Keystone's Midday Market Action 10-3-11

BAC stock is tumbling, down 4% currently with the BAC site experiencing slowness. Perhaps that $5 per month gouging surcharge placed on deposit holders has the depositors voting with their feet? MS also tumbling over 4% while the defenders say all is fine. Denial is a sure sign of trouble.

SPX just lost support at 1119, now on the verge of completely losing the descending triangle baselines as described with the SPX chart a few blog posts back. Retail and utilities remain the key.  RTH now well below the 103.60 level, calculated by Keystone's algo, with a 101 handle, firmly bearish for markets.  UTIL, now at 428.65 is only four and one-half points away from the critical 424 level for this week. As long as UTIL stays above 424, the market bulls will prevent any significant selling in the broad markets. If UTIL loses 424 any time this week, the bottom will fall out and the broad markets will drop sharply lower.

SPX support and resistance in play is 1131, 1124, 1121, 1119, 1115, 1104, 1101, 1090.

Note Added 10/3/11 at 1:20 PM EST: UTIL now printing 427.19, just had a 426 handle minutes ago, this is becoming serious.  The fate of the markets are held in balance by the UTIL 424 level. The market bulls are hanging on by the skin of their teeth--as long as they maintain 424 or higher.

Note Added 10/3/11 at 1:48 PM EST: UTIL now printing 425.60, slipping away. Bulls are hanging in there if they maintain 424, now only a point and one-half away, but if they lose 424, they lose the markets. The UTIL 424 level will probably correspond to the SPX 1101, August's low. Keep watching. High drama. Note that the Nasdaq percent drop is less than the S&P so this gives the market bulls a sliver of hope that they can hold on today.

Note Added 10/3/11 at 2:30 PM EST:  RTH has an 100 handle now, far below the 103.60 level so this is firmly in the bearish camp forecasting bearish markets overall. UTIL, now at 425.27 is only a point and change from disaster if the 424 level is lost. The Nasdaq percentage move remains less than the S&P move lower that is why the move down in the indexes is occurring slowly rather than sharply. If UTIL 424 fails, you will see the sharp move down in the broad markets.  For now, the market bulls continue to hang on by a thread, but hanging on nonetheless. High drama continues.

Note Added 10/3/11 at 2:50 PM EST:  SPX down to 1103, still above the 8/9/11 intraday low at 1101.54. UTIL is at 426.60, now exploding upwards from 424.75 to 426.60 in only the last four minutes. Looks like the market bulls are saving the day currently. UTIL has only managed to spike to an intraday low of 424.44 thus far today, remaining 44 cents above disaster.

Note Added 10/3/11 at 3:10 PM:  UTIL spiking up and over 428, now at 427, a full three points above the danger level of 424, thus, the market bulls saved the day by spiking the utes at 2:47 PM. UTIL 424 is the key, it looks like the bulls stopped a disaster for the markets, but, keep watching.

Note Added 10/3/11 at 3:33 PM EST:  Here we go again, market bears are making a run lower.  UTIL just lost the 425 handle.  Watch to see if UTIL loses the 424.44 intraday low from ealier today, then the all important 424. There is the invisible hand again, at the 3:33 PM mark, 50 cent boost in UTIL in one minute saving the day again. UTIL now printing 425.50. Many algo's will key off the 424 level and sell the markets off in a substantial way if it is lost, for now, the market bulls continue to save the day and keep their heads above water. Can the bulls stumble into the close and avert disaster?

Note Added 10/3/11 at 3:50 PM EST: The fix is in for today, UTIL was launched at 3:42 PM, from 425.25 to 428.25, three points, in only 7 minutes. The UTIL 424 level held today so the bulls held on.  Now tomorrow...........simply keep your eye on UTIL 424.........

Note Added 10/3/11 at the close, 3:59 PM, whoa!!  High drama! Into the close, UTIL collapsing from over 428............., just printed 424.19!!  Steady....steady............424.03...........424.08..........FAILURE AT THE CLOSE!!!!   423.68............423.45..............423.52.   THE UTES FAILED AT THE CLOSE BUT TIME RAN OUT BEFORE THE MARKETS COULD COLLAPSE.  SPX FAILED THE 8/9/11 LOD AT 1101.54. NEW SPX CLOSING LOW AND INTRADAY LOW. WHAT A FINISH. THIS IS EXTREMELY BEARISH AND NOW EVERYONE HAS A NIGHT TO SLEEP ON IT. Interesting how Keystone commented earlier in the day that UTIL 424 and SPX 1101 would probably line out together--and they did.