Keystone's Midday Market Action 11/5/12; Presidential Election Tomorrow

RTH dropped under 44.45 but is now recovering. The big shocker is the utilities sector with UTIL dropping like a stone, now printing 465.12, no check that, under 465, it sliced straight thru the 50-week MA which should act as a trap-door for the markets. The SPX fell under 1413 so more downside is expected.  UTIL rupturing the 50-week MA is very serious. Watch the markets closely, they may roll over at anytime. The Nasdaq is not leading the downside so perhaps the bulls can avoid the cliff edge. RTH is hanging on by a thread. Hang on tight.  SPX is at 1411.

Note Added 11/5/12 at 9:42 AM:  RTH is 44.39.  UTIL 464.11 is under the 50-week MA at 466.39.  The 8 MA stabbed down thru the 34 MA on the 30-minute chart signaling bearishness for the hours and days ahead. The utes are omnious, the markets may break down. Use extreme caution. SPX is 1410.

Note Added 11/5/12 at 9:45 AM:  VIX is well over 18 at 18.32.  UTIL now lost the 464 level. This is a serious warning. Keep focused on the markets over the next one-half hour, bad things may happen. COMPQ is at 2978; the 200-day MA is 2980. Tech and the broad markets are now moving coincidentally lower.  Watch to see if the COMPQ accelerates lower. AAPL is up 7 at 584 but remaining under its 200-day MA at 589.42. RTH is 44.35.

Note Added 11/5/12 at 9:51 AM:  Keystone's UPS 20 and 50-Week MA Cross Indicator shows the 20-week MA stabbing down thru the 50-week MA triggering a Cyclical Bear Market moving forward. This is the first change for this signal since it said a Cyclical Bull Market had started in January, 10 months ago.

Note Added 11/5/12 at 9:55 AM:  UTIL is at 463.34, breaking down. VIX is at 18.42 printing today's high thus far. RTH 44.37.  The SPX is down -0.3% but the COMPQ is only down -0.1% so tech is not leading lower.  AAPL remains up 7 and is probably the only thing holding the markets together right now. It is extremely surprising to not see the SPX down 10 or 20 handles right now.  Perhaps the ISM services data in a couple minutes will serve as a trigger?

Note Added 11/5/12 at 10:36 AM:  RTH is tapping at 44.45 trying to recover. The bulls are focusing on retail and tech, AAPL, semiconductors, as a means to stop the downward slide. The SPX is coming back up to test the 1413 resistance, which was support when the day started. Very perplexing to not see a full-fledged market breakdown today. Nasdaq and RUT (small caps) are positive. The RTH up and over 44.45 provides the bullish lift right now. UTIL poked back above 464, now 463.90.

Note Added 11/5/12 at 10:58 AM:  RTH moved above 44.45 creating the broad market lift. Bulls are also targeting the semi's, the SOX 379.50 bull-bear level, now at 375.37. Markets idle along flat currently. The mystery continues, perhaps the central bankers entered the markets today? AAPL is up 9 but remains under the 200-day MA. Nonetheless, tech is leading on the upside so this helps the bulls maintain market buoyancy. VIX is at 18.29 now testing the 20-week MA resistance at 18.32. COMPQ is at 2993 recovering above the 200-day MA at 2980. Use RTH 44.45 as the main guide right now. The current print is 44.57 helping the bulls. Keystone took a couple heart pills from this erratic and unstable action. A slice of pie may aid in assessing the situation.

Note Added 11/5/12 at 1:06 PM: UTIL now has a 461 handle no doubt some of the weakness is due to the ongoing hurricane tragedy. This breakdown in utes is extremely bearish. RTH drifted lower to 44.47 but recovered again, now printing 44.51, stopping the donwnside from acceleratiing. SOX does not have as much gas as this morning. AAPL is now up 3. Tech continues to not lead lower which also helps maintain the market buoyancy. The COMPQ (tech) and RUT (small caps) are sligthly positive while the INDU (blue chips) and SPX (broad market) are a hair negative.  Volatility is moving higher printing at the highs of the day heading towards 19. Considering the enormity of tomorrow's election, markets may be content to stumble sideways.

Note Added 11/5/12 at 1:44 PM:  RTH is 44.56 holding above the 44.45 danger line, so markets stumble sideways as the tension over the presidential election mounts, and the victims of Hurricane Sandy suffer.

