Keystone's Midday Market Action 4/10/12

UTIL is losing more ground and CRB, JJC and SOX remain bearish as well.  XLF, RTH and VIX, however, are not yet breaking their critical levels of 15.10, 40.80 and 19.40, respectively, so the bulls are putting up a fight. Thus, sideways markets today, a standoff so far. SPX is in a tight two and one-half point range thus far between 1379.50 and 1383.00. Keystone's SPX:VIX ratio is at 73.70, five points above the market danger level of 68.

The Nasdaq is positive as AAPL punches out another new high this morning, so without tech leading the downside, the broad indexes move sideways.  Apple is the markets.  Keystone shorted more AAPL, took profits on SVU, added more EGO long, bot AEM long and reentered JRCC long. Thanks to the two of you that had the stretcher ready to carry good ole Keystone out on the SVU earnings but to his good fortune, SVU beat with great guidance moving forward. Although this trade is now exited, investors looking for a longer term play should give SVU a look, perhaps give it a week or two to settle out, and then it should be a good play for the months ahead. Go ahead and place the stretcher back behind the door where it can stand ready for use for carrying Keystone out if one of the current or future trades go the wrong way.

Note Added 4/10/12 at 10:10 AM:  As the broad indexes drift lower, use VIX, XLF and RTH as your guide as described above.  If the markets drop but none of the levels are breached for these three sectors, the downside will not have any juice and the markets will recover.  If one of the three levels fail, a new down leg for the broad indexes will begin. VIX is now on the ragged edge printing 19.17, only 23 cents from the critical 19.40 level.

Note Added 4/10/12 at 10:19 AM:  VIX now printing 19.31 only nine pennies from creating accelerated market negativity. XLF and RTH are holding on the bull side, for now. The 10-year note yield is now at 2.01% on the verge of losing the 2% level as traders seek safety (Treasury price up yield down).  Keystone bot more AEM.

Note Added 4/10/12 at 10:38 AM: VIX came up to tap on the 19.40 but received a spank down, watch to see it makes another run.  The Nasdaq is red now but still not leading the downside since AAPL remains elevated. Watch AAPL to see if it gives up the ghost, or not.

Note Added 4/10/12 at 11:42 AM:  VIX moves above 19.45 (Keystone's algo is constantly recalculating the levels of interest) triggering the market down move and XLF is pennies from failure, hence, the broad indexes are dropping for another leg down.  The European markets closed and wish they had stayed on vacation.  Italy markets are down 5% and Spain down 3%.  The Spain 10-year yield has breached 6%. The European banks were beat from 4 to 6%. The U.S. 10-year note fell under 2%.  The SPX is now testing the critical 1370-1372 support zone; the 50-day MA is 1372.42, and failed.  The NYA, INDU and RUT had all already lost their 50-day MA's.  The bears are cruising.  AAPL is trying to hang on, still up a couple bucks, if she rolls over things can become extremely ugly. The Nasdaq is not leading the downside so the move down may slow, but, if Apple gives up the ghost, the selloff will become dramatic.  UTIL has a 450 handle less than nine points away from triggering a market trap door.  This is a great day--for bears.

Note Added 4/10/12 at 11:54 AM:  XLF failure occurs, now printing 15.07, under the 15.08 critical level, see if this holds for seven to ten minutes.  AAPL is now red and puking.  The Nasdaq is now acelerating down at the same pace as the SPX and starting to gain steam.  The broad indexes are losing their grip. Fantastic bearish action today, a thing of beauty. SPX S/R is 1370, 1368, 1366, 1363.61, 1363, 1361 and 1358.

Note Added 4/10/12 at 12:07 PM:  Keystone's SPX:VIX Ratio Indicator now failed at 68 verifying a large down day today. SPX now trading between 1363.61 and 1366 S/R. VIX jumping large well over 20 now.  XLF just locked in failure. RTH would be next to exhibit failure, now printing 40.92, the level of interest is 40.65.  Lots of bear fun today. The technical damage is significant and opens the door to an extended and sustainable down move for the days and weeks ahead. Keep kicking it down the steps bears. Keystone bot more JRCC, also now bot a long position in CDXS.

Note Added 4/10/12 at 12:43 PM:  XLF is back on the bull side now printing 15.09 and Keystone's algo is identifying 15.08 as the line in the sand. See if this holds, or fails again. Note the markets trying to recover as the XLF tries to regain the bull camp.  These are fast markets. And there goes XLF again, now printing 15.07 and returning to the arms of the bears.  Use XLF 15.08 and RTH 40.65 to gauge broad market direction for the remainder of the session. JPM and WFC report earnings on Friday which will ensure plenty of drama all week long since the results will directly impact XLF. The Nasdaq is down -1.5% and the SPX -1.4% so tech is leading the way down, very bear-friendly. Copper remains red but gold and silver recovering. XLF is back below 15.08 so markets are weakening again, but will be held in check if RTH does not fail. If RTH loses 40.65, the day will get far more uglier.

Note Added 4/10/12 at 1:21 PM: RTH is on the verge of failure, printing 40.67, only three pennies from failure at 40.64. The markets continue to deteriorate. The SPX printed under 1360 and is now moving between the 1358 and 1361 S/R. The Nasdaq fell under 3000. The 10-year note yield is 1.97%. Watch the RTH, the bears only need three more pennies. Burn, baby, burn. Tech continues to lead the downside which will continue to push markets lower, watch the COMPQ versus SPX percentages.

Note Added 4/10/12 at 1:34 PM:  Here she goes folks.....RTH 40.63 and the level of interest is 40.63. This action will decide the remainder of the day.  If RTH fails, the mini-crash today will become worse. If the bulls can prevent RTH from failing at this level, the markets will recover.

Note Added 4/10/12 at 1:55 PM:  Note how RTH moved up slightly, the bulls trying to prevent the 40.63 failure, now printing 40.70, so the markets are gaining buoyancy, the Nasdaq regaining 3000. RTH now printing 40.75 hinting that further downside today may be limited.  Keep watching RTH 40.63 and XLF 15.08. SPX now moving between 1363.61, 1363 and 1361 S/R.

Note Added 4/10/12 at 2:39 PM thru 3:15 PM:  RTH failure occurs and the markets take another leg lower, the SPX has a 1358 handle now.  The markets continue to experience significant technical damage today. AAPL is printing the lows of the day now. Tech continues to lead the downside. Dr. Copper is now on life support, copper is cascading lower on volume. Keystone took profits in AEM as a day trade; AEM remains attractive and will look to reenter. Keystone added more CDXS longs and now bot a long position in MNKD.

Note Added 4/10/12 at 3:31 PM: Markets are trying to slide out sideways to finish the day.  Keystone covered the AAPL short taking profits and will look to reenter short again; also bot more MNKD.  RTH now recovering again moving back above 40.63.

Note Added 4/10/12 at 3:52 PM:  RTH is back under 40.63 favoring selling into the close but it is a wrestling match over pennies.  XLF just lost the 15 level.

Note Added 4/10/12 at 4:02 PM:  Great day for the growling bears.  Time to let the smoke clear and let things settle out. AA earnings are just released; appears to be 10 cents a share which is a beat, the top line beat as well, AA is bouncing 5% AH's.