Keystone's Midday Market Action 6/19/12

FedEx laid an egg but the futures did not weaken. Housing Starts, one of Keystone's key economic numbers, were weaker but the futures yawned again.  The market buoyancy indicates how traders are more and more loaded to the bull side and expecting some form of quantitative easing from the Fed over the next couple days. The Fed needs to delivery a pony.  Subsequently, we will find out if it is a sell-the-news event or if a more full-fledged QE3 occurs that will launch a stronger upside move. The FedEx news should have much more of a negative impact today.

Sticking to the technicals, NYA 7668 (price is now under and bearish), VIX 18.90-ish (price is now under and bullish-remember, volatility moves inverse to the markets), SPX:VIX 68 (price is now over and bullish) and SOX 383.50 (price is now under and bearish) will tell the story. Any juxstaposition by these four characters will push the broad indexes in that direction. For the SPX starting at 1345, if the bulls push above 1348 an upside acceleration will occur for the broad indexes.  The bears need to push down under 1334.50 to reignite strong negativity.  A move thru 1336-1347 is sideways action. Markets tend to be weak into the new moon which is this evening so this will be interesting to consider today. For the week after June OpEx, the markets are typically down 90% of the time, this is also important to keep in the back of your mind this week.

Concerning SPX S/R, the 50-day MA at 1347.39 will provide high drama again today. Support and resistance levels for today are 1326, 1329, 1331, 1332, 1333, 1336, 1337, 1338, 1341, 1343, 1344, 1347, 1347.39 (50-day MA), 1348 (for today), 1349, 1351, 1358 and 1358.72 (100-day MA). A break up thru 1348 would lead to a test of 1351 in quick order.

Note Added 6/19/12 at 9:38 AM:  NYA pops up thru 7668 like it is not even there. VIX is under 18. Keystone's SPX:VIX ratio jumps higher now at 75. Looks like the large bull move higher may occur today--unless the ratio drops back under 68. The SPX 50-day MA folded like a cheap suit as price pierced up and thru.  Note that the semiconductors, SOX, jumped to 383.48, two pennies shy of the number Keystone is watching, thus, for now, the semi's remain in the bear camp, barely. How does Keystone know these numbers ahead of time? The bears are dizzy, receiving a smack in the head with a 2x4 at the open. The shorts were blown out at the opening bell adding strong bull fuel.  The SPX spikes up thru 1348 then thru 1351. Price is now back kissing the 1351. Looks like bulls want to play between 1351 S and 1358 R. A wild start to the day. The bulls are running.

Note Added 6/19/12 at 10:10 AM:  The SOX has punched above 383.50 so the markets will receive more bullish positivity. Watch SOX 384.00 moving forward as a handy bull-bear line. The bulls are not taking any prisoners today. Next to join the parade is financials, XLF, now at 14.47 above the critical 14.43 level, which will add more bull fuel. NYAD spikes above +2000 so far verifying the bull orgy. The bulls are in full control. Watch the SPX behavior as it tests 1358 R and the 100-day MA at 1359.10. Interestingly, the TRIN is at 1.06, right at the neutral 1.00 area. For this type of bullish party today the TRIN should be 0.80 or lower. Some of today's uber bullish affects may be chalked up to the low volume which will exacerbate moves in either direction.

Note Added 6/19/12 at 11:03 AM:  Today we see the Dow triple digit up move that the SPX:VIX ratio predicted would occur yesterday.  Traders are expecting QE, that is obvious. Not only must a pony be provided over the next couple days, but Chairman Bernanke is expected to be wearing a white suit, riding the pony into the stock exchange tomorrow, throwing dollar bills out to adoring traders, not unlike firemen throwing candy off the back of a firetruck to cheering children during a parade in Anywhere, USA. A tall order with tall expectations. The 1358 R is pesky, it is taking a while for the SPX to try and chomp up thru. The SPX S/R listed above is blown out already.  Additional resistance levels above are 1358, 1359, 1359.11 (100-day MA), 1360.48 (20-week MA), 1361, 1363, 1364, 1366, 1369, 1370, 1371 and 1372. Watch SOX 384 and XLF 14.35 moving forward; if either lose these respective levels, the broad indexes will move sideways to sideways lower from here. If the bulls keep both elevated, the sky is the limit. Keystone took profits on the KWK exiting the trade. This one only yields enough to only buy lunch today as well as provide a tip for the doorman.

Note Added 6/19/12 at 1:38 PM:  The bulls are relentless today, riding roughshod thru the bear village and burning down the bear encampment. The SPX resistance levels above keep falling off like domino's. SPX resistance gave way above at 1358, 1359, the 100-day MA, the 20-week MA, 1361, 1363, boom, it could not hold 1363 for more than four minutesso this is the upside resistance for now; 1363 and then much stronger R at 1364. NYAD prints over +2200, uber bullish euphoria, this will need to see a snap back move to relieve the extreme positivity. TRIN is 0.78 more lin line with what would be expected, here or lower. XLF is up over 2%; BAC is up 5.4%!  The banks running higher tells you that traders are gun-ho expecting quantitative easing at anytime. JPM's Dimon finishes testimony before the House, another dog and pony show.  Said satirically, several Congressmen genuflect in front of the bank big wig as they exit the hearing room while another kneels and kisses his shoes.  NYA ran all the way up to almost tag 7800, the 40-week MA well in the rear-view mirror, so markets will remain bullish on an extended basis as long as the NYA stays above this critical moving average. This is an interesting market set-up for Chairman Bernanke, can he live up to the expectation?

Note Added 6/19/12 at 3:27 PM:  XLF and SOX continue rockin'. The bears remain out back behind the shed receiving a severe beating. The 20-week MA is 1360.58. The 100-day MA is 1359.13. Price is currently 1359.14.  The closing price in relation to these moving averages is important. The bears can at least escape within a hair of their life if they can close the day under both of these moving averages. The utes, UTIL, are down today, very interesting Dr. Livingston. If UTIL drops about 80 cents more today it may create an outside key reversal to the downside.

Note Added 6/19/12 at 3:47 PM: Look at UTIL drop, she's coming down for a potential reversal. Data shows low print yesterday at 481.46 but that may be a bad print, looks like it should be 482.50.  UTIL now printing 482.74.  The money that chased into utes, as well as divvy stocks such as T, is flowing out today into other stock sectors such as technology, semi's and financials.

Note Added 6/19/12 at 4:05 PM: The four items to watch today, listed above, were the NYA, starting bearish and immediately turned bullish; the SPX:VIX ratio was bullish and stayed bullish; the VIX was bullish and stayed bullish; and the SOX was bearish and turned bullish. In addition, the banks ran higher with the XLF starting out bearish and turned bullish (all these parameters as measured by Keystone's algorithm). Traders have high expectations and expect much more than a simple continuation of Operation Twist.  The seasonality affects of a new moon were not a factor; Fed stimulus dominates everything today.  UTIL finished red today but a key reversal did not occur. Medic! Medic! Get a gurney in here! The bear is beaten badly, carry him out and treat the wounds. As the bear is wheeled away he says that at least he stopped the SPX from moving above the 100-day and 20-week MA's as well as holding the strong 1358 resistance. ADBE just laid an egg with earnings and guidance which drops a wet napkin in the tech punchbowl. Chairman Bernanke is frantically searching for tranquilizers as the tension mounts. The NYAD printed a HOD at +2226 and closed at +2077, uber bullish euphoria. Market selling will be needed in the VST to relieve all this bullish pressure. JBL disappoints with earnings, dropping a deviled egg into the tech punchbowl, landing on the soggy napkin.