Keystone's Midday Market Action 11/8/12

The day after the big sell off results in a sideways move.  Price often moves sideways with an upward bias the day after a large up move, and sideways with a downward bias the day after a large down move occurs. This provides time for the smoke to clear. The Bradley window from the 11/1/12 date closes today, and yesterday was the first day of the new Bradley window influenced by the upcoming 11/14/12 actual turn date. Interesting how the wild action yesterday occurred exactly at this confluence of the two windows.  Also the sell off in the broad markets off the top is right on target with the area that is identified by Keystone's Eclipse Indicator. Funny how the esoteric indicators have a role in trading. It never matters that you do not understand how a particular indicator works, all that matters is if it is repeatable and worth using as a tool in the tool box.

The retail sector dropped at the open as KSS kissed forward guidance goodbye. RTH collapsed thru 44.38 and is now printing down at 44.05. The financials, XLF, popped above 15.73, so the bulls puffed their chests and a couple champagne corks popped, however, the XLF quickly reversed and fell under 15.73 so the bulls frantically tried to replace the corks, a rally celebration is premature.  XLF is 15.65 so the bears are running today with weak retail and financials. It is surprising that the broad indexes are not substantially lower. The SPX is stumbling sideways but that critical 10-month MA is nearby at 1387.41. If this fails, the bulls will receive further beatings. AAPL is down 2% today at 547-ish. The important 520-ish support level is now in the neighborhood. Thus, as a thought, a long play on Apple from 515-530 is likely attractive, if it pops before then, so be it. Any long side trade on AAPL should be short-lived since more downside into the 400's is likely for the weeks and months ahead.

Watch the SPX 150-day MA slope which is flat and going negative. This is one of Keystone's cyclical signals which would indicate a cyclical bear market ahead which verifies the UPS 20 and 50-week MA signal that triggered a few days ago.  The NYA is 8108. Keystone's algo tracks the NYA as one of its many duties and the 40-week MA is a key bull-bear line and also a cyclical market signal. The 40-week MA is 8000, only one hundred points away, where the big trouble begins.

Note Added 11/8/12 at 12:25 PM:  That little bugger, SPX, was sneaking down to a LOD at 1387.96 as Keystone entered the above missive.  So price has now successfully tested this critical 10-month MA support twice now. The bulls should feel good about that but RTH and XLF remain bearish and the NYA is on the verge of losing the 8100 level. Keep watching SPX 1387.41....... 

Note Added 11/8/12 at 2:00 PM:  The SPX fell thru the 10-month MA. RTH is under 44.  XLF is under 15.73.  VIX is 18.26. NYA is 8092 now only about ninety points from triggering another important cyclical bear market signal. Tech is leading the broad markets lower which is bearish into the close.  The 200-day MA is 1380.76, the 150-day MA is 1384.81 and the 10-month MA is 1386.96.  The SPX is now printing 1386.36.

Note Added 11/8/12 at 2:20 PM:  Keystone covered all his T shorts completely exiting the trade. It will likely result in a minor loss, the call was great with the negative divergence spank down as forecasted but the original entry was a bit early, so the trade execution was weak.  Also bot more DNDN to add to that ongoing long position.

Note Added 11/8/12 at 2:45 PM:  SPX keeps drifting sideways with a downward bias. Price is at 1384.65 teasing the 150-day MA at 1384.79.  The 10-year yield is 1.63%.  NYA is 8079 inching closer to the 8000 danger level. Keystone covered the RTH short trade completely exiting that position for a smidge of a profit.

Note Added 11/8/12 at 2:53 PM:  Keystone bot IWM opening up a new long position, nibbling on the long side. Will either ride it up if the markets rally, or, add if the markets continue to sell off.

Note Added 11/8/12 at 3:20 PM:  The SPX dances on each side of the 150-day MA, watch to see if price moves and closes above, or below. This is a strong confluence of support, the 150-day, 200-day and 10-month MA's as highlighted above, between 1381 and 1386. Bears win under 1381, bulls recover above 1386. Between 1381-1386 both sides agree to sleep on it.  Keystone bot USD opening up a new long position, nibbling on the long side. Will either ride it up if the markets rally, or, add if the markets continue to sell off. USD is the 2x semiconductor long ETF not to be confused with the $USD, the U.S. dollar.

Note Added 11/8/12 at 3:43 PM:  The SPX is now testing the 200-day MA at 1380.73 having chomped thru the two other moving averages; the vital 1381 area mentioned in the prior paragraph.  Keystone bot TLAB opening up a new long position, this is a speculative long tech trade, the positive divergence appears attractive.

Note Added 11/8/12 at 3:51 PM:  The tension mounts.  She's (1380.73) holding........

Note Added 11/8/12 at 3:55 PM:  Five more minutes, can the bulls hold the line at 1380.73?

Note Added 11/8/12 at 3:57 PM:  Whoopsies daisies, SPX falls thru the 200-day MA, see if it closes above or below.

Note Added 11/8/12 at 4:01 PM:  The SPX closes under the 200-day MA. Markets collapsed at the close finishing at the lows. VIX, however, was down which is unexpected. MCD choked on a McNugget today.

Note Added 11/8/12 at 8:00 PM:  The Mouse House, DIS, has Goofy and Pluto takin' the pipe AH's on the disappointing earnings.  Likewise, JWM, which shows the wealthy are no longer spending money at the same pace.