Keystone's Midday Market Action 5/14/12

Minutes in front of the open, watch Keystone's SPX:VIX Ratio Indicator to see if 68 fails.  The futures say yes so the ratio says a large down day is on tap, as long as the ratio stays under 68.  Watch RTH 41.35, XLF 15.18, VIX 18.14.  Bears need to push the SPX under 1349 to accelerate the downside. A move thru 1350-1364 is sideways action today.

Note Added 5/14/12 at 9:37 AM:  SPX:VIX ratio collapses at the open, now at 63.11, the bears are running strong.  XLF 14.61 falling down hill; European banks very weak today. VIX exploding upwards, now over 21.  Copper continues to crumble down 2 1/2%; JJC now sporting a 45 handle. Brent Oil 110.58. WTIC Oil 94.15. Gold 1559. What China triple R cut? Two months ago, the SPX would have been up 14 handles not down 14 handles on that news.  SPX now lost the 1440 level.  The RTH under 41.35-ish ushers in the new leg down for markets. The SPX lost the 100-day MA at 1351.00. SPX 1337 support is the strongest support of the year for price since this level was broken to the upside in February. Breaking down thru 1337 is a big deal and very troubling for markets. Uber strong support exists at 1337, 1333, 1331, 1329 and 1326. Under that is the strong 1314-1318 gauntlet. If that breaks, the SPX will be moving to 1300-ish.

Note Added 5/14/12 at 10:08 AM: The SPX 1337 support holds thus far.  RTH lost the 41.35 level. The market bulls have no hope unless they return the RTH to 41.38 or higher.  The market bears are next locked on to the NYA, now printing 7710.  If 7630 fails, the broad indexes fall into a secular bear market pattern moving forward. The ramifications are very serious. Only 80 points on the NYA is holding back the bears from gaining longer term control of the markets. SPX:VIX is at 62.76 so a large down day is locked in for markets with a Dow Industrials triple digit down day on tap--as long as the ratio stays under 68. The bears are cruising. Keystone's Inflation-Deflation Indicator falls into DEFLATION as the CRB prints 288 and the 10-year note price is 99.781 with a 1.77% yield.

Note Added 5/14/12 at 10:24 AM:  SPX punched out a new low that stabbed under the strong critical 1337 support. Another test should come.  RTH 41.12. The bears are not fooling around today. NYA is printing 7708 now only 78 points above the critical 7630. Remember the CPC put/call was up over 1.2 and with today's market weakness should travel towards 1.3 or higher setting up a relief rally. With SPX:VIX and RTH collapsing today, and NYA in trouble, today's weakness should have staying power all day long, so a recovery bounce may line up for tomorrow. NYA punched out a LOD toay under 7700 at 7699.64 so watch this level closely today.

Note Added 5/14/12 at 11:18 AM:  The bulls are trying to push RTH back above 41.38, now printing 41.30. Keep an eye on it. If 41.38 is regained, the bulls are fighting back and do not plan to give up easily. If price failure occurs again and RTH stays under 41.38 and moves lower, the markets, and SPX and NYA will move lower. Lots riding on the retail sector this week. SPX:VIX ratio is at 62.78, well under 68, continuing to lock in the market negativity all day long. Tech is not leading the broad market lower so further downside may be muted.

Note Added 5/14/12 at 11:27 AM:  Bingo for the bulls. RTH is back above 41.38, see if the bulls can hold this level for seven to ten minutes, or not.  Note the recovery in the markets as the retail sector is wrestled back into the bull camp. SPX:VIX is 64.19 saying the large down day will remain in place. The bull-bear battle continues.

Note Added 5/14/12 at 12:08 PM:  Note the battle for RTH 41.38. the bulls could not hang on, RTH falls to 41.35.  This battle for the retail sector is pushing the broad markets to and fro today.

Note Added 5/14/12 at 3:17 PM:  RTH fell on its sword, so the markets did as well as the day moves along.  The SPX:VIX ratio fell under 68 from the opening bell and never looked back, now printing 61.97, so a large down day is expected today with the Dow Industrials down triple digits, and the Dow is currently down -103 points. The market bears will remain in control of markets as long as the SPX:VIX is under 68. A recovery rally will require close watching to see if the ratio back tests 68 and fails, or if the bulls can move it back above 68. The bulls have held critical SPX 1337 support. SPX now printing 1340.46.

Note Added 5/14/12 at 3:41 PM:  SPX LOD is 1336.61, critical support is 1337, now printing 1340. Tech is not leading the broad market lower so this makes it tougher for bears to push lower but the market weakness remains firmly in place with RTH now printing 41.16, collapsing after the back test of 41.38, bearish, and SPX:VIX under 68.

Note Added 5/14/12 at 3:44 PM:  NYAD down over -2000, TRIN spiked to 2.5 today, now firmly on the bear side at 1.31, and CPC put/call should spike towards 1.3 or higher, that can be checked after the close. All three point to a snap back bounce to relieve some of the negativity. If that recovery occurs, watch RTH 41.38 and SPX:VIX 68 since if markets recover but these two parameters stay bearish, the bulls got nothing and the bounce will be nothing more than a short reloading opportunity.

Note Added 5/14/12 at 4:02 PM:  Dow finishes down -125 points, triple digits. Good ole Keystone's SPX:VIX ratio forecasted this finish at 9:30 AM today. The bears are cruising but a snap back bounce should be on tap.