower VIX, all verify the ongoing bullish complacency in markets. The TRIN and put/calls indicate that a near-term top should be on tap at any time, any day. Retail Sales data will likely determine if that near-term top occurs now or later in the week.

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