Keystone's Midday Market Action 5/29/13

The SPX loses the 1653 support out of the gate so the test of 1649 support came quickly, then that failed. The dollar/yen just dropped under 101 so the stronger yen creates lower equities. TRIN is collapsing, surprisingly, to 0.45, which is typically uber bullish. This low TRIN number matches the action during the April and February market sell offs. Within one to two days later the TRIN spiked to 3 or higher and signaled a market bottom so hold on to your hats for the remainder of the week, it may be a bumpy and intense ride.

The 8 MA fell under the 34 MA signaling bearish markets for the hours ahead. VIX is 15.55 near the highs of the day. The elevated volatility will create wilder price moves up and down. Copper and oil are weak not indicating a robust economy. The IMF and OECD downgraded Europe's prospects moving forward. China is lowering expectations. Gold and silver are higher. UTIL is printing 482.40 less than two points from the UTIL 480.67 that will create a whoosh lower. The algo's should kick in with sell programs at UTIL 480-481 so the bulls are starting to lose their grip. The bears are pushing hard today. If UTIL 481 fails, the push lower will become much easier with the broad indexes moving far lower. SPX support below is 1639.28 (20-day MA), 1636 (last week's low 1635.53) and 1634. The 20-day MA is finally receiving the respect it deserves so the action in this 1639-1640 area is important. The LOD thus far is 1640.05 bouncing from the 20-day MA on the first attempt.

Note Added 11:43 AM:  The UTIL firm bull-bear line in the sand (identified by Keybot) is 480.64. Price is now 480.65. This test is huge for markets. Bulls have to bounce UTIL immediately or they will lose control of the markets. If this level fails, the day will likely become very ugly. Bounce or die.

Note Added 11:47 AM:  Bounce. UTIL 481.10. Bulls pull a handkerchief from a pants pocket to dab the beads of sweat on the forehead. A low was printed at 480.23 for UTIL so failure occurred but resulted in an immediate bounce. Watch for further tests of this critical level today. Dollar/yen 100.94.

Note Added 1:46 PM:  Dollar/yen 101.07 up from the sub 101 numbers so the weaker yen moves equities higher in these central banker-controlled markets. The SPX recovers and is now testing the all-important 1649-1650 resistance again. VIX is 14.84 dropping from the 15+ numbers so this allows equities to receive buoyancy.  TRIN remains uber low in the bull camp for today at 0.50 also helping the broad indexes recover. UTIL is higher, up to 485.61, well off the lows and away from the 480.64 market failure level. The bears need to keep the SPX under the 1649-1650 support. Also, copper, commodities and volatility remain in the bear camp. The bulls stopped the downward slide with the defense of UTIL 480.64 and now will try to move the SPX above 1649-1650 and also try to bring copper, commodities or volatility back into their camp. The 8 MA remains under the 34 MA on the 30-minute chart signaling bearishness ahead, however, the bulls are curling the 8 MA back to the upside. Bears need to keep the SPX under 1646 to keep the 8 MA moving lower. Traders interpret Rosengren's (Fed) comments as QE-friendly helping the afternoon market recovery.

Note Added 1:58 PM:  SPX 1652.62. So after all of today's excitement thus far, the fight through the 1649-1653 area, described before the opening bell, resumes. The recovery move can be considered a back kiss of the 1649-1653 failure this morning so price should bounce or die from this 1653 level. Bulls win above 1653, bears win below 1653.

Note Added 3:32 PM:  Dollar/yen 101.18. TRIN 0.49. VIX 14.70. UTIL 486.11. SPX stumbles through 1649-1653.

Note Added 3:56 PM:  Dollar/yen 101.21. TRIN 0.49. VIX 14.86. UTIL 485.01. SPX 1649.01 at the bottom of the 1649-1653 range in place for 2 1/2 hours. Slight weakness occurs in the SPX and UTIL into the close as the volatility moves higher.

Note Added 4:03 PM:  SPX closes on the underside of the 1649-1653 S/R gauntlet at 1648.36. Aunt Abigal and Uncle Frank remain worried about their investments. Frank pumped air into the front tire of the 1993 Cavalier and they drove back to the financial manager's office.  The lights remain off and no one answers the phone. They took their entire life savings and placed it into dividend utility stocks three weeks ago like all the pundits and analysts told them to do on television.  But buying UTIL at 538 results in a print today at 485, a drop of -10%, the level that is called a correction. All of a sudden the 4% divvy yield does not appear attractive since it will take 2 1/2 years to simply recover the loss in price over the last three weeks. Now they are confused as to what to do. Abigal and Frank decide to drive back home, hoping the Cavalier does not break down on the parkway, and eat a dinner of franks and beans.