Keystone's Midday Market Action 11/14/12; PPI; Retail Sales; FOMC Minutes

Futures were up over 10 S&P's this morning now up three.  Retail earnings are coming in better than expected. SPLS beats which is encouraging for an economic recovery if businesses are starting to spend again. FB's lock-up expires today so it will see gyrations.  The markets bounced yesterday on a rumor that Spain was going to request the bailout but the markets gave up the gains into the closing bell.  The soap opera continues with the SPX 1369 (see the previous chart) and NYA 8002 levels. Both represent the cliff edge where bad things will happen to markets.

The bulls can right the ship if the VIX falls under 16.  For the SPX today starting at 1375, the bulls need to touch the 1389 handle to accelerate the upside to test 1391 and move higher above 1400. The bears need to drop under 1371, and the 1369 cliff edge will surely crumble, sending markets into a potential free fall drop. A move thru 1372-1388 is sideways action. PPI and Retail Sales data hit at 8:30 AM and will set the tone for the opening bell. Business Inventories at 10 AM may cause markets to pivot.  President Obama will speak at 1:30 PM EST, his first conference since winning reelection.  Concern is growing that the republicans and democrats are splitting apart just like before the election. The fiscal cliff mess is occurring with the Patreaus scandal continuing to unravel at the same time.  Markets may become very jumpy from 1 PM on.  The FOMC Minutes are at 2PM where a pivot point will occur, so lots of market action is in store for the afternoon.

The solar eclipse was last evening; google that if you have not enjoyed the two-minute show. Today is a Bradley turn so the markets are ripe for a strong move in either direction from here. Couple this with the SPX sitting at the 1369-1370 cliff edge, and we are at a major market inflection point right now.  SPX 1375 and 1391 are strong resistance overhead. The action over the last three days can be quantified as a sideways move thru 1369-1391. Within this zone the bulls and bears will fight it out. Bulls win above 1391.  Bears win below 1369, which will lead to dramatic selling. The euro is 1.2742. The 10-year yield is 1.62%.

Note Added 11/14/12 at 9:00 AM:  No great shakes from the data.  Retail Sales were far more important before the RTH broke down a few days ago.  RTH will need to recover to about 44.20 and higher for the bulls to wave this flag again. Markets are flat with some upside buoyancy heading into the open.

Note Added 11/14/12 at 10:03 AM:  Business Inventories are no biggie.  The SPX wrestles with the strong 1375 S/R.  The NYA is at 8022 only twenty points from failure. More sideways stuff today, the markets are waiting to be pushed in one direction or the other.  The president, fiscal cliff circus and FOMC minutes will cause market drama after lunchtime.

Note Added 11/14/12 at 10:20 AM:  VIX is at 16, watch this closely, bulls will be very happy under 16, bears need to be above 16, this will indicate broad market direction forward.

Note Added 11/14/12 at 10:30 AM:  VIX spikes a half-buck.  SPX drops to test the 1371 low from yesterday......... now 1370...... crash helmets mandatory...... she is going in...... 1369 is for all the marbles..... NYA 8002 failure occurs .........

Note Added 11/14/12 at 10:36 AM:  The NYA has lost the 40-week MA at 8002. This is a significantly bearish development and locks in the third Keystone signal that now forecasts a Cyclical Bear Market moving forward.  The exact number for the 12-month MA is now 1368.59, this is the tip of the cliff.  Price has printed a LOD at ...... whoa 1368.57 ......... there's a bounce, price punctured the cliff edge, the tension mounts, see if she lets loose to the downside in the coming minutes........ this is truly bounce or die.....

Note Added 11/14/12 at 10:48 AM:  Quick, blow on the markets and they will go over the waterfall.  The SPX 50-week MA is 1365.70. This represents the branch sticking out of the cliff about ten feet below the top.  If markets fail right now, they will cling on to the 1365.70 branch, but that will likely snap, and then a free fall may occur. Tech is not leading the downside so it is a slow motion decay today. The market bulls need to thank CSCO for putting up a fight.  Lots of drama playing out now.  It appears the markets have lost it, so the time ahead will be interesting. The SPX has lost the 12-Month MA ushering in a Cyclical Bear Market. This is the fourth Keystone cyclical signal that has now turned bearish.

Note Added 11/14/12 at 11:12 AM:  SPX is back testing the 12-month MA. VIX is at 17.

