Keybot the Quant Turns Bullish

On Thursday, Keystone's algorithm (status always posted in left margin) moved to the short side, and a short time ago Keybot the Quant moved back to the long side at SPX 1412.  Typically, the model would have went long after the open but the programming rules held it back but after 2 PM things fell into place.  Obviously, the entire rally today is due to Chairman Bernanke. Stay on guard since the markets remain highly unstable.

More information at Keybot's site;
http://www.keybotthequant.blogspot.com

Keystone's Midday Market Action 3/26/12

Chairman Bernnake delivered a new batch of crack cocaine (quantitative easing) at 8 AM EST. As discussed on the weekend, any mention of QE3 would result in a rocket ride higher, and Bernanke came out with guns blazing.  He referenced an abnormal job recovery that may lead to structural economic problems moving forward and the 'Fed will remain accomodative' with quantitiative easing.  Futures were flat before his words, the dollar was up, after the magic words about further drugs and booze on the way, the futures markets sky rocketed higher, the dollar plummeted turning red as Bernanke beat the dollar relentlessly with a baseball bat, gold, oil, commodities, copper, which was key today, and of course equities markets, are all substantially higher on the money printing news.

Markets are moving up on light volume in recent days and the Fed's easy money carries the broad indexes higher today.  There is a macro price to be paid in the months ahead for the Fed's actions but in the short term, today, the bull party is now in full force.  The SPX punched up thru the 1399 no problem, then took out the 1403 and 1406 resistance levels, then 1410 with the 1413 R holding, for now.  The HOD thus far is 1412.06.  Copper and commodities are higher on the weaker dollar.  Utilities, UTIL, are climbing as well today printing 455 currently well above the 446 danger level for this week.

Tech is leading the way higher with the Nasdaq up more than the SPX so this provides street cred to the bull move today. Interestingly, AAPL is flatish.  Thus, call this the Bernanke EOQ1 Rally, he obviously wants to elevate the broad indexes at all costs.  His intent is to create the wealth effect among folks so they can help kick the economy into gear thru increased spending since they feel better and better about the economy.  The obscene move higher today, however, purely due to the leader of the Federal Reserve Bank willing to drop money from helicopters, is hardly encouraging moving forward. At least Bernanke is consistent, often mentioning the Great Depression and the mistake made was the Fed not acting strong enough back then.

To add to the drama, Keystone's algorithm should have flipped back to the long side and took the whipsaw loss, but, oddly enough, what isn't these days?, the quant probably wants to see the SPX over 1412 today to commit back to the long side, and instead continues to idle along on the short side.  So watch SPX 1412 closely today to see if the bulls continue to drive higher, if so, Keybot the Quant will likely take rejoining the bulls. The SPX is at 1411 only one point under. With tech leading today the markets would be expected to float upwards.

European Bond Yields 3/26/12

Italy's leader Monti warns that Spain could reeignite the European debt crisis.  Nothing like throwing stones at the glass house next door. Finland warns of Spain's problems as well.  Euro leaders meet in Copenhagen this week.  There is mention of an 'exit strategy' this morning which is laughable.  Europe is folowing the same game plan as the States. Pump money into the system, hope the money gains velocity thru lending, kick the can down the road, and at the same time try to instill confidence in people so they can slowly reenter and support markets. Time is the main key, the farther you can move down the road the closer you get to solving the debt problems. Thus, any mention of exit strategy is ridiculous from a practical standpoint at this time, but it is likely a simple magician's trick to try and instill confidence in the Eurozone.

10-Year Bond Yields:
Greece 20.36%
Portugal 12.58%
Hungary 8.93%
Spain 5.31%
Italy 5.00%
Belgium 3.32%
France 2.92%
Netherlands 2.45%
U.K. 2.26%
U.S. 2.25%
Germany 1.87%

Greece yield is up and over 20% gaining almost 250 basis points since Thursday. Portugal is moving sideways and their yield curve remains inverted from the 5's thru the 30's indicating recession ahead.  Hungary steadily climbs higher day after day.  Yields are blowing out higher; perhaps a bell will ring when it hits 9%?  Spain's plans for austerity are hitting a snag today in addition to the slaps in the face from Italy and Finland.  Spain 10-year yield is moving sideways, actually lower than Friday, now at 5.31%.  Italy sits directly on top of the 5% level. France is below 3% the first time in a week.

