Keystone's Midday Market Action 5/29/12

SPX punches straight up thru 1324, now playing around at 1326 S/R, further upside would be expected today. RTH is 41.45 well above 41.15 favoring the bulls and encouraging more upside. The NYA, however, is at 7590, remaining far short of the critical 7645 (note the subtle change from 7637 since the moving averages, ini this case the 40-week MA, are constantly recalculating) the bulls need to guarantee a strong recovery. Markets are waiting for the Con Con at 10 AM. Tech and the broad markets are moving in lock-step today so neither bulls or bears can claim the tech push. When tech favors a direction this will ripple thru for the broad market direction.

Keystone took profits on CTRP and RIMM, will look to reenter both.  Also shorted more T. Also bot more TWM.

Note Added 5/29/12 at 9:49 AM:  NYA is at 7604 now 42 points away from the critical 7645 that will launch markets into a bullish frenzy, and likely cause Keystone's prprietary algo, Keybot the Quant, to move to the long side. This is the drama ahead of the Con Con number. Consumer Confidence is always an important monthly indicator but considering how the markets are on a bull-bear line fighting it out right now, this number in about ten minutes takes on huge importance. As an initial indication of whether or not NYA wants to continue higher, watch the 200-day MA at 7623 which price, now at 7610, will want to back test. If NYA takes out 7623 the bulls are probably going to make a run at 7645 as the broad markets continue higher. If the Con Con dampens today's mood, and the NYA fails from here, the bears will wrestle back control focusing on pushing the RTH back under the 41.15 level.

Note Added 5/29/12 at 10:20 AM:  Con Con disappoints with a weak 64.9.  The revisions this year tend to be lower while late last year the revisions were higher. So perhaps the 64.9 will be revised lower next month.  Markets momentarily weakened but then moved higher. Note the SPX testing the 1331 resistance level discussed this weekend, punching up thru, now printing over 1333. This behavior can be considered a back kiss of the neckline fialure at 1340 ten days ago for the H&S pattern. The SPX 20-day MA is sloping down now at 1344 so the 1340-ish level is firm resistance. COMPQ is now leading SPX to the upside, thus tech is leading the broad markets higher, which provides the bulls additional street cred today.  RTH is now at 41.62 printing the highs for the day.  NYA is now printing 7621 testing the 200-day MA at 7623, this is very important right now. The bears can hang their hat on the fact that the NYA has not been able to overtake 7646, at least not yet. VIX is only down a hair, for this type of rally, it should be down a lot more. Keystone opened new long positions in SRS and SDP. SRS is a double inverse ETF that is short real estate. 90% of traders now say the real estate market is in recovery so this is obviously a contrarian play. Case-Shiller Index did not provide much clarity this morning. SDP is a double inverse ETF that shorts the utilities. This is a thinly traded ETF so extreme caution is needed. SRS can easily move lower to a better entry at 28.70-28.90 and SDP lower to 30.70-30.90 but Keystone wants to establish a beach head now shorting these sectors and building on the positions as time moves along. SRS is now forming the right shoulder for an inverted H&S which is a bullish pattern.

Note Added 5/29/12 at 10:42 AM:  NYA overtakes the 200-day MA at 7623, a big feather in the bulls cap that keeps the bullish fun on tap for today.  NYA HOD is 7632.48 only fourteen points from the big-time bullish recovery rally signal that will launch markets far higher. Watch to see if the NYA maintains the 200-day MA as support here on out, or not. Traders were bearish going into the holiday weekend so much of today's move is short covering as traders exit taking the minor losses making sure they do not grow into major losses.  SPX S/R is 1347, 1344.30 (20-day MA), 1344, 1343, 1341, 1338, 1337, 1336, 1333, 1332, 1331, 1329, 1326 and Friday's HOD at 1324.20. SPX moving thru 1333-1336 S/R for the last half hour.

Note Added 5/29/12 at 12:35 PM:  Good ole Keystone was out in the strawberry patch as the euro fell out of bed at 11:30 AM, the broad indexes fell since the euro and the U.S. equity markets, as well as commodties, all tend to move in the same direction, the dollar moves opposite and to no surprise, is up.  The SPX is now at 1324.49, price is testing support at the HOD from Friday listed above ever since noon time.  The bulls must hold 1324.20 and the bears must push down thru. RTH lost some steam but remains above 41.15 at 41.35. Note how tech lost its leadership to the upside so the bears took that feather from the bulls cap and placed in their own.  The NYA fell on its sword, dropping back down thru the 200-day MA, now printing 7574 about 70 points away from 7646--bull's hopes for a sustained recovery rally growing more dim as time passes.  Euro news dominates the market. Stay on guard to see if Merkel picks her nose or if Hollande coughs. It is ridiculous. Europe needs to take care of business or get off the pot.  There is still a wee bit time for central bankers to save the day.  The CRB is about to lose 280; QE3 will occur between CRB 250 and 280, as the U.S. is now mired in deflation.

Note Added 5/29/12 at 12:57 PM:  SPX held the 1324.40 support and is now wrestling with the strong S/R at 1326. RTH is above 41.15 so the bulls remain in favor today. On the SPX 30-minute chart, the 8 MA remains above the 34 MA which is bullish. FB is under 30 now at a LOD at 29.23, what a shame, poor Ma and Pa are holding those shares riding them down. The 27.70-29.20 area may start to provide an entry for a possible FB long.

Note Added 5/29/12 at 1:33 PM:  Volatility, VIX, is now up 2.5% today. Equity markets should be down with this move. Volatility shows that worry and fear remains elevated due to the Euro mess. SPX now testing the 1324.40 support once again. RTH is 41.38 so the bulls should be able to hang on today. That will change if RTH drops under 41.15.

Note Added 5/19/12 at 3:44 PM:  RTH is 41.61 well above 41.15 supplying bull buoyancy all day long. NYA is under the 200-day MA. VIX moved lower to agree with the higher market. The volume on the NYSE is only about two-thirds of an average day's volume. Keystone took profits on TLAB and will look to reenter, this is an attractive long.