Keystone's Midday Market Action 9/11/12; Patriot's Day

Today is Patriot's Day, Anniversary of the 9-11 Terrorism Attacks. Today in Pennsylvania, near the Shanksville site, the weather is clear and beautiful, just like that fateful day in 2001, eleven years ago. Today is a solemn day of rememberance.  China's money supply and lending data released overnight is mixed.  German law makers were trying to delay the vote scheduled for tomorrow but the vote is going off as planned. When this news hit early this morning, the euro popped, and is moving sideways across 128. The 200-day MA is 128.59. Watch this very closely since bells, whistles and air horns sound if the 128.59 is breached to the upside, not seen since November 2011, eleven months ago.

Trade data a few minutes ago did not change the futures picture. The S&P's are up about five, with fair value, the SPX should open about three, so a move from 1429 to 1432 may occur at the bell.  As this morning's chart shows, price poking up thru 1431 will make its way to 1435. The 8 MA is under the 34 MA on the SPX 30-minute chart, a bearish signal moving forward, so watch that this morning to see if it holds. For the SPX starting at 1429, the bears only needed a tiny sliver of red in the futures to accelerate the downside, and the futures were red last evening, but not now. Any red print after the bell serves the bear's needs as well.  If the SPX loses 1429, then it will accelerate lower to the 1427, 1424, and 1422 levels.  The bulls, which are favored at the bell, need to touch the 1439 handle to get their mojo back and accelerate a move higher thru the critical 1440 level (the 2008 intraday high).  A move thru 1430-1438 is sideways action.  Watch the 20-day MA at 1412.45 moving forward.

Keystone's algo, Keybot the Quant, is tracking three areas with interest currently; SOX 393, UTIL 464.31 and VIX 18.25. If the SOX or UTIL drops under the levels shown, or the VIX moves above its level, that will be an all-clear signal for market bears, and the algorithm will likely flip to the short side. Barring any change to these three characters, the markets should stumble along sideways in front of the German vote and Dutch elections tomorrow, and Chairman Bernanke on Thursday. Watch to see if tech leads the broad markets lower today as it has since Friday (COMPQ vs. SPX). Also watch copper after its strong run recently.

Note Added 9/11/12 at 9:02 AM:  Business news outlets report that Moody's ratings agency will likely cut the US rating if budget talks by Congress do not produce a decreasing trend in the debt-to-GDP ratio. The fiscal cliff becomes more and more important each day. The presidential election is 57 days away and the fiscal cliff is 112 days away. Rajoy keeps providing lip over Spain's upcoming bailout, voicing resistance to any conditionality. That is like the teenager that has all the answers and wants to run the show, then asks for their allowance one day early.

Note Added 9/11/12 at 9:40 AM:  SPX is testing 1431 R, next upside R is 1435 but bulls have no mojo unless they can touch 1439.  The 8 MA remains under the 34 MA on the SPX 30-minute chart, bearish.  The SOX printed a 393 handle in the opening minutes, keep an eye on it, things may get interesting very fast.

Note Added 9/11/12 at 9:58 AM:  Here's the test of SPX 1435 R, see if it holds, or not. Next move up if 1435 gives way would be 1438. SOX is now over 396.  VIX drops to a 15 handle. Utililties are flat. Copper is higher. The bulls are fighting back this morning. The 8 remains under the 34 MA on the 30-minute chart, but a continued upward spike will turn this bearish signal back to bullish. The euro remains under its 200-day MA by only 20 cents, now printing 128.35--watch this closely today.  Considering the weak and bleak profile pointed out in this morning's chart, a move back down to test 1429 is likely on tap but lots of trading ahead.  The VIX 20-day MA is 15.78 and the 50-day MA is 16.55. VIX is now printing between this bracket at 15.89. The move under 15.78, or over 16.55, will tell you a lot, bullish markets under VIX 15.78, bearishness markets above VIX 16.55.

Note Added 9/11/12 at 12:34 PM:  The SPX punched thru 1435 so it went up to take a look at 1438 at 11:30 AM and turned back down, so 1438 R is holding. The 8 MA remains under the 34 MA on the SPX 30-minute chart although the 8 MA is starting to move upwards towards a possible cross this afternoon.  SPX is up 0.44% but COMPQ up only 0.21% so tech is not leading the broad markets higher, therefore, the bulls do not have much oomph, and the upside should be limited, this is why price did not have the juice to attack 1438.  SOX is at 397, no worries for bulls.  VIX is 16.16 exactly in the center of the 20 and 50-day MA bracket. UTIL has a 470 handle. 464 is the level of concern. The bulls need UTIL to work upwards towards 478 into Friday's close, if not, the markets are in serious trouble. Note the euro testing the 200-day MA at 128.56; the euro price is now printing 128.59. This test is perhaps the most important thing to now watch today. If they euro moves up thru the 200-day MA and stays above, market bulls rule and the euro and equities head higher. If the euro receives a spank down from the 200-day MA today, the market bears will rule as the euro moves lower. Retail stocks are hit today on Burberry news this morning that the luxury shopper is running out of gas, and the coveted Asian and Chinese shoppers that have been spending dough like water, are dwindling.  Keystone has been waiting for Godot with the retail short plays, and thought that he saw Godot in the shoe department the other day, so Godot must be arriving and perhaps the retail sector finally rolls over.  RIMM is feeling love over the last four days, a positive divergence bounce, perhaps something is going on behind the scenes, it is now above its 20 and 50-day MA.

Note Added 9/11/12 at 2:09 PM:  The 8 MA moved back above the 34 MA on the SPX 30-minute chart so the bulls have wrestled back control. Price and the moving averages are actually all at the same level, so consider it a toss-up right now, and one side or the other should win into the close. The euro is frozen at the 200-day MA at 1.2859, like a deer in the headlights, whichever way the euro goes, so goes the markets.

Note Added 9/11/12 at 3:28 PM:  While tending the tomato plants, the 8 MA stabbed back down thru the 34 MA on the 30-minute chart so the bears are driving the bus again for the hours and days ahead.  The Nasdaq turned red and some of the air is coming out of the markets. Despite the stronger market upside today, since tech was not leading, that did indeed act as a drag on the bulls, and continues to do so. The tech versus broad market behavior is now taking on a new dimension since Friday, Monday and today shows this new pattern of tech preferring to now lead to the downside.  Monitor the COMPQ versus the SPX every day forward. Copper is now red after several days of positivity.  The euro is parked at the 200-day MA.  The markets are going to wait for Germany to make the decision tomorrow and then the euro will react and take the markets with it.

Note Added 9/11/12 at 3:44 PM:  The VIX is printing the highs of the day at 16.36, working towards the top side of the bracket described above, the 50-day MA, at 16.56. The bears need to see VIX above 18.25, however, to accelerate downside market damage. SOX is holding up at 396.  The utilities continue to leak lower, UTIL is now under 470.