Keystone's Midday Market Action 4/12/12

The economic data at 8:30 AM diminshed the S&P futures from up seven to up a couple points.  The opening bell rings and the markets are off and stumbling.  As mentioned last evening, check the VIX in these opening minutes. VIX is printing 19.46, the level of interest identified by Keystone's algo is 19.45.  How does Keystone identify these numbers ahead of time? Keep an eye on it. VIX above 19.45 and the bears are growling, below and the bulls are continuing with the recovery bounce.  Keystone's SPX:VIX has a 70 handle, thus, above the 68 level this favors bulls.  If you see the ratio drop under 68 this morning it will signal a large down day on tap, the Dow Industrials would typically lose triple digits. The bulls will fight to maintain 68 and higher.

Note Added 4/12/12 at 9:52 AM:  The bulls are pushing higher today. VIX is now printing 19.09 well under the 19.45 so the markets are moving higher. The SPX is now testing the 50-day MA resistance ceiling at 1374.54; last SPX print is 1375.40, another feather in the bulls cap.  Tech (COMPQ) is leading the broad market (SPX) higher so this is yet another feather for the bulls. AAPL is higher and Apple is the markets.  Utilities are red. Copper was sick in the early going but is now enjoying some buoyancy. XLF and RTH remain above the levels Keystone highlighted last evening.  The bulls are enjoying early buoyancy thus far today. VIX now at 18.99 well under the critical 19.45 so the bulls are running. SPX:VIX ratio is 72. Use VIX 19.45 and the SPX 50-day MA as your guide as the markets settle in today. Since price popped above the 50-day MA and jumped higher, look for a back kiss. Keystone sold XCO taking profits in a one-day trade, will look to reenter; exited MNKD which was a flat trade, will look to reenter. Keystone bot TWM.

Note Added 4/12/12 at 10:43 AM: Wild day today, the bulls are running. The SPX punched thru the 1375 level identified last evening and accelerated higher.  Keystone's algorithm, Keybot the Quant, is on the verge of going long right now.  Semiconductors, SOX, are key, a few more pennies higher and the complexion of the markets would change from bearish to bullish and extend this recovery rally a few days.  Watch SOX 423.40, it is the bull-bear line in the sand; Keybot will probably go long if it is exceeded.

Note Added 4/12/12 at 10:58 AM:  The tension mounts as SOX continues to tease the 423.40-ish area. The 8 MA crossed above the 34 MA on the 30-minute SPX chart which is bullish. This is an intense bull-bear fight right now. Watch SOX. Keystone bot USD (2x semi's). Tech is leading the upside.  Markets are benefiting from the talk of ECB intevention yesterday and the dovish comments from Fed heads such as Yellen over the last day (more accomodation and quantitative easing).

Note Added 4/12/12 at 12:10 PM:  The drama continues with Keystone's algorithm, Keybot the Quant coming within seconds of flipping long a few minutes ago.  As a rule of thumb, watch 1383.97, if this level holds for two to three minutes, Keybot will likely flip to the long side. Current SPX print is 1383.05.

Note Added 4/12/12 at 12:17 PM:  A quick summary in these fast-moving markets.  Markets bounced after the bell on the lower volatility.  Then the semiconductors, SOX, moved higher which triggered upside buying. The SPX touched 1375 so the upside accelerated. The dollar weakened after the open and that supplied buoyancy to copper and commodities, and in turn, equities.  AAPL turned red at 11:30 AM but only for ten minutes before recovering, but Apple is now red again.  Tech is leading the broad markets higher but its strength is diminishing, thus you see the markets starting to drift a bit lower. Focus on SPX 1383.97, it will provide the answer in the minutes ahead. Keystone's ticker cannot take this much excitement, glad the defibrillator is nearby.

Note Added 4/12/12 at 1:38 PM:  Keybot the Quant flipped to the long side a few minutes after the previous message.  Note that tech has actually lost its leadership role today with the COMPQ now lagging the SPX, not exactly a ringing endorsement for the long side. AAPL is red now, rolling over as the day progresses due to the ongoing negative divergence. This Apple negativity is damaging the Nasdaq's run today and places the bull rally into jeopardy before it really has a chance to gain momo. Remember, Apple is the markets.  Watch SOX 423.40, now printing 424.36, one point above, which provides bull fuel for the broad indexes. If SOX fails, the markets will likely reverse once again. Rumors about a healthy China GDP overnight tonight is said to have fueled today's rally. Pure rubbish since traders agonize over the issue of China lowering the triple R's (QE), or not, and the case can always be made for either outcome to occur. Plain and simple, lower volatility and higher semiconductors provided the bull fuel today.  For now, the bulls are throwing confetti, pouring booze into the punch bowl, donning lamp shades and singing songs.