Keystone's Morning Wake-Up 11/9/12; Consumer Sentiment

Futures are dropping over the last hour, the S&P's were positive an hour ago now down four.  The euro is weakening to 1.2711 approaching the 1.27 level.  The weak DIS and JWN earnings last night casts a cloud on early trading. DIS is a Dow Industrials component so the 1.50 drop in the AH's would equate to about 12 negative points for the Dow as the day begins.  The 10-year Treasury yield dropped to 1.62% this morning, then 1.61%, 1.60%, and as this missive is typed, now 1.59%.  The SPX fell thru its 10-month MA, 150-day MA and 200-day MA, yesterday, the 1381-1386 zone, which is very bearish. These are very important moving averages and signal technical breakdown. The other major indexes had already lost these levels so the SPX confirms that the broad market is now following the overall lead lower.  Two of Keystone's cyclical market indicators (reference the Cyclical Turn page on this site), the SPX 150-day MA Slope Indicator, and the UPS 20 and 50-Week MA Cross indicator now show that the broad indexes have fallen into a Cyclical Bear Market.

Keystone's SPX 12-Month MA Cross indicator says 1369 is the line in the sand, the edge of the waterfall, and is also another cyclical bear market signal. All hope is lost for the broad market if the SPX rolls over 1369. Likewise, Keystone's NYA 40-Week MA Indicator is on the verge of flagging a cyclical bear market ahead.  The NYA is at 8050 and only needs to drop under 8001 to unleash dramatic market selling and usher in extended and sustainable bearish markets over the intermedite and longer term basis, for weeks and months ahead. Thus, pay close attention to SPX 1369 and NYA 8001.

After all this negative talk, please hide the knives. In the near term, today, the futures show that tech is not leading the broad market lower, so far, which will enable bulls to slow the downside, so an opening flush may occur which would place a short-term bottom for the markets and allow some upside so traders can catch their breath.  But many traders are looking for an opening drop to buy the dip so nothing is ever easy.  A bounce after the open may roll over for lower numbers before a short term bottom can occur. Watch the COMPQ versus SPX percentage today to see which way tech leads.  If SPX 1369 or NYA 8001, or both occur, a bounce is out the window, the broad indexes should be dropping in near free fall.  The bears only need to see a smidge of red in the futures to accelerate the downside after the openign bell.  The SPX will test 1375 which will fail, then the test of the all-imortant line in the sand at 1369 can occur. The fate of the markets would be determined here, bounce or die from 1369.

The CPC printed at 1.21 as discussed yesterday, and also the VIX was lower with the lower market yesterday, so the shopping list for the long side must be fine tuned and some nibbling can begin. Keystone initiates some long plays yesterday. These longs can simmer and if the market bounce occurs, some profits may be enjoyed, if the markets drop like a rock, the longs will be added as the market bounce sets up. The morning trade may be quite wild, do not trust the initial moves.  A pivot point will occur at 9:55 AM EST when Consumer Sentiment hits then the markets should settle in after 10 AM.  Tuesday is the new moon and solar eclipse so human's tend to act oddly over the next few days. Markets tend to be bearish into the new moon. Veteran's Day is Sunday, observed on Monday. The stock market is open but the bond markets will be closed on Monday. Next week is also OpEx. President Obama and Speaker Boehner will conduct dueling press conferrences late morning to address the fiscal cliff.

Note Added 11/9/12 at 7:41 AM:  The S&P's are down 7.40, -0.54%.  The Dow is down 60. The Nasdaq is down 8, -0.31%.  Despite the weakness, tech is not leading lower. If the Nasdaq would overtake the S&P's on the downside, Katy bar the door.  But if tech continues to lag, this will help prevent any serious down move. AAPL is down a couple bucks to 535 and obviously will play a key role in today's trading since it dictates Nasdaq direction.

Note Added 11/9/12 at 8:16 AM:  The euro drops under 1.27. The S&P's are down 11.  Dow is down over 100. Nasdaq down 13.  The S&P's are down -0.74% and the Nasdaq is down -0.51% so tech is not leading lower; the bulls hang on to this tiny glimmer of hope. Dr. Copper is takin' the pipe.