Money continues to seek a safe haven in Germany with its yield another tick lower to 1.87% as its price rises. Note that the U.K. and U.S. are at the same yield level at 2.25%-ish.  Germany and France auctions are going off this morning.  Portugal will need a second bailout, Greece a third, and Ireland will likely need additional help as well.  Spain has raised about 40% of its borrowing this year, which is a positive, but, on the glass half-empty side, they worry about markets closing their open arms for the remaining 60% this year. An optimistic note for Portugal is that their unions are working closely with the government to find solutions, which does not appear the case in Spain.

Keystone's Key Events and Market Movers Week of 3/26/12

© 2012 The Keystone Speculator™. All Rights Reserved. No part of this document may be copied although links to this site are encouraged.

Keystone presents the following underlying market currents, sometimes subtle, sometimes turbulent, that move global markets in real time.  The key dates and times below typically correspond to market pivot points.

Summary for the New Trading Week Ahead:

Last week was the week the bears needed to come to play, and they did. This week we find out if they got game, or not.  On the esoteric side, a major Bradley turn occurred 3/16/12, so the window for a major market turn has closed, and this week we see if the model identified a significant market top, or not.  Markets are typically weak moving into the new moon (3/22/12) and this accurately shows market direction once again.  Markets are typically bullish into the full moon (next full moon is 4/6/12).

For this week, the last week of the month, EOM, and last week of the quarter, EOQ1, window dressing may come into play.  Keystone says ‘may’ because he cannot remember any other time where window dressing was so widely publicized ahead of time.  Window dressing is where funds will buy the stocks that have performed during the quarter to make sure they are listed on the quarterly statements to make clients happy.  Thus, if a fund missed the boat on a stock, it will tend to buy at least some of it as the month or quarter comes to a close, the quarterly action is much more important, and this buying tends to elevate the broad indexes.  Oddly, AAPL is already owned by 90% or more of fund and money managers so if they wanted it they would already have it and other funds that have avoided it surely will not buy it now.  At the same time, when everyone expects an event (window dressing) it has a way of not happening; the markets always strive to hurt the maximum amount of traders. So if you believe that too many traders are already expecting window dressing, maybe you try to front run the others since you feel you are smarter than the average bear (reference to Yogi Bear). Perhaps that was the reason behind the Friday buoyancy?  At any rate, we will find out tomorrow if markets are bullish showing that indeed window dressing is occurring.  Window dressing may turn out to be a non-even this week and that would be very evident if Monday is weak.

Note the Fed talk appearing in the schedule this week, you would think they were paid by the speech.  Interestingly, the Fed Indexes are released as well that will provide a gauge on manufacturing.  Much hoopla has been made recently about the bump higher in manufacturing and how it signals an all clear for the economy.  Keystone sees the manufacturing gains only in select industries such as shale gas support, or automotive areas as companies built inventories. This week tells the story. Traders want to hear that the dealer (Fed) is coming to town with more crack cocaine (quantitative easing). If a couple of the Fed heads, and especially Chairman Bernanke whisper the ‘accommodation’ sweet nothings in traders’ ears, as well as slipping in an occasional ‘QE3 on the table’, the markets will be off and running higher perhaps towards the SPX 1425 gap fill.  However, if the QE talk is muffled, and by mid week all that is heard is crickets with hints that the money printing presses may be down for maintenance, the markets will sell off strongly. Markets have rallied purely off the crack cocaine easy money, QE2, Operation Twist, promising low rates thru 2014, LTRO1 and LTRO2 by the ECB, etc…; the junkies (traders) already went thru that batch of drugs but now need more.

The politicians will be mouthing off and the U.S. Healthcare mess will start to be sorted out by the courts.  Markets need this like they need a hole in their head. Markets are bearish when Congress is in session and considering all the political hot air on tap, this casts negativity on trading.

