Keystone's Midday Market Action 5/21/12

Futures steadily move higher overnight and the S&P's are over 10 handles higher in the early morning hours but have now given back half of that move. Markets are set to open higher nonetheless. Keystone does not need to reemphasize the SPX 1292 again, everyone understands this by now, simply read thru the previous messages.  Hints that China may perform further easing is fueling some of the buoyant futures.  FB is trading under the 38 issue price in the pre-market; traders smell blood in the water. Pehaps the low 30's will develop into a FB entry area.

Lots of media folks talking about a short squeeze market pop today and to sell the rallies. If the group think is in that direction the markets will typically not oblige.  Thus, either 1292 is taken out to the downside which means a serious market slide will kick in, or, the markets drift upwards slowly and as the short sellers try to pick the level to short, they become burned, and the markets continue to drift upwards towards a back test of the 1326 resistance and/or 1340 H&S neckline frustrating short sellers along the way. Monday is Memorial Day and the markets are closed. Thus, late week, Thursday and Friday would be expected to be bullish. With the higher volatilty now, markets may move into a period where the large up and down swings start occurring day after day such as up 200 Dow points one day, down 200 the next day, etc...  In these markets it is even more important to continually lock in profits since if you wait a few hours, bloop, the profits are losses.

For today for the SPX, starting at 1295, for the umpteenth time, watch 1292, markets will accelerate to the downside if it gives way.  The market bulls need to touch 1313 which is the 150-day MA, if so, a more substantial recovery rally can begin.  A move thru 1293-1311 is sideways action. The utilties, UTIL, remain elevated at 464. For the entire week this week the UTIL level to watch is 450.45. If this level should fail, the markets will likely be in or moving into a crash profile. UTIL 444 is a line in the sand, if it fails, markets will likely go into free fall at the same time or in very short order. But, with UTIL sitting comfortably above these numbers, these fears are not front and center right now.  If/when the markets move up with a relief rally the behavior in the utilities sector is very important. If UTIL leads the next market move down, that will be bad mojo for markets. For today, SPX 1292 and 1313 are the levels to watch. Above 1313 and the bulls pour champagne, below 1292 and the bears accelerate the selling party.

Note Added 5/21/12 at 9:39 AM:  SPX punches out a high over 1300, albeit by six pennies.  FB prints a 34 handle.  All the folks bragging last week that they were in on the FB action are now screaming, "Get me the H*ll out!"  Thus, the 30-34 area will likely be an attractive area for FB once the negativity works thru. Tech is leading the broad market higher today so this is a feather in the bull's cap. AAPL is up. TRIN is 0.93 a hair in favor of bulls below 1.00. Two more feather's for the bull's cap.  SPX 30-minute chart, however, continues to show the 8 MA under the 34 MA, bearish. SPX fighting for the 1300 level.  FB heading towards a 33 handle.

Note Added 5/21/12 at 9:51 AM:  FB down 13% today printing a 33 handle heading towards 32. It appears that FB is receiving support at the 33.00 level. The sharks are in the water now biting off chunks, 33 will probably fail. SPX 1300 is putitng up a fight. The more important stronger S/R is 1298, now being tested.

Note Added 5/21/12 at 10:35 AM:  SPX is moving higher, resistance above is 1305, 1307, 1308, 1312, 1312.24, 1314, 1314.17 (150-day MA), 1315, 1316 and 1318. If price hits 1312.24 and holds for several minutes, the upside will accelerate and a recovery move will lock on course.  SPX is now fighting at the 1307 S/R. The strongest resistance levels above are 1314, 1316, 1318 and 1326. Keystone bot more FSLR. Also took profits on the SSO trade opened late last week, will look to reenter. Also opened a new position now shorting T. Traders continue to chase into the divvy stocks such as T, VZ, XOM, etc.., but this appears to be a bubble popping.

Note Added 5/21/12 at 12:10 PM:  SPX using 1307 as support for the last two hours. Punching up thru 1308 would lead the way up to test the 1312.24. If the SPX cannot print 1312 today, this will continue to keep the 1292 support in play thru tomorrow. Today is a sideways day for now. FB continues to stink up the joint.

Note Added 5/21/12 at 12:28 PM:  SPX is coming up for a look at 1312 and the important 1312.24 for today. RIMM is gaining steam today-crank up the patent talk once again.

Note Added 5/21/12 at 1:39 PM:  The 8 MA has crossed above the 34 MA on the SPX 30-minute chart which is a bullish market signal.  The SPX, however, has yet to test the 1312.24 which would trigger an upside market acceleration.

Note Added 5/21/12 at 3:01 PM:  SPX punched thru 1312.24 minutes ago, see if it holds. If so, an upside acceleration should occur. Watch the 150-day MA at 1314.21 to see if it puts up a fight or if it folds like a cheap suit. Keystone took profits on FSLR and RIMM closing both longs out, will look to reenter both.

Note Added 5/21/12 at 3:06 PM:  SPX is at 1313.84 not yet experiencing an upside acceleration. The 150-day MA is holding price down.

Note Added 5/21/12 at 3:16 PM:  SPX now testing the 150-day MA at 1314.21, see if it holds over the coming minutes.  Keystone bot TZA reopening this long position which is short small caps. Remember, volatilty is up so large market moves up one day can lead to large market moves down the following day, and so on.

Note Added 5/21/12 at 3:41 PM:  SPX continues fighting with the 150-day MA at 1314.21--current print is 1314.17......1314.26....the dance continues to and fro.  Keystone bot TWM opening a long position which is short small caps. TWM is a 2x inverse ETF while TZA is a 3x inverse ETF, highly dangerous trading vehicles, both bet on small caps dropping.  The intent of the trades is a potential give back move coming in markets due to volatility. Even if the markets continue higher the market bias is to print lower lows moving forward so the trades should be fine over several days or more if they do not work out for quickie profits over one or two days. Also, the bias of the overall markets remains bearish according to Keybot the Quant, Keystone's trading robot.

Note Added 5/21/12 at 4:45 PM:  SPX closed above the 150-day MA today right at the 1316 resistance listed above. SPX 1316, 1318 and 1326 are important R above. Also the H&S neckline at 1340 was not yet back tested. The SPX 30-minute chart shows the 8 MA crossing up thru the 34 MA today which is bullish.  With the hoiliday on Monday, Thursday and Friday are expected to be bull-friendly days so with Monday finishing up two outcomes can be forecasted. Weakness tomorrow and/or Wednesday that then leads into late week strength, or, strength for the markets the whole week long from here into the Memorial Day weekend.  The key turning point this week is overnight Wednesday with the Flash China PMI and Eurozone PMI's. This will either launch the late week bull move or crush it. The NYAD today tagged and bagged +2143. Just as the uber low readings at -2100-ish on Thursday and Friday led to the rally today, the uber euphoric bull print today should lead to a snap back market move down tomorrow that lets the air out of the extreme positivity. TRIN continues its odd behavior printing 1.12 which is a seller-friendly print. For this type of market rally today, the TRIN should be under 0.80, but, in fairness, it did spend much of the day under 1.0. FB closed at 33.85 under the issue price of 38 continuing to embarass itself. JPM is down another 3% today, along with MS losing another percent or more from handling the FB IPO, both casting a negative vibe over the financials sector.