Keystone's Midday Market Action 6/6/12

Draghi was the skunk at the garden party this morning slicing the futures in half.  The SPX jumps at the opening bell nonetheless.  SPX is now above the 50-week MA at 1283.74 and the 200-day MA at 1286.54. Watch the SPX 10-month MA, and 12-month MA (Keystone's secular market signal) at 1297.93 and 1290.87, respectively. The back kiss of the 12-month MA has been anticipated. The HOD after the first few minutes of trading is 1296.34. Keystone took profits on the DDM and SSO trades. Best wishes to all veteran's today and especially any families affected by the Normandy D-Day Invasion decades ago.

Note Added 6/6/12 at 9:43 AM:  SPX now testing the 10-month MA.  SPX key S/R is 1314, 1312, 1307, 1296, 1295, 1292, 1287, 1285, 1278, 1277 and 1268. SPX punched thru the 10-month MA charting a course to the psychological 1300 and then 1307. The 10-month MA at 1298 will likely see a back test to make sure price wants to head upwards.

Note Added 6/6/12 at 11:49 AM:  Keybot the Quant, Keystone's trading algo, that handles 65% of the portfolio, flips to the long side at SPX 1305 at 11:02 AM EST. In this environment a whipsaw would not be out of the question. The Beige Book is 2 PM and Chairman Bernanke speaks tomorrow. The retail sector, RTH, moved above 41.00 which ushered in the stronger bullishness. Watch RTH 41.00 closely today, now printing 41.10 in the bull camp. Keystone took profits on CDXS and SVU.

Note Added 6/6/12 at 1:16 PM:  NYAD printing an uber uber high over +2350, the chart barely goes that high.  TRIN is printing an uber low at 0.5-ish signaling the uber bullishness. Both of these tools will want to see a snap back market sell-off move today or tomorrow to relieve this excessive positivity. The SPX LOD today is 1285.61. The VIX remains elevated which means large market moves of up 200 Dow points one day and down 200 the next day will be the course forward. Today happens to be the large up day. Thus, if tomorrow results in a large give back day, watch to see if the RTH drops back under 41. If so, that signals bearishness ahead for markets and then today's LOD number at 1285.61 comes into play.  If markets tumble tomorrow to give back some of today's move, watch to see if 1285.61 ruptures, or not. If so, the bears will be back in the drivers seat like nothing happened. If not, the bears have nothing and tomorrow will result in a simple rest move for markets and the sideways to sideways up direction will continue moving forward favoring bulls. The Beige Book is about one-half hour away. Keystone has the defibrillator ready.

Note Added 6/6/12 at 1:58 PM:  Keystone shorted more T.

Note Added 6/6/12 at 2:02 PM:  Beige Book appears to be the same ole thing hashed over, moderate growth, blah, blah, blah. Markets are non-responsive, the SPX jumping a point, then falling back down a point, moving sideways at SPX 1308. Tech is leading the broad markets higher so this provides the bulls some street cred.

Note Added 6/6/12 at 2:11 PM: Looks like a delayed market pivot as the SPX jabs lower a couple handes to 1306. Watch the SPX 10-day MA at 1306.13. Keystone bot more SDP (this is an extremely thinly traded ETF so caution is warranted). SDP is the inverse short for the utilities.

Note Added 6/6/12 at 2:52 PM:  Keystone took profits, a tiny gain, on TLAB, will look to reenter.

Note Added 6/6/12 at 3:35 PM:  The broad indexes are maintaining the high prints into the last half hour.  Most stocks popped today so it is difficult to justify chasing any longs. A pull back move will probably occur for the markets (uber high NYAD) so most tickers should permit lower entries for longs. Conversely, with Chairman Bernanke on deck tomorrow, it is hard to justify bringing on any new shorts. The idea in trading is to be stingy on the entry. If you enter long or short at a very good price the success of the trade increases dramatically. The coals have been smashed lower; Keystone is watching ANR and JRCC as potential long plays. WMT and DG are setting up as nice short plays. This was a very active trading day so perhaps its best to simply ride out the close and let the smoke clear.

Note Added 6/6/12 at 3:52 PM: Considering a TZA trade (inverse small caps ETF) for a quickie countertrend move tomorrow due to NYAD.

Note Added 6/6/12 at 3:55 PM:  Keystone bot TZA opening up a new long position.

Note Added 6/6/12 at 4:00 PM:  SPX closed on the high at 1315.07.  Best to let things settle out and enjoy a slice of apple pie.