Keystone's Midday Market Action 11/28/12; Beige Book; Fiscal Cliff

Today we see if the bears have what it takes to move markets lower.  Semiconductors, financials and volatility all jumped into the bear camp yesterday afternoon which started the growling. The SPX fell thru the 200 EMA on the 60-minute chart which forecasts bearishness for the days and hours, perhaps weeks ahead. The 8 MA is probably going to slice down thru the 34 MA on the 30-minute chart which would forecast bearishness ahead. XLF 15.65 and VIX 15.84 will directly dictate market direction today. Both are bearish only by pennies, thus, the bulls must immediately reverse the moves and push one or both into the bull camp. If both remain as is, XLF under 15.65 and VIX over 15.84, the bears will rule.

For the SPX today starting at 1399, the bulls need to touch 1409 to set off an upside acceleration but this does not appear to be on tap. The bears only need a smidge of red in the futures and this will ignite a downside acceleration at the opening bell. The futures are negative all thru the overnight session and now down over five S&P's.  A test of the strong 1391 support is likely on tap, if so, markets will either bounce or die from 1391.  The action will revolve around the following key S/R; 1414.13 (20-week MA), 1413, 1409, 1407.57 (100-day MA), 1406, 1404, 1403, 1402.50 (200 EMA on the 60-min), 1401, 1399, 1397, 1394, 1393.34 (20-day MA), 1391, 1389, 1388.02 (10-month MA), 1385.08 (150-day MA), 1385, 1383.76 (200-day MA), 1380, 1378 and 1375. Keystone's uber important 'Decider' is the 12-month MA cross now at 1371.02, also known as the cliff edge or the waterfall, where all bullish hope is lost.

New Home Sales are 10 AM-markets may pivot on the news.  Oil Inventories are 10:30 AM.  Fed's Tarullo talks at lunch time.  A 5-Year Note Auction goes off at 1 PM. The big excitement of the day is the Beige Book at 2 PM where a market pivot point will occur. Retail earnings are important.  PLL will provide a clue as to how the global economy is doing. The full moon and lunar eclipse is this evening. Markets tend to be buoyant about two-thirds of the time into the full moon.  The Aussie's and Asian folks will enjoy the eclipse but North America will not see it. Nonetheless, if you see odd human behavior today or tomorrow, chalk it up to the heavens. The politico's will continue to drop tape bombs on the markets as the fiscal cliff drama plays out in public view. The Egypt turmoil continues. Europe remains a mess, the euro fell thru the psychological 1.29 level about one hour ago. Copper is weak.  The 10-year yield is 1.62%. The asset relationship in play is the euro down = dollar up = commodities down = gold down = copper down = oil down = equities down = bond yields down prices up. In a nutshell, the whole ball game is XLF 15.65 and VIX 15.84 today.

Note Added 11/28/12 at 10:32 AM:  XLF and VIX gave up the fight from the get-go, very happy in the bear camp.  The 8 MA stabbed down thru the 34 MA on the 30-minute chart signaling bearihsness for the hours and days ahead. The bulls did not show up to fight today, instead, they folded like a cheap suit.  Gold and other commodities down large. The SPX dropped down to test the 1391 support and failed. Price comes back up for a back kiss of the 20-day MA at 1392.33.  The Nasdaq is leading the broad markets lower, another feather in the bear cap.  AAPL is off -1.5%. Oil Inventories do not change the weak oil price today; WTIC has an 85 handle.  Markets typically never bottom on a Wednesday so if short, a lower low in price usually occurs on Thursday morning. The 10-year yield is 1.61%. VIX 16.50. XLF 15.52. The euro is 1.2916, back above the 1.29 level no doubt creating the market buoyancy now.

Note Added 11/28/12 at 10:42 AM:  Speaker Boehner provided happy fiscal talk but the euro moving up caused the market bouyancy. SPX now at 1396. The 20-day MA should receive a lot of attention today.

Note Added 11/28/12 at 11:32 AM:  Bulls stage a strong come back. The euro now at 1.2924, quite a move; up euro = up equities.  XLF is 15.60 and VIX 15.96 so the bears are fine, however, they must not give up anymore ground. The TICK only shows a couple spikes downward at -700 and -800. Keystone was looking for a -900 or -1000 or lower TICK to take profits on a couple of the short plays, alas, it did not occur and markets moved higher.  The TICK is well-behaved today, not showing the selling overdone, but printing +1000 prints which indicates the buying is too overly enthusiastic. The TRIN is 1.0-1.3 reflecting steady-eddy selling, no panic selling at all.  The NYAD printed -1500 also well short of a -2000 or lower print so the selling was not overdone by any means. TICK, TRIN and NYAD all show that the selling was steady-eddy and this type of selling can continue indefinitely. Typically a panic low will cause a relief pop, but today Speaker Boehner and the euro moving higher created the market pop. Markets may stumble along until the Beige Book at 2 PM. The final couple hours today may be eventful.