Earnings are all but over, after all we are moving into Q2 next week, but some notables remain.  LEN earnings have taken on extreme importance in light of the Friday KBH debacle. Bullish traders say housing is recovering and the KBH somber news as a one-off. If LEN disappoints, housing is in for some damage and this will ripple thru the markets since housing is such a huge part of the economic foundation.  FDO and BBY are important to keep gauging consumer spending.  Keystone continues to short retail but that has been a fool’s errand so far. More importantly, listen for earnings warnings as companies enter the confessional and lower their estimates or guidance before the numbers hit over the next couple months.  Traders should already realize that earnings are dropping, not raising, and as Larry Kudlow opines each evening on CNBC, ‘earnings are the Mother’s milk for stocks’. A year ago earnings estimates were running about $112 for the S&P, now they are about $100. A 14 multiple places the SPX at 100x14 = 1400, right where it sits.  Attaching lower multiples, like 13 or 12, yield SPX forecasts of 1300 and 1200 respectively. Considering the bullish euphoria currently, very few are considering these lower numbers.

The European debt crisis drama continues with Greece, Portugal, Hungary, Spain and Italy all remaining a concern.  Portugal will need a second bailout.  The yields, as shown by the early morning posts during the week on this site, show yields starting to blow out again to the upside. Perhaps this week the lid blows off the boiling European pot again.

Note how the markets moved in sync on Friday with the same old asset relationship in place for a long time, despite some recent minor blips; dollar weaker = euro stronger = gold, copper, oil, commodities and equities stronger.  A stronger dollar will drop copper and commodities lower, as well as equities, and reward market bears. Bulls want to see the weaker dollar remain in place to allow further market upside.

On Thursday, Keybot the Quant, Keystone’s algorithm, moved to the short side so in tomorrow’s trading we find out if a whipsaw occurs, or not.  The key overnight tonight is the dollar and copper.  If the dollar is stronger, copper will be weaker and the markets will sell off.  If the dollar is weaker, copper will be stronger, and Keybot will likely flip back to the long side. If JJC moves higher than the current price of 48.83 and the SPX moves over 1400, Keybot will likely be back on the long side.

Keystone considers the current broad market action to be a rolling top and has commented often about the instability existing in the markets.   What better proof of this last week with the TVIX volatility derivative failure, then the Iranian export news that launched oil, now holding a 10 to 20 dollar premium due to Middle East turmoil, the AAPL trading halt, and the BATS Exchange mini-flash crash.  These are not your grandfather’s markets folks.  This is the Wild West with the casino wheel spinning and it is every man, er HFT robot, for himself.

Continue watching AAPL since as AAPL goes, so goes the markets.  As Keystone pointed out last week, the Apple daily chart wants a smack down.  The weekly AAPL chart maintains momo, however, so price will want to come back up after the sell off (down up down move). The projection is that for every 10 dollar down move in Apple, the broad indexes will probably lose 1%, thus, a 70 drop in AAPL price will probably correlate to a market pull back of 7%. From the uber bullish euphoria that remains in the markets, very few expect any pull back that would exceed a couple percent. Remember, however, the markets strive to hurt the maximum amount of traders and it would be as easy as driving AAPL lower, especially during a week where joyous window dressing is expected.

Watch the Nasdaq versus S&P 500 percentage moves in real-time. If the Nasdaq 100 and Nasdaq Composite start to lag the broad market, the SPX, that will show tech running out of gas and thus affect the broad markets negatively. Friday’s action showed AAPL slightly propping up tech which helped prop up the markets once again.  Tech leads overall market direction so AAPL is the markets.  Traders enjoying the technology rally will likely take profits moving forward. A pull back in AAPL will negatively impact the tech sector, Nasdaq, and the broad markets, as well as the 90% of fund and money managers that own the stock.  Bullish traders enjoyed the parabolic ride up in Apple but will not enjoy the topping and rolling over action ahead.

Market bulls have made serious gains in the broad markets in 2012, overtaking the moving average lines as well as other key levels indicating a return to secular bull markets.  AAPL blow-out earnings in mid-January launched the indexes as well as the quantitative easing from the Fed, the ECB and others. The bulls are in good shape as long as they stay above SPX 1300 and NYA 7700.

