Keystone's Midday Market Action 12-5-11

SPX 1260 was blown out to the upside at the open.  1268 is the next strong overhead resistance and the SPX HOD is 1266.39 thus far, remaining over a point short.  A strong resistance cluster exists at 1277-1280, simply reference Keystone's SPX S/R post from the weekend for the proper support and resistance levels.  The SPX and Nasdaq are both up an equal 1.6% so this is fostering the sideways action today. Watch to see if the Nasdaq leads one way or the other as the day continues.

The VIX is down only 1.9% when actually a move down of 4 to 6% would have been more in line, considering the almost 2% up move in the SPX. This buoyancy in VIX favors bears.  Utilities are up favoring market bulls. Semiconductors, retail, financials and copper all remain elevated providing the broad maket buoyancy but reference the RTH chart this morning to realize the party is about to end for retail. NYAD is printing lofty numbers up at +2100 and a HOD approaching +2300, that is consistent with a market that will sell off so it can take a rest from such uber upside participation.

Use the percentages of the Nasdaq and SPX for the broad market direction today. Markets will remain flat if the Nas and SPX track at the same percent. If Nas leads upwards, markets will become more buoyant, if the Nas leads downwards, the markets will sell off.  Current print is the SPX up 1.58% and the Nasdaq up 1.61%, in line with each other hinting at continued sideways movement with a very small feather in the bull's cap.

Note Added 12/5/11 at 12:34 PM:  VIX now printing at the highs of the day at 27-ish.

Note Added 12/5/11 at 1:03 PM: SPX now printing 1265.60.  The 200 day MA is 1264.56. Will the bullishness hold? Watch this drama closely.

Note Added 12/5/11 at 1:20 PM: Easy now.......SPX printing 1264.47, just lost the 200 day MA at 1264.55. Is it simply a back kiss for the bulls, or will price now collapse lower?

Note Added 12/5/11 at 2:36 PM: SPX price collapsed thru the 200 day MA at 1:41 PM. News report said S&P is considering downgrades on European sovereigns. SPX is now back to the negative side fo rthe year, albeit by a hair.  Nasdaq is leading the SPX on the upside by a smidge so markets are moderating sideways currently. Key SPX S/R is 1268, 1261, 1258, 1252, 1247, 1240.

Note Added 12/5/11 at 4:07 PM:  VIX, volatility, was a tip-off today how it did not want to go down as the indexes ran higher. As shown by the S/R levels in the previous message, price could not maintain 1258 support. NYAD favored a pull back for the indexes since the high prices showed too much bull euphoria. The SPX 50-week MA resistance at 1269.23 held. The SPX 200-day MA resistance at 1264.52 held. The SPX was unable to move 56 measley pennies higher at the close to attain the starting year number at 1257.64. These three compadre's now serve as important resistance to watch in tomorrow's action.