Keystone's Market Action 6-14-11

China inflation numbers were elevated and they raised reserve requirements.  Why did the markets perceive this as good news?  Simply, a rate hike was expected on the news but instead they raised reserve requirements.  This probably pushes off the rate hike for a few more days.

NFIB Biz Sentiment was gloomy as it has been lately, this moved futures a bit lower but after retail sales and PPI hit, the markets jumped up.  After the opening bell, the NYA moved back above its 40 week MA, so the secular bull market was back in vogue again after yesterday’s move into a secular bear occurred.  The SPX bounced at the open and is in a fight for 1286 resistance as pointed out in prior blog posts.  Reference Keystone’s SPX S/R levels. 1286 is the most important S/R level between 1258 and 1298, so take this level very seriously. 1289 is next, then 1293, but watch the 1286 level in relation to today’s close.

Copper is reacting to lower supply and higher demand news, making a run higher today.  Keystone’s proprietary algorithm is scanning the 414-415 level for copper.  As long as copper stays under here, the market bears have game.  If copper busts up thru 415, the broad markets are going to run higher and it may be sustainable for a few days time.  At this writing, over the last few minutes, copper is oscillating from 413.7 to 414.8

Biz Inventories at 10 AM matched expectations and were a non-event.  The 4-week bill auction is at 11:30 AM.  BBY earnings beat on top and bottom lines helping the index’s gain strength and bolstering the overall positivity.

Keystone’s SPX:VIX Ratio Indicator moved back above the 68 level to a 71 handle so the bull-bear struggle continues.  The ratio now favors the bulls again unless it moves back below 68.  The SPX is doing the heavy lifting since the VIX remains elevated fighting around the 18 level.  The VIX favors the bears unless it falls under 17.62, now at 18 on the dot.

Market bears are holding on by their fingernails currently. The SPX:VIX ratio under 68 tells you to short the rallies but now that it has regained that level, all bets are off for now.  Watch SPX 1289 resistance and especially 1286 today.  Whichever side the SPX closes above or below 1286 will tell a lot at 4 PM.  Watch copper like a hawk, the broad markets will move the way copper moves today.