Tuesday, July 8, 2014

Keystone's Midday Market Action 7/8/14; Q2 Earnings Season Kicks Off with AA

The bears are growling again but do not have a whole lot of life as yet even though the indexes are down sharply with the Dow down triple digits. Keybot the Quant remains long and the algo is tracking commodities, volatility and retail with interest. The GTX is remaining under the 5029 bull-bear line which creates a top in the markets. Watch VIX 13.15 as a bull-bear line in the sand. VIX is rising today up +20% this week to 12.35 but remains 80 cents under the bull-bear line creating market lift. Thus, the bulls need GTX above 5029 to restart the market upside. The bears need VIX above 13.15 or they got nothing. RTH 59.33 is another bull-bear line in the sand and may help the bears before volatility. If either VIX moves above 13.15, or the RTH under 59.33, Keybot will likely flip short.

The bears needed to push under SPX 1975 to accelerate the downside today; and they did. The 10-year yield failed at the 2.60% pivot point (20-day MA), tentatively, so a move to 2.50% is in play. The dollar/yen drops to 101.56 (stronger yen) nearing the dangerous 101.0-101.5 area the baseline of the descending triangle pattern highlighted in this morning's charts. The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead. The SPX remains above the 200 EMA at 1945 on the SPX 60-minute chart signaling continued bullishness for the hours and days ahead. Either the 8/34 cross will reverse to the bull side to agree with the 200 EMA cross, or, stocks will continue to weaken with SPX losing the 200 EMA at 1945-ish signaling lots of trouble ahead with another 20 or 30 SPX handles lower at a minimum.

Note Added 11:04 AM:  TRIN is 1.73 representing steady and increasing selling pressure as trader angst increases. TRIN spiked to 2 a short time ago. The TRIN is at or very close to indicating a near-term market bottom (with elevated TRIN numbers above 1.7, 2.0 and higher) that will allow a relief bounce the mirror image of the projected market sell off move that is occurring now due to the uber low 0.5-ish TRIN number. If equities recover in tomorrow's session that may set up a short-the-rallies opportunity since Thursday is typically a down day. Seasonality-wise, the date in July this Thursday is a down market day about 70% of the time or more. The full moon is Saturday and markets are typically bullish through the full moon so perhaps a Friday low leads to a Monday high. Watch GTX 5029, VIX 13.15 and RTH 59.33. Watch the important 101.0-101.5 dollar/yen last chance support and the 10-year yield 20-day MA at 2.60%. A lower 10-year yield is in concert with lower stock prices and higher yields with higher stock prices.

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