Keystone's Midday Market Action 9/27/12; GDP

Futures are up overnight on the umpteenth rumor that China will provide more stimulus. This sends copper and commodities, and equities, higher. GDP disappoints but traders do not appear to care. The market bears will remain in the drivers seat if UTIL remains under 483 and SOX under 395, despite any upside market move.  Also watch VIX 17.70, RTH 44 and XLF 15.30. All three are contributing bullishly to markets, if any of the three cross the levels shown, it will create market negativity. The VIX is moving higher now so expect more dramatic intraday moves in the markets moving forward.

The 8 MA remains under the 34 MA on the SPX 30-minute charts projecting continued market bearishness for the hours and days ahead. The SPX 60-minute chart posted last evening shows price testing the critical 200 EMA and bouncing. Another test of the 200 EMA at 1431-1432 would be in order but the futures at this writing show that a bounce is on tap.  For the SPX today, beginning at 1433, the bears have the easy road, only needing to push under 1430.50 to receive a downside acceleration. But, the futures are going the other way.  The bulls need to push above 1441.50 to accelerate the market upside. A move thru 1432-1440 is sideways action today.

SPX S/R in this area is 1453, 1448, 1446, 1444, 1441, 1440 (5/19/08 intraday HOD for 2008 at 1440.24), 1438, 1437.69 (20-day MA), 1435, 1433, 1431.92 (200 EMA on 60-minute chart), 1431, 1429, 1427 (5/19/08 closing high for 2008 at 1426.63) and 1424.

Q3 ends tomorrow so the monthly charts will all receive new data points.  Window dressing must be considered as the month and quarter closes out; EOM, EOQ3.  The full moon is Saturday and markets tend to be buoyant in front of the new moon.  A Bradley turn date is Sunday, 9/30/12, so a window remains open for a trend change in the markets to occur anytime now thru next week, especially now thru next Wednesday.  The Spain bailout continues to be a major focus including the riots in both Spain and Greece. Markets are starting to give up on Spain asking for a bailout but news on this front would help to elevate markets even if only for a day or two. Behind the scenes, Spain and the ECB are working on the conditionality aspects of a bailout so news may hit at anytime.  Spain plans to announce further monetary news tomorrow so the markets will remain at the mercy of the on again, off again, Spain bailout talk.

Watch the SPX bracket formed by the 20-day MA resistance above, and the 200 EMA support below, as highlighted above. The bulls will push the markets sideways with upward bias if the euro continues to stay above the 128.30-128.50 area. If the euro drops under this range, the broad indexes will sell off strongly.

Note Added 9/27/12 at 9:35 AM:  The SPX fights the 20-day MA at 1439.11. Keystone took profits on AMD, will look to reenter on a pullback today, AMD remains very attractive moving forward.

Note Added 9/27/12 at 9:42 AM:  Utes are weak. SOX flat. The SPX 20-day MA resistance is holding price down. VIX is flatish at 16.21; see if it maintains above the 50-day MA support at 15.96. The COMPQ is not leading the SPX higher today thus far so tech is not leading the broad markets higher so this hints that the upside is limited and should peter out. Keystone bot AMD reopening a long position.

Note Added 9/27/12 at 10:01 AM:  Pending Home Sales are weak. The SPX moves flat across 1438. Watch the RTH, retail sector, testing support at its 20-day MA at 44.84, a failure here could finally lead to a cascade lower for retail, and perhaps Godot shows up to verify the short side for retail afterall. Keystone took profits on AMD, will look to reenter, AMD remains very attractive, the minute charts from 30-minute and lower are agreeable to a rest after this thrust higher to start the day, the hourly charts point to higher highs, so perhaps let things simmer and reenter at some point today.

Note Added 9/27/12 at 10:21 AM:  Markets are meandering sideways. Potential longs that Keystone is interested in include AMD 3.3-3.4, MRVL 8.7-8.9, NFLX 54.80, BBY 16.7-17.0, PAY 27.7-27.9, ZSL 39.7-39.9 and CRR 63.20. All of these plays exhibit positive divergence in place or setting up.

Note Added 9/27/12 at 10:27 AM:  RTH failure at the 20-day MA. XLF falls thru its 20-day MA as well. UTIL now down two points today. Markets remain weak. The SPX cannot regain its 20-day MA today, so far.  TRIN is 0.63, with a low print today at 0.49, uber bullish action, that begs to see some market selling today or tomorrow to relieve this uber bullish euphoria. Interestingly, for such a low TRIN, the SPX should be up 10 or 20 handles, instead, the SPX is up four.  The euro is at 128.52 now knocking on the door of the 128.30-128.50 range highlighted in yesterday's euro chart. Markets will noticeably weaken if the euro falls thur 128.50, more so at 128.40 and significantly so at 128.30.

