Keystone's Midday Market Action 5/3/12

JJC failed the 48.30 level at the open, very bear friendly.  The broad indexes, however, continue languishing sideways, the SPX no where near testing the 1394 support as yet.  The ISM Non-Manufacturing number is hitting now; weakest number of the year, suprising traders on the weak side, so that data tamps the SPX down a couple handles.  JJC now on the verge of dropping under 48.  SOX is red by a point now printing 415.38 three points under the bull-bear line remaining in the bear camp. Whoa, as this is typed, copper continues lower.  JJC now printing 47.94. You see the broad indexes continuing to slowly weaken. SOX now has a 414 handle.  The information is changing faster than this message can be typed.

JJC now printing 47.81. The air is coming out of copper. If Dr. Copper catches a cold, the markets will catch pnemonia. XLF is 15.39 remaining in the bull camp above 15.20. VIX is above the 50-day MA at 17.03. See if the VIX moves above the 20-day MA today at 17.96. As mentioned this morning, VIX 18.10 is the magic number bears need to push the markets much lower. If the VIX moves over 18 today, Keystone's algorithm, Keybot the Quant, will likely want to move to the short side. Focus on XLF 15.20, VIX 18.10 and SPX 1394 in the time ahead.

Tech and the broad markets are moving down the same percentage so the bears do not have a lot of oomph. AAPL is up two bucks remaining above the 50-day MA at 584.48 which keeps the Nasdapple elevated and prevents the bears from gaining downside steam. For the SPX 30-minute chart, the 8 MA is under the 34 MA which is bearish moving forward. There should be a big fight at SPX 1394-1395 where markets bounce or die.  The broad markets have been moving sideways all week waiting for the Friday jobs number, does that trend continue, which would mean a bounce on tap, or, do the market bears take control and start slapping markets lower by piercing under 1394? Now that copper gave up the ghost today, watch VIX 18.10, that would seal the deal for bears, otherwise the bulls will stay in the game.

Note Added 5/3/12 at 10:45 AM:  Copper puked this morning and semiconductors drift lower with the SOX now printing a 413 handle, thus, Dr. Copper emerged from the cage match hoisting the market bears on his shoulders. The drop in copper is a significant bearish development for markets. If you recall yesterday, the JJC danced around the 48.30, to and fro, but today price collapsed thru, and now printing 47.75, fifty-five cents below the critical 48.30. The SPX prints a LOD thus far at 1395.32 where a market bounce occurred, thus, the markets may favor one more day of sideways. With the copper weakness now appearing, markets should travel sideways to sideways lower moving forward. SPX 1394 is key, the fight for 1394-1395 may still take hold today. Watch XLF 15.20 and VIX 18.10. The day may be a lazy sideways endeavor so perhaps it is a good time to tend to the rose bushes.

Note Added 5/3/12 at 12:13 PM:  JJC is sick. SOX falling apart now with a 310 handle. XLF 15.10 and VIX 18.10 are not cracking, however, so the markets drift sideways with a sideways lower bias. AAPL dropped under the 50-day MA which is 584.39. Watch to see if this weakness takes hold or if the bulls push Apple higher again.  Note how with the slight weakness in AAPL, but especially the weakness in semi's as a whole, tech is now leading the broad markets lower which is a feather in the bears cap.  The SPX is coming down for another test and fight at the 1394-1395 gauntlet, now printing 1395.28.  This time the bears have tech leading down which is a plus for the market downside but financials and volatility remain in the bull camp and are helping hold this vital 1394-1395 support....the 1395 support holds again, price now heading up printing 1396.25. Markets may want to drift sideways since the final print is less than four hours away now ahead of the jobs data in the morning. The 200-day MA for JJC is 48.03 so copper falling thru this important moving average further announces a significant bearish development for markets. Gold and gold miners getting hit today. All commodities, oil, copper, getting hit. Keystone's PAAS has him out behind the shed receiving a beating right now. This behavior in the metals and commodities is disinflationary and deflationary.  The 10-year yield is 1.92%. The dollar is up.  Keystone's Inflation-Deflation Indicator shows 301.76/100.703 = 3.00 on the dot, exactly where the country slips into disinflation.

Note Added 5/3/12 at 1:52 PM:  It's hot outside but it appears things are heating up inside as well. SPX 1394 support failure. Whoopsies daisies.  Note the acceleration move that occurs now printing with a 1389 handle. The SPX will likely come back to back test the 1394 to verify the failure.  Copper weakness is important today. Traders are losing confidence.  SOX is now at 407, a complete collapse today in semi's and copper, two key market drivers. XLF is 15.31 inching closer to the 15.20 danger level. VIX is 17.81 inching closer to the 18.10 danger level (remember, volatility moving up means markets move down). CRB is printing a 301 handle moving the economy into disinflation. SPX S/R is 1397, 1394, 1391, 1389, 1388, 1387, the 50-day MA at 1386.50 and the 20-day MA at 1384.76. Thus, an important confluence of support occurs at 1387-1388; the SPX just bounced off of 1389.35 so the 1389 support held so far.

Note Added 5/3/12 at 3:12 PM:  Status quo with everything as the indexes move towards the close. SPX is in a range of 1389-1391 for almost two hours. Keystone took profits on BGZ. Also bot CTRP. Also bot ENOC.

Note Added 5/3/12 at 3:22 PM:  SPX popped up out of the 1389-1391 sideways channel formed this afternoon.  Now printing 1393. A back kiss will likely be needed to 1394 but this pop up to 1393.50-ish may very well serve as the back test. The bears need VIX or XLF to join the negativity band wagon but VIX is drifting lower again at 17.59, short of the 18.10 danger level, and XLF is printing 15.34 fourteen cents above a significant market danger signal. The beat goes in. The NYSE is starting to erect the circus tent for the jobs carnival in the morning.

Note Added 5/3/12 at 3:39 PM: Keystone bot BGZ, reestablishing the position exited one-half hour ago.

Note Added 5/3/12 at 3:58 PM:  Financials should play a key role tomorrow.  Watch XLF 15.20 level, now printing 15.33 with the close minutes away. Weaker copper and semiconductors were two nails in the market coffin today, if XLF fails 15.20, the third nail will usher in significant market selling. Mentioning this, Keystone does his part to hype up the jobs circus tomorrow morning. AAPL is set to close under its 50-day MA, bearish. Natty gas now up above the 20 and 50-day MA's, bullish. VIX closing above its 50-day MA, bullish for volatility, bearish for markets; watch the 20-day MA at 18 tomorrow in addition to the critical 18.10 level.