Keystone's Midday Market Action 8/15/12; Indecisively Sideways

The SPX continues thru the indecisively sideways 1399-1406 range. When will it break out one way or the other?  Futures are on the negative side overnight into the open, but only by a smidge. SPLS disappoints with earnings and verifies that businesses are not spending. This means that the economy is not healthy and those unfortunate souls that are out of work wanting and trying to find a job are likely in trouble for the foreseeable future. DE disappoints as well, cutting forecasts moving forward. This is a great global economic indicator and will ripple into trading for CAT and JOY. TGT beat the EPS but top line revenue was not impressive. The CRB continues to fight at the 300 level. Market bulls win at CRB 300 and higher, bears win under 300. The U.S. dollar is now printing 82.67, the 50-day MA is 82.64, so the market bears win if the dollar is above 82.6 and the bulls win if the dollar is below 82.6. The 10-year is at 1.76%, Keystone scratches his head, feeling the need to ponder this behavior, perhaps over a slice of apple pie as the day proceeds.

The TIC data is hitting so that provides a read on foreign investment. Industrial Production is at 9:15 AM, only a few mintues away.  The Housing Index data hits at 10 AM so markets may pivot. Natty Inventories are 10:30 AM.  For the SPX today, starting at 1404, the bulls need to touch 1410, and the bears 1401, to ignite acceleration moves in their respective directions.  A move thru 1402-1409 is sideways action today. Marrying the ongoing sideways 1399-1406 channel to today's price projections says the bulls win above 1406 and the bears win below 1402. Tech is not leading the downside this morning so this hints that any downside move will be muted. Does the indecisiveness end today? If not, this week will likely tell the tale.
Note Added 8/15/12 at 9:40 AM:  TIC data flows disappoint, coming in below expectations. Industrial Production data was encouraging but hanging its hat on the automobile and utilities industries. Car sales will likely drop and the summer heat is subsiding. SPX continues to love the sideways indecisiveness. VIX is up a touch, see if it moves above 15, or not. The dollar 82.6 level tells the story, above and bears are happy, if the dollar drops, the bulls are happy. Watch the SPX 30-minute chart; the 8 MA is curling down now, see if it stabs thru the 34 MA over the next hour or two, or not.

Note Added 8/15/12 at 9:53 AM:  Here's the test of 1406 R, the top rail of the sideways 1399-1406 channel, do the bulls have the juice?  Housing data in a few minutes.

Note Added 8/15/12 at 10:01 AM:  Housing data is no big whoop, as the young folks say, the SPX sits at the 1406 resistance contemplating the next move.  Watch the utilities, UTIL, closely, down today. Significant market trouble will occur under 470-ish, but price remains above 480. The thing to watch is the 50-day MA at 482.33; price is now 482.39..... six pennies away. A rupture of the 50-day means more weakness ahead for utes and thus more weakness ahead for the broad indexes.

Note Added 8/15/12 at 10:41 AM:  TRAN at 5109, above the 200-day MA at 5103, and trying to break up and out of the sideways triangle. UTIL is pennies above the 50-day MA. COMPQ leads the SPX higher, so tech is leading the broad markets higher creating the subtle buoyancy in the broad indexes today. Watch to see if the COMPQ weakens, or not, as the day proceeds. The 8 MA remains above the 34 MA on the SPX 30-minute chart which continues to favor the bulls moving forward but the MA's are converging.

Note Added 8/15/12 at 10:54 AM:  Whoopsies daisies. UTIL loses the 50-day MA. Utes moving lower, leading the broad markets lower, is a very bearish indication. Watch to see if UTIL remains under 482.33 and lower today.

Note Added 8/15/12 at 11:52 AM:  UTIL is back up for the back kiss of the 50-day MA, the drama taking place at 482.35-ish, this is important. Price will either punch up thru and recover making market bulls happy, or, colllapse from here which is ominous for markets moving forward.

Note Added 8/15/12 at 2:12 PM:  SPX moves thru 1399-1406 range. Dollar is 82.67, above 82.6, bearish. CRB is 302, a feather in the bulls cap, but, over 300 actually indicates that Chairman Bernanke has no intention to follow thru with QE3 at this juncture. The 8 MA is above the 34 MA on the SPX 30-minute chart, by a hair, bullish.  UTIL collapsed lower after the back kiss of the 50-day, so that is bearish. TRAN is at 5123 continuing to threaten a breakoout to the upside out of the sideways triangle pattern. The 20-week MA is 5126.21 which would probably seal that bullish deal. Watch to see if the bulls have three more points, or not. The 10-year yield moved above 1.8% this morning but has ticked back to 1.79%. Higher yields show less interest in notes and bonds, but the equities markets are not feeling that movement of money, so folks must be stashing money under the mattress now. SPX is trying to move under 1404 and turn negative on the day. The weak utes should act as an anchor to drag the markets lower today.  Note, however, that the COMPQ continues to lead on the top side of the SPX so tech is not leading the downside so the bears cannot gather any momo. VIX is 14.62 down a smidge on the day, as the Dow Industrials are down on the day and SPX flirting with the negative side, more odd counter-current market behavior.  VIX HOD is 14.98 so watch to see if a 15 print occurs today which would be market bearish. DNDN is feeling some love today.

Note Added 8/15/12 at 2:22 PM:  Here is the test of the TRAN 20-week MA at 5126.39, now printing 5126.44.  This is a helpful signal. If TRAN stays above the 20-week, the bulls will crank up the party rally. The market bears need to spank the TRAN backwards from these levels. UTIL is 482.10. TRAN and UTIL are making a decision and they both should move the same way so they will confirm each other whichever way they decide to move. DNDN takes another pop upwards, now above 5, as a cable news channel says takeover rumors are in play. An island reversal must be considered for the DNDN daily chart which would be an instantaneous move from 5 up to 6, however, it is perhaps smarter and more prudent to take profits as soon as price prints a higher high than today's HOD at 5.08.

Note Added 8/15/12 at 2:47 PM:  SPX is back up, now over the 1406 resistance. UTIL is back to the bull side again and TRAN are poking higher now at 5141. The 10-year yield is now 1.81%. The bulls are pushing and appear to be gaining upside ground. Keystone took profits on DNDN exiting the trade, will look to reenter, especially with the island reversal under consideration, but, for now, the minute charts are favoring negative divergence.

Note Added 8/15/12 at 3:06 PM:  Keystone shorted RTH opening up a new short position. Also bot INVE, a thinly-traded penny stock, a dangerous speculative play that was downgraded today. The RTH trade exhibits attractive negative divergence while the INVE trade exhibits attractive positive divergence.

Note Added 8/15/12 at 3:13 PM: UTIL drops back under the 50-day MA. Trannies remain elevated. 8 MA curled up before crossing the 34 MA on the 30-minute chart so the bulls do  not want to relinquish market control. Tech leads the broad markets higher.  Keystone adds more SPXS as price fills the gap from yesterday at 18.76.

Note Added 8/15/12 at 4:01 PM:  UTIL had an ugly day. TRAN parks itself at the top rail of the sideways triangle so tomorrow is important to assess its decision on direction. SPX stays tucked inside the 1399-1406 channel, thus, it was another indecisively sideways day.