Copper will dictate Monday’s start; if the dollar is higher, copper lower, the down move in the markets will continue.  If the dollar is lower, copper is higher, the market bulls will push the SPX up and over 1400 and back up to test 1403 and 1406.

Key Dates and Times for the Week Ahead:

·         Monday, 3/26/12: Watch for window dressing (market buoyancy) this week. The European debt crisis drama continues; Greece, Portugal, Hungary, Spain and Italy all remain at risk. Ongoing political rhetoric, Congress in session, and now the start of hearings on the constitutionality of President Obama’s Healthcare Program are market negatives since they lessen trader confidence moving forward. Listen for any China news since this impacts copper and commodities markets which will cause the equities markets to move in the same direction. China PMI is targeted after the week ends.  Fed’s Plosser speaks 7:30 AM.  Chairman Bernanke speaks 8 AM. Chicago Fed Index 8:30 AM. Pending Home Sales 10 AM. Dallas Fed Survey 10:30 AM. Earnings: APP, APOL, CALM.

·         Tuesday, 3/27/12: Fed’s Rosengren speaks.  S&P Case-Shiller House Price Index 9 AM.  Consumer Confidence 10 AM. Richmond Fed Index 10 AM.  Chairman Bernanke speaks 12:45 PM. 2-Year Note Auction 1 PM.  Earnings: LEN, WAG, ZZ.

·         Wednesday, 3/28/12: Mortgage Purchase Applications 7 AM. Durable Goods Orders 8:30 AM. Oil Inventories 10:30 AM. 5-Year Note Auction 1 PM. Fed’s Bullard speaks 9 PM. Earnings: FDO, FUL, PAYX, RHT.

·         Thursday, 3/29/12: GDP and Jobless Claims 8:30 AM.  Natty Inventories 10:30 AM. Kansas City Fed Index 11 AM. Fed’s Plosser speaks 1 PM.  7-Year Note Auction 1 PM. Farm Prices 3 PM. Fed Balance Sheet and Money Supply 4:30 PM. Fed’s Lacker speaks 6:45 PM.  Earnings: BBY, FINL, JOSB, SHAW, SORL, TXI, TIBX.

·         Friday, 3/30/12: Informal meeting of EU finance ministers in Copenhagen. EOM. EOQ1.  Personal Income and Outlays 8:30 AM. Chicago PMI 9:45 AM. Consumer Sentiment 9:55 AM.  Earnings: CLRO, TOPS.

·         Saturday, 3/31/12: China PMI.

·         Monday, 4/2/12: ISM Manufacturing Index 10 AM.

·         Tuesday, 4/3/12: FOMC Minutes 2 PM.

·         Friday, 4/6/12:  U.S. Markets are Closed in Observance of Good Friday. Jobs Report 8:30 AM.

SPX S/R Week of 3/26/12

SPX price closed below the 10-day MA on Friday. The 1389 support level failed on Friday which should have ushered in further downside towards the 20-day MA but the big spike in oil price, caused by the lower Iranian export news, sent oil, commodities, gold and equities higher. A weaker dollar sends markets higher and a stronger dollar sends markets lower.

For Monday trading, watch the price of copper, if it moves up so will the markets, if copper moves down the markets move down.  Watch the Sunday night futures for the early tell. For the SPX starting at 1397, the bulls have an easier road ahead since only two points higher is needed, to move up and over 1399 (strong R), and that will ignite a strong push up for the bulls towards 1403 and 1406.  The market bears need to see the dollar stronger, copper weaker, and the SPX to move under 1387, if so, the broad markets will accelerate lower.

If the SPX touches 1400 on Monday, it is likely that Keystone's algorithm, Keybot the Quant, will flip back to the long side. 

