Keystone's Midday Market Action 3/16/12

The bulls succeeded in keeping the overnight futures slightly green so the upside popped at the open. The upside is held in check, however, since AAPL is languishing today, thus the tech sector is not leading the upside, so the upside move remains muted.  The dollar is weak today so commodities are higher, and with the CRB remaining elevated, the market bears got nothing today. 

Seasonality played a big part this week calling for an up Monday, up Tuesday and up week all of which will come to be. The successful banking stress tests provided the ignition for bulls.  The interesting set up moving forward is that window dressing is expected for the last week of the quarter (Q1), which is the week of 3/26/12.  Thus, if the market bears are going to start the downside, they need to growl now and growl strongly, thru next week, otherwise, they will end up as road kill. The charts for the broad indexes and major players are negatively diverged going into the week, but seasonality factors overruled the negativity desired by the charts.  Perhaps its time for the charts and technical analysis to take over for a few days.

Today is the major Bradley turn date, thus, a major trend change in markets expected now, especially stay alert now thru Wednesday.  Of course, the melt-up on Tuesday and move higher now may qualify as the Bradley confirmation of an upside move, we will not know for sure for another week. The expectation is a strong market sell off to begin at any time.  Keybot the Quant (left margin) remains long but the algorithm is not programmed to catch exact tops and bottoms. If Keybot turns bearish, however, that is a signal not to be taken lightly. The market bulls are moving sideways today, the bears got nothing unless they can boost the dollar so the CRB falls under 313 or if the SPX falls under 1393 today. VIX is at the 14.80 level, the low complacency further reinforcing the discussion this morning with the CPC chart.

Note Added 3/16/12 at 2:02 PM: The bulls idle along today. Expect a large volume increase in front of today's close due to the Quadruple Witching.  The SPX is flat, VIX is flat in the high 14's, and the dollar remains weak, thus CRB is up, teasing a 317 handle, so well above danger at 313, thus, the bulls are already choosing St. Patty's Day hats and noisemakers for the weekend festivities, much more concerned about partying than any fear that markets can actually go down.  Keystone took profits on the MNKD trade that was open the last few days, that was a positive divergence bounce trade. The precarious nature of the broad indexes is too tricky to maintain exposure to a speculative stock like MNKD. If the markets sell off hard here, the small caps are going to get beat badly, and it typically takes the form of indiscriminate selling.  A long position was intiated with TYP today. AAPL is languishing all day, on their banner iPad3 release day, and this continues to cause tech to lag the broad markets and is a bearish indication for the indexes. No, Keystone does not call it the new iPad, if Apple wants to play mind games and not assign a name, with the hope that all the Apple drones will think of the iPad as the only iPad device that matters, that is fine if AAPL can manipulate their loyal followers that way, but, Keystone does not roll that way, thus, it will be called the iPad3. Reference the SPX S/R a few posts back which lists 1409, 1407, 1406 (5/29/08), 1403, 1399, 1396, 1394, 1393, 1391, 1389 and 1386. Price is within the 1399 to 1406 bracket all day long.  HOD is 1405.88, into the close, watch to see if the 1406 R from 2008 holds, or not. As a means to gauge the final time remaining in trading today, the bulls win with a move up thru 1406, the bears win with a move down below 1399. St. Patty wins between 1399 and 1406 and the fun begins again on Monday. Check to see if the SPXA150R stays above 90, or not, after the print occurs this evening.