Keystone's Midday Market Action 6/1/12

The SPX drops thru the 12-month MA at 1290.34.  The 200-day MA is 1284.59. SPX is printing the lows now at 1288.73.  The minute charts are setting up for positive divergence. The utilities sector remains elevated hinting that markets will need tocome back up. The ISM Mfg Index is in the minutes ahead, watch to see if the markets pivot. Keystone took profits on the TWM and TZA trades. Also bot SDS (short the indexes to maintain short exposure), ERX (energy positive divergence) and SSO (long the indexes for potential very short term bounce).

Note Added 6/1/12 10:01 AM: The ISM is mixed, new orders up, employment down but strong, inventories down. The SPX pivots off the LOD although with no great oomph to 1290. Tech is leading the downside, albeit slightly, so this will help the indexes at least maintain a sideways posture. The 8 MA is under the 34 MA for the SPX 30-minute chart signaling further bearishness in the hours ahead.  In the minutes ahead the broad indexes may want to reexplore some of the levels that were violated on the way down.

Note Added 6/1/12 at 10:10 AM:  NYAD printing an uber low -2100. TRIN spiked to 3 but has now moved down to the neutral bull-bear level at 1.0. The uber negativity shown by these two indicators hint that markets may need a quickie relief bounce in the VST time frame. The markets are fighting for survival now with the SPX 12-month MA at 1290.45 and the SPX now printing 1290.38....... keep watching. This is for all the marbles.

Note Added 6/1/12 at 10:21 AM:  SPX printing more lows, now 1287.33.  The 200-day MA is 1284.58.

Note Added 6/1/12 at 10:35 AM: SPX LOD 1285.15, the 200-day MA is holding, so far.  Keystone took profits on the SDS day trade and exited, will look to reload. Keystone bot TYH (a dangerous 3x ETF which is bullish for tech, positive divergence forming).

Note Added 6/1/12 at 10:43 AM:  High drama, Keystone needs his defibrillator. SPX prints LOD at 1284.96 thus far, 1284.57 is the 200-day MA, now only 39 pennies away from this critical moving average support line.  Does she hold?  Charts are hinting that price should hold and bounce but any bad news out of Europe at anytime will push the SPX down the steps. High drama indeed. .....1285.92....... 1286.15 ......

Note Added 6/1/12 at 10:57 AM: SPX is down -1.80% and Nasdaq is down -1.98% so tech continues to lead the broad markets lower which is a feather in the bears cap. Here we go for the big test of the 200-day MA, this will likely set the tone for the remainder of the day..... SPX 1284.92 .....whoa... 1284.25 ... 1284.45, see ifthis holds for seven to ten minutes, or not. If bulls plan on bouncing things it would be now. Otherwise, failure will result. Oh-oh, here comes the heart palpatations.

Note Added 6/1/12 at 11:04 AM:  SPX 200-day MA is 1284.56 ... now printing 1284.59. Bounce, or die.

Note Added 6/1/12 at 11:14 AM: SPX back over 1284. NYAD -2100, TRIN spike to 3 today and NYHL -108 all three agreeable to see a quickie bounce. SPX now back kissing the 200-day MA, price will either jump higher to run back into the bulls open arms, or, roll over into despair.  ....1285.19 ... 1285.28 .....

Note Added 6/1/12 at 1:21 PM:  The drama continues along the 200-day MA at 1284.56; the SPX now printing 1283.77. Keystone took profits on the ANR long coal trade exiting that position, will consider a reentry or another coal play.  Also took profits on the ERX day trade opened up this morning, will look to reenter.

Note Added 6/1/12 at 1:36 PM:  SPX collapsed to 1280. Keystone bot DDM (long large caps ETF) opening up a new long position.

Note Added 6/1/12 at 1:55 PM: SPX is at 1280. VIX is over 26. Serious technical damage has occurred today but a market pop would be reasonable now.  Keystone bot more TYH.

Note Added 6/1/12 at 2:53 PM:  SPX is at 1282.  Some buoyancy occurs but it is running out of gas.  An interesting finish is on tap today.  The dollar/yen continues a downward trek. This is important in relation to the coming QE.  Japan wants to stem the strength in the yen and may be the first to act in a coordinated intervention move involving the Fed, ECB and China as well as other nations. Interestingly, Japan likes to take intervention actions on Sunday's as the new trading week begins.  If Japan would move on Sunday, traders may figure that the coordinated QE intervention move is going to follow along quickly next week, so a large rally may occur as Japan intervenes. Traders are making the decision now as to whether or not to stay short over the weekend.  Last week the shorts were pressed over the holiday weekend and on Tuesday the bears had to run in and cover as markets started the week with the large rally. It is interesting that the Dow Industrials have now turned negative on the year printing below the starting year number of 12217.56. The SPX starting year number is 1257.60.

Note Added 6/1/12 at 3:45 PM: Very surprising to not see a bounce back up to 1290-ish this afternoon. SPX continues to print at the lows..... 1278.68 ...1279.16. NYSE volume is running at the expected average pace. Remember the rally this week was only on about 50% of an average days volume. The sell days are stronger than the buying days, bearish. NYAD -2200, markets need a bounce to relieve this negativity.

Note Added 6/1/12 at 4:00 PM:  The markets were slapped down thru the closing bell ending at the low prints.  Dow Industrials drop 275, -2.2%, to 12119.  The SPX drops 32 points, -2.5%, to 1278.  The Nasdaq is down 80 points, -2.8%, to 2747. 10-year yield is 1.46%. Oil 83.26.  VIX 26.56. Dollar 82.909. Euro 1.2342. Dollar/Yen 78.12. CRB 268.38. Gold up 59 to 1633.  Copper 3.32. UTIL 464. Lots of traders now heading to their favorite watering holes to drown their troubles and sorrow. Epic, history-making markets and economic times are unfolding before our eyes. The CRB is now under 270, quantitative easing is imminent. QE3, LTRO3 and China stimulus are now clearly on the table and the coordinated QE move may be kicked off by Japan intervention.