Keystone's Midday Market Action 11/30/12; EOM

Say goodbye to November and hello to the cold December winds. The monthly charts receive new prints today. The euro popped overnight up to about 1.3030, tagging the target we discussed yesterday with the $XEU euro chart. Scroll back a couple pages to study that chart or type XEU into the search box above, or find it in the lower right hand margin with the archives.  The euro hit this target and fell on its sword, dropping thru 1.30, now printing 1.2981. Euro down = equities down. The futures are flat. As shown this morning, the 10-year yield is of great interest moving forward so keep a close eye on that, now printing 1.60%. Yields down = equities down. 1.60% is an important pivot point so if the 1.59% and lower prints for the ten-year it will receive lots of attention and would be in concert with the equties markets selling off. Commodities are favoring some moderate weakness today.

Watch SOX 372.42, XLF 15.65, VIX 15.85.  All three are bullish.  If the markets sell off  but none of these three turn into the bear camp, then the bears got nothing and the markets will move higher. If any of the three move into the bear camp, then the markets will sell off. The degree of market selling will be impacted by whether one, two or all three of these parameters turn bearish, or not. For the SPX today starting at 1416, the bulls need to touch the 1420 handle to set off an upside acceleration. The bears need to push under 1409 to create a downside acceleration.  A move thru 1410-1419 is sideways action.

Watch the COMPQ versus SPX relationship to see if tech leads lower, or higher, so the strength of the market move today can be measured.  The politico's will likely don their top hats and tails and tap dance in front of the camera's again todaym, creating market volatility. President Obama is speaking at noon so note the market reaction at that time. As both the democrats adn republicans profess that they want to control spending, the president's proposal includes 50 billion dollars in new spending. Welcome to the circus. Chicago PMI hits fifteen minute after the opening bell. Farm Prices are at 3 PM. Watch to see if the 8 MA stabs down thru the 34 MA on the 30-minute chart, or not. Also watch the potential ascending triangle on the 5-minute chart posted after yesterday's close. The opening bell is about twenty minutes away.

Note Added 11/30/12 at 9:48 AM:  Chicago PMI disappoints.  The wild ride in volatilty is eye-catching, the VIX was higher at the start, then plummeted to under 15, now spiking all the way back up to the highs of the day at 15.28.  Overall, however, SOX, XLF and VIX remain bullish so the long side continues to run the show.  Tech is slilghtly leading the broad market to the downside so this is a feather in the bears cap.

Note Added 11/30/12 at 12:16 PM:  The SPX is testing the strong 1413 support.  The VIX is over the important 15.85, identified by Keystone's algo, albeit by a few pennies, but this will create market negativity as long as the VIX remains above 15.85. XLF and SOX remain in the bull camp. The euro is 1.30, bulls will be happy if it stays above 1.30, bears will increase the selling pressure if it drops under 1.30 and leaks lower. The 10-year yield is steady at 1.61%. Keystone took profits on the ZSL trade, nice launch today, exiting the position. Will look for a place for a potential reentry.  Also shorted EXPE opening a new short position. Keystone is hanging the outside Christmas lights today a la Chevy Chase in Christmas Vacation. Perhaps the smartest follks are those that let the holiday lights remain up all year long, although the lights would be an eye sore during the July 4th picnic.

Note Added 11/30/12 at 12:56 PM:  A skunk shows up at the garden party. Speaker Boehner walks to a microphone and says "Who are we kidding, we are at a stalemate, and the talks are going nowhere." The SPX drops under the strong 1413 support level.  The Dow Industrials drop under 13K.  The Nasdaq is at 3000. All in all, no great shakes, the broad indexes continue along sideways. The 8 MA is curling down and converging with the 34 MA on the 30-minute chart but remains above for now so the bulls rule. Keep an eye on this since it is a firm bearish signal that short is the place to be should the cross occur.  VIX is now over 16 solidly in the bear camp which will create futher market selling.  SOX and XLF remain bullish so the bulls can hang their hat on these two parameters, for now. Keystone is adding more to the ongoing long EGLE trade, a speculative shipping industry play. EGLE keeps sliding south and analysts are expecting 1.7-1.8.  The charts show attractive positive divergence; EGLE needs to hold the 2.15-2.30 area to set up the potential launch move.

Note Added 11/30/12 at 2:34 PM:  The 8 MA is nearing the 34 MA on the 30-minute chart but the bulls are trying with all their might to push price sideways or higher to stop the cross from occurring. The SPX is at 1415. The VIX is bearish and XLF and SOX bullish. Status quo. The euro is 1.3002. The 10-year is 1.61%. The bulls got nothing unless they drop the VIX under 15.85. TRIN is moving up from 1.00 to 1.26 in the last twelve minutes. The TRIN moving up would correspond to increased market selling. Tech and the broad markets are moving down coincidentally so the bears cannot receive any oomph from tech leading lower, however, the bulls do not receive any benefit either since tech is not leading higher either.  AAPL is down five bucks today, almost a percent.  Yesterday, Apple bumped its head on the 200-day MA at 596 and received a spank down, unable to move above this important moving average, a bearish signal for AAPL.

Note Added 11/30/12 at 2:52 PM:  The 8 MA is coming down too cross the 34 MA.  The SPX is dropping towards the lows at 1412. VIX is 16.06 just printed the HOD. XLF printing the LOD at 15.71. SOX dropping like a stone; one more point lower and all Hades will break loose in the markets. The 10-year is 1.60% down a tick favoring equity bears. The euro is 1.2998, under the 1.30 albeit by tow ticks. Things may get ugly into the close, hang on to your hat.

Note Added 11/30/12 at 3:18 PM:  The Nasdaq is now down 0.22% with the SPX down 0.11%, tech is leading to the downside so place a feather in the bears cap.

Note Added 11/30/12 at 3:50 PM:  Markets are typically buoyant on Friday afternoon's since short traders pare back positions due to weekend event risk. The weekend news events tend to be on the positive side so short traders may cover one-third of their holdings to reduce exposure and avoid having their head handed to them on Monday morning. Of course, with this fiscal cliff drama, the weekend will be a jump ball.  The goose into the close right now will keep the 8 MA a hair above the 34 MA on the 30-minute chart which keeps the bulls in charge and sets up Monday morning as a showdown. VIX is 15.93 remaining bearish. SOX and XLF remain in the bull camp all day and prevented the SPX from falling to the low 1400's today.

Note Added 11/30/12 at 4:00 PM: Goodbye November. Lots of volume at the close with a rebalancing. The SPX came up to tag the 1418 from yesterday.  The session was flat today. Wait to see where the VIX settles out; looks like the bears will be happy with that victory today.