Keystone's Midday Market Action 5/15/12

Early this morning, East Coast U.S.A. time, the futures were strong with the S&P's up over 10 points. Futures dropped back but then returned to these levels, but a short time ago, as news that new Greece elections would be required, the futures are tanking, now red.  European indexes have given up today's gains and now turned negative. It is obvious that traders were optimistic hoping Greece would develop common sense and form a coalition government, but, all hope is now lost, and the Greek tragedy will continue along on a Lehman-esque path.

Sticking to the technicals, RTH 41.38, SPX:VIX 68 and the SPX 30-minute chart 8 and 34 MA cross are all important as the bell rings.  NYA 7630 is important with price only 75 points above this danger level that represents where markets fall into a secular bear market pattern. For the SPX, starting at 1338, watch the 100-day MA at 1351 and gap fill at 1353-ish. The market bulls need to touch the 1352 handle to accelerate the market upside.  The bears need only one point lower, to push under the critically strong 1337 support, and the downside will accelerate. A move thru 1338-1350 is sideways market action.

Tomorrow, Wednesday, is a big drama day with Housing Starts on tap before the bell and the FOMC Minutes in the afternoon. The markets want to see a snap back bounce today to simply relieve the negativity with the uber low NYAD, high TRIN and high CPC, but futures are now red. Mix all this together and you may see a sideways day today where traders are content in waiting to make a directional decision after tomorrow's data.  Retail Sales were lackluster this morning. HD disappointed on the top line and is down pre-market. Another day of time will also allow more retail stores to report earnings providing more information on the strength of the resilient American consumer. The retail sector is a key sector helping the market bulls stay in the game. Weakness in RTH will drive markets lower. The opening bell is only a few minutes away.

Note Added 5/15/12 at 9:43 AM:  RTH is at 41.15, bearish. SPX:VIX ratio is at 63.16, bearish. The 8 MA remains under the 34 MA on the SPX 30-minute chart, bearish.  The bears tried to punch down thru 1337 but failed, so far, so give the bulls a feather for their caps. LOD thus far is 1337.06 so keep an eye on this number.  Sideways market move thus far today. Bears are having trouble piercing the strong 1337 support, but bulls cannot move RTH or SPX:VIX higher. NYA prints a LOD of 7685 thus far today only 55 points away from serious market danger.

Note Added 5/15/12 at 9:47 AM:  NYA new LOD now, printing 7681.  SPX testing the 1337.06 LOD, and bounced, but did punch out a new low so watch 1336.80 now. Tech is not leading the markets lower so the bears are having trouble pushing markets lower. RTH is sneaking upwards now at 41.25.  SPX:VIX also moving up but at 64 remains four points below the critical 68 bull-bear line.

Note Added 5/15/12 at 12:29 PM:  RTH continues to dance above and below 41.38 and takes the markets along for the ride. RTH is now at 41.47 so the market bulls receive market positivity. SPX:VIX is 63.87 stating that the bears remain in control underneath the surface. The SPX broke thru 1337 but only managed to stay under for about four minutes before recovering. It needed to hold from seven to ten minutes or more to lock in the 1337 failure. The SPX is moving sideways thru 1337-1347 for the last day and one-half. RTH is above 41.38 so the markets float upwards; when RTH moves under 41.38, the markets will sell off. Coals are takin' the pipe today. PCX, that Keystone exited a couple days ago, is down 15% today; sometimes it is better to be lucky than good.  The coal stocks, however, are attractive moving forward since this last flush down should help create a firmer base for this troubled sector. The government is on a vendetta to destroy the coal industry and the stock pullbacks show that they are succeeding.

Note Added 5/15/12 at 3:00 PM:  A very moody market today that is mainly moving sideways thru 1337-1344 and as this is typed, failure occurs thru the 1337 and 1336 levels. GM pokes a stick in FB's eyes ahead of their IPO saying that the car ads will be pulled since they are ineffective.  SPX just fell thru 1335. Consider the neckline of the H&S pattern at 1340 to now be ruptured placing the 1260 target area in play as time moves forward into the summer.  There goes SPX 1334.

Note Added 5/15/12 at 3:09 PM:  RTH fell under 41.38 for the umpteenth time ushering in this market weakness.  SPX:VIX ratio is collapsing now with a 60 handle, well under 68. Dr. Copper has pnemonia, coal, steel, other commodities getting hammered today. If the bearishness in retail, RTH, stays in place, the NYA and utilities, UTIL, will next be in focus. NYA is now printing 7650 only 22 points away from the 7628 line in the sand. If the NYA fails 7628, the broad markets enter a whole new phase of extended intermediate and perhaps long term bearishness. NYA LOD just failed, now printing 7644......... hang on Nellie.

Note Added 5/15/12 at 3:35 PM:  Sounds like Greece may be seeing a run on the banks, European contagion worry is now boiling over. This is causing the late day swoon. The NYA lost the 40-week MA but is now back above. Price has not been below this critical moving average since 1/18/12. NYA is now printing 7632; the 40-week MA is 7628. High drama indeed. SPX:VIX ratio now printing 59.41.

Note Added 5/15/12 at 3:51 PM:  NYA is fighting for its life. SPX is printing 1330.  The strongest support and resistance for SPX is 1337, 1333, 1331, 1329 and 1326.

Note Added 5/15/12 at 4:07 PM:  NYA beat the devil by a few bucks but lots more drama should be on tap for the days ahead. The Greece banking drama, Housing Starts and FOMC Minutes tomorrow will move markets. JCP lays an egg with earnings after the bell so this puts another nail in the RTH coffin. NYA 7628 (40-week MA) is key tomorrow.