Tuesday, May 13, 2014

Keystone's Midday Market Action 5/13/14; Retail Sales; Business Inventories

Retail Sales are weaker than expected but do not have a negative impact as would be expected. The RTH is 58.84 remaining well above the 58.69-ish bull-bear line in the sand identified by Keystone's algorithm so the bulls are having another party to begin the day. The broad indexes are flat to up. The SPX prints above the psychological 1900 level and creates a new all-time intraday high. Tuesdays have been higher nearly 90% of the time over the last four months. Typically, an OpEx Tuesday low occurs that leads into a Wednesday high. The full moon is tomorrow, the night sky is very bright, and equities are usually bullish through the new moon. Everything is going the bulls way.

The BPSPX is at 72 receiving the double whammy market buy signal. Dow Theory confirms the upside rally with the Dow Industrials and Transports both printing new highs. The CPC and CPCE put/call ratios drop like a stone showing complacency remaining in markets. Ditto the low volatility. The TRIN (see previous chart) printed a low number yesterday indicating that the upside may be overdone. TRIN is under 0.70 today as the SPX prints above 1900.

The VIX and SPX are both up today so one of them is wrong. Business Inventories are in line with a build since sales are lackluster. Bears are taking it on the chin these days and need RTH under 58.69 or they got nothing. The SPX 2-hour and 1-hour charts are showing negative divergence over several indicators but the RSI is not overbot and the RSI and MACD lines show long and strong behavior so another one to three candlesticks are needed for price to top out which would be the 2 hour to 6 hour time frame, essentailly today's trading session. Markets may stay buoyant through lunch time and then relax and regroup to the downside beginning this afternoon or tomorrow morning. This would conflict with the expected seasonality-type bullishness mentioned above so the outcome will be interesting. Bulls are motoring along without a care in the world.

Note Added 10:17 AM:  TRIN 0.65 (verifies the strong bullishness for today but warns that this is likely topping action). SPX HOD 1901.03. RTH 58.83 remaining 14 cents on the bull side. The bulls appear unstoppable. BPSPX 72.40. VIX is now negative at 12.16 nearing an eleven handle. The bulls are popping champagne corks staggering around the floor of the NYSE cheering and toasting the central bankers for providing the daily parties.

Note Added 10:38 AM: TRIN 0.65. SPX 1901. VIX 12.06. RTH 58.89. The SPX likely needs some time to churn up here so perhaps around 2 PM this afternoon an inflection point may develop. Bulls are smoking a cigar with their feet up on the desk. If VIX fails 12, the broad indexes will all pump another leg higher.

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