Keystone's Midday Market Action 2/16/12

JJC drops down to bounce directly off the 48 support level. The level to watch specifically is 47.80. JJC now printing 48.23.  If bears push under 47.80, substantial broad market selling will occur.  The utilities, UTIL, remain under 451.17, bearish. SPX:VIX ratio is 62.36 well under 68 showing that market bears remain in firm control of the broad markets.  SPX playing around with 1344 S/R. JJC weakens if the dollar strengthens. Lots of data and excitement is on tap today. AAPL is red today and the Nasdaq is down lower than the SPX, thus, with tech leading the downside, albeit a smidge, this is a big feather in the bears cap. Volatility, VIX, is attacking the 50-day MA at 21.50 trying to punch up thru.  Up VIX is bearish, down VIX is bullish. See which side wins the battle for 21.50 since it tells you which way the broad markets will move.

Note Added 2/16/12 at 9:47 AM: Major development, the bulls are punching UTIL up thru 451.17 to spoil the bear party.  See if it holds for seven to ten minutes, or not.  Wow, first punch failed after two minutes.  UTIL now printing 451.54......451.34.......this is big news and adds another cross current into the works, if the bulls now hold 451.17.

Note Added 2/16/12 at 9:53 AM: Whoa, UTIL failure.  Now printing 450.77. A failure here will now embolden market bears since it will prove that the bulls do not have strength if they cannot maintain 451.17. High drama, hopefully, good ole Keystone's ticker will hold out. UTIL now 450.47, big failure for bulls. VIX at 21.48 with bulls and bears fighting it out over the 21.50 line in the sand.

Note Added 2/16/12 at 9:56 AM: Wow, the bears just stabbed the bulls with VIX rocket launch up thru the 50-day MA at 21.50.  Now printing 21.72.  Broad markets should noticeably weaken.

Note Added 2/16/12 at 10:00 AM: Here's the back kiss for the VIX back to the 21.50. If successful price will launch higher favoring bears.  Bulls need to push VIX back under 21.50. This battle for VIX 21.50 will tell a lot for today. NYAD has not yet printed an uber low of -2000 or lower during the last three days of market weakness so this shows the selling to be orderly, steady-eddy selling, along with a 1.58 TRIN now, favoring market bears. SPX testing the 1347 R.

Note Added 2/16/12 at 10:34 AM: The markets are changing faster than a chorus line backstage at Las Vegas.  Note that the utilities have returned to the bull camp, now printing well up and over 451.17 to 452.34.  This is a strong bullish development should it hold today and tomorrow. VIX at 21.10 so the 50-day MA is serving as resistance. SPX punched up thru the strong 1347 R, now working on 1349 R. Further upsdie resistance is 1351, 1354 and 1357.  If 1356 is hit today, Keystone's aglorithm, Keybot the Quant will likely flip back to the long side.  The market bulls are not rolling over, they are fighting today and the utilities are providing the firepower but at the same time, the bears are pushing copper lower.

Note Added 2/16/12 at 2:09 PM: Keystone's algorithm, Keybot the Quant whipsawed back to the long side but in these erratic markets, do not be surprised if it flips back short again as well.  The pre-holiday seasonal market buoyancy may be coming into play for today and tomorrow. Keystone's SPX:VIX ratio moved above 68 at 1:02 PM today, that's when the market bears started to scatter and run for cover.  The VIX failed at the 50-day MA, as we witnessed this morning, now below 20, which hurt the bear case.  Likewise, the UTIL moving up and over 451.17 was a tough blow to bears and added bull fuel.  SPX 1357 is overhead R that price is fighting to move thru right now.  SPX 1360 is the gap that has wanted filled for many months.

Note Added 2/16/12 at 2:51 PM: Watch the Dow Industrials 12928.45 level which was the intraday high for 2011 on 5/2/11.  The Dow already closed above the closing high in 2011. Current print is 12900. SPX is now using 1354 as S, attacking 1357 R, and 1360 is the gap fill. SPX daily chart showing negative divergence across all indicators. Keystone holding/adding to short-term bear bets with shorts in retail, housing, energy, silver and the broad indexes; also long volatility, long natty.

Note Added 2/16/12 at 3:59 PM: The gap at SPX 1360 occurred at the market top in late April early May 2011. The gap was formed between 1359.76 and 1361.22, so any touch inside this range would fullfill the gap fill. This gap fill would finish the upside business that has remained unresolved for almost one year and open the door for the downside. The HOD today is 1359.02 which is 74 cents short of the gap fill.  See if it fills in this last couple minutes.