Keystone's Midday Market Action 2/24/12

Groundhog Day was three weeks ago but, like the Groundhog Day movie, each day repeats a similar pattern.  Markets are bumping along sideways in early action.  The SPX moved up thru the 1363.61 number and touched the 1364.25 number so the upside acceleration occurred.  The highs of the day are printing as this is written, the SPX now testing the 1368 resistance level highlighted in the SPX S/R numbers a couple messages back. If 1368 gives way, the intraday HOD from 2011 at 1370.58 will become the focus.

As mentioned this morning, the key sectors to watch that are most impacting the broad markets currently are the utilities, retail, copper and commodities.  The pattern continues with the utilities helping the bears and retail and copper helping the bulls.

The Nasdaq and SPX are both up about 0.30% so even though tech is not leading the broad markets, it is concidental which is supportive of the upside move today, thus far.  Of no surprise is AAPL moving higher, now at 520, which provides the tech boost which takes the markets higher. Apple is a highly attractive short now and this 520 appears as a fine entry, but not a trade for the faint of heart, since AAPL is a freight train momo stock. The negative divergence as pointed out in the daily chart a couple days ago has now set up properly so AAPL should sell off from this 520-ish area.  AAPL moving lower should take the broad markets lower as well.  The euro is the Energizer Bunny with limitless energy, now at 134.7 in the midst of an upside orgy, providing the bullish thrust today.  The dollar is lower as would be expected with the euro higher, and the market bulls are running. Watch the euro and AAPL since they will dictate today's action. The euro, XEU, chart from last evening remains in play today. Negative divergence remains on the MACD histogram, stochastics and ROC, wanting to see the euro receive a spank down. The RSI is long and strong, however, so after the euro pulls back, for perhaps a day or three, the euro will need to move back up to these levels to satisfy the RSI (reference last night's XEU chart).

Note Added 2/24/12 at 10:47 AM:  Note that UTIL came up to take a look at 452.91 again, now printing exactly on top of that. Keystone told you to watch this number a week ago, and here we are, watching it print.  The 452.91 is only important for another five hours. At 4 PM today and for all next week, the UTIL number to watch changes to 442. The Nasdaq is now lagging the SPX so without tech leadership, the market upside is limited. SPX HOD so far today is 1367.76, so the 1368 R has held, so far.

Note Added 2/24/12 at 11:48 AM:  Markets always have a way of surprising traders.  Just when today looked like a slow day, Keystone's algorithm is signaling a desire to move to the short side; reference the Keybot link in the upper left margin for the skinny.  The bears can develop serious downside mojo if they print SPX 1352 today, which is a formidable task from current levels at 1367. Watch UTIL 452.91 to gauge the bull-bear sentiment today.  This afternoon's trade may be dramatic. UTIL now maintaining back above 452.91 for several minutes, the SPX keeps bumping its head agains the 1368 R. Bulls are trying to push utes higher to gain market strength, UTIL now 453.28, whoa, now 453.40, the bulls are ramming the utilites higher to try and punch the SPX over 1368 R.  High drama. There it is, SPX 1368, the bulls win above, the bears win below.

Note Added 2/24/12 at 12:18 PM:  Markets receiving a large goose over the last half hour.  UTIL leaped up over 454, now comfortably above the 452.91 level; keep watching.  This pushes SPX over 1368 R and price remains above 1368 for 25 minutes. This behavior opens the door to test 1370.58. Thus, for today, watch SPX 1370.58, 1368, 1364.25, 1363.61. The Nasdaq strengthened which is helping push the markets higher; AAPL printing the highs of the day.

Note Added 2/24/12 at 12:39 PM:  SPX now back kissing the 1368 breakout level. See if the bulls hold it and launch to test the 1370.58 R, or, if the bears punch back and force the SPX to collapse back under 1368 S/R. UTIL remains elevated so you would have to give the market bulls the advantage for now. The Nasdaq is leading the SPX higher today, so tech is providing the bullish support for markets. AAPL in a vertical move now, an 80 cent move in only 13 minutes, now printing 521, daily chart continues showing beautiful negative divergence set up indicating that this is a temporary top for AAPL and a smack down will occur at any time. Markets will remain elevated until the Apple falls from the tree.

Note Added 2/24/12 at 12:48 PM:  The SPX successfully back tested 1368, and launched, now printing 1368.38. Price should make a try for 1370.58. The utilities remaining elevated is supporting the bulls, along with tech. Volatility, VIX, is printing 16.46, new lows, but, on both the daily and weekly charts, the postive divergence is indicating a launch is on tap from this area.  Up VIX = down markets. The VIX launch move will likely occur in concert with the AAPL spank down move. This afternoon may supply exciting market drama.