Keystone's Midday Market Action 5/31/12 EOM

Markets are moving along sideways, flatter than a newleywed's souffle. The RTH dropped under 41.16 but continues to not yet firmly commit to one side or the other.  Now at 41.10 so watch to see if the bears can hold it down, or not. If RTH stays under 41.16, the markets will deteriorate. Watch to see if the SPX drops under 1311 which will accelerate the downside and pave the way to 1300.  RTH printing 41.12....SPX printing 1311.60 and dropping........

Note Added 5/31/12 at 9:42 AM:  Looks like the road is being paved to 1300. RTH falling under 41.00 firmly favoring the bears. The 8 MA remains under the 34 MA on the SPX 30-minute chart signaling this bearishness so this tool carries clout.  SPX 1309 handle, 1308 handle...... Chicago PMI 52.7 lowest since Autumn 2009. Market weakness continues.  SPX 1307 handle......remember, the cliff is the SPX 12-month MA at 1292.83 now only 14 points away. SPX 1306 handle.......

Note Added 5/31/12 at 9:49 AM:  SPX 1305 handle...... RTH is 40.92, looks like the flighty retail gal finally made her committment--to the bear side. Here's a bounce but the minute charts want price to come back down again. AAPL is red adn tech is leading the downside providing the bears further street cred.

Note Added 5/31/12 at 9:53 AM:  SPX 1304 handle.....

Note Added 5/31/12 at 10:07 AM:  SPX 1303 handle.  Keystone took profits on TZA exiting the trade, will look to reenter. Also bot more CTRP. Also bot more EGLE.

Note Added 5/31/12 at 10:16 AM: SPX LOD is 1301.55.  Keystone bot SSO opening up a new long position. Also bot more ANR.

Note Added 5/31/12 at 10:52 AM:  SPX printing the lows for the day at 1300.49. The failure at 1311 led straight to 1300.  The bears are pushing today but the SPX minute charts are setting up with positive divergence. Oil Inventories may provide a pivot point in a few minutes. Keystone bot more SSO.

Note Added 5/31/12 at 11:05 AM:  SPX ruptures the 1300 level. Support is 1300, 1298, 1296, 1295, 1293, 1292.08 (12-mth MA cliff) and 1292. SPX 1292 is for all the marbles. Minute charts remain favorable to market buoyancy.

Note Added 5/31/12 at 11:20 AM: Keystone bot ERX opening up a new long position.

Note Added 5/31/12 at 12:40 PM:  Markets ran upwards for an exciting pop.  Note the inverted H&S on the SPX 5-minute chart; head at 1299, neckline at 1306-ish, so the target is 1312-1313, target achieved. The positive divergence in the minute time frames helped to bounce the markets for the mini-pop.  Keystone took profits on the SSO and ERX day trades. Also reopened the TZA position as a long (short small caps). RTH is sitting at 41.16, this fickle retail sector keeps playing around.  Wichever way the RTH moves, above 41.16 or below, it will take the market with it.

Note Added 5/31/12 at 1:12 PM:  Markets bounced on news that the IMF is planning to meet with Spain to discuss ways to help with funding.  The bounce occurs now everyone looks around at each other and says, "What now?" RTH is 41.24 above the 41.16 helping bolster the bullish case.  Keystone's algo, Keybot the Quant, is chomping at the bit to go long now but one rule it must overcome today would be to travel above yesterday's high at 1331 before flipping long, so the bears appear safe for today. Keystone took profits on the TLAB long trade exiting that position, it remains attractive, will look to reenter.

Note Added 5/31/12 at 1:29 PM:  The SPX 30-minute 8 MA/34 MA cross remains bearish.  Tech continues to lead the broad indexes to the down side, bearish.  RTH threatening 41.16 again.  Keystone bot TWM opening up a new long position (short small caps). Watch RTH 41.16.

Note Added 5/31/12 at 2:47 PM:  Fickle RTH sits at 41.16 and continues to be non-committal thus the markets stumble sideways. Here we go, RTH 41.14, is it simply another tease to the downside or is she about to break lower and take the markets along. Probably lots of sideways moving into the close since the Jobs Report is in the morning. Over the next hour you must place your bets on red or black for the jobs number, or, perhaps the smart traders are increasing their cash positions and simply willing to wait for the open tomorrow after the dust clears. RTH 41.12 liking the bears right now. SPX printed a LOD with a 1298 handle, note the 1298 support listed above, only about five points away from the cliff edge. Pebbles and rocks are falling down the mountain side as the bull's feet gingerly move along the trail occasionally slipping and sliding. RTH 41.11......

Note Added 5/31/12 at 3:09 PM:  Keystone's Inflation-Deflation Indicator is CRB/10-yr price = 273.05/101.75 = 2.68, well under the 2.90 level signaling that the U.S. economy is mired in deflation.  If/when the SPX loses 1292, that will serve as a trigger for Chairman Bernanke to announce QE3.  The Fed, ECB, China and Japan are likely working behind the scenes to set up the coming intervention. The FOMC rate announcement and press conference is 6/20/12 which serves as a bookend. Thus, QE3 may occur anytime over the next fourteen trading days.  RTH is 41.12 liking the bear side. Whoopsies daisies, fickle RTH now jumps above 41.16 again, what a soap opera. RTH refuses to pick sides but after the jobs number in the morning, the RTH will surely commit.

Note Added 5/31/12 at 3:40 PM:  RTH is 41.27 taking the broad indexes higher.  Keystone took profits on CTRP closing out the trade.  Also added more TWM. Utilities and Telecom were the only two positive sectors in May so T is enjoying buoyancy today going against Keystone's ongoing T short trade.

Note Added 5/31/12 at 3:52 PM:  SPX puking into the close, from 1320 to 1312 in 12 minutes. RTH decided it likes the bear side under 41.16 again jerking the markets to and fro. Keystone bot more EGLE.

Note Added 5/31/12 at 4:00 PM:  RTH finishes at 41.02-ish, things are settling out, so fickle retail jumped into the arms of the bears at the close.  The markets will write the story in the morning when the Jobs Report circus rolls thru town. Strike up the caliope.