Keystone's Evening Nightcap 11-7-11

VIX 30, SPX 1261, SPX 1239 and XLF 12.95 told the story today.  The financials, XLF, were above 12.95 all day long so that was and is a feather in the bulls cap. At the open, the indexes ran higher but the VIX did not move under 30, hence, the bulls did not have a lot of oomph, and sure enough the indexes back tracked and sold off into the noon hour.  The market bears could not advance the ball either. Although volatilty was elevated promoting the market selling, the bears could not get under SPX 1239, so the down side petered out and the bulls took back the ball. This is when Jurgen Stark, at a conference in Switzerland, launched global traders into a bullish frenzy when he said the Eurozone crisis would be brought under control within two years.  Markets moved steadily upwards.

As the afternoon progressed, the market bulls finally moved the VIX lower around 3 PM so the markets started to run into the close.  The SPX finally reached the 1261 number Keystone called out this morning but the bell rang and time ran out on the clock.  Keystone's algorithm is on the verge of going long and appears wanting to flip to the bullish side at the open tomorrow.

The only two things the market bears can do to stop the upside is to move the VIX above 30.50 at the open tomorrow, or, prevent the SPX from touching 1261.70 only 58 cents above the close. If the market bulls simply keep the futures green overnight and touch 1261.70, the upside will ignite into a bull orgy. JJC 46.65 is bull fuel if hit.

Despite the upside today, Apple finished in the red. Hence, the Nasdaq did not show the enthusiasm for the upside that the S&P did, which limited the up move. The dollar index was flatter than a newleywed's souffle today. Gold, oil and equities are moving in the same direction, contrary to the dollar. RUT, the Russell 2000 Small Cap Index, was red on the day. The 10-year note dipped under 2% today, this is important with the auction coming up this week.  The odd behavior today was that the euro was down. This should lead to euro down=dollar up=commodities and equities down. Today, however, the dollar did not move up so equities gained traction. This inter-asset relationship between the constituents (euro, dollar, gold, commodities, etc...), however, would be expected to move back in sync tomorrow and the days forward.