Keystone's Midday Market Action 9/13/12; FOMC Rate Decision and Press Conference

Lots of information posted this morning. Very simply, broad market direction is dictated by SOX 393, UTIL 464.31 and VIX 18.25.  All three are bullish, if any one flips, the markets will start selling off strongly and Keystone's algo, Keybot the Quant will likely flip short.  Watch the 8 and 34 MA cross on the SPX 30-minute chart, now bullish. The bulls need to see 1439.15 and an upside acceleration will occur, the fix will be in, Chairman Bernanke will provide a bazooka, and the bulls will break open the lock on the liquor cabinet to celebrate.  The bears need to see sub 1433 and a downside acceleation will occur.  Natty Inventories are at 10:30 AM EST, then the 30-Year Bond Auction at 11:30 AM, then the FOMC Meeting Announcement at 12:30 PM, then the Fed Forecasts at 1:45 PM, and lastly, Chairman Bernanke's Press Conference at 2:15 PM. Expect very erratic and jumpy markets from noon on. The major inflection and pivot points should occur at 12:30 PM and also between 2:15 PM and 2:45 PM.

Note Added 9/13/12 at 9:41 AM:  Markets are off to a flat start. Tech (COMPQ) is leading the broad markets (SPX) higher today, thus, the markets should maintain a flat to buoyant posture into the Fed, now less than three hours away. Utilities are higher, remember, by tomorrow's close the UTIL must be up near 478 otherwise, that is a very bearish signal for next week.  SOX is 396, three points above 393, that would cause market selling. VIX dropped at the open but is now rising. The low VIX verifies the low CPC chart posted this morning, both are fear gauges showing that the bulls have no worries in the world, they are completely convinced that Bernanke shows up with such a large bazooka today, they may need to wheel it in on a separate trailor. Watch to see if the VIX can move above its 20-day MA at 15.92, if so, the bears can place a tiny feather in their caps.

Note Added 9/13/12 at 12:22 PM:  Here we go. It is game time.  They are singing the National Anthem right now, the kickoff is minutes away. All indications remain in favor of the bulls going into the Fed decision. SPX poked above 1439.15 but could not hold it. Thus, the year has another new high today at 1439.71.  Tech is maintaining a hair of leadership to the upside which helps the bulls. Bernanke now decides the fate of the markets............

Note Added 9/13/12 at 12:48 PM:  Fed says 40 billion per month new money and they will keep going with stimulus as needed. Bernanke provides the super deluxe bazooka and shows that he is indeed the market's lackey. His mandate is not full employment or inflation but rather keeping the equity markets elevated. The SPX immediately spiked to fill the gap at 1446. Resistance above is 1446, 1448, 1453, 1455, 1457, 1460, 1464 and 1468. If you reference this morning's daily chart, price has now tagged the top rail of the upward-sloping channel at the top of the rising wedge.  The bulls are in full control.  Expect continued wild action today. The VIX is under 15. Gold is up almost 20 bucks over 1750. Bernanke will speak at 2:15 PM. Keystone added more TWM and UVXY.

Note Added 9/13/12 at 1:05 PM:  Green screens everywhere.  The SPX tags 1450, so the four-year high is now officially toast, and the new multi year high is today's HOD, now at 1450.44. The blue ascending triangle is playing out from the 30-minute chart; the 1450-1451 would be the target. The Fed shot his bazooka surprising Keystone. Bernanke truly believes he can stimulate the economy into recovery. The press conference should be very entertaining.  The euro is 1.2930 gaining no significant upside as yet.

Note Added 9/13/12 at 1:25 PM:  The SPX continues printing higher highs, the 1453 resistance is next.

Note Added 9/13/12 at 1:40 PM: SPX blew thru 1453 now testing 1455 R.  The euro is now up to 1.2957. VIX is at 14.27.  Tech continues to lead the broad markets higher all day long thus far. UTIL is at 472, it will need a few more points, to move towards 478 by tomorrow's close, and remain above 478 all next week, for the markets to continue higher. Bernanke is scraping the jelly donut stains from his neck tie as he prepares to take the stage.

Note Added 9/13/12 at 1:59 PM:  Very interesting, the SPX is up 1.21%, the COMPQ up 1.18%. Tech is no longer leading the broad markets higher after doing so all day long today. This relationship is worth watching the remainder of the day. Euro moving sideways at 129.60-ish.

Note Added 9/13/12 at 2:06 PM: The SPX pushes thru 1455 and is now testing 1457 R, 1460 is next. Tech continues to lag. Euro is printing the day's highs at 1.2987 with markets printing the highs. Bernanke now places his suit jacket on and walks towards the hall.

Note Added 9/13/12 at 2:30 PM:  Bernanke is taking questions. He does not see inflation exceeding 2% moving forward. The SPX is now thru 1460 R and onward to test 1464.  Note the resistance levels listed above where 1468 offers up a very strong resistance ceiling. VIX 14.06. Euro bumping along in the 129.90's.

Note Added 9/13/12 at 3:09 PM:  Bernanke finishes the Q&A and the SPX remains elevated at 1460 S/R, euro up, dollar down, commodities, gold, equities all up.  Bernanke says they likely do not have the tools to handle the fiscal cliff should it occur. Bernake thru everything he has at the economy today. It tells you that the economy must be far worse than anyone thinks, and there is a disconnect between the economy and markets.

Note Added 9/13/12 at 4:30 PM: QE3 arrives; the Fed announces open-ended free money as far as the eye can see. SPX ends the day at 1460, up 1.6%. The Nasdaq is up 1.3%. Tech stopped leading the broad markets higher this afternoon. As usual, Keybot the Quant was on the correct side calmly doing its thing all week long.  Keystone was surprised, however, since he though Bernanke would wait for disinflation and deflationary pressures but instead, the Fed is throwing the kitchen sink while the markets are elevated, and crossing their fingers that it all works out. Keystone's short term short positions were smoked today. SPX 1464 and 1468 is resistance above, 1468 very strong R.  The markets obviously did not have the Fed move priced in. NYSE volume is a bit above average but less than yesterday's volume which is less volume than the move higher for Draghi last week which is less than the move higher from Draghi's late July announcement about supporting the euro at all costs which started the entire game. Draghi's bazooka last Thursday resulted in 29 SPX points while the Fed's bazooka today is 23 points. The ECB move had a more positive effect on the U.S. markets, go figure. The QE3 move today will cause commodity inflation which will add to the food inflation and to the oil buoyancy already in place due to the Middle East and Norther Africa turmoil. The SPR release is on the table now to bring the gasoline price down moving into the holiday shopping season.  The banks are not lending, there is no velocity of money, which makes this Fed move bazaar. The people that can buy a house (uber high credit scores or cash buyers) have already done so or do not intend to while at the same time everyone else has to live with all the commodity inflation once again.  VIX dipped sub 14 and ended at 14.05.  Bernanke's friends, the banksters, ran higher, BAC is up 5% today; XLF is up 3%.  UTIL closed at 475.29, approaching the critical 478.48 level which the bulls must overtake before the opening bell on Monday morning. Therefore, watch for UTIL 478.48 in the final minutes of trading tomorrow. The bulls ran the table over the last two weeks.  Draghi delivered a bazooka, the German vote went the bulls way, ditto the Dutch elections, and today Bernanke fired his cannon; 4 for 4.  The sleeper day is tomorrow. More European drama is on tap with G-20 and Euro zone meetings. The economic data releases include CPI and Retail Sales at 8:30 AM, then Consumer Sentiment at 10 AM which will cause a market pivot point.