Keystone's Evening Nightcap 6-14-11

POMO pumps were targeting copper today, knowing that if copper could be buoyed, the broad markets would follow this leader. To Keystone’s amazement, copper was a smidge away from turning the markets bullish for a more substantial basis for the days ahead but instead, copper fell short of the goal set by Keystone’s proprietary algorithm, by a penny, truly amazing.  Thus, the market bears remain in business, at least overnight tonight, so do not get caught up in today’s hoopla.

For Wednesday's session,the market bulls will be looking for confirmation of today's euphoria. Any green on the indexes will make the bulls happy.  If the bulls can drive the SPX above 1292.50, consider it confirmed, the markets will drive higher thru 1293, 1295, towards 1298, even with sights at 1307.  If you see even the slightest buoyancy in copper tomorrow, you will know that the market bulls mean business, and the indexes will go higher.

Keystone cannot remember when the markets exhibited such odd behavior.  As measured by the algorithm, every major sector is bearish, except for utilities.  With this back drop, the Dow Industrials posts a triple digit move up.  Tomorrow will tell a lot.

The market bears need to get the SPX under 1284, if so further weakness should develop.  Then, the bears need to get down to 1272, to reinitiate the major selling, do not rule this out.  We have seen before how markets make large moves one way, only to erase the move the next day.

The VIX stayed above 17.62 all day favoring the bears, closing at 18.26.  SPX:VIX ratio closed at 70.5, back above the critical 68 level so the sell the rally mode was placed on hold.  Once the ratio falls under 68 again, perhaps tomorrow, the Dow Industrials will fall between 100 and 300 points.

The NYA went back above the 40 week MA negating the secular bear market call from yesterday.  This type of behavior is expected.  Continue to watch this relationship.

Fascinating market move today with such a large gain when the sectors are garbage for the most part.  Watch copper. CPI, Empire Manufacturing and Oil Inventories will set the tone tomorrow.

Perhaps today's odd behavior was simply in tune with the full moon? The Bradley turn window is open so a trend change is targeted currently. Tomorrow we will find out if the move up today is confirmed, or, if it turns out to be an illusion.

Happy Flag Day all.  We honor and salute all veterans and the United States of America.