Keystone's Midday Market Action 8/22/12; FOMC Minutes; War Drums Beat Loudly

Lots of excitment yesterday with the SPX piercing multi-year highs, as well as filling a gap remaining from 2008, only to fall on its sword. Copper ran higher on the weaker dollar which created the upward momo in the broad indexes.  Today, however, copper is lower with a stronger dollar.  Watch JJC 43.61 today, above and bulls will receive further market buoyancy, below and the bears will continue to drive markets lower.  Utility weakness is very important. UTIL begins at 476, watch to see if UTIL 472 fails which would indicate major market trouble ahead.  If both JJC 43.61 and UTIL 472 fail, Keystone's algo, Keybot the Quant, will likely flip to the short side.  Keybot has been long since 8/3/12 at SPX 1377.

Mortgage Appication data is weak this morning. Existing Home Sales are at 10 AM so expect a market pivot at this time.  Oil Inventories are at 10:30 AM and with all the war talk ramping up, sending gold to 1640+ and oil 97+, the data takes on added significance. If an Israel/Iran conflict cranks up, then it may turn into a U.S./Russia conflict, and China may end up the winner. The heightened tensions are placing traders on edge.  DELL lowered guidance last evening so HPQ is down in sympathy and pundits are professing the death of the desktop.  All gadget sales will probably suffer as time moves forward and the disinflationary and deflationary forces continue to wreak havoc.  CRB is at 308 so Chairman Bernanke has no intent on delivering QE3. Bernanke worries about deflation and that is not an issue to cause QE3 until the CRB drops under 270.  The FOMC Minutes are at 2 PM toay and expect a market pivot point. Traders will likely be disappointed on the news since the Fed will reiterate the same old talking points such as 'we stand ready to act, blah, blah, blah'. Traders are fully expecting verbage concerning quantitative easing so if the Fed repeats the same old line, the markets will sell off.

At this evening around 10:30 PM EST, the China PMI will hit and that will immediately impact copper and commodities and tomorrow the markets will move the same way.  For today, for the SPX starting at support at 1413, the bears needed to only see a smidge of red to create a downside acceleration and the futures have been negative all night long.  S&P's are down about four points. The bears will target 1410, then 1406 and 1403, the latter two are very strong support.  Losing 1403 points to much more downside ahead. Bulls can stop the downward market slide if they keep JJC above 43.61. Tech is not leading the broad markets lower this morning so this says the downside move does not have any oomph. The opening bell is a few minutes away. Watch JJC 43.61 and UTIL 472, and also pay attention for the pivots at 10 AM, 10:30 AM and 2 PM. Also, track the 8 MA and 34 MA on the SPX 30-minute chart, now saying that the bears are in charge for the hours and days ahead--as long as the 8 stays under the 34.

Note Added 8/22/12 at 10:04 AM:  Exisitng Home Sales are better than expected.  The SPX dropped at the open thru 1410 support but tech was not leading the downside and JJC, copper, moved higher not lower, favoring the bulls, so the markets recovered. JJC is now printing 43.88 well above the 43.61 danger level. The VIX printed above 15 but it fell back under as the markets recover today.  The SPX shorter duration minute charts are bull-friendly as the action currently shows but the longer duration, 30-minute and one-hour charts hint that the lows today should be retested at some point. Perhaps markets will remain flat to buoyant into munch time, then weaken in the afternoon. The 8 MA remains below the 34 MA on the 30-minute chart which is bearish moving forward. Oil Inventories are on tap within the half hour, then the main event today at 2 PM, the FOMC Minutes.

Note Added 8/22/12 at 10:32 AM:  UTIL has a 474 handle, ever closer to danger at 472. A spectacular fall continues for UTIL from 500 to 474, over 5%, in only 16 days.  JJC keeps moving higher, however, now at 43.96. Oil Inventories do not have much of an impact, oil is around 97, markets are flat.  The Nasdaq is higher than the SPX so tech is leading to the upside providing the bulls with the advantage.  SPX is moving thru support/resistance in the 1410-1413 range.  Markets may play a waiting game until the grand event this afternoon.

Note Added 8/22/12 at 12:20 PM:  JJC is at 43.79, leaking lower.  UTIL is at 474.03, and printed a LOD 473.88. Markets are ilding along ahead of the FOMC Minutes. Gold's descending triangle on the weekly chart remains in play and is ominous; watch the 65-week MA at 1657 since that would send gold much higher. Under 1657 keeps the descending triangle hanging like the Sword of Damocles. Tech is not leading the markets lower so the bears have no oomph as the day moves forward.

