Keystone's Midday Market Action 8/7/12

The opening bell is minutes away.  S&P future's are up five or six so the bulls are going to make a run at SPX 1400 to start the day. If the bulls touch 1400 and hold it a few minutes, an upside acceleration will occur to 1403, then 1406.  The bears need three points lower, to push under 1391 to accelerate the downside today. A move thru 1392-1399 is sideways action. Euro 1.2437. The 10-year yield is now at 1.62% (50-day MA is 1.56%). S&P futures are up 0.40% while the Nasdaq is up 0.59% so tech is leading the broad market which is encouraging for the bulls. Big drama ahead for the JJC 44 level. Bulls need this which will lock in sustainable market upside. Bears must prevent JJC 44 with all their might. This level of interest will likely come down after the open.  A big fight should occur in copper this morning that will determine the broad market direction ahead. Watch JJC 43.60-44.00.

Note Added 8/7/12 at 9:31 AM:  There's SPX 1400, see if it holds.  Keystone's algo is now watching JJC 43.75 and JJC is now printing 43.71, how is that for drama?  SPX 1400 and JJC 43.75 are the inflection points for the markets here and now. Above and bulls will rage higher. Below and bears will begin a push lower. Utes are flat; UTIL not showing any upside enthusiasm. Note that both the COMPQ and SPX are up 0.5% so tech is not leading the upside, tech and the broad markets are moving coincidentally which places into question the bullish strength.

Note Added 8/7/12 at 9:42 AM:  SPX is staying above 1400 so 1403 and 1406 would be in sight.  Copper, JJC, however, is at 43.72, only a single hair away from providing its blessing for substantial market upside ahead at 43.75 and higher, but, it has not provided the blessing yet.

Note Added 8/7/12 at 9:46 AM:  SPX testing 1403 R but JJC is at 43.71 not yet able to attain 43.75.

Note Added 8/7/12 at 10:14 AM:  SPX punches up thru 1403 but JJC cannot yet move above 43.75, now printing 43.65. The tug-o-war continues. Bulls win if JJC moves above 43.75, bears win if the SPX moves back under 1400. UTIL is negative. VIX is at 15.86 moving upwards today after the 15.54 at the open.

Note Added 8/7/12 at 11:37 AM:  The status is quo. The bulls cannot move JJC above 43.75. The bears cannot move the SPX under 1400. A stalemate occurs as this lazy hazy day of summer continues along. VIX moves down to 15.62 to reload with positive divergence on the minute charts as time moves forward.

Note Added 8/7/12 at 11:50 AM:  There's SPX 1406 R, the bulls are not messing around, they keep testing overhead resistance.  See if they can punch up thru, or, if they fail and head back down to 1403 S.  JJC 43.65, remaining under 43.75, says the bullish action today is all bluster.

Note Added 8/7/12 at 12:36 PM:  Interesting action ongoing. JJC remains under 43.75.  SPX continues to fight with 1406 R, now trying to push above. VIX is in the 15.5 and 15.6 area. TICK just printed +700.  A TICK of +1000, as long as the JJC does not move above 43.75, and the SPX does not venture far above 1406, should prove to be an attractive entry area for shorts.

Note Added 8/7/12 at 1:34 PM:  SPX meanders across 1406. JJC is 43.68. Status quo, the fight continues. The TICK machine is behaving itself since the +700 print at 12:40 PM which marked the exact top for the market thus far today at SPX 1407.14 HOD. Keystone bot ERY, opening a new long position, the dangerous inverse energy triple X ETF, which is a play on energy selling off from here. ERY exhibits attractive positive divergence.

Note Added 8/7/12 at 1:58 PM:  NYAD now prints at an elevated +500 or higher for the last three days including the high +2200 print on Friday. The TRIN prints in the 0.7's continuing its three-day streak under one. Both are screaming for a snap back move to relieve the uber market bullishness. VIX is printing 15.73; bears need to move up to the HOD at 15.89 then to 16 and higher.  The bulls need to keep the VIX here or lower. JJC is 43.68; the bulls cannot muster up the gusto to push copper higher. UTIL is red; remember, if the utilites lead the broad indexes lower, that is an ominous signal for markets moving forward. Two more hours of trading is ahead.

Note Added 8/7/12 at 2:46 PM:  VIX trying to move up thru the HOD at 15.89, does it make it up on thru which is market bearish, or, collapse, which is market bullish?

Note Added 8/7/12 at 2:58 PM:  VIX 15.91.  SPX 1403 handle.  JJC 43.64.

Note Added 8/7/12 at 3:16 PM: VIX 15.95. SPX 1402. JJC 43.58. The bulls ran out of gas since copper could not muster up the strength to move the JJC over 43.75 today. Lots of time remaining.

Note Added 8/7/12 at 3:46 PM:  VIX 15.97. SPX 1402 handle. JJC 43.57.  UTIL down 4.38, one percent today.

Note Added 8/7/12 at 3:56 PM:  Keystone took profits on the UVXY trade exiting the position, it remains attractive, will look to reenter.

Note Added 8/7/12 at 4:01 PM:  VIX 16-ish. SPX 1401 handle. JJC 43.65 told the story today, copper did not have enough oomph to take the markets another leg higher. Be prepared to watch the JJC 43.75 level again tomorrow. NYSE volume was vapor only trading about two-thirds of an average days volume. Keystone added more ERY in the final seconds.

Note Added 8/7/12 at 8:22 PM:  The Mouse House (DIS) dopey earnings after the bell this evening are leaving traders grumpy.  The EPS has a happy beat but, like so many other companies, the top line revenue fell short. DIS was punished by 2% in AH's trading and since it is a component of the Dirty Thirty (Dow Industrials), it will contribute about (0.8 x 8 = 6.4) seven negative Dow points to this index tomorrow.