Keystone's Midday Market Action 3/19/12

Spring begins tomorrow but today AAPL springs a surprise on markets announcing a divvy and share buyback.  Traders are luke warm to the news.  Buy backs rarely have a great outcome, quite the contrary if you look at data a few weeks or months later, the stock is typically lower.  AAPL's hands are tied with its billions in cash since most of it sits overseas and they see no reason to bring it home to the States due to the tax hit.  AAPL is up one percent now and supporting the broad markets since Apple is the markets. The Housing Index data was flat with a weaker revision to last month's numbers. Funny how the data numbers, for any indicator and from any source, are nearly always reported as higher and more bullish, only to experience a revision lower a month later when traders have already moved on. Thus, in the housing sector tally this week, score one for the bears to start the week off.

The dollar is up by a hair, call it flat, so the CRB is not selling off and now teasing 319 well above the 313-ish danger level.  Copper, JJC, is printing 50.25 and the level of interest there is now at  49.10 so copper is comfortably above. Thus, commodities and copper continue to help support the broad markets. VIX is up but still below 15 as bulls continue to view the markets without any worry at all. Utilities, UTIL, are up as well so the bulls are easily maintaining control today.

Keystone bot SSG today, also adding to the TYP that was initiated on Friday. These tickers need the semiconductors and tech sector in general to roll over.  The SPX touched the 1406 handle which is now on par with 2008 numbers, but oddly, an upside acceleration has not occurred for markets yet, as would be expected.  The day is young, however.  A move up to test resistance at 1407, 1409 and perhaps 1413 would be expected once 1406 was pierced.  Last week we saw how the SPX hit the level where an acceleration should occur but it stalled out then as well.  Perhaps some of this behavior is further indication of a topping market.  As this is written, the SPX grabs 1407 and moves over this resistance level. See if the 1409 R holds, or not. A back kiss of 1407 would be expected where price will decide to move up to test 1409, or, fail and move lower to test 1406 again.

Note Added 3/19/12 at 11:00 AM:  The dollar is flat to red now adding the bull fuel for markets.  Nothing has changed with the expected asset relationship; lower dollar = higher euro = higher commodities = higher equities. The dollar remains the key.

Note Added 3/19/12 at 12:43 PM:  The dollar is lower, commodities higher, AAPL higher, equities higher. The beat goes on.  SPX did move higher afterall as would be expected once 1406 was hit this morning. SPX 1407 R gave way, also 1409 R, so watch to see if 1413 R can hold back the bull assault higher. SPX HOD thus far is 1412.22, now printing highs of the day. AAPL tries to be sticky at 600. BAC hits 10.

Note Added 3/19/12 at 2:30 PM:  Bulls punched up thru SPX 1413 resistance, the Energizer Bunny keeps going. Next resistance levels higher are 1413, 1415 and 1419.  The dollar is down so stocks are up.  Interestingly, did you notice that utes went negative?  UTIL now printing a 453 handle, a slight bit lower than where it started today.  The danger level which will usher in strong broad market weakness is 447. The high stakes drama in the markets over the last month continues. The lower dollar and higher AAPL keeps the market bulls smiling. UTIL now losing the 453 handle printing 452.93.

Note Added 3/19/12 at 4:14 PM:  Markets pared the gains into the close on a rumor that BAC is going to offer a secondary, which would dilute the shares and weaken the stock price.  BAC peaked at 10.10 today and tumbled down to 9.55 at the close a give-back of 5% in the last four hours of trading. To keep it in perspective, however, BAC was 5 in mid-December, thus, it doubled from 5 to 10 in three months and today gave back 5% of that 100% gain.  SPX followed S/R closely today; 1406, 1407, 1409, 1413 and 1415 which held. The HOD was 1414 on the dot. The dollar tells the story, if it is weak, stocks are up, if it is strong, stocks sell off.  The weak dollar causes commodities, copper and equities to rock higher so the market bears do not have a chance as long as the dollar is red. The TNX 10-year yield (see previous chart) hit a high today at 2.39%; the top rail of the current channel is 2.40%. The AAPL news this morning was just what the bulls ordered since that helped buoy markets from the start. As AAPL goes, so goes the markets; AAPL closed at 601.56.  The broad markets will not turn lower if the dollar is weak and Apple is strong.  The most interesting development today was the utilities sector.  Higher yields on Treasuries hurt the utes since their borrowing costs to manage the large scale projects they undertake increases.  UTIL closed with a 451 handle only 4 handles above the 447 danger level for this week.  The dollar, AAPL and UTIL will tell the story each day forward.

Note Added 3/19/12 at 8:37 PM:  ADBE is taking the pipe after hours, down 4.5%. DIS comes clean about its John Carter movie flop and it is dropping a percent after hours.  DIS is one of the Dirty Thirty (Dow Industrials), so to gauge the effect any Dow stock has on the Dow, use a factor of 8.  Thus, if DIS drops a percent in tomorrow's trade, that is down a half buck, so the hit to the Dow would be about 4 points, no biggie, but a potential drain on the Dow nonetheless. ORCL is down 0.7% after hours.  APPL is up 0.6% AH on positive sales of iPad3. The effects of ADBE and ORCL on the tech sector is important for tomorrow.