Note Added 11/5/12 at 1:55 PM:  Time to play the latest hit parlor game, Guess the President, which requires a look at the metrics that hint at either a President Obama victory, or Governor Romney victory.  Starting with the 12 stocks assessed this morning in the healthcare sector, they are 9 to 3 in favor of an Obama victory.  We see the utes collapsing today, as well as REIT"s and telecom's moving lower, all divvy stocks. DVY and SDY divvy ETF's are both down over the last couple days. Thus, if Obama is victorious, the capital gains taxes will be higher, so trader's will want to cash out this year and pay lower taxes, so the divvy stocks would move lower, hence, this indicates an Obama victory.  Coal stocks are flat to higher which is a feather in Romney's cap since Obama has the war on coal ongoing. The dollar is higher which is in favor of Romney since the anticipation is that Romney would lessen all the QE, thus the dollar would regain strength. So all this results in a 2-2 tie. Looking at the banks, the large 'too-big-too-fail' central bankers' favorite sons, JPM, C, BAC, etc..., all down today. The XLF is down but the KRE regional index is flat to up. Traders disagree over the potential bank reaction to the election. Keystone believes that Romney will favor the regional banks over the big boys, so the weakness today hints at a Romney victory. The regional banks built a strong nation with the local banks handling mortgages and other steady-eddy products, on a personal level, unlike the big boys which are huge hedge funds in disguise, taking huge risks and more concerned about their stock market plays via algorithms rather than Aunt Nellie's question about current CD rates. With an Obama vicotry the big banks will get bigger, Keystone estimates that over 3,000 regional banks will disappear, each one either closing or gobbled up by a large conglomerate. The election will decide which direction the banking sector moves and of particular interest is that many likely do not understand the effects of each outcome on the financial sector and realize that the result is counterintuitive to what they are actually expecting (Romney is likely better for regional banks and not for the big banks while Obama will allow the big bank era to continue). So the Guess the President game is pushed under the couch for now.  The stock movements today do not hint at a clear winner either way, both sides are well represented as explained above. However, in one more day, all the ties end, and a victor will emerge, and the stocks will react in kind. If Obama wins, the coal sector carnage will be epic with ANR, ACI, BTU, CNX, KOL, etc... beaten and bludgeoned beyond recognition. If Romney wins, these coal stocks will be exalted to greatness. Type 'Presidential' in the search box above and Keystone's 10/8/12 article will come up that describes the trades in play for an Obama versus Romney win.

Note Added 11/5/12 at 2:11 PM:  RTH is at 44.58.

Note Added 11/5/12 at 3:18 PM:  RTH is at 44.56. The utilities are really giving it up.  With the UTIL 461 handle today, a new low has been printed that goes all the way back to test the levels in April-May this year, seven months ago. Watch SOX 378.60, price is at 377.98. The bulls will gain strength with a very strong finish higher for the broad indexes if the SOX moves above 378.60.

Note Added 11/5/12 at 3:40 PM:  Holy smokes, the semiconductors catapulting higher. SOX at 378.88 markets should moive several handles higher. SPX now 1418. SPX is testing the strong 1419 resistance. Major indexes all positive now. RTH 44.64.  This is wild action today, craziness in front of the election.

Note Added 11/5/12 at 4:25 PM:  That was a wild finish. Tech and semiconductors saved the day for the bulls today, however, in the final eight minutes, the SOX fell on its sword dropping back under 378.60 to stay in the bear camp, closing at 378.38.  RTH closes at 44.61 staying above 44.45 preferring the bull camp.  Thus, tomorrow's market direction is determined by retail and semi's, the two sectors most greatly effecting the broad indexes right now.  The bulls win if SOX moves above 378.60.  The bears win if the RTH drops under 44.45. Check them at the opening bell in the morning. The SPX was held down by the 1419 R. The utility sector failure (UTIL falling thru the 50-week MA) is uber important and bearish. Perhaps this trap-door market indicator has rusty hinges and is stuck only to give-way suddenly tomorrow? Keystone's UPS 20 and 50-Week MA Cross Indicator triggered today signaling a Cyclical Bear Market for the weeks and months ahead. Very odd market behavior today but perhaps it is expected considering the next leader of the Free World will be decided tomorrow.