Keystone's Midday Market Action 12/15/11

The retail sector, RTH, popped at the open supporting the bullish move by the markets.  The financials are gaining as well.  Watch XLF 12.82, last print is 12.74. If 12.82 is attained, the broad markets will take a big leg up.  VIX is dropping favoring bulls. The SPX HOD thus far is 1225.30. From this mornings missive, SPX needs to touch 1226, if so, the upside will accelerate.  SPX should move up to take a look at 1226.

Note Added 12/15/11 at 9:50 AM:  The Nasdaq is not leading the upside so that is why the market move is leveling off. Philly Fed in 10 minutes. VIX 24.27. XLF 12.75. The XLF 12.82 and SPX 1226 levels are the two important things to watch now.

Note Added 12/15/11 at 9:55 AM:  Keystone's Inflation-Deflation Indicator is currently 296.57/100.61 = 2.95, indicating that the U.S. is in Disinflation.

Note Added 12/15/11 at 10:02 AM:  SPX comes up for a new HOD 1225.60 but it did not touch the 1226, so the second try received a spank down. Let's see if a third try is the charm.  XLF is at 12.74 so financials are not supplying the oomph needed for more market upside.

Note Added 12/15/11 at 10:39 AM:  SPX keeps testing the 1219 support level. 1220 is a major support level. Financials are petering out. XLF is at 12.68. There it goes, SPX failure at 1219, now 1218. Now 1217. Next support is 1216, 1215, and then back to the 1209-1210 area again.

Note Added 12/15/11 at 10:45 AM:  RTH remains above 109.40 so the market down side move now should be limited just as the upside market move was limited due to XLF 12.82. Thus, that is the bracket to watch. If the RTH loses 109.40, the market selling will substantially increase.  If the XLF moves above 12.82, the market buying will accelerate. If there is no change with RTH or XLF, the SPX should drift along thru 1210-1225. SPX 1216 support was just violated, thus, see if 1215 support holds. Gold is down 22.

Note Added 12/15/11 at 2:00 PM:  RTH remains above 109.40 and XLF remains below 12.82. The SPX moves sideways under the 1219-1220 resistance ceiling, forming a sideways symmetrical triangle today. This triangle will resolve with a break out in the remaining two hours. The VIX is printing lows of the day now at 23.90, this favors market bulls.

Note Added 12/15/11 at 2:27 PM:  The SPX has moved out into the apex of the sideways symmetrical triangle today, things should get interesting now, price has to choose a direction.  Big spike in VIX from 23 handle to 25 handle now, that would favor bears. Let's see which direction the SPX breaks.

Note Added 12/15/11 at 2:30 PM:  Hello. There you go.  SPX failed out the bottom rail of the sideways symmetrical triangle. The VIX tipped off the direction. Market downside should be limited, however, since RTH remains above 109.40. Watch to see if the SPX reverses and comes back up since a fake out move sometimes occurs out of these sideways triangles. We will know over the coming minutes.

Note Added 12/15/11 at 2:49 PM:  SPX now dropping to a 1215 handle, testing the lows from the 10 o'clock hour this morning. See if it holds or fails.

Note Added 12/15/11 at 3:12 PM:  The support at 1215 held. RTH and XLF are status quo. TRIN has been under one all day and is now 0.88 which is market bullish. VIX is at 25 but drifting lower now, see if it loses the 25 level, volatility moving down would favor the bulls into the close.

Note Added 12/15/11 at 4:03 PM:  The SPX drifted down to the 1215-1216 support area into the close. All in all an uninspiring day.  Markets are drifting along sideways waiting for Europe news, as well as resolution to the latest U.S. political mess concerning the potential government shutdown.