Keystone's Midday Market Action 12/12/11

The Intel news before the open sent semiconductor's off a cliff as the bell rang. SOX immediately collapsed thru the 371.30 level and is now printing 363.89. Copper collapsed at the open as well, the JJC now printing 44.32.  These two are causing serious market weakness today.

Watch the financials closely since the next leg down for the indexes will only occur if the financials, XLF, drops under the 12.80-12.83 area.  XLF is currently printing, holy smokes, financials just failed.  XLF is now 12.80, watch to see if this holds. If so, stronger broad market selling will occur.

Note Added 12/12/11 at 10:22 AM:  XLF now printing 12.78, firm failure, see if it holds.  Notice the further broad market weakness appearing.  Keystone's algorithm, Keybot the Quant, should flip to the short side if this action holds for several minutes.

Note Added 12/12/11 at 11:23 AM:  Keystone's algo flipped to the short side. Stay on guard for a whipsaw, however, either today or tomorrow since the markets are jumpy and financials remain on the fence.  Copper, semi's and financials are causing today's market weakness. XLF now printing 12.80, below the critical 12.82 level, thus, market bearish, but only by a smidge.

Note Added 12/12/11 at 12:40 PM:  The financials crumbled with the XLF now printing 12.70. Thus, copper, semi's and financials are all firmly negative and pushing the broad markets lower.  The utilities have not broken down and the VIX remains low, relatively, so the down move is not that convincing from a sustainability perspective.  Note that the SPX collapsed out of the eight day 1235-1268 range which is very important. A back kiss of 1235 would be in order for such an important failure. Traders are calling a bottom currently but that may be a bit premature. A different scenario would be markets staying weak all day long since the three sectors above stay weak, then potentially weak retail sales numbers in the morning may allow markets to flush lower at the open tomorrow and then provide a place to cover shorts and enter long. Should the broad markets weaken further, the retail sector, RTH, will come into play. RTH is now printing an 111 handle and will signal broad market trouble if it loses the 110-ish level, only a point and change lower.

Note Added 12/12/11 at 12:44 PM:  NYAD now printing a -2157, once again overcompensating now to the downside. Reference this mornings chart where the +2200 number forecasted a market sell off today, which we are now experiencing, but now the NYAD is posting an uber low number, indicating that the markets are, or will be very shortly, ready to bounce upwards. For the weak retail sales numbers data scenario mentioned above, the NYAD could print a -2500 tomorrow morning to signal the snap back rally.  Since a -2157 is printing now, then a snap back rally should occur any time today into tomorrow. If copper, semi's and financials stay weak today, perhaps the bounce can be pushed into Tuesday.

Note Added 12/12/11 at 12:54 PM:  TRIN at 2.88, uber bearish. This is in agreement with NYAD where it would like to see the market have a snap-back rally. The question is do you cover your shorts now, into the close today, or tomorrow after the open? NYAD and TRIN are voting in favor of the sooner the better. But the break of SPX 1235 is very bearish and retail sales may be weak in the morning which leads to lower prices. A move up today to further explore the SPX 1234-1235 area may be in order.

Note Added 12/12/11 at 3:12 PM:  TRIN at 3.11, even more uber bearish. NYAD is -2072, very low and uber bearish, wanting to see a bounce in the markets.  SOX, JJC and XLF remain weak keeping the broad markets weak.  VIX is oddly flat today hinting that the down move will not have legs. The SPX moving under 1227 should set up positive divergence for a bounce. SPX losing 1235 is a big deal, perhaps a back kiss is in order. The market bears have the ball. Copper, financials and semi's collapsed today which ushered in the market weakness and are allowing the weakness to continue.  Watch XLF, now printing 12.72.  The LOD is 12.68. If the low is taken out, that would signal additional broad market selling.

Note Added 12/12/11 at 3:31 PM:  XLF spikes upwards to 12.75. Market bulls need to regain 12.82 to wrestle back control of the markets. The loft in financials provides the indexes some buoyancy, now the SPX coming up for the back kiss of that 1333-1335 area.

Note Added 12/12/11 at 3:36 PM:  Very light volume today, lighter than last week, NYSE doing only 50% of its 10-day average volume.  Everyone must be home drinking eggnog already.

Note Added 12/12/11 at 3:42 PM:  XLF spiking up to the 12.81 level and spanked down. See if it can get up and over.  Note the SPX moving up to test that bottom rail now as well, with price moving thru 1235-1237. XLF now printing 12.80.  Watch the 12.82 level.

Note Added 12/12/11 at 3: 57 PM: The finish above or below 1235 is important, what will it be?  XLF is 12.77.

Note Added 12/12/11 at 4:07 PM: SPX recovers and closes just above the critical 1235 support, the bottom rail of the nine day channel. XLF could not regain 12.82 so this is bearish. Looks like the stage is set for the retail sales data in the morning. Market bears are in control since copper, semi's and financials turned bearish today and did not recover. Tomorrow's another day.