Keystone's Midday Market Action 11-18-11

Opening pop is retracing.  Focusing on the SOX 377.50 level, the semi's remain weak and will create weakness in the broad markets.  Note that hte Nasdaq percentage is leading the S&P percentage for the downside, thus the Nas is providing a little street cred and oomph to a potential down move.

Financials, XLF are sad looking, VIX remains elevated with a 33 handle.  The utes and retail are the last two sectors supporting bulls so they must now come under scrutiny.  Retail, RTH, is now toying, pun intended, with a 109 handle.  Keystone's algorithm now consider the RTH 108.60 as the sign of big market trouble, where the retail sector rolls over into the bear camp and will take the broad markets down another leg. Utes are bouncing today and as mentioned in last evening's nightcap, since the utes did not lead or coincide with the market down move over the last couple days, the overall broad market down move is suspect.

But staying in the here and now, the Nasdaq is now down 0.31%, the S&P is flat. This continues to give bears the upper hand for today. SPX 1209.43 is the key level to watch, the bottom will fall out in the indexes if this is touched.  For now, the market bulls are stopping the two-day bleeding.  Keystone's SPX:VIX ratio is above 35 at 36-ish, so this is another feather in the bulls cap giving them strength to hold back the down side.

SOX 377.50, RTH 108.60, SPX:VIX 35 and SPX 1309.43 is all you need to watch to determine market direction today. Leading Indicators data should hit any minute.

Note Added 11/18/11 at 12:42 PM:  Status quo.  SOX under 377.50; RTH over 108.60; SPX:VIX over 35; SPX never touched 1309.43, so far today 1211.36 is the low. Thus, nothing exciting going on, one of these characters has to make a move, otherwise, we slide into the weekend.

Note Added 11/19/11 at 9:10 AM:  None of the characters above made a move yesterday, so the indexes limped flatly into the close to let the European drama play out this weekend. Monday evening the super committee must deliver the goods since the Budget Office needs time to score the potentail plan to meet the Wednesday deadline. Low volume action is anticipated as well, upping the drama ante even more.