Tuesday, May 20, 2014

Keystone's Morning Wake-Up and Midday Market Action 5/20/14; HD, SPLS, DKS; DRYS, CRM

Keybot the Quant remains short but the algo is in position to go long. If the SPX prints above 1886 and remains above, Keybot will likely flip long. S&P futures are flat to lower shortly before the opening bell. For the SPX starting at 1885, the bulls will accelerate higher with the move above 1886. The bears need to push under 1873 to accelerate the downside. A move through 1874-1885 is sideways action for today.

The key market directional drivers currently are financials and retail. Retail is taking the pipe this morning with weak earnings from HD, SPLS, DKS and TJX. Watch XLF 21.83. Yesterday's drama will continue. If XLF remains above 21.83 (now at 21.85 creating bullishness), the markets move higher and bulls win. If the XLF drops under 21.83, the bears win and markets will sell off today. XLF is trading at 21.84-21.85 pre-market so despite the weaker futures, the bulls have come to play today and are already fighting to stay above XLF 21.83 since it holds the key.

Note Added 9:51 AM: The XLF collapses through 21.83 creating market negativity. SPX 1879. So the bears beat back the bulls to begin the day. The 1878 level is strong support (scroll back to study S/R) so the bears will mean business if they push under but if the 1878 holds, the bulls can easily mount a comeback. The 20-day MA is 1879.70 so pay attention to this number to see who is winning. Keep watching XLF 21.83. Bears are fine as long as the XLF remains under 21.83. TRIN is 1.06 providing the bears a slight advantage. The beat goes on. The bulls need to send XLF back above 21.83 and the SPX above 1886 to place Keybot in position to want to go long.

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