Keystone's Evening Nightcap 4/25/12

A wild gap-up day ends in confusion as the closing bell rings twice. Keystone cannot remember that happening in any recent memory.  The bell was mistakenly rang one minute too early, then had to be rang again to officially close the markets.  You just cannot find decent help these days--there's only millions and millions of people unemployed. 

Day One of the Apple Rally ticks by.  AAPL closed at 610 above the 20-day MA at 607.62 which is bullish. The buying volume today was not impressive.  The move up for Apple will provide new opportunities to short.  The power that AAPL wheels is remarkable with the Nasdaq, the Nasdapple, jumping like a puppet on a string, and the broad markets following close behind.  Apple is the markets.  The broad indexes are fueled by two engines; one is Apple and the other is Chairman Bernanke's quantitative easing (QE). Markets were mixed in the 2 PM hour as Bernanke assumed his position behind the mahogany desk for his quarterly Desk Conference. Keystone wonders what is in the drawers of that desk? Perhaps printing plates? The Chairman said the magic word 'accomodation' in the Q&A session and the markets were breathing easy knowing that another fix (QE) was always close at hand.

RTH 40.96, XLF 15.10 and VIX 18.50 were all in the bull camp to start the day and stayed that way, each adding bullish energy to the broad indexes.  Copper, commodities and semiconductors, JJC, CRB and SOX, respectively, all add bear negativity to markets.  For the bulls to make any sustainable progress upwards, they must win back one of these three sectors. Watch JJC 48.10, CRB 311 and SOX 417. If one or more of these give way to the upside, the market bulls got game, if not, the bulls got nothing.  The bears will continue to try and pull retail, financials and/or volatility into their camp; watch the levels shown at the start of this paragraph.

Keystone's algorithm, Keybot the Quant, flipped back to the long side today taking a two percent loss. Do not be surprised if it whipsaws back again this week.  The bulls and bears are in a tug-o-war right now, think of the six sectors above as the two teams with three on one side and three on the other, and the levels shown for the sectors will dictate the winner of the tug-o-war.  The bulls have the advantage currently.

The SPX closed at 1391, above the 20-day MA which is bullish.  SPX 1391 is resistance, then 1394, 1399, 1401 and 1403. The 8 MA is above the 34 MA on the 30-minute chart which is bullish.  For Thursday, the bulls only need to see a smidge of green in the futures and this will launch another upward move with price testing 1399 likely. The bears will try to prevent further upward momo by keeping the futures red overnight and trying to win over RTH, XLF and/or VIX. A move thru SPX 1374-1390 is sideways action.

The NYAD printed over +2000 today hinting that a pull back is needed to relieve the positivity. TRIN is 0.89 consistent with the bullish move today. The BPSPX has been on a bearish sell signal for markets for the last couple weeks but a drop thru 70% kicks in additional bearishness. BPSPX stopped at 71 and curled up today so it was not quite ready to tumble thru 70, yet.  The CPC Put/Call prints 0.75, truly remarkable. This print once again states that traders are very complacent, feet up on the desk, no worries about any market pull back large or small.  Moving forward days and weeks, the market bears should have the last laugh since markets will sell off until the CPC eventually prints 1.2 or higher. Seeing complacency in the markets again, the VIX has a 16 handle as well, indicates that we are at a market top.

Keystone's trades today included taking profits on the MNKD long, exiting that trade but will look to reenter again.  Also made a large add to the ongoing SRS trade.  Also bot CTRP, a new long.  Also bot FSLR, a new long. First Solar is a dangerous knife-catch trade, actually it is a guillotine-catch. The solar business is down the tubes since governments such as Germany and the U.S. do not want to fund the industry anymore so it collapses since solar cannot support itself without government handouts. If markets were actually free the solar industry would never have grown with a paper mache foundation. The chart has nice positive divergence and a falling wedge hinting that a quickie bounce may occur now.  Also bot BGZ which is a triple X short ETF that helps hedge against Keybot.

Jobless Claims occur in the morning at 8:30 AM.  Pending Home Sales 10 AM.   Natty Inventories 10:30 AM. Another earnings lollapalooza is on tap as well.  Never a dull moment.