Keystone's Midday Market Action 6/22/12

Monitoring the eight parameters in this mornings missive;

SPX:VIX ratio is now 71, bullish
SPX 30-minute remains bearish
SPX 60-minute look at the test at the critical 1332.45, remains bearish
NYA now 7613, remains bearish
XLF is at 14.33, look at that battle, how does Keystone know these values ahead of time? Bearish
VIX under 19, bullish
SOX under 384, bearish
RTH is over 41.27, remains bullish

Thus two parameters flipped bullish, so the tally is 3 bullish and 5 bearish, note the slight bullishness in the markets in concert with the slight improvement in the parameters.  Both the SPX and COMPQ are up 0.35%, so tech is not leading either direction. The up move will not have legs without tech strength.  AAPL is  flat.  Keystone took a tiny profit on UCO and will look to reenter. Lots of drama ahead today. Pay close attention to the SPX 60-minute chart, the 200 EMA at 1332.43, it was tested as resistance and spanked price back down, thus establishing itslefl as an important number from the get-go.

Note Added 6/22/12 at 10:51 AM:  SPX:VIX ratio coming back down to 68.68, if 68 fails, market will take a big drop lower. The 1332.45 continues to hold as overhead R. XLF remains under 14.35 and bearish. Thus, the Moody's bank downgrades are keeping the banks in check today. Watch RTH 41.27, now only five pennies above, failure at 41.27 will usher in strong market selling.  The VIX is over 19. As volatility stays over 19 and heads higher this will create further market negativity. It's a lazy hazy day of summer.

Note Added 6/22/12 at 1:05 PM:  Fortunately, the slow action today has enabled Keystone to catch up on valuable hammock time. The SPX is dead flat moving across a small four point range thru 1327.50-1331.50 today.  Note the RTH is on top of 41.27, see if it fails which will usher in strong selling.  Ditto VIX now a shade under 19. If it moves above 19 the broad indexes will weaken.  Keystone's SPX:VIX ratio is at 70.73 with the 68 level holding so far today keeping the bulls in business.  Oil is buoyant as the storm Debbie is forming in the Gulf and helping to kick in the positive divergence on the oil charts.

Note Added 6/22/12 at 3:10 PM:  The RTH moves upwards and the VIX moves down, both moving in the bullish direction.  The XLF jumps above 14.35 which ushered in the market bounce over the last half hour. Watch to see if the XLF stays above 14.35 thru the close, or not. SPX broke out of the tight sideways range when the financials started to run higher. VIX is at 18 which will maintain the market buoyancy. The affects of the Russell rebalance should appear during the final half hour of trading. The SPX minute charts are setting up with negative divergence which may cause the markets to drift lower. Keystone took profits on APKT and still likes it for the coming days and will look to reenter.

Note Added 6/22/12 at 3:19 PM:  XLF is back down and sitting on top of the critical 14.35. How does Keystone highlight these numbers before they occur?  If XLF drops under 14.35 and heads lower, the markets sell off into the close, if the XLF moves above 14.35, the markets will rally.  Note that the SPX poked above the 200 EMA on the 60-minute chart at 1332.43 which is bullish for markets going forward.  See if the 1332.43 holds thru the close, or not. We knew this number would be important by the SPX behavior after the opening bell.

Note Added 6/22/12 at 3:23 PM:  Whoopsies daisies, XLF 14.34, keep watching. If it  holds underneath for seven to ten minutes, the markets will sell off.

Note Added 6/22/12 at 4:05 PM:  The XLF recovered into the close as the Russell rebalancing provided a positive bias to the markets during the final 20 minutes of trading.  At the final tick, however, the XLF dropped from 14.35 to 14.30, running back into the bear camp to spend the weekend with only seconds to spare. The SPX:VIX ratio finished at 73 above the critical 68 level, bullish; the SPX 60-minute chart finished bullish; the 30-minute chart, bearish; the NYA 40-week MA finished bearish; XLF bearish; VIX bullish; SOX bearish; RTH bullish. Thus, the tally is 4 bullish parameters and 4 bearish parameters as compared to the start today of 7 bearish and 1 bullish.  The SPX gained 10 points and experienced buoyancy in the afternoon due to three of the tools switching to the bull side. Window dressing will occur next week since it is EOQ2.