Keystone's Midday Market Action 2/4/13; YUM

The broad indexes finally experience weakness and the SPX has retraced Friday's entire up move. Today's candlestick serves as a negative bearish engulfing candle, so far, also a key reversal vibe. SPX is under 1498 which should lead to additional downside.  UTIL dropped at the open and is now at 472.62.  The bulls will be happy at UTIL 475.49 at any time this week. The bears are happy to pound the utes lower today and will push towards 467.29 which would damage the broad markets. VIX is 14.56 well over 14. The bears need the VIX over 16 to cause significant broad market damage. AAPL is negative now at 445.

The 10-year yield drops under 2% to 1.98%, then 1.97%, then 1.96%, all very friendly to the equity bears since money is flowing from stocks back into the safety of bonds and notes (bond prices move up so yields move down). The 8 MA stabbed down thru the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours and days ahead. See if this holds today, or not.  The SPX is at the strong 1498 support. SPX S/R is 1505, 1503, 1500, 1498, 1495, 1489, 1485.58 (20-day MA), 1485, and 1481. The 1485 level is uber important with the 20-day MA there. Keystone took profits on FXP and will look to reenter. This is the China short ETF. With YUM on tap today, happy earnings news will send FXI higher; bad news will send FXP higher. Chart-wise, FXP remains positively diverged and attractive moving forward. FXI is negatively diverged and not attractive. Will look to reenter FXP.

Note Added 2/4/13 at 1:55 PM:  The SPX is under 1498 and should fall further. The hourly charts point lower. A move to test 1495 and perhaps 1489 support is not unreasonable. The TRIN is 1.45 firmly in the bear camp but not excessive, representing steady-eddy selling that can continue for a while. The NYAD low is printing now at -1700, not excessively low as yet, also representing orderly selling today. The Dow Industrials are down 125.  Tech and small caps are leading the broad markets lower, a bearish indication moving forward.  AAPL has a  443 handle.

Note Added 2/4/13 at 2:08 PM:  Speaker Boehner is talking on the floor of the House commenting on President Obama's failure to provide a budget. The president extended the budget deadlne to perhaps next week or so. None of them take the situation of 25 million underemployed or unemployed people seriously.  It will be interesting to see how the markets react since the political minds are showing their incompetence once again. The sequester is 24 days away, 17 trading days. The dollar has quite a move today. Dollar up = euro down = euro/dollar pair down (now at 1.311) = equities down.

Note Added 2/4/13 at 3:41 PM:  UTIL has a 471 handle. The SPX is at 1497 flat all day long after the intial drop. TRIN is 1.33 so the bears continue to rule the day. The euro is 1.3516. 10-year yield is 1.96%. WTIC oil is 96.17, watch to see if it drops sub 96, and Brent oil is 115.60 having lost the 116 level today. YUM earnings are only about twenty minutes away. Keystone bot JO opening up a new long position that is long coffee. Coffee peaked in May 2011 and has been down ever since. Attractive positive divergence and falling wedge behavior points to a basing and recovery moving forward. JO is somewhat thinly traded so that is a consideration.

Note Added 2/4/13 at 3:55 PM:  SPX hits a little air pocket.  Keystone bot MWW opening a new long position. The charts are attractive from a positive divergence standpoint. A few adds may be needed before it wants to move.  It seems FB may need a way to compete with LKND, and buying MWW may be a possibility for FB to gain a quick leg-up.  FB has lots of bucks as well so they would shell it out for MWW. Never buy a stock as a takeover play, but, considering the charts are attractive for a long play, the takeover potential may be viewed as simply a lottery ticket aspect. Finding long plays is like finding needles in a hay stack nowadays but JO and MWW have possibilities. NAT may be setting up as well and shipping tends to pick up in February.

Note Added 2/4/13 at 4:04 PM:  SPX closes with a 1495 handle taking back all of Friday's gains in a bearish engulfing candlestick. If the SPX would have gained a point at the open then reversed it would be a key reversal day but when something is this close, it provides the bearish reversal vibe anyways.  The Dow has its first triple digit down day for the year. AAPL closes with a 442 handle.  UTIL is 471.36. VIX is 14.68 closing at the highs. The NYMO, CPC and BPSPX charts will be interesting this evening.  YUM is on deck; traders ask how many drumsticks and how many burgers? YUM lost 3% in today's trading to close at 63.96.  Keystone added more MWW into the close.

Note Added 2/4/13 at 5:08 PM:  Medic! Medic! Colonel Sanders is choking on a chicken bone.  YUM beat on top and bottom lines, revenue is in line, but their guidance for 2013 is bad. Much is blamed on the food supply issue but that is likely a cover for the weak conditions overall. YUM dumps over 5% in the AH's now printing 60.49.  CAT and YUM, the two key bellwethers for China, come up short, but, everything looks great through the rose-colored glasses.

Note Added 2/4/13 at 5:27 PM:  Is there a doctor in the house? Poor ole Colonel Sanders is turning blue. YUM breaks through 60 now printing 59.95. Check that, 59.90; that's four bucks from the close.