Friday, July 18, 2014

Keystone's Midday Market Action 7/18/14; Israel Invades Gaza; Ukraine Airplane Crash Aftermath; Consumer Sentiment

Retail stocks are the key today since Keybot the Quant algorithm identifies RTH 59.46 as the key metric affecting market direction. Whichever way the RTH pivots from 59.46, so do the markets, and the RTH runs higher now at 59.52 providing a nod to the market bulls sending equities higher. The TRIN is down to 0.71 which will guarantee bull victory today if it stays under one. Now that the bulls take back RTH 59.46 into their camp, VIX 13.06 is the next target, which gives way to the downside (bullish) as this missive is typed. VIX is now at 13.00. Watch the VIX closely since the drop under 13.06 will create a lot more bull fuel and a stronger relief rally.

The SPX bounces immediately so the 200 EMA cross on the 60-minute will not turn negative, at least in the early going, so the bulls sit back and light a stoagie (refernce the previous chart). Markets should pivot at 10 AM with Consumer Sentiment and Leading Indicators so wait for this to pass before seeing how markets settle in for the day. RTH above 59.46, and VIX under 13.06, with the low 0.7 TRIN, says the bulls easily win today. Can they keep it up?

Note Added 9:50 AM: RTH 59.56 (above the 59.46 bull-bear line causing market bullishness). VIX 13.18 (above the 13.06 bull-bear line causing market bearishness). These two parameters are the rudder steering the market directional ship today. Monitor them closely so see which way the broad market will move. TRIN 0.77.

Note Added 9:54 AM: RTH 59.55. VIX 13.30. Sentiment hits in one minute.

Note Added 9:56 AM: Consumer Sentiment is 81.3 the weakest since spring time. Dollar/yen 101.37. RTH 59.56. VIX 13.34. TRIN 0.79.

Note Added 10:00 AM: Leading indicators are up +0.3% missing the +0.5% estimate. RTH 59.58 so the bulls latch on to the retail stocks to keep equities buoyant into the weekend. VIX is 13.32 so the bears latch on to volatility to maintain downward pressure in equities. One of these two characters will flinch and tell you the market direction answer. If they remain status quo, then equities simply stagger sideways into Happy Hour.

Note Added 2:34 PM: The VIX collapses under 13.06 and bears fold like a cheap suit. Keybot the Quant algo remains short but will likely flip long if the SPX moves above 1982.63. The SPX is currently printing 1978 and rising at the highs of the day. VIX is at 12.15. TRIN 1.04 interestingly moving above one today in the bear camp but the low volatility is powerful and forces equities to move higher.

Note Added 2:39 PM: The 8 MA just moved above the 34 MA on the SPX 30-minute chart which which gives the nod to the bulls for the hours ahead. The cross is only occurring by pennies thus far so if the bears want to prevent the 8/34 cross or at least make it very short-lived, the bears must push the SPX lower immediately. If the bulls keep pushing higher they may push higher into and through early next week. There is lots of time remaining in today's trading. The next one-half hour or so will tell a lot. If bears plan on pushing back they have to do it now. VIX 12.22. TRIN 1.03.

Note Added 3:39 PM:  The drama continues. SPX 1978. VIX 12.21. TRIN 1.12Bulls still have time to push higher. The TRIN is maintaining a ceiling on the SPX. Keystone bot QID, a 2x inverse ETF that goes up if tech (Nadaq) goes down, opening a new long position. QID has attractive positive divergence on weekly and daily charts. It may need more time to base but it will simply be added to moving forward. 

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