·         1440 (5/19/08 Intraday High for 2008: 1440.24)

·         1427 (5/19/08 Closing High for 2008: 1426.63)

·         1425 (Gap Fill from 2008)

·         1424

·         1422

·         1419

·         1414

·         1413

·         1410

·         1406 (5/29/08 HOD)

·         1403

·         1401

·         Friday HOD 1399.18

·         1399

·         10-day MA 1397.61

·         Friday Close 1397.11

·         1394

·         1391

·         1389

·         Friday LOD 1386.87

·         1386

·         20-day MA 1381.12

·         1378

·         1372

·         1371

·         1370 (5/2/11 Intraday HOD for 2011: 1370.58)

·         1368

·         1366

·         1364 (4/29/11 Closing High for 2011: 1363.61)

Keystone's Trading Week in Review and Path Ahead 3/24/12

On 3/16/12, Friday, markets move up after the bell but the weaker than expected Consumer Sentiment and AAPL flirting in and out of negative territory the markets languish sideways.  The SPX finishes the week at 1403 and the Dow at 13233. Gold lost about fifty bucks this week to close at 1660.

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On 3/19/12, Monday, China home prices fall the most in one year’s time. LaGarde says the European crisis is not over and warns of too much optimism. At 8:30 AM, AAPL announces a dividend and stock buyback program.  The hope is that this move will allow dividend funds to now carry AAPL stock and support price moving forward. AAPL shares and the markets languish sideways.

On 3/20/12, Tuesday, BHP projects flat growth in China and iron ore prices to fall. This causes commodities and especially copper to fall during the session.  AAPL is weak, so the markets are weak, but in the afternoon, Apple turns green so the markets recover. A down day occurs for markets but only marginally well off the lows earlier in the day. Keystone’s SPXA150R Indicator drops under 90 indicating broad market selling ahead.

On 3/21/12, Wednesday, markets languish sideways with a lower bias, in a continued low volume funk, in the absence of any significant news events. BHI says the shift away from drilling and oil rigs will weaken the economy as their stock is hit hard. Chairman Bernanke warns that the European crisis in not over and this is not the time for complacency.

On 3/22/12, Thursday, market weakness continues thru the New Moon.  China, Eurozone, U.K., France and German manufacturing data are all weaker than expected sending overnight futures sharply lower.  Oprah’s OWN Network falters on low viewership. FDX earnings are in line with estimates but margins fall and guidance is lowered.  The broad indexes sell off and remain weak all day long with the SPX closing down 10 points and back under 1400. NKE earnings after the bell, however, are in line and encouraging. Chancellor Merkel is booed by a couple hundred protestors in Frankfurt.

On 3/22/12, Keystone’s proprietary trading algorithm, Keybot the Quant, turns bearish flipping to the short side at 10:51 AM EST at SPX 1392. Weakness in copper and commodities are the major cause of the market selling.

On 3/23/12, Friday, Asian and European markets languish sideways and lower. Basic materials and mining stocks are getting hammered.  Fed’s Bullard says that the U.S. economy may be at a turning point as the recovery continues.  Chairman Bernanke says higher household spending is needed to sustain growth, a formidable task with gasoline at $4 per gallon. Portugal, Hungary and Italy 10-year yields blow out to the upside indicating that the turmoil in Europe is increasing again. Germany 10-year yield plummets from 2.06% to 1.88% in 48 hours showing that money is seeking the perceived safer havens. KBH releases poor earnings which shocks traders and now places the projection of a recovery in the housing sector into substantial jeopardy.

On 3/23/12, markets are weak to start the day but recover as commodities and copper trade higher. Between 10 AM and 10:30 AM, Iran announces a drop in oil exports which causes oil prices to leap higher.  Oil, commodities, gold and stocks all move higher in sync.  The expected asset relationship that Keystone has discussed many time is in place; dollar down = euro up = oil up = gold up = stocks up. Just before 11 AM, AAPL trading is halted as a trade well below the current price is executed triggering circuit breakers. Apple trading resumes quickly as the focus shifts to the BATS Exchange, which was issuing an IPO of its own exchange of all things, which contributed to the crash of the exchange.  The IPO is now withdrawn. The problem resembled the May 2010 Flash Crash, albeit in a much smaller way.  It also shines a new spot light on HFT (high-frequency trading) as well as the reliability of smaller exchanges that rely on technology. In addition, the dark pools, which represent trading volume and liquidity not openly available to the public, will come under closer scrutiny moving forward.  After the dust settled on the wild trading day with the AAPL trading halt, the Iranian oil export data, and the mini-flash crash with BATS, stocks end the day logging the worst week of the year. The SPX closes at 1397 losing a half percent this week.  The Dow Industrials are down on the week but the tech strength continues to show with the Nasdaq Composite eeking out a gain for the week. Gold is up for the week recovering from recent losses.

