Keystone's Evening Nightcap 3/6/12

The third anniversary (3/6/2009 intraday low 666.79) of the supersticious 666 low for the SPX results in a dramatic market selloff today.  Interestingly, the SPX is almost exactly two times the 666 level on this day three years later. Lots of excitement today not the least of which was Keystone's proprietary algo, Keybot the Quant, joining the bear side.  The Wednesday session is important to see if a whipsaw occurs, or not.  The market bears appear to have a firm grasp on markets.  The SPX:VIX ratio is under 68.  Semi's and copper are in the bear camp now, SOX is under 410 and JJC is under 48.40, respectively. For the bears to travel lower, the financials and/or commodities must lose the XLF 14.30 and/or CRB 313 levels, respectively. If so, the broad markets will move substantially lower.  A stronger dollar will send the CRB lower.

Super Tuesday election results are in progress this evening and will probably not effect markets to any great extent tomorrow.  ADP Employment data hits at 8:15 AM EST and this is important since it helps handicap the Friday Jobs Report; futures will react to the numbers. Oil Inventories at 10:30 AM are also important.

AAPL dropped today but was much more subdued than the broader markets. In fact, this muted move down by Apple helped move the broad markets sideways preventing further weakness under SPX 1340.  The AAPL 20-day MA is 513 so there is plenty of room for Apple to drop before testing this critical moving average.  Volatility, VIX, spiked 16% higher today with the VIX moving back above 20. This move shows that complacency remains, just as the CPC chart previously posted shows. The VIX moving above 23 will show that fear is returning to markets.

The NYAD chart shows the uber low -2500 reading which would be consistent with a market that now needs to bounce to recover.  Same with the TRIN that spiked intraday to 3.5 and closed at 2.4 to verify the strong selling but at the same time indicating that a market bounce back is needed to remedy these high numbers.  At the same time, the CPC and VIX continue to indicate complacency which forecasts that continued market weakness should occur moving forward, at least until the CPC moves above 1.2 and/or the VIX moves above 23.  The NYMO is also of interest printing in the mid negative 80's at the exact level as the beginning of the August 2011 water fall crash. The NYMO is agreeable to a market bounce at anytime moving forward. The SPX weekly chart wants to see price come back up while the daily chart is broken.    

For the SPX for Wednesday, stating at 1343, the bears will accelerate the downside if the 1340 level is lost. If so, a test of 1333 support is likely.  The market bears will try to stop the downwad slide by moving the SPX sideways thru 1341-1362.  Key SPX S/R is 1358 (20-day MA and horizontal support), 1351, 1344, 1341, 1340 (key for Wednesday's trade), 1337, 1333, 1331, 1229 and 1226. A back kiss of the 20-day MA at 1358, and failure, would be very bearish moving forward. Watch AAPL very closely since as Apple goes, so goes the markets.