Keystone's Midday Market Action 10-24-11

Since the Dow Industrials turned positive for the year last Friday, the SPX must want to follow. The SPX began the year at 1258 and the last print is 1254, only a few bucks away.  The market bulls are receiving their strength from the utilities, semiconductors, retail, financials and lower volatility. The commodities continue to create a drag on the indexes despite recent buoyancy in copper and the CRB.

For the SPX, the 1240, 1242 and 1247 resistance all got blown out to the upside today. A fight occurred at 1249 but that gave way opening up the ride to test 1252-1253, the pre-Lehman bankruptcy number back in 2008.  The starting year number is 1257.64.

Lower volatility is causing this latest push upwards today. As long as the VIX stays under 29.86, and is now actually printing lows of the day at 29.5-ish, the market bulls are having a party. Next resistance is the starting year number at SPX 1258 with support at 1252. Stay on guard, the markets can reverse back down just as fast as they jumped on Thursday--and this time the markets already know about the quantitative easing talk from the Fed.

SPX support and resistance:

·        1268

·        1262

·        1259

·        1258 (1257.64 is the starting number for 2011)

·        1257 (3/16/11)

·        1252 (9/14/08 pre-LEH bk)

·        1249 (LOD 3/16/11; failure at this level 8/4/11)

·        1247

·        1242

·        1240

·        1235 (12/15/10; also HOD 12/7/10 large volume)

·        1233 (LOD 12/16/10)

Note Added 10/24/11 at 1 PM: Watch SPX 150 day MA, this moving average slopes down in bearish markets, like now, and slopes up in bullish markets.  The last three days show the 150 day MA printing 1265.98, 1265.56, 1256.16. See how the numbers continue slightly lower each day verifying a downward slope for the 150 day moving average? The current last print as of this writing is 1264.88, thus, today would continue the downward sloping trend. If the 150 day MA revereses and starts to print higher numbers each day showing that the slope is heading positively again, then the bulls will really have something to celebrate. If the current down trend stays in place for the 150 day MA, then the secular bears are maintaining underlying control of the indexes.

Note Added 10/24/11 at 2 PM:  The markets are rallying due to more Fed quantitative easing talk. The Fed's Dudley is now talking up QE3, thus, the SPX jumps and is now assaulting the starting number for the year at 1257.64. Think of the letters 'qe' as rocket fuel pumping the markets currently, ever since the Fed first announced qe news and saved the indexes last Thursday at lunch time.