On 3/23/12, the drama continues when news reports state that John Corzine, the shamed head of MF Global when it collapsed, gave ‘direct instructions’ to move $200 million from an MF Global customer account to remedy a $175 million overdraft problem that was hampering MF Global’s ability to buy and sell securities in its final days. The customer accounts are not to be touched as per federal regulations.  An email by Edith O-Brien, an assistant treasurer, states that the action was ‘per JC’s direct instructions’, obviously, JC is the initials of John Corzine.  This bombshell news blows the situation wide open since Corzine’s testimony before Congress may have contained falsehoods. The news potentially sets up what may be the most historic perp walk in financial history coming to a television near you.

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On 3/26/12, Monday, watch for window dressing this week although Keystone cannot remember a more publicized window dressing event ever.  Perhaps some of the late day Friday buoyancy was already front-running the anticipated window dressing for the quarter but if market buoyancy does not show early in the week markets could head for trouble. Listen for earnings warnings to gauge projections for Q1. Lowered earnings estimates will seriously dampen the bull rally.  Hearings begin in the States over the constitutionality of President Obama’s Healthcare Program, now reaching its 2-year anniversary. Lots of Fed talk in the new week ahead, especially the doves, so the money pumping talk may be prominent.  Quantitative easing is the support under the markets so as long as the Fed keeps dealing out the crack cocaine, the markets are happy. If QE is mentioned markets will move up, if there is an eerie silence with little or no mention of QE by the Fed heads, markets will sell off. Fed’s Plosser speaks. Chairman Bernanke speaks. Pending Home Sales.

On 3/27/12, Tuesday, Case-Shiller Housing Index.  Consumer Confidence. Chairman Bernanke speaks. 2-Year Note Auction.

On 3/28/12, Wednesday, Durable Goods Orders. Oil Inventories. 5-Year Note Auction. Fed’s Bullard speaks.

On 3/29/12, Thursday, GDP. Jobless Claims.  Natty Inventories. Fed’s Plosser speaks. 7-Year Note Auction. Fed’s Lacker speaks.

On 3/30/12, Friday, EOM, EOQ1. Personal Income and Outlays. Chicago PMI. Consumer Sentiment. China PMI.

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On 4/2/12, Monday, first day of Q2. ISM Manufacturing Index.

On 4/3/12, Tuesday, FOMC Minutes.

On 4/6/12, Good Friday holiday, U.S. markets are closed. Oddly, the Jobs Report is released today but U.S. traders will not be able to react until Monday, 4/9/12.

Keystone's Midday Market Action 3/23/12

The bulls wanted to rain on the bear parade this morning and got off to a great start bouncing CRB higher back into the bull camp.  The dollar is weaker so the bulls smile.  Copper, however, measured by the JJC, is now printing 48.35 remaining below Keystone's critical 48.80 level today, thus, the bears have strength.  Minutes ago, the CRB and oil spike wildly higher.  Iranian oil exports are falling so sanctions are tightening supply so price moves up, then the oil shorts jump in to add the short-covering rocket fuel to propel the oil price higher.  The markets remain highly erratic and unstable.

The housing data this week ends with New Home Sales that were not impressive; all the housing data this week can be summarized as slightly bearish.  KBH reported this morning and threw a wrench into the housing recovery works.  Great news was expected but instead KBH sees lackluster sales and cancellations increased. Housing is the foundation, figuratively and literally, of a strong economy, and the path forward is troubled with weaker housing data.

The SPX lost the 1389 level so lower numbers are expected today. The LOD thus far is 1386.87. A back kiss of the rupture at the 1389-1390 level is now printing. If the bears are successful, SPX will drop from here.  The bulls need to fight hard if they want to prevent the day from getting away from them.  SPX S/R is 1394, 1391, 1389, 1386, 1378, 1372 and strong support at 1371. A test of the 20-day MA at 1380.73 is likely moving forward.  Continue watching CRB 312.40, JJC 48.80 and the SPX S/R. JJC now coming up to 48.59. The bears are cruising.