Note Added 9/27/12 at 11:29 AM:  Spain releases budget information.  Copper turns red.  The euro drops to 128.43. The European markets are closing. The U.S. markets remain surprisingly flat; the euro weakness should push the equities markets lower.  Euro 128.37....128.36.......the critical test of the 128.30 line in the sand is occuring.  Euro 128.40...128.41.. 128.43....... the first test of 128.30 results in a bounce higher.

Note Added 9/27/12 at 12:05 PM:  Markets spike higher. The euro spikes to 128.75. Gold is up 25 bucks.  The Spain 10-year yield drops.  The SPX accelerates higher to test 1444 R, the 1446 is very strong resistance. The bulls must be viewing Europe in a positive light from the ECB's bond-buying perspective since gold is moving higher. Note the two +1200 TICK's over the last fifteen minutes, a wildly strong upward spike.

Note Aded 9/27/12 at 1:14 PM:  The euro is 128.88 driving the markets higher. The SPX is bumping up against the strong 1466 R.  The VIX fell thru the 50 and 20-day MA's at 15.95 and 15.52, respectively, keep an eye on these levels.  After the strong move higher today, tech is now leading the markets higher so this helps the bulls maintain the indexes higher. UTIL is flat on the day. SOX is up 2% today but remains ten points below where the bulls need to be at 395-ish. RTH and XLF regained their 20-day MA's but keep watching them. TRIN remains uber bullish at 0.57 which will need to see some market selling over the next day or two to remedy this uber low number. Three +1200 TICK's occurred today which is not something that typically happens.  Interestingly, the last uber high +1200 TICK that occurred was on Thursday 9/13/12, as the markets placed their top for the year, at the opening bell the next morning on Friday, 9/14/12. The SPX 60-minute chart never tested the 200 EMA today so that will have to be placed on the back burner for the days ahead. On the SPX 30-minute chart, the 8 MA is under the 34 MA, bearish, but the 8 MA appears likely to stab up thru the 34 MA today, so watch to see if that occurs.

Note Added 9/27/12 at 2:21 PM:  The 8 MA pierced up thru the 34 MA on the SPX 30-minute chart at 1:30 PM so the bulls are driving the bus for the hours and days ahead according to this tool. A +1100 TICK printed at 1:40 PM which exactly marked the top at 1449.91. These +1100 and +1200 TICK's are obscene. Stay alert in these markets. Expect the unexpected. Tech continues to lead th ebroad markets higher which helps the bull case.

Note Added 9/27/12 at 2:31 PM:  Keystone added more VXX. This is the highly volatile and dangerous long volatility ETF. The volatilty ETF's and ETN's such as VXX and UVXY, which are long volatility, and Keystone currently holds both of these, or XIV, which is short volatility, are some of the most dangerous and psycho trading vehicles available. Volatility increases as fear increases when market selling increases. Volatilty decreases as complacency increases when markets are rallying.

Note Added 9/27/12 at 3:10 PM: Keystone bot ZSL, a dangerous 2x inverse ETF that moves inverse to silver, opening up a new long position. Quantitative easing catapults commodities, gold, silver and other PM's higher making this a dangerous trade from the 'don't fight the Fed' perspective as well. ZSL has been bludgeoned, falling from 75 to 39, -46%, in only about 12 weeks time, also falling from 65 to 39, -40%, in only the last six weeks alone.

Note Added 9/27/12 at 3:59 PM:  Keystone bot AMD reopening a new long position.

Note Added 9/27/12 at 4:15 PM:  Tech ran today, AAPL (Apple accounts for about 10% of the SPX and about 20% of the Nasdaq) jumped 16 points, so, as goes AAPL, so goes the markets. The euro move higher today set the wheels in motion for the bulls to take markets higher. The euro came down to touch the danger level at 128.30 and then catapulting skyward like a missile well over 129, now at 129.09.  Perhaps some window dressing is occurring, the full moon effects, call it what you will, there was a mini melt-up today. The SPX closes above the strong 1446 resistance, which now becomes support, as well as the 20-day MA at 1439.52. The +1200 TICK's are important today since all TICK's here or higher, over the last few months, results in a pullback in the SPX from 10 to 40 handles within one to a few days time.  TRIN closes at 0.66, uber bullish, that will want to see a market sell move ahead. NYSE volume was only about 70% of a day's average expected volume which makes the bullish market move today unenthusiastic. Remember that for this week in September, after OpEx, the markets are down over 80% of the time.  The SPX is down 13 points, or -0.9% so far this week, with one day remaining in the week. Utes ended red.  The VIX was down today but flat on the week with charts that look very attractive for upside ahead.  Gold is at 1780-ish teasing Keystone's 80/20 rule where if it closes in the 1780's, then that will likely lead to a move to the 1820's, thus, this price area for gold is very important. RIMM is up 14% AH's on better than expected earnings so perhaps Keystone will finally be rewarded for holding that one long. NKE is puking AH's, money is better spent on food rather than three hundred dollar shoes.