Keystone's Midday Market Action 7/11/12

Today is an economic data day, the trade data did not create any ripples, futures are flatish.  Wholesale Trade is at 10 AM so watch for a market pivot point.  Oil Inventories are at 10:30 AM.  The 10-year note auction, in light of the U.S. and Germany yields tumbling lower, takes on added importance at 1 PM. But the big show is at 2 PM when the FOMC Minutes will provide guidance as to just how gun-ho, or not, the Fed is in relation to offering QE3.  The markets have probably already priced in a change where the low rates will continue from 'thru 2014' to now 'into 2015' so when Chairman Bernnanke announces this measure, probably on 8/1/12, it will likely be met with a yawn. For today, expect a market pivot at 2 PM. The FOMC Minutes today is the most important data inflection point this week except for China GDP on Friday but markets will be closed when that bad news is announced. JPM and WFC earnings on Friday morning will greatly impact the futures as well.

Sticking to the technicals to gauge this ongoing turbulent bull-bear struggle, XLF 14.40 and VIX 18.75 will immediately dictate broad market direction at the open. The XLF is under 14.40, which creates market negativity, to start the day. The VIX is under 18.75, which creates market positivity. The change in these two characters, if a change occurs, will push markets in that respective direction. If these two indicators want to remain in their respective bear and bull camps, the markets will stumble along sideways. Watch NYA 7738 as well today, the bears firmly in control now.  Also, the 200 EMA at 1339 on the 60-minute chart as described in a previous post. The SPX 20-day MA is 1342.12 and the 50-day MA is 1337.10, there's that pesky 1337 level again;  1337 is for all the marbles. The SPX 20-week MA is 1358.79.

For the SPX today starting at 1341, the bulls need over 20 points of upside to restart an upside party, a formidable task.  Instead, the bulls will focus on pushing the XLF above 14.40 to stop the bleeding.  The bears need to push under 1337 which should begin a dramatic downside acceleration.  A move thru 1338-1360 is sideways action.  Pre-market, tech (COMPQ) is -0.02%, leading the broad indexes (SPX), at +0.19%, lower, which provides the bears some street cred.  The XLF is trading at 14.38-14.39 pre-market, more bear stret cred albeit by one single penny.  XLF 14.40, VIX 18.75, SPX 1339.61 and SPX 1337 support tells you what you need to know today. The opening bell is less than one-half hour away.

Note Added 7/11/12 at 9:35 AM:  XLF 14.35 maintaining market negativity under 14.40.  VIX 18.26 well under 18.75 which creates market buoyancy. Tech is leading the broad market lower. SPX at 1339.57 taking a look at the 60-minute chart's 200 EMA at 1339.61, watch it closely.  Keystone took profits on the NOK long trade, will allow it to base further before reentering.

Note Added 7/11/12 at 9:44 AM:  VIX moved above 18.75 which should indicate big trouble for the broad indexes. See if the VIX holds above 18.75, if so, the markets will likely flush. XLF is 14.35 creating market negativity.

Note Added 7/11/12 at 9:53 AM:  Bulls recover, VIX is below 18.75 and XLF now above 14.40. The SPX 20-day MA is 1343.10, price just punched thru, it is significant if the bulls stay above the 20-day MA.  Data is minutes away which should create another pivot.

Note Added 7/11/12 at 10:38 AM:  Looks like markets may want to idle until 2 PM. Keep watching XLF 14.40, VIX 18.75, the 20-day MA, the 200 EMA on the 60-minute, and the 1337 support.  Keystone may restring and tune his banjo under the oak tree as the markets languish with indecision.

Note Added 7/11/12 at 2:02 PM:  The FOMC Minutes cause a wild vertical spike in markets then collapse. XLF is 14.43 so this is bullish.  VIX at 18.71 under 18.75, bullish. Whoops.  XLF at 14.40 and VIX above 18.75.  That changed quickly. Give it some time, markets are erratic.

Note Added 7/11/12 at 2:06 PM:  SPX heads down to test the 1337 support.  The SPX 50-day MA is 1335.89.  The 200 EMA on the 60-minute is 1339.68, it ruptured, bearish. VIX over 18.75, bearish.  XLF is fighting at 14.40.

Note Added 7/11/12 at 2:12 PM:  SPX continues to hold 1337 support. The loss of the 200 EMA is very bearish, see if price stays below 1339.70. Bears are trying to gather steam, if they pierce down thru 1337 they will want to run under 1336 to break the 50-day MA.

Note Added 7/11/12 at 2:20 PM:  The dust is settling but the picture is no clearer, the markets prefer indecision and drama.  VIX is sitting at 18.75.  XLF is not under 14.40 so the SPX is having trouble moving lower under 1337. Bulls are pinning all their hopes on the XLF.

Note Added 7/11/12 at 2:24 PM:  SPX is now testing the 50-day MA at 1335.84 ... whoa, failure. XLF breaks 14.40.... here she goes.....

Note Added 7/11/12 at 2:40 PM:  VIX is over 19, bearish.  XLF is 14.39, bearish.  Bump up the level of interest for XLF to 14.41 instead of 14.40, so the bulls have to work a shade harder now if they want to bring the markets back from the dead.

Note Added 7/11/12 at 2:45 PM:  Here is the back kiss of the 50-day and the important 1337 S/R.  This is the last chance corral, bulls either recover from here, or they fail.

Note Added 7/11/12 at 3:09 PM:  Bulls do not want to let go.  XLF is 14.43 above 14.41, bullish. VIX is 18.56 under 18.75, bullish. SPX:VIX ratio is 72 four points above the danger line at 68, bullish.  SPX 8 MA is under 34 MA on the 30-minute chart, bearish. SPX price is under the 200 EMA on the 60-minute chart, bearish. The fight is ongoing. Strong S/R at 1337.  The 50-day MA is 1335.90.  This is the play book, the drama continues.

Note Added 7/11/12 at 3:46 PM:  Bulls recover. SPX now at 1343. Neither side wants the ball, now moving sideways thru 1335-1344. SPX moves above 200 EMA on the 60-minute, bullish. 

Note Added 7/11/12 at 4:00 PM:  Lots of excitement but markets not going much of anywhere when it is all said and done. Time to let the dust settle.  Keystone wanted to short the indexes for a quickie trade but the minute charts would not line up properly before the close.