Keystone's Midday Market Action 11-16-11

Watching XLF 14.04 and VIX 31.25.  XLF is printing 12.93 and VIX 31.56 so both are bear friendly today and this led to the early weakness and sustained weakness now.  Bears remain in control as long as XLF and VIX cooperate.  SPX 1244.34 was very important and it held for the test after the opening bell. The Nasdaq percentage down is less than the S&P pecentage down so the market move down did not have a lot of oomph this morning; Nasdaq must typically lead.

Thus, continue to watch XLF 13.04 and VIX 31.25, if they remain in the bear camp, watch for another test of SPX 1244.34. If that gives way markets will drop strongly several more handles quickly. Bulls will need either XLF or VIX to turn bullish and the SPX to get up over 1264 and the bulls can get something going strongly to the upside. Otherwise, SPX 1245-1263 is sideways action today.

If markets move lower, the indexes typically never bottom on a Wednesday so weakness would be anticipated to continue into Thursday morning. Wild move in oil today hitting 102+.

Note Added 11/16/11 at 12:20 PM:  Italy 10-year yield is 7.097%. Unicredit seeking funding from ECB causing increased worries concerning contagion. Tension is in the air.

Note Added 11/16/11 at 1:02 PM:  Note that the percentage down for the Nas and S&P are lining out with each other now at about -0.45%.  If Nasdaq accelerates the down side it will lead the markets lower.  Both now printing -0.40%.

Note Added 11/16/11 at 1:26 PM:  VIX dropped under 31.25, bulls are charging. See if it holds.  XLF remains under 13.04.

Note Added 11/16/11 at 1:49 PM:  The lower VIX elevated the broad markets into the green.  Note that S&P is now up 0.11% with Nasdaq up only 0.06%. Thus, the Nas is not leading to the upside so it is the same set up as this morning only a mirror image. The upside should be limited since Nas is not stronger than S&P.  This can change so keep watching.  SPX 1264 is key.  Watch XLF 13.04 for the next clue since volatilty is lower.

Note Added 11/16/11 at 2:15 PM:  Nasdaq now down -0.26% with S&P down -0.18%. For first time today, Nasdaq is leading and it is leading down. Let's see how much juice the bears have. First task is to move the VIX back above 31.25, if the bears cannot do that, then they got nothing. VIX now printing 30.80............30.81.........

Note Added 11/16/11 at 3:13 PM:  Here we go again. VIX just crossed up thru 31.25 so the market bears are pushing hard now. See if it holds, if so, then SPX 1244 may get tested afterall as the indexes move down towards the close. VIX last print 31.28.........31.29..........

Note Added 11/16/11 at 3:17 PM:  S&P down -0.71% and Nasdaq down -0.70%, in line with each other so the move down may run out of gas, watch to see if Nasdaq accelerates, or not. VIX 31.69...whoa, big jump.....bears pushing harder now......

Note Added 11/16/11 at 3:30 PM:  Some high drama into the close.  VIX now printing 31.92......32.04.........SPX moving lower........1244.34 is key...........WHOA....it just failed..........printing SPX 1244.12.........1244/13.......if this holds for a few minutes, the broad markets will drop several handles in short order now.

Note Added 11/16/11 at 3:34 PM:  S&P down -1.19 % with Nasdaq down -1.24% so Nas is leading giving the move down some street cred.  SPX failed 1244. VIX now at 32.50.  All systems go for downside, it should flush a little now...........

Note Added 11/16/11 at 3:35 PM:  There it is, SPX 1237 handle. Flusheroni.

Note Added 11/16/11 at 3:40 PM:  VIX over 33 now. Bears are gliding. SPX 1240 support trying to hold.

Note Added 11/16/11 at 4:10 PM:  VIX settling out at 33.38, what a jump, almost 2 1/2 points in the last 45 minutes. Financials, XLF at 12.71, collapsing into the close.  Today was a big feather in the market bears cap. Next sectors to watch are retail and semi's but we can set them up before the open tomorrow. The selling was a comfortable selling today, it was not a whoosh downwards, so that hints that more selling is to come.  Typically on a large down Wednesday, markets  never bottom on a Wednesday, so weakness will continue Thursday morning. Today filled the gap at SPX 1239 and continues with the sideways symmetrical triangle pattern over the last three weeks. Support/resistance is 1242, 1240, 1239, 1238, 1235, 1233, 1229, 1227, 1225, 1224, 1220. SPX closing print 1236.91. Tight range to watch is 1240-1233.