Note Added 3/23/12 at 10:51 AM:  The bears could not defend the back kiss at 1389-ish, so the bulls press higher. The key today is JJC 48.80, that will tell you the story.  If JJC moves over 48.80, the HOD thus far 48.63, the bulls will muster some upside juice, if the JJC stays under 48.80, weakness will reenter the broad markets and send them lower, back down thru SPX 1389 and lower. Markets bulls are holding up due to volatility remaining low; when you see the down move in the markets with the spike up in volatilty that will signal trouble for markets. JJC now printing 48.76, here it is folks, four pennies away, either the bears spank it down now, or the bulls punch up thru, and the broad markets will follow along.

Note Added 3/23/12 at 10:59 AM: JJC printing 48.79, here it is, who is stronger bulls or bears? High drama that is now determining today's market outcome.

Note Added 3/23/12 at 11:01 AM:  Circuit breakers trigger for AAPL halting the stock. A trade supposedly went off at 342 which is an error.  Regardless, this type of thing displays the erratic and unstable nature of markets now. Hang on.  JJC punches up thru 48.80, see if the bulls can hold it for seven to ten minutes, or not. AAPL is trading again.

Note Added 3/23/12 at 12:22 PM:  The market shenanigans continue centered around the BATS Exchange. An alert on their website says open orders in the symbol range A - BFZZZ (think Apple, AAPL) will be cancelled at 12:40 PM and trading will resume for this symbol range at 12:50 PM. http://www.batstrading.com/alerts/  JJC remains above 48.80 for an hour now and note the buoyancy in the broad indexes.
  JJC now printing
Note Added 3/23/12 at 12:48 PM: JJC now printing 48.81, the bulls are hanging on by a fingernail.  The bears need to see JJC sub 48.80, if so, the broad markets will weaken substantially again.

Note Added 3/23/12 at 1:03 PM: JJC printing 48.84........high drama today especially with the BATS problems affecting AAPL stock, drastic bounce in oil on Iranian lower exports and copper theatrics. Keystone's algo, Keybot the Quant, is in a mode to go long currently but is held back due to internal programming rules. The quant probably wants to see the SPX above 1402 before recommitting to the long side, otherwise, it will likely remain short.  Of course, if JJC fails 48.80, that will confirm the short side moving forward. Note that tech (Nasdaq) is leading to the downside so the upside in the markets should be limited.

Note Added 3/23/12 at 3:30 PM: One-half hour of trading remaining and JJC is printing 48.83 barely hanging on to the bull side. SPX HOD is 1399.18 so far today, now printing 1398.  The beat goes on.  Looks like the fight for JJC 48.80 will continue into next week. Utilities are up today so the bulls are keeping that sector propped up.  VIX is at 15 allowing complacency to rule into the weekend. Traders continue to fully believe in the bull rally. JJC remains at 48.83, bears too weak to push back under 48.80, and bulls too weak to take it higher, both sides must be looking forward to happy hour.

European Bond Yields 3/23/12

All the countries in the first group below see a bump higher in yields over the last day, France is moving flat.  The countries in the second group are the perceived safer havens that all see a bump lower in yields over the last day.

10-Year Yield Summary:
Greece 19.78%
Portugal 12.64%
Hungary 8.88%
Spain 5.52%
Italy 5.14%
Belgium 3.39%
France 3.00%

Netherlands 2.47%
U.K. 2.29%
U.S. 2.26%
Germany 1.88%

Note the joke that is Greece, moving 180 basis points since yesterday from 18.00% to 19.78%. Portugal jumps 14 bips since yesterday.  This week the ECB must have been intervening to keep a handle on Portugal but the lid just blew off the boiling pot again. Portugal obviously will need another bailout soon. Hungary continues to rise but no one pays attention, perhaps they will when it moves over 9%? Spain is now over the 5.5% level and looking at higher targets. 