Note Added 11/28/12 at 12:00 PM:  The television screens are showing the podium where President Obama will speak any minute.  The SPX is 1398.50. Here's the president, let's see what happens to the SPX.

Note Added 11/28/12 at 12:13 PM:  President's speech was short and sweet resulting in a three-point drop in the SPX, he sure does have the touch.  The SPX is recovering now that the speech is over.  The 10-year yield is at 1.62% not moving higher. This hints that the equity rally is more of a dead-cat bounce since money is not leaving the safety of bonds for stocks. XLF is 15.57.  VIX is 16.07.

Note Added 11/28/12 at 12:19 PM:  Big spike upwards. SPX 1402. VIX is testing the bull-bear line at 15.84, this is important.

Note Added 11/28/12 at 12:41 PM:  VIX drops under 15.84 so the bulls gain a feather for their caps. XLF is at 15.66 trying to punch up thru to help the bulls further.  The SPX is 1404.45. This scenario is the jog scenario discussed a couple days ago, sharp down, shorts become frustrated, markets spike higher, now the bulls see the all-clear and jump in big, but then sharp reversal occurs again with bulls and bears standing on the sidelines as markets drop. Time will tell if the last move occurs, or not.  Keystone's algorithm, Keybot the Quant, will likely want to whipsaw long if the SPX 1409 is tagged; if the 1409 is not achieved then Keybot will likely stay short thru the closing bell. XLF 15.66 and VIX 15.85 will tell the story as the day plays out. XLF is now printing 15.66 and VIX is 15.71. The 10-year yield is 1.63% remaining somewhat tame. The SPX is above the 200 EMA on the 60-minute at 1402.29 which is bullish for the hours and days ahead.  The 8 remains well under the 34 MA on the 30-minute chart which is bearish for the hours and days ahead.  The bulls and bears continue to fight it out each day.

Note Added 11/28/12 at 2:51 PM:  Dramamine is required for these markets. One minute the broad indexes are moving one way, the next minute the opposite, it is difficult to update the action since it moves the other way before a comment can be written. Days like this it is best to let your hands off the steering wheel and sit in the back seat taking it easy.  The pivot occurred at 2 PM with the SPX dropping from over 1405 to 1402, but then recovering again to 1405, now at 1403.  The 200 EMA at 1402.29 is key.  Likewise, three parameters are moving the broad indexes right now; XLF 15.65, VIX 15.85 and SOX 372.42.  All three are currently bearish but anything can happen with this erratic and unstable market action.  Keystone's algo will likely stay short unless SPX 1409 is achieved.  For now, Keystone is simply riding in the back seat taking in the drama. Higher volatility will bring even more wild intraday and day-to-day market point moves going forward.

Note Added 11/28/12 at 3:10 PM:  The bulls are pushing hard, XLF 15.67 now bullish, ditto VIX at 15.84, by a single penny for each.  SPX printing the HOD at 1406. Two heart pills are required for this market stress.

Note Added 11/28/12 at 6:13 PM:  That was a wild day at the circus. Keystone's algo, Keybot the Quant, flipped back to the long side a few minutes in front of the closing bell. The bears were holding their own and then once SOX 372.42, XLF 15.66 and VIX 15.85 clicked over to the bull side, the markets took off vertically.  Watch these three parameters closely tomorrow.  Speaker Boehner provided a market lift this morning with soothing fiscal cliff words, ditto the president at noon time, who also promised a resolution to the cliff by Christmas, and then a Hilsensrath (considered to have an inside track at the Fed so when he writes about further bond-buying and QE the markets always bounce higher) article in the afternoon created the bull frenzy into the close. What a circus.  These are very treacherous markets. The SPX stayed above the 200 EMA on the 60-minute chart, bullish.  The 8 MA crossed back above the 34 MA on the 30-minute chart signaling bullishness for the hours and days ahead.  The action for the last four months is not for the faint of heart, unless of course, if you are prepared with heart pills at the ready.