Keystone's Midday Market Action 5/18/12

The market bulls were jipped on a strong open. The Nasdaq turned red in quick order and since tech leads the broad markets, the major indexes are languishing sideways thus far today. SPX continues to hold the 1305 support level, so far. If 1305 fails, 1300 and 1298 are next. Perhaps markets are in a holding pattern until 11 AM EST when the much-awaited FB IPO hits the market. The best thing about it all is that the hype will finally be over.  Mark Zuckerberg opened the Nasdaq for trading today remotely, in Hacker's Square, from the company's headquarters.  All the employees cheered and partied but wouldn't you if you were on the clock and paid for having fun?  The carnival atmosphere smacked of dotcom bubble type euphoria.  Keystone took profits on CHK, an overnight trade, and will look to reenter.  Also opened a new long position in SVU. Also added more SSO. The CPC put/call is an important indicator that wants to see a snap back rally; ditto the uber low NYAD yesterday below -2200. FB's trading is now less than an hour away, watch the Nasdaq closely as Facebook trading begins.

Note Added 5/18/12 at 11:24 AM:  FB does not open at 11 AM, news hits that the trading will begin at 11:05 AM. Well, 11:05 AM comes and goes. Time ticks by, what is taking so long?  Is there a problem? Folks in New York City gather in Times Square watching the Nasdaq jumbotron. The Nasdaq drops from 2827 to 2813 over the last fifteen minutes as trader's perhaps sell other tech companies to build cash to purchase FB. The average pop for a tech IPO is about 30 or 40% so that would equate to a price of 51-ish or higher. Now at 11:20 AM, twenty minutes late. Is there a BATS exchange event in the making? AAPL is up 1.5% today so those holder's seem content iwth staying with Apple instead of moving to Facebook.  The minutes continue to tick by....... sweat beads must be appearing on foreheads since the open was promised 11 AM, then 11:05 AM, now long gone. This is high drama.......   

Note Added 5/18/12 at 11:25 AM:  The Wall Street Journal reports that traders are having problems changing and cancelling orders ahead of the FB IPO.  Concern grows in the markets that there is a problem with FB's IPO.   ....yep, it looks like a Faceplant....  It should open fine in the time ahead but each minute that passes is another nail in its coffin. This is not what you want to happen when you kick off an IPO.

Note Added 5/18/12 at 11:30 AM:  There it is, FB opens at 42.05, a paltry 12 or 13% far short of the 50's which can only be viewed as a disappointment.  Let's give it some time. Nasdaq remains weak but Apple remains positive.  FB now printing 41.58 ..... watch to see if 40 is lost, that would not be good.

Note Added 5/18/12 at 11:33 AM:  FB now printing at its lows, dropping under 41.... so far, yep, it looks like Faceplant. SPX now collapses thru 1305. The FB IPO is stinkin' up the markets.

Note Added 5/18/12 at 11:39 AM:  FB printing 40.03 ....... 40.00.... the market makers are trying to hold the 40 support level.....if 40 is lost, this may get ugly.  Pump and dump baby, the smart money got theirs, Ma and Pa Sucka holds the bag.  FB now printing 40.00 holding on for its life, not exactly a joyous start. SPX prints a LOD of 1300.62; 1300 and 1298 is support.  The major indexes are now red; FB is creating  a stench in the markets.  ZNGA (FB's right hand company) tumbles down over 13% and now triggers circuit breakers halting trading. This continues to stay ugly. Yep, it's a Faceplant.

Note Added 5/18/12 at 11:45 AM:  Whoopsies daisies. FB fell thru 40, now at 39.12.... looking more and more like a piece of garbage. The could not hold 40. FB is now about to fall thru 39 headed for the offering price at 38 dropping a buck in seconds. Now printing a 38 handle.... here's 38.35 a whopping 35 cents above the opening price. A true Faceplant isonly penies away once 38 would give way.  The big players ditched this garbage at the open.

Note Added 5/18/12 at 11:50 AM:  FB now at 38.02..... about to break syndicate bid, there it is 38.00, so twenty mintues after the open it is officially flat as a pancake--and it should be at a minimum up in the 50's. ZNGA remains halted.  AAPL now a point away from turning negative.  FB is stinkin' up the joint in the hot summer sun dragging everything lower. SPX lost 1300. SPX 1298 is strong support, see if it holds, or not.