Note Added 11/14/12 at 11:27 AM: SPX wrestling with the key 1368.59 level. The NYA remains under 8000, thus, the SPX would be expected to trail lower. Tech is not leading the downside but it is in the hunt; Nasdaq -0.2%, SPX -0.3%.

Note Added 11/14/12 at 11:52 AM:  The SPX 30-minute, 1-hour and 2-hour charts are positively diverged so this is a feather in the bulls cap for the hours ahead.  NYA under 8000 will create market negativity. If NYA moves above 8000, the bulls are staging a comeback.  If the SPX drops back under the 1368.59, the downside can begin in earnest again. For now, the SPX is back above the 12-month MA which is a cyclical bull market signal. Markets may be content in floating sideways into the president and the FOMC minutes after lunchtime.

Note Added 11/14/12 at 12:19 PM:  The SPX collapses thru the 12-month MA at 1368.59 again signaling a Cyclical Bear Market ahead so the bulls and bears are playing ping-pong with this vital indicator. NYA is down at 7969 now.  VIX moving back up towards 17. Bears are making another push lower. President Obama speaks in one hour. The SPX dropped ten handles when the president spoke last week. Oil moves higher after Israel kills a Hamas leader with an air strike, and subsequently, Egypt voices concern further escalating this new drama.

Note Added 11/14/12 at 1:01 PM:  The SPX is over the cliff, but is hanging onto the skinny 50-week MA 1365.66 branch sticking out of the side of the cliff, which should snap at any time. The SPX is printing 1366.60, less than a buck away.

Note Added 11/14/12 at 2:16 PM:  Markets have fallen from over 1370 to 1365 since 2 PM.  The president continues to take questions at the news conference. The FOMC minutes may have helped push lower as well.  The SPX just ruptured the 50-week MA at 1365.66, the last branch in the side of the cliff snapped..... 1365 .... 1364 ...... 1364.05 .....

Note Added 11/14/12 at 3:03 PM:  SPX .... 1363 ...... 1362 .......

Note Added 11/14/12 at 3:06 PM:  SPX ...... 1361 .........markets tend to never bottom on a Wednesday. For a strong sell off like today, on a Wednesay, typically Thursday will give you a lower low....... 1360 .....ahhhhhh...the cliff. ......

Note Added 11/14/12 at 3:09 PM:  SPX ......1360 ........ 1359 ...... 1358 ..... the 1358 is a strong support level.......a 1358 failure would want to lead to 1345........

Note Added 11/14/12 at 3:19 PM:  SPX ....1358 .... 1357.....the SPX bounced off 1358 then fell thru again. This is sturdy support, if price falls thru, this means we move more dramatically lower entering a potential waterfall crash.  The Nasdaq and SPX are now moving coincidentally down at -1.1%. The 10-year yield is 1.59%, flight to safety.  The euro is 1.2740 flatish on the day.  Keystone's SPX:VIX Ratio Indicator is 76, if 68 ruptures, that will be another strong leg lower for markets. VIX is 17.71 at the 200-day MA at 17.73.  Bears need to push the VIX higher to prove they really want it. TRIN is 1.33, very orderly selling, no panic, just steady-eddy pace of traders thowing things overboard. NYAD is at -2400, that is uber low, and markets will need a snap back move to relieve some of this bearish pressure.  SPX 1357 ..... LOD is 1357.01 from a couple minutes ago .......

Note Added 11/14/12 at 3:56 PM:  SPX .... 1356 .... 1355 ...... 1353 .... 1352....... VIX moving towards 18. Someone tell the president to stay away from a microphone. The election was a large selloff, a couple days later his speech resulted in a ten handle selloff, and now today, the markets dropped 12 handles from the press conference inot the closing bell. The SPX is now about 120 handles off the 1475 market top. The cyclical bears are growling. If Thursday typically provides a lower low after a large Wednesday selloff, perhaps the place to consider long would be from 1345 or 1335. The RSI and MACD line on the SPX daily chart are weak and bleak so even if a bounce occurs, which would satisfy the uber low NYAD today, the RSI and MACD still want to see lower lows in price. So a bounce move will likely require nimbleness if played.  The NYA 40-week MA cross chart will be a good one to post. This NYA development is a major failure signals and major cyclical bear market indicator. Ditto the SPX 12-Month MA Cross, the bears took them both down today. The bears are driving the bus along the interstate with the wind at their backs and the bulls stuffed in the trunk. The day had an electric feel to it from the start. Time to ponder the days events with a slice of apple pie.