Keystone's Midday Market Action 8/9/12

The dollar is catching a bid today and will test the 82.6-ish level which is the 50-day MA. Above and market bears will rejoice.  Below 82.6 and market bulls will throw confetti. Copper, commodities and equity markets move lower on the stronger dollar but move higher on the weaker dollar.  Watch copper, JJC 43.75. The bulls need to attain the 43.75 level and higher to verify and sustain a strong bullish market ahead. Alas, the bulls have failed this week in attaining the 43.75 goal. Wholesale Trade is 10 AM so the markets may stutter step at this time. Natty Inventories are 10:30 AM.  The 30-Year Bond Auction is 1 PM. Watch CTB earnings to gauge rubber and tire usage which will reflect the global economy. JWN is also important to see if the rich folks are spending their dough, to keep the retail sector alive, or not. KSS is important for the retail sector as well.

The SPX 30-minute chart with 8 MA and 34 MA cross, as posted last evening, will tell the tale today. Bulls win if the 8 stays above the 34 but bears win for the hours and days ahead if the 8 MA falls below the 34 MA. For the SPX, starting at 1402, the bulls need to touch 1404, only two measley points higher, to ignite an upside acceleration.  The bears need to push under 1396 for a downside acceleration to occur. A move thru 1397-1403 is sideways action. The futures show a slight negative bias for the open. Tech is not leading the broad markets down to start the day so the bears do not have any oomph despite the slightly lower futures. The opening bell is less than ten minutes away.

Note Added 8/9/12 at 9:31 AM:  The SPX 30-minute chart shows the 8 MA (1401.62) falls under the 34 MA (1401.75) which indicates bearishness for the hours and days ahead, but, this is a game of pennies still yet so allow the morning to play out. The chart is thirty minute candles so watch to see if the 8 MA remains under the 34 MA as the 10 AM candle prints, then the 10:30 AM candle, and so forth.  JJC is negative so copper continues to refuse to provide bullish help. Tech is not leading the broad markets lower, however, so the bears have no downside oomph. Bears need to see 1396 today, otherwise, they got nothing.

Note Added 8/9/12 at 9:43 AM: The SPX 30-minute chart shows the 8 MA (1402.07) now back above the 34 MA (1401.85) so the bulls are going to control the hours and days ahead. The drama continues. The SPX prints 1404 which is what the bulls needed today. If the SPX holds 1404, markets will accelerate a few handles higher. Looks like another sideways fight is setting up today. Best to give the markets some time and allow the 30-mintue chart to provide the firm answer on broad market direction, perhaps by sandwich time.

Note Added 8/9/12 at 10:10 AM:  The SPX 30-minute chart shows the 8 MA directly on top of the 34 MA, both at 1401.89.  How is that for drama? One side or the other will win today.

Note Added 8/9/12 at 11:43 AM:  Keystone added more ERY.

Note Added 8/9/12 at 2:48 PM:  The SPX 30-minute chart shows the 8 MA down thru the 34 MA since noon time which would place the bears in the driver seat for the days ahead. The bulls are trying to fight back to stop the slow-motion slide but the bears will be favored if the 8 MA stays under the 34 MA.  Trannies are negative.  Utilities are flat.  JJC is 43.45, under the important 43.75, remaining bearish.  The Nasdaq is positive and is allowing the bulls to maintain buoyancy today. The SPX has ventured above 1404 but the bulls did not have the juice to accelerate higher, and the 1404 handle does not want to stick so far today.  See if it sticks now or drops again as the SPX prints 1404 now. The TRIN is remarkable, now five days in a row with sub one numbers favoring bulls; this is very odd behavior and is a coiled spring that should help push markets back in the bear direction. The 30-minute chart decides the direction forward and it favors the bears but only by pennies.

Note Added 8/9/12 at 3:10 PM:  The SPX 30-minute chart shows more separation with the 8 MA extending its drop thru the 34 MA, 1402.31 vesus 1402.73, respectively, so 42 pennies on the bear side and expanding.  This action increases bear favorability moving forward. The bear side will be bolstered if SPX price stays under that 1402.3-ish area since price goes into the calculation of the moving average and a price printing under 1402.3 will continue to drag the 8 MA number lower and ensure the bear direction forward. The only way this can reverse back for the market bulls would be a strong thrust upward in the broad indexes in this final hour of trading.  A move like that can only be envisioned from a tape bomb, something such as Spain asking for an official and formal bailout (equity markets would likely rally strongly). Barring the thrust move, the bears are becoming more and more favored as time moves along.  Keep watching. The 10-year yield pushed over 1.7% but hit resistance in this area and pulled back under. Use this as a gauge forward. If the 10-year yield moves back above 1.7% and heads higher, this will be in concert with the broad markets moving higher. If the yield stays under 1.7% and heads lower, this tells you the market bears are back.

Note Added 8/9/12 at 3:33 PM:  The SPX has moved sidedways thru a tight two point range 1402-1404 for about three hours.  Perhaps some late day excitement will occur.  SPX is printing 1403.55 so the bulls do not want to give up and are using tech strength to hang their hat on.  The bulls just regained the 30-minute chart with the 8 MA now back above the 34 MA.  This indicator is changing its mind more than a lady shopper in the shoe department. The markets are obviously in a tug-o-war bull-bear struggle and there is no clear winner as yet. The 10-year yield is 1.69%.

Note Added 8/9/12 at 4:05 PM:  The SPX 30-minute chart is finishing with the 8 MA above the 34 MA so the bulls receive the nod but the difference is pennies so this broad market directional signal will have to play out again tomorrow.  Interestingly, today's action simply extends the sideways symmetrical triangle pattern highlighted this morning on the 30-minute chart. The 8 MA is 1402.77, the 34 MA is 1402.66, the closing SPX price is 1402.80.  This is now a game of pennies; this 1402.66-1402.80 cluster provides the answer. Throw out the playbook.  Plain and simple, if the SPX moves higher at the open tomorrow, the broad indexes should run higher for the days ahead. If the SPX moves lower after tomorrow's open, the broad indexes should weaken and sell off for the days ahead. Obviously, the futures markets are very important overnight tonight, as well as any Euro news.