Italy jumped 8 bips since yesterday now comfortably back above the five level at 5.14%. Italy needs to revitalize their labor markets; the youth unemployment is about 30%. Yields are expected to continue higher as problems persist. Portugal, Hungary and Italy are the three that appear most troubling over the last day.  France flat lines staying above that 3% wishing that it could join the cool kids, the perceived safe havens in the lower group, but that remains highly unlikely. Germany receives a huge move down from 2.06% to now under 1.90% in the last 48 hours. Money obviously flowing strongly into Germany.  Note how the U.K. and U.S. are right on top of each other.  The problems in Euroland are far from over and appear to be worsening again.

Keystone's Evening Nightcap 3/22/12

Short and sweet tonight so Keystone can get some beauty sleep although unlimited hours of sleep will likely not result in an improvement. Quite a day today, the market bears came to play and sent markets lower with the stronger dollar which slapped copper, then commodities as the day moved along.  Utilities, UTIL, remain above 447 this week so they are currently not breaking down.

For Friday, the bears will be on cruise control as long as JJC stays under 48.80 and CRB stays under 312.40. The CRB is on the bear side only by pennies so focus on that one first thing in the morning. In a nutshell simply watch the dollar since a weaker dollar will bounce JJC and CRB but a stronger dollar will slap them harder.  For the SPX tomorrow, starting at 1393, the bears are favored, and will accelerate the downside if the 1389 handle is lost. Bears would then likely push lower to test the 20-day MA at 1379.55. The bulls need to retrace today's entire move to reignite the upside, highly unlikely, although not impossible, but the bulls will simply focus more attention on creating a weaker dollar so JJC and CRB will run higher and ruin the bearish fun.

Tomorrow we find out if Keystone's algo, Keybot the Quant, whipsaws, or not. For a general idea of what the algorithm is currently scanning, if CRB moves above 312.40, and JJC moves above 48.80, and the SPX moves above 1400, the quant may move back to the bull side, otherwise, the bears are favored.

SPX Daily Chart Showing Keybot the Quant Algorithm Turns Bearish from 3/22/12

3/22/12: Keybot the Quant flipped to the short side at 10:51 AM EST at SPX 1392; for the year thus far SPX Benchmark is up 10.7%; Keybot algo is up 5.2%; Keybot actual trading is up 6.8%. Stay on guard for a whipsaw. Watch JJC 49.80, CRB 312.50, UTIL 447.
3/8/12: Keybot the Quant flipped to the long side at 12:04 PM at SPX 1364; whipsaw occurs; for the year thus far SPX Benchmark is up 8.4%; Keybot algo is up 3.1%; Keybot actual trading is up 5.8%. Stay on guard for a whipsaw.
3/6/12: Keybot the Quant flipped to the short side at 12:18 PM at SPX 1343; for the year thus far SPX Benchmark is up 6.8%; Keybot algo is up 4.7%; Keybot actual trading is up 7.4%. Stay on guard for a whipsaw.
2/16/12: Keybot the Quant flipped to the long side at 1:10 PM at SPX 1356; whipsaw occurs; for the year thus far SPX Benchmark is up 7.8%; Keybot algo is up 5.7%; Keybot actual trading is up 8.2%. Stay on guard for a whipsaw.
2/14/12: Keybot the Quant flipped to the short side at 2:30 PM at SPX 1342; for the year thus far SPX Benchmark is up 6.7%; Keybot algo is up 6.7%; Keybot actual trading is up 10.2%. Stay on guard for a whipsaw.
1/1/12: The new year begins. For 2011, the SPX Benchmark is flat finishing up 0%; Keybot algo finished the year up 33%; Keybot actual trading ended the year up 37%. Keybot begins 2012 remaining long. The new year begins at SPX 1258.
12/20/11: Keybot the Quant flipped to the long side at 2:49 PM at SPX 1240; for the year thus far SPX Benchmark is down 1.4%; Keybot algo is up 31.2%; Keybot actual trading is up 35.5%. Stay on guard for a whipsaw.
12/12/11: Keybot the Quant flipped to the short side at 10:25 AM at SPX 1234; for the year thus far SPX Benchmark is down 1.9%; Keybot algo is up 31.7%; Keybot actual trading is up 37.0%. Stay on guard for a whipsaw.