Keystone's Midday Market Action 10-10-11

The utes, UTIL, have not yet attained the 439 level which favors the market bears. The offsetting factor today is the launch in semiconductors out of the gate, the SOX now at 368, well above the 361 level that Keystone's algo is focused on. So the market bulls have two feathers in their cap, semiconductors and retail, and are trying to attain the UTIL 439 feather as well. The market bears continue to have commmodities, copper, financials, utilities and the SPX:VIX ratio in their favor.

The SPX attained 1171 in the early trade so the buyers were expected, and they showed up, launching the SPX seveal additional handles quickly, the SPX now printing 1187. The play book to follow depends on if you are a bull or a bear.

If you are bullish, you want to see that UTIL print 439 (now 437.43) and higher and the SPX:VIX ratio to get up and over 35 (now at 34.5). If so, the upside rally is verified and the bulls will run a lot higher. If you are market bearish, you want to see UTIL remain under 439 and the SPX:VIX ratio remain under 35, and for the semiconductors to fall back under 361. Markets will be at a flat stalemate until one of these indicators flip.

Note Added 10/10/11 at 10:36 AM EST:  Note the NYAD printing +2600!! This extremely high uber optimistic number is consistent with a reversal move coming (market downside). UTIL just climbed to 438.20 but still not enough oomph for 439, keep watching. SPX:VIX 34.8-34.9, only a hair from 35 now, can it make the last push to show that the recovery rally is real and a large up day will remain for today (if the ratio moves and stays above 35)?