Keystone's Midday Market Action 11/2/12

Now that some of the smoke has cleared, let's take a look at the metrics.  SOX 380 is key today, especially since semiconductors drove the markets higher yesterday.  Price came up to punch thru at the opening bell, then promptly fell on its sword, now printing 375.80, so the bears dodged a bullet, and the bulls missed an opportunity, so far today.  VIX 15.90 is also key.  The VIX came down but held the 16 psychological support and is now printing 17, which keeps the bears in the game.  GTX, commodities, are falling thru 4800 now, a far cry from 4920, also helping the bears maintain the reins. Copper is getting crushed.  The bears need RTH 44.44 to reestablish the market downside but the bulls are keeping it at 44.83 right now well above this danger level.  Thus, the markets are in standoff mode and may stay that way thru the presidential contest on Tuesday.

For the SPX, the bulls punched thru the strong 1429 R at the bell so it appeared to be all wine and roses today, but, alas, the SOX and VIX behavior immediately tells you that is not the case.  Price pierced the 200 EMA on the 60-minute chart at 1432.25 so the champagne corks popped, but minutes later the bulls were frantically trying to replace the corks into the bottles. Ditto the 50-day MA at 1434.70.  The HOD is 1434.27, a textbook back kiss resulting in price collapse.  Keep an eye on these important levels. Also, the SPX S/R at 1438, 1435, 1434.70, 1433, 1432.25, 1431, 1429, 1426.63, 1424, 1422 and 1419.

Tech is leading the broad markets lower so far, the opposite of yesterday's action.  AAPL is down five today testing the 200-day MA at 588.70.  The iPad Mini is on sale today. Several souls are waiting in line but the New York gasoline lines are far longer as the East Coast Hurricane Sandy tragedy continues to unfold. The New York Apple store action for the iPad Mini is a bit pathetic compared to all other past Apple product releases.  There are more employees than customers in the store and the joyous employee cheers greeting purchasers appears odd with an empty store as a back drop. The 10-year is 1.74%.  The euro is weak at 1.2842. Under 1.2830 will likely add to the broad market weakness. The BOJ intervention boosts the dollar/yen, which helps to buoy the dollar, and move the euro lower. Also, the ECB may cut rates on Thursday morning. DNDN is feeling some love today up 28%, looks like Keystone will be footing the bill for food and booze for everyone this evening. DNDN has formed an island from August to now on the daily chart so a print at 5.35-5.50 would be nice to test the resistance for the potential island reversal, but price would likely retreat so that is a good target to exit the long side and perhaps reload lower. Then again, the stock could perform an island reversal immediately jumping over 6 at anytime. Perhaps AMD, BBY and/or HPQ will show some signs of life as the days and weeks move along. The beat goes on, the SPX is now testing the sturdy 1424 support. Utilities are weak again today. Gold is now down 31 bucks.

Note Added 11/2/12 at 1:00 PM: SOX 376.55, bearish.  VIX 16.59, bearish. RTH 44.80, bullish. The drubbing of utes continues with UTIL at 471.83. The 50-week MA at 465.67 serves a a trigger for the markets to drop into free fall and this is now only six points away. Keystone's algo will be tracking UTIL 494.40 all next week; the bulls have a long road to hoe to bring price all the way back up to near 500, thus, the utes should continue to create market negativity. Markets are floating along sideways today. The action remains a toss-up. The bulls can flex their muscles if they breathe life into the SOX or push the VIX lower. For now, status quo into the weekend. Trader's are sneaking out the back door like a summer Friday session. Volume maintains the pattern this week of light action during the trading day, the run rate is at about 85% of a day's average volume. Gold is down 38 bucks. Oil has an 85 handle. The strength of the dollar is causing the large moves south with commodities. Dr. Copper is receiving a beating and will have to treat his own wounds this evening.  Note how the 1426.63 resistance level is placing a ceiling on price for the last two and one-half hours so keep an eye on that level. The euro is 1.2846; the 200-day MA is 1.2839. Bad things will happen to the equity markets if the 1.2830 level gives way. SOX, VIX and RTH will tell you the story today and into Monday.  Markets may simply float sideways into the weekend. Tech is leading the broad indexes lower with small caps leading everything lower today, a very bearish signal (RUT is the large leader lower today along with tech (COMPQ); the broad indexes (SPX and INDU) are following the tech and small cap leaders).

Note Added 11/2/12 at 1:57 PM:  The SPX lost the 1424 support. Next support is 1422 and very strong support at 1419, where price broke out of the sideways channel discussed yesterday morning. The euro, XEU, is at 1.2836; the 200-day MA is 1.2839, the bulls are losing their grip, now only holding on by a single fingernail.

Note Added 11/2/12 at 2:04 PM:  The SPX lost 1422 support, now printing a 1420 handle. VIX is up towards 17. Oil lost 85 and is now printing an 84 handle.  Gold is down 40. The euro is under the 200-day MA support at 1.2830. Hang on Betsy, the bulls have to bounce things immediately, otherwise, the downside could get out of hand. RTH is 44.73 well above the 44.44 danger line.  AAPL is down 15 bucks, quick, sell more iPads. Apple fell thru the 200-day MA at 588.66. Small caps are collapsing, the RUT is down 1.1% giving back all of yesterday's up move.

Note Added 11/2/12 at 2:37 PM:  The SPX now testing the strong 1419 support. RTH is 44.70.  Euro keeps hanging on by one fingernail.

Note Added 11/2/12 at 2:39 PM:  SPX fails 1419.  Oil is 84.77. Euro 1.2825. VIX 17.18.  Hang on folks.

Note Added 11/2/12 at 2:41 PM:  SPX now under 1417. RTH 44.63 now only 19 pennies above danger.  Euro 1.2824.

Note Added 11/2/12 at 3:31 PM:  SPX has a 1416 handle, check that, now 1415. VIX 17.32.  Oil 84.90.  RTH 44.52 now only 8 cents from causing a large down leg in the broad indexes. Euro 1.2830.  The Dow Industrials have now dropped 200 points off the high today. It is easy to appreciate the leadership power of the small caps and tech, where they go, everything else follows, and AAPL is 20% of the Nasdaq. Apple collapsing, now down over 20 bucks to 576.

Note Added 11/2/12 at 3:46 PM:  SPX 1413.  RTH is 44.49 hanging on by a hair. Blow on it and you will probably knock it over. VIX 17.44. There is fifteen minutes of trading time on tap. UTIL now has a 469 handle approaching the extreme danger point at 465-466.  The bulls need to send reinforcements quickly, unfortunately, the power required is being used at the New York marathon.

Note Added 11/2/12 at 4:00 PM:  The bulls ran out the clock. RTH closes at 44.46, but still settling out, watch the RTH 44.44-44.46 level as a key indicator come Monday morning. The closing print may take it under. Time for a slice of pumpkin pie to ponder the day. Best of luck and good wishes to all our friends on the East Coast dealing with the hurricane aftermath.  Hang in there.