Keystone's Midday Market Action 8/1/12

VIX 18.80 will tell you the market answer at the open.  If VIX stays above 18.80 bears win, below and bulls win. Watch the SPX 30-minute chart to see if the 8 MA remains under the 34 MA (which signals market bearishness moving forward), or not, as the previous chart show.  Also watch XLF 14.45, RTH 42.15, SOX 376, NYA 7760, all are contributing to market bullishness now. If any turn bearish, the broad markets will trail lower.  If two of the four turn bearish, Keystone's algorithm, Keybot the Quant, will probably flip to the short side. The markets will be a circus now thru the Jobs Report on Friday morning. Tonight is a full moon and markets are typically bullish about two-thirds of the time moving into the full moon.  The major Bradley turn window remains open this week as well for a major market turn to occur.  In a few days we find out if the turn occurred last week off the bottom and the broad indexes will continue ever higher, or, if the markets collapse this week and the Bradley marks a down turn and trend change.

The markets will likely pivot at 10 AM on the ISM.  Watch the energy markets closely.  Then the Fed at 2 :15 PM, another market inflection point.  For the SPX, the bears only needed a tiny smidge of red, to drop under 1379, to accelerate the downside but the futures remain green. The bulls need to touch 1387 to accelerate the upside. A move thru 1380-1386 is sideways action but considering the Fed this afernoon, one side or the other will emerge victorious at the end of the day. VIX 18.80 and SPX 1379 is important for early trading.

Note Added 8/1/12 at 10:47 AM:  VIX remained above 18.80 favoring bears until 10:35 AM when it collapsed thru favoring bulls. The ISM data reports two months in a row under 50 which is weak but the construction spending was better than expected.   Markets moved down to test SPX 1379 at 10:20 AM, creating a bottom, and bouncing off this key level for today. Markets will remain buoyant into the Fed this afternoon if the VIX remains under 18.80. Bears will make another run at SPX 1379 if the VIX moves above 18.80. If 1379 fails, the 1372 level should appear in quick order.

Note Added 8/1/12 at 1:58 PM:  You could be Rip van Winkle for the last three hours and nothing has changed; VIX 18.65 and SPX 1382. Is everbody ready to rock?  Fifteen minutes until Fed.

Note Added 8/1/12 at 2:19 PM:  Chairman Bernanke keeps low rates thru 2014 but this is what was already in place.  No hints of 2015 so the markets are selling off with some disappointment.  Bernanke did not deliver a pony, not even a figurine of a pony. Bernanke's term is up before 2015 so that may be why he hesitated at extending low rates that long, plus the fact that low rates are not helping the way it is.  SPX 1377 and VIX 18.70.  Note the VIX is not over 18.80 so the markets may languish sideways just as they have all day long.  Market bears need VIX above 18.80 or they got nothing.

Note Added 8/1/12 at 2:54 PM:  VIX at 18.54, so bears got nothing. The dollar is at 83.04, well above the critical 50-day MA at 82.60 (reference this morning's chart). Watch the 20-day MA where price sits now. The dollar will run lots higher, taking markets lower, if the 20-day MA is taken out to the upside, but, dollar will likely not decide until tomorrow.

Note Added 8/1/12 at 4:02 PM:  Now just a doggone minute. Look at VIX, just like yesterday, it pops above Keystone's important level at 18.80 in the final minute of trading. All eyes are on Draghi for tomorrow morning.