Note Added 8/22/12 at 12:37 PM:  The $BPSPX closed at 70.80 yesterday.  The 70 and 30 levels are important for BPSPX.  Now that the bullish percent moved above 70, watch for a six percentage point revesal that would signal extended bearish market downside action. For now, as long as no six percentage point reversal occurs, the bulls continue to rule, and the rally party continues as the BPSPX continues higher. Check tonight's print, and remind Keystone in the days ahead to take a look since he may be thinking more about eatig pie or resting in the hammock under the oak trees. JJC is now 43.73, only twelve cents away from the 43.61 bull-bear line.  Very interesting.

Note Added 8/22/12 at 1:56 PM:  TRIN is at 1.07 favoring the sellers. Earlier today, the TRIN was as low as 0.60, on the uber bullish side, despite the market moving lower.  Either the TRIN or SPX was wrong, and the TRIN moved to the bear side.  Similar drama with JJC, running up to 44, then slipping on a banana peel, now printing 43.78, but still above 43.61. Upon release of the FOMC Minutes in the minutes ahead, markets will be selling off strongly if JJC drops under 43.61, if not, the market bears got nothing.

Note Added 8/22/12 at 2:04 PM:  The FOMC Minutes say 'many members are in favor of accomodation and it is near unless the markets recover substantially'.  The broad indexes view this as positive news, the stimulus crack cocaine fix, and float upwards slightly.  SPX is now stone-cold falt on the day at 1413 hinting that much of the stimuls talk may be priced in.  Dollar down, gold spikes. JJC is at 44 so with the stronger copper, the bulls are happy. UTIL is over 475.  Tech is leading the broad markets higher. TRIN drops to 0.78, back below one, on the bull side, verifying the buoyancy in the markets after the Minutes.  So the bulls are proud of themselves, puffing their chests out and unconcerned.  Meanwhile, the SPX 30-minute chart continues to show the 8 MA under the 34 MA so market bearishness would actually be expected moving forward.  Perhaps more sideways will occur into the close where the table is then set for China PMI tonight. The SPX is moving thru the range created by the two strong resistance and support levels at 1413 and 1406, respectively, since 3 PM EST yesterday.  Price just tested the top at 1413 and remains within the 1406-1413 range. Any move from this range is important.

Note Added 8/22/12 at 2:39 PM:  The euro is over 1.25.  Gold is at 1652.40.  The 65-week MA, a critical tool for gauging gold, is 1656.76. Five or six more bucks and the gold bulls will be throwing confetti since price will be moving up and away from the descending triangle pattern. Gold should provide lots of drama at 1650-1660 to finish the week. JJC is over 44 so market bulls are whistlin' Dixie. The importance of China PMI tonight and its impact on copper cannot be underestimated. VIX is at 15.20 so lots of cross currents in markets today. VIX is up but SPX is up also, one of these characters is wrong (VIX and SPX move inversely 90% of the time and only in the same direction less than 10% of the time; we are seeing unique market action these days).

Note Added 8/22/12 at 2:51 PM:  SPX 30-minute chart shows the 8 MA curling back up due to the spike higher in the markets following the jolly Fed news. Two more candles will print so keep an eye on it into the close to see if the bears keep the 8 MA under the 34 MA, which would be expected, or not. SPX is up on the day, by a smidge, at 1414. The weight on China's shoulders grows heavier as the minutes tick by.

Note Added 8/22/12 at 3:09 PM:  JJC is printing the highs for the day at 44.20.  This means that traders are betting that no matter what the China PMI is tonight, it will cause China to announce some type of stimuls program. If not, the air will come out of the copper balloon faster than the hot air out of a poliltician's mouth.

Note Added 8/22/12 at 4:01 PM:  Gold now printing at the 65-week MA.  If you are playing gold you want to watch this closely to finish the week. Markets are stumbling into the close. Bears did not have any oomph today since tech was not leading the broad markets lower today and copper is being goosed ahead of the China PMI in six hours. But there is healthy bear meat, and the SPX 30-minute chart keeps the 8 MA under the 34 ma, a very bearish indication going forward. After the PMI tonight, either copper moves lower and takes the markets lower tomorrow, or, the 8 MA will cross above the 34 MA on the 30-minute chart tomorrow verifying a continued bulll party rally. VIX closes above 15. JJC above 44. UTIL above 475. The weaker dollar, upon release of the FOMC Minutes at 2 PM, creates the copper, commodities and equities bouyancy. For tomorrow, continue watching JJC 43.61 and UTIL 472.

Note Added 8/22/12 at 4:10 PM:  HPQ lays an egg with earnings, disappointing on the top line, adding to the DELL stink last evening.  Make sure you interupt your viewing of American Pickers, or Mad Men, or funny YouTube videos, or whatever your bag is, at 10:30 PM EST this evening to find out what yarns China is spinning with PMI. It will likely dictate our markets tomorrow. Copper, JJC, will move strongly one way or the other on the news.