Keystone's Midday Market Action 11-14-11

Watching VIX 30.45, XLF 13 and SPX 1258/1267/1272 in the early going. Markets sold off at the bell and the volatility spked up thru 30.45 on the opening print. This is a feather in the bears cap. Keystone's algorithm constantly recalculates the levels of interest to determine market bullishness or bearishness, and, for the VIX, that number now moves upwards to 31.20.  Thus, watch VIX 31.20 from here forward to gauge the bull or bear strength in the markets.  As fate would have it, the current print for VIX is 31.39, only pennies above the 31.20.  The market bulls will regain the advantage and move markets higher if VIX loses the 31.20 level.

Since the bears are making a try at moving the markets lower, and have managed to push volatility higher, then the financials are next to watch.  The XLF, now at 13.09, must stay above 13 to keep the market bulls happy. If XLF 13 level is lost the selling will accelerate.   XLF now printing 13.06, keep watching this closely.

SPX came down to test 1257-1258, the starting year number, and failed that level, so lower levels of support will be explored.  Next in line is 1254. Watch the Nasdaq percentage versus the S&P percentage, 0.40% down versus 0.65% down, respectively.   Thus, the S&P is leading the down side thus, the down side is perceived to not have much oomph.

Here we go, XLF at 13.02..................this is for the marbles today.................

Note Added 11/14/11 at 9:57 AM:  VIX is at 32, favoring bears above 31.20. XLF at 13.03, the bulls holding on by three measley pennies. Bears got nothing unless they can send XLF under 13. Since bears could not push the XLF sub 13, see how the broad markets are now floating back upwards?  Another test of XLF 13 should occur.  Nasdaq is not leading lower so the move down does not have street cred.

Note Added 11/14/11 at 10 AM: XLF 13.02........are the bears strong enough to push under 13?.......13.02..........

Note Added 11/14/11 at 10:54 AM:  Bears do not have the oomph so far to push XLF under 13. Nasdaq is not leading lower favoring bulls. VIX remains elevated at 32 favoring bears. If XLF holds 13 and recovers higher, the bulls will simply take over and push everything higher.  The bears needed more Wheaties this morning and will not accelerate the market down side unless XLF 13 is breached. There you go........13.05.....if the bears do not plan to go lower, the bulls will come in and push it all higher.....13.06...........

Note Added 11/14/11 at 11:06 AM: XLF at 13.08. VIX at 31.39 only 19 pennies above 31.20. If VIX loses 31.20, then the markets will recover dramatically to the upside. If VIX stays above 31.20 and XLF stays above 13, the standoff continues and the indexes should stumble along sideways all day long. VIX 31.32...........the bears tried to push today and ran out of steam, now the bulls are tying to push.........VIX 31.30.......ten cents away...........

Note Added 11/14/11 at 12:40 PM: VIX held the 31.20 level in the 11 0'clock hour so the bulls did not have the oomph to move it under 31.20, hence, the VIX moved back up and is now printing highs at 32.84.  At the same time, XLF fell under 13 at 11:52 AM indicating further trouble today for market bulls, and, the indexes drift lower as expected. The S&P is down 1.15% with the Nasdaq down less at 0.92% so the move down remains suspect.  Continue to watch XLF 13, and now also watch SOX 379 level today. Markets will remain weak if XLF remains under 13, markets will recover to the upside if XLF moves above 13. The market bears need to touch SPX 1240 to accelerate the negativity.