Keystone's Midday Market Action 12/5/12; Factory Orders; ISM Non-Mfg; Fiscal Cliff Drama

The S&P's were up 7 early this morning with the euro topping at 1.3120 and higher. There has been a slow leakage ever since. Euro lower = markets lower.  Euro higher = markets higher.  The ADP Jobs Report was uninspiring showing no job growth and perhaps hinting that the Friday Jobs Report may be a tad weaker than expected.  Productivity data is in-line showing that workers are fighting to keep their jobs, maintaining strong productivity, which means there is no need to hire any new workers. Sad news for the millions of unemployed, especially young folks.

Keybot the Quant flipped short yesterday but the move is tentative and a whipsaw back to the long side may occur today. XLF 15.67 carries a lot of clout today, the financials sector.  The day begins with the XLF under 15.67 causing market bearishness. SOX 372.75 remains important. If the XLF pushes above 15.65, and this holds for about ten minutes, the bulls will push the broad indexes higher. If the SPX moves above 1413, Keybot will likely flip back to the long side. Factory Orders and ISM No-Manufacturing are at 10 AM so markets may take a stutter step at that time.  Oil Inventories are 10:30 AM. The 10-year is 1.59% showing that traders want to stay in safety.

The first hour or two of trading may be erratic and indecisive. If the SOX drops under 372.75, and the SPX heads down to 1403, bears will be in full control. If the XLF moves above 15.67 but the SPX does not move above 1413, the markets will likely stumble along flat today, Keybot may or may not flip long. If the XLF moves above 15.67 and stays above, and the SPX moves above 1413, that should forecast smooth sailing for the bulls ahead, and Keybot will likely flip long.  The 200 EMA on the SPX 60-minute chart is 1404.97; bad things will happen to markets under this level, the market bulls will remain in the game above 1405. The XLF is 15.67 pre-market. Holy smokes.  Nurse Cratchett wheels the defibrillator closer to the computer as Keystone looks in the desk drawer  for some heart pills.

Note Added 12/5/12 at 9:14 AM:  No sooner did the above missive hit cyber space than C announces the canning of 11K workers.  Stock price moves up on news of layoffs since companies are becoming more lean and mean and the presumption is that stronger earnings will result due to the decreased expenses.  C pops 2% and this affects the XLF. The bulls are trying to stick save the XLF today.  The XLF gains two pennies, now at 15.69, over the coveted 15.67 bull-bear line in the sand.

Note Added 12/5/12 at 11:25 AM:  Wild day thus far.  XLF is above 15.67 so it is causing market bullishness. However, the semiconductors fell on their sword, the SOX is under 372.75 contributing bearishly to markets.  The SPX failed thru the 200 EMA desdcribed above, a very bearish signal. Ditto the strong 1403 support. VIX was over 17 now dropping so there may be a market push higher right now. TRIN is 0.56 which is uber bullish. The mixed signals continue, this is a head scratcher, either the markets should recover, or, the TRIN needs to move up towards 1.00. Euro is 1.3075.  AAPL is down 4%.   Watch SOX 372.75 and the SPX 200 EMA at 1404.93. Keybot the Quant remains short, at least for now. SPX 1413.14 is important for today as well.

Note Added 12/5/12 at 12:00 PM:  SOX and XLF are bullish, markets are running higher. SPX 1413 would signal that the bulls have taken control. Markets are running higher despite the weakness in Apple and the Nasdaq.

Note Added 12/5/12 at 3:05 PM:  Another wild day. SOX and XLF are pushing markets higher, especially financials. Keybot the Quant has not flipped long, yet, but wants to at this level, SPX 1413, or higher. Today was another dramatic reversal exactly like last Wednesday's reversal.  The 8 MA pierced up thru the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours and days ahead.

Note Added 12/5/12 at 5:18 PM: One day is stranger than the next.  Keybot the Quant remains short and never flipped long today, although it teased several times, but would not commit.  If SPX 1416 occurs in the morning, Keybot will likely flip long. The low TRIN this morning provided a hint that the markets would rally; 0.53 is uber bullish and some selling in the markets would be useful to burn off this excessive bullish energy. The -1000 TICK identified the bottom today at 11 AM, then the +1000 TICK was the top at SPX 1415+ at noon, then markets leaked lower into the close with a near -1000 TICK at the closing bell. The BPSPX has yet to provide a market buy signal, it remains on a sell signal.  CPC put/call is bouncing around like a ping-pong ball. There is odd market behavior in many places.  AAPL is selling off 5% while the Dow Industrials are up over 100 points.  The Nasdaq exchange had more trouble handling an IPO. The television business cable feed numbers started to lag the real-time markets by a minute or two in the afternoon. There are some odd data things going on. Who knows what all this odd behavior means? These are not normal markets, the broad indexes are unstable and erratic. Watch your wallet. For Thursday, watch SOX 372.80, XLF 15.68 and SPX 1416.