Keystone's Midday Market Action 6/21/12

The start came up quick on Keystone, all this market action is cutting into valuable hammock time. The China, German and Eurozone manufacturing data is weak overnight weakening oil, the miners and basic materials.  Watch the utes and commodities indexes as described on this mornings charts. Pay attention to the VIX and also the SPX 30-minute chart to see if the 8 MA crosses under the 34 MA, or not. Apple had a bad day yesterday with the patent case loss, the outage and now having to pay employees higher wages. Watch AAPL today and tech in general since RHT earnings disappointed.  BBY also disappointed so watch the retail sector. RTH is very attractive as a short now. The next FOMC meeting is late July so a new question emerges if Chairman Bernanke would act with QE3 before that meeting. In recent years, moves between meeting have not occurred, but in these touchy markets, anything can happen.  The market has the feel that one day we will wake up to an incident in Europe where the markets force the hand of the political leaders. Until then, let's stick to the technicals.

Watch NYA 7761, VIX 18.90, SOX 384.00 and XLF 14.35.   All four are creating market bullishness so cracks will only form in the markets if one or more of these fail. A market pivot point should occur on the housing and other economic data hitting at 10 AM. For the SPX, bulls need to see 1361.50 for an upside acceleration while bears need to see 1346.50 for a downside acceleration.  Here's the bell....

Note Added 6/21/12 at 9:31 AM:  Moody's may announce bank downgrades today. Spanish bank audits should be available today as well. Keystone bot USO at the open to begin a new long oil position.

Note Added 6/21/12 at 9:35 AM:  Note the 8 MA on the 30-minute chart curling upwards just like the smile on bulls faces. VIX drops under 17 which is increasingly more market bullish. NYA, SOX and XLF all remain above the levels listed above so the bulls cannot help themselves but to parade around with their chests puffed out to start the trading day. The pivot at 10 AM may change the market mood. AAPL is flat. The tech sector is leading the broad market on the downside so the bulls better not keep that chest puffed out too long.

Note Added 6/21/12 at 9:43 AM:  Keep watching the 8 and 34 MA cross on the SPX 30-minute chart. The data in fifteen minutes will create excitment. Keystone bot APKT opening up a new long position.

Note Added 6/21/12 at 10:04 AM: Markets pivot downwards on the data releases.  The 8 MA stabbed down thru the 34 MA on the 30-minute chart which now forecasts bearish markets in the VST, watch to see if the move holds. Watch SPX 1346.50 which triggers an accelerated move down for markets. The SPX 50-day MA is 1346.47.

Note Added 6/21/12 at 10:18 AM:  SPX S/R in this area is 1363, 1361.50 (today only), 1361, 1359, 1358, 1351, 1349, 1347, 1346.50 (today only), 1346.47 (50-day MA), 1344 and 1343. There is also strong interest at 1354 and 1358 over the last day. Price is now at 1350.60 attacking 1351 R but having trouble punching up thru so far. 1351 would lead to 1354. 1349 is support below thus far today.  What's that? Keystone hears the siren song from the hammock under the oak trees.

Note Added 6/21/12 at 11:32 PM:  SPX fell thru the support levels shown above, see if the sturdy and strong 1343 support holds, or not. The move lower accelerated after the rupture of 1346.50.  Keystone bot more USO. HPQ appears attractive for the long side but Keystone is not in it. Here it is SPX 1343.12.... high drama.... 1343.06 ....1343.09........

Note Added 6/21/12 at 11:37 AM:  SPX pierces down thru 1343. The minute charts are positively diverged, however, favoring upside from here.  SPX now printing at 1342.09, see if it holds under 1343 for a few more minutes, or not. The minute charts favor sideways to sideways up from here. But the 30-minute chart, however, shows the shift to the bear side by the 8 crossing down thru the 34 MA so for the hours and day or two time frame that forecasts bearishness for markets. The SPX suppport below is very strong at 1343, 1341, 1338 and 1337. Note that the NYA lost the 40-week at 7669 but only by a couple bucks, this will usher in strong market bearishness, if it holds. The VIX is moving up towards the critical 18.90.  SOX failed the 384 so semiconductors are causing much of todays weakness. XLF is coming down for a look at the 14.35 as well. This is a bull-bear struggle right now, one side will win and push markets more firmly in that direction. NYA 7669 and VIV 18.90 will play a key role for this decision in the time ahead. The semi's, SOX, are now back into the bear camp this morning.