Note Added 5/18/12 at 11:57 AM:  FB drops thru the issue price at 38. Zuckerberg is probably laughing since he got his payoff, maybe the holder of FB can be called a suckaberg. There is a long day ahead but one has to wonder how this weak showing will affect the happy vibe over the Facebook brand, maybe users will not view it as the hip cool thing anymore?  Everynoe wants to feel like a winner, not like a loser. SPX LOD is 1298.94. FB lost the issue price in 26 minutes time but has now recovered to 38.44. The fanfare is over and the cleanup begins, nothing else to see here folks, move along, move along, time to refocus on the real world, the Euro woes as well as weak China housing data that hit overnight. ZNGA remains halted. SPX 1298 support held.

Note Added 5/18/12 at 1:39 PM:  There remains trading issues ongoing with FB. A sloppy start is ongoing but FB is starting to gain its footing. SPX is moving thru the 1298-1307 range. AAPL is up a percent today but tech is leading the broad markets lower. TRIN remains under one and bullish all day long.  Perhaps as the FB stink wears off, and tech recovers, markets will recover as the CPC and NYAD want to see occur. Typically markets float up on Friday afternoon as shorts pare back positions in front of the weekend but the tricky aspect this weekend is the G-8 summit. The Spain and Greece turmoil is adding worry. President Obama, France's Hollande and other Euro nations, hat in hand, want some of Germany's money. Poor Merkel, she must be lonely at the meetings, a cool breeze blowing up her skirt, er pants.  She is probably sitting at a table by herself trying to strike up a conversation with the waiter. FB is printing 41.29 so it is staging a mini comeback. Watch FB 42.05 resistance since that was the opening print. ZNGA is trading although there are many unhappy traders with this entire Facebook and gang faceplant today.

Note Added 5/18/12 at 2:33 PM:  SPX just tested the critical and strong support at 1298. Price only punched down thru for three minutes before bouncing. Let's see if the bulls made a line in the sand for today at 1298. SRS contnues with a phenomenal three-day move higher. What happened to the real estate recovery? Utilities, UTIL, are flat. VIX well above 24. SPX is now only a few measley points from signaling a secular bear market when price falls under the 12-month MA, now at 1292. Whoopsies daisies, 1298 just failed again, see if it holds for seven to ten minutes.

Note Added 5/18/12 at 3:02 PM:  FB is puking again, now under 40 and a smidge above 39. SPX failed 1298.  SPX S/R is 1300, 1298, 1296, 1295, 1293 (10/27/11), 1292 (12-month MA), 1289 and 1287. The 1292 and 1287 levels are very strong and sturdy support levels. FB just lost 39 again headed towards 38, what an embarassment. The markets are a mess this week. The 1295 support has held today, so far.

Note Added 5/18/12 at 3:22 PM:  SPX is fighting along that 1298 S/R. FB only 13 pennies above dropping under the 38 issue price. Quick, post a message to Facebook to tell the users to buy some shares to try to keep the boat afloat. Now printing 38.05.  The underwriters are supporting FB at 38.  SPX is now moving lower again unable to shake off the FB stink. Watch for another test of SPX 1295 support, if she fails, a test of that 12-month MA at 1292 is on tap. These are ugly markets.

Note Added 5/18/12 at 3:39 PM:  SPX pierced 1295 support, the bears are not fooling around.  Keystone exited the SRS trade with a tiny profit, that was a longer trade than originally expected.  Also took profits on NOK, a one day trade, will look to reenter. Also added more SSO.

Note Added 5/18/12 at 3:44 PM: SPX now with a 1293 handle...1293.19 ....1293.14.... the bears are trying to hit the home run by pushing under the 1292 level representing the 12-month MA. Here's 1292.81.  Many algorithm's will kick in favoring the bears if the 1292 is lost.

Note Added 5/18/12 at 3:53 PM:  SPX hangs on by a thread above 1292. Keystone bot more RIMM. Also opened a new long position in FSLR.

Note Added 5/18/12 at 4:04 PM:  FB is settling out; the underwriter's prevented it from falling under the issue price of 38. Definitely not the first day hoped for. SPX finishes at 1295. The LOD is 1291.98 piercing the 1292 level by two cents. The exact number for the 12-month moving average is 1291.73 so the bears needed 25 cents more to violate this critical MA thrusting markets into a secular bear.  The battle will continue next week.