Monday, May 19, 2014

Keystone's Midday Market Action 5/19/14

The fight today is at the 20-day MA at 1879.48. Price is printing 1880.16. The HOD is 1881.66 held in check by the overhead resistance at 1882. The stronger resistance is 1884 also the May starting month number. The bulls win big above the 20-day MA and 1884 resistance since this lights the way to 1891 and higher. The 2-hour and 1-hour SPX charts hint that price wants to remain elevated into this afternoon. The SPX is above the 200 EMA on the 60-minute at 1874 signaling bullish markets for the hours and days ahead (reference previous chart). The 8 MA pierces above the 34 MA today signaling bullish markets for the hours ahead.

The bears need to push under the 20-day MA, under 1878 and mainly under 1874. If the 200 EMA on the 60-minute at 1874 fails, markets are in deep trouble. As the new week begins the bulls are floating markets higher. The VIX is higher as well today so either the SPX is wrong or the VIX is wrong. The retail sector, semiconductors and financials are the three key market directional movers today according to Keybot the Quant algorithm. Semi's jump higher providing the lift to markets. Retail is flat. Watch the XLF 21.83-21.85 bull-bear line in the sand. XLF is now printing 21.76 nine pennies on the bear side causing market bearishness. Equities can float higher all they want but if XLF remains under 21.83-21.85, the bulls got nothing and the upside will fade. If XLF moves above 21.83-21.85, the bulls are going to have a big upside party catapulting back to the SPX 1900 highs.

TRIN is 1.35 favoring the bears today representing a steady-eddy selling mood. The dollar/yen is 101.20. Whichever way the dollar/yen goes, so goes markets. Whichever way the financials go, so goes markets.

Note Added 11:08 AM:  HOD 1881.80 and price is coming up for another look. Bulls are pushing...boom, another high for today at 1882.02. Price is testing this 1882 resistance. It appears likely the test at the important 1884 is on tap.

Note Added 11:11 AM:  That did not take long. The SPX is testing the important 1884 resistance. Bears must hold the line or they will fold like a cheap suit. A back kiss of the 20-day MA at 1879.68 should occur in the time ahead today. Bingo, the bulls thrust higher above 1884; see if it can hold for a few minutes, or not. XLF is 21.84. Whoa, the bulls are starting a big party. Keybot's XLF number is now 21.83 so the financials turn bullish and this says the equity upside has street cred. Bears need to push SPX under 1884 and the XLF under 21.83 right away or they will fold like a cheap suit. The bears only have a few minutes to try and reverse this bullish thrust.....

Note Added 11:17 AM: XLF 21.83 sitting exactly on the bull-bear line in the sand. This is more important than the broad indexes since it will determine if the broad indexes go up or down today. Who will win? Whichever way XLF pivots from 21.83 tells you the winner today, bull or bear.

Note Added 11:19 AM:  XLF 21.82. Bears wipe the beads of sweat from their forehead. They are fighting back. This drama will likely continue today.

Note Added 6:48 AM on 5/20/14: The bulls win yesterday. The XLF closes at 21.86 three pennies on the bull side creating market bullishness. Continue watching this XLF 21.83 pivot point, identified by Keybot, since it will dictate market direction for Tuesday. The bulls close price above the 20-day MA at 1879.73 so this is a big win for bulls. Bears need to push price back under the 20-day today, otherwise, up is the direction forward. The tight standard deviation bands on the SPX daily chart are squeezing out a huge move for the days ahead probably 20 or 30 SPX handles or more. The initial direction of the squeeze appeared to be moving lower but the bulls reverse the course on Friday late-day and yesterday to create a squeeze move to the upside, but, this morning the S&P futures are -2 showing that the decision on direction is not yet firm. The tight standard deviation bands are keeping everyone guessing; the direction of the big move should expose itself today or tomorrow as price commits strongly one way or the other. If XLF is above 21.83, markets are going higher and bulls win. If XLF loses 21.83 and moves lower, markets are going to sell off and the squeeze move will be down.

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