Note Added 6/21/12 at 1:07 PM:  The NYA, SOX and VIX mentioned at the top of this message all failed this morning, joining the bear camp. The SPX support below is 1337, 1336, 1333, 1332, 1331, 1329 and 1326. This is a very strong support zone. Price held at the 1336 support and is now trying to stay above the strong 1337 support. Watch the XLF now at 14.36. If 14.35 fails and holds for about ten minutes, the markets will crumble lower and the bears will be back in full control. Interestingly, Moody's is to release the bank downgrades today which will immediately impact the XLF and in turn impact the broad indexes. Here we go, XLF now printing 14.35..... this will decide the day and path ahead. Keystone's proprietary algorithm, Keybot the Quant, is very close to flipping short and a drop in XLF would likely trigger the move to the bear side. High drama right now, the bulls started out with a strong grasp on the markets today, but arthritis has set in and the markets are slipping thru the bulls' weak hands. XLF 14.36 ......hello, 14.34, see if it holds for seven to ten minutes, or not.

Note Added 6/21/12 at 1:23 PM:  XLF now printing 14.35 walking on top of the fence.  It is very simple. If you are bearish, you need XLF to fail and remain below 14.35. If you are bullish, you need XLF to stay above 14.35 and move higher.

Note Added 6/21/12 at 1:55 PM:  Keystone's algo, Keybot the Quant went short at 1:39 PM at SPX 1334 after the financial sector failed. Details to follow.

Note Added 6/21/12 at 2:43 PM:  The pending Moody's bank downgrades are casting a pall over the markets. All four major parameters called out above before the open failed; NYA, SOX, VIX and XLF. Keystone's algorithm decides which sectors are impacting the markets to the greatest extent in real-time continuously. The financials, XLF, were hanging on by a thread until the thread snapped.  Stay alert and cautious. The Moody's bank downgrades may not be as bad as expected and create a wild recovery move. Europe controls the markets, now Moody's controls the markets. Today's investing world is far different than years ago. Thus, we wait for the Moody's tape bomb to explode at any time. Also of interest is Keystone's SPX:VIX Ratio Indicator regularly updated on the Turn Signal page on this site.  SPX:VIX ratio failed the critical 68 level ushering in the sustained selling at 2:18 PM EST.  The ratio has now recovered and is printing 68.09. This is very important and the ratio is likely waiting for the Moody's news to commit. If the ratio stays above 68 and moves higher, bulls will recover today. If the ratio drops back under 68 and stays under, the markets will be traveling much lower in the days ahead.

Note Added 6/21/12 at 3:05 PM: Business cable news channels are reporting that the Moody downgrade news will not be released until after the close.  Therefore, the markets may move sideways into the closing bell until clarity is provided.

Note Added 6/21/12 at 3:19 PM:  Keystone bot UCO opening up another new oil long position.

Note Added 6/21/12 at 3:53 PM:  SPX fails thru the strong 1326 support, see if it closes under, or not.

Note Added 6/21/12 at 4:03 PM:  SPX closes under the critical 1326 support which is bearish. Markets take quite a tumble today; SPX lost 30 points, -2.2%, to 1325. The Dow Industrials lost 251 points, -2%, to 12573. The Nasdaq dropped 71 points, -2.4%, to 2859. The small cap RUT is down 19 points, -2.5%, to 765.  Keystone's SPX:VIX Ratio Indicator finished at 66 two points under 68 which helped usher in the large market down move today. The dust is not allowed to settle yet since the Moody bank downgrades are to be released any minute.

Note Added 6/22/12 at 6:19 AM:  The Moody's downgrades were not a surprise, MS only received a two-notch downgrade rather than three and bounced over 3% AH's.   Keystone's SPX 60-Minute 200 EMA Indicator also turned bearish yesterday (reference the Turn Signal page).