Keystone's Midday Market Action 3/4/13

VIX 15.65 and SPX 1520 are the keys to begin the trading week.  The bears were happy as the VIX jumped above 16 this morning since this signaled smooth sailing to the downside for markets, however, the bulls fight back and pushed the VIX lower. Keystone's algo continuously recalculates the levels of interest so watch VIX 15.55 now, for the remainder of the day. The VIX just came back up to 15.55, and failed. VIX is now at 15.38 so the bulls are smiling. The bears need to push the VIX higher by 17 pennies, if so, the broad markets will sell off.  With the VIX under 15.55, the bulls can ignite an upside acceleration if SPX 1520 is printed. Today's HOD is 1518.88 only one point away.

TRIN is 0.96 so, although a hair on the bull side, it is not low enough to signal bull strength today; the 1.00 is the neutral bull-bear line. Watch the Trannies, $TRAN, to see if the bulls can print 6020 today. Bears will be happy if 6020 is not printed. AAPL is 423 and set up for a bounce, but, as discussed on the weekend (type 'AAPL' into the search  box to bring up the latest Apple chart), a bounce would likely lead to one more quick move down, then a more sideways to sideways up move can begin for Apple moving forward. GOOG, on the other hand, is at a top. It is amazing to see the equities markets continue to stay buoyant and elevated while oil, copper, commodities, steel, materials, and industrials, all stumble lower. WTIC crude oil lost the 90 level. Equities would be expected to follow the commodities lower but the Fed keeps pumping the easy money. The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours and days ahead, however, in these fickle markets, this can change back in short order. The market bears are okay today if they keep the SPX under the 8 MA at 1516.32 and heading lower.  Markets need to make a decision up or down but instead prefer to stumble sideways for now.  VIX 15.55 will tell the story.

Note Added 3/4/13 at 2:21 PM:  The bulls beat the volatilty lower with the VIX falling under 15 so that created bull fuel for the broad indexes. Keybot the Quant will likely flip long if the SPX moves above 1520 and holds that level or higher. TRIN is 0.92 not excessively bullish, only mildly bullish. The RUT is at 912.76; watch the drama at the 20-day MA at 912.50.  TRAN is 6008, under 6020, for now. The SPX is at 1519 with a HOD at 1519.79.

Note Added 3/4/13 at 2:54 PM:  Keybot the Quant flipped to the long side about 20 minutes  ago at SPX 1520.  Stay alert for a potential whipsaw back to the short side over the next day or so. The key is the collapse in volatility today. So market bulls will likely drive the bus unless the bears can send the VIX above 15.55 and the VIX is now far below at 14.36. In fact, the VIX LOD is right now at 14.36. Very interesting markets with commodities and materials slumping but equities pump higher. TRIN dropped to the low 0.80's to supply bull fuel.

Note Added 3/4/13 at 3:22 PM:  The 8 MA pushes up through the 34 MA on the SPX 30-minute chart to signal bullish markets for the hours and days ahead. VIX 14.31, bullish. TRIN 0.84, bullish. TRAN is 6037 well over 6020 so it is all blue skies for bulls. Last week's SPX high was 1525.84. Today's HOD is 1524.55 about one-point short. Breaking up through the 1526 resistance would lead to 1531. Thus, the bull goal is SPX 1525.84 and the bear goal is VIX 15.55.

Note Added 3/4/13 at 4:04 PM:  Bulls melt-up into the close printing a HOD at 1525.27 only 57 cents away from last week's high. The Dow Industrials and Trannies both close at new highs which is a healthy sign from a Dow Theory perspective, however, the daily and weekly charts are setting up with negative divergence. TRIN closes at 0.79. VIX drops a huge -8.5% to 14.06 making up for Friday's action where the equities and volatility both moved higher. The equity bulls proved today that the VIX was wrong on Friday, however, the market cross signals continue. The global economy appears to be weakening due to the weakness in commodities and raw materials but the equity markets do not care.