Keystone's Midday Market Action 6/28/13

Consumer Confidence is on par with last month but the Chicago PMI was much weaker than expected. The Fed heads continue to pump the markets with happy QE talk but the comments are not helping so far today. The broad indexes are starting to recover off the lows so traders may be taking the bad PMI as good news since it will cause the Fed to supply more crack cocaine. Keybot the Quant remains long and is tracking UTIL 480.81, XLF 19.20 and RTH 51.48. These three parameters are all bullish and will continue to support markets and not allow any significant drop in equities. UTIL came down to test the 480.81 threatening a break down but now catapults higher to 484.16. XLF is 19.36 and RTH is 52.09 so bulls are not worried.

The 8 MA is curling downwards towards the 34 MA on the SPX 30-minute chart so this a key indicator to watch today.  The confluence of resistance at 1618-1623 created by the 20-day MA at 1618.71, the 50-day MA at 1621.69, the lower channel rail on the daily chart and the 200 EMA on the 60-minute at 1619.06, remains important moving into next week. Key S/R is 1598-1600, 1609, 1614, 1618, 1623 and 1626-1627. The 1623 level is interesting since this is the 50% Fib retracement for the move down from the 1687 top to the 1560 bottom. All these technicals place major emphasis on the 1618-1623 resistance zone. The 10-year yield is 2.52%. UTIL, XLF and RTH all indicate that the bulls have no worries and a move higher to the 1619-1620 gauntlet is likely coming. If the negative 8/34 cross occurs today, that would sour the market move and point to lower equities ahead. UTIL is now up over 485 far from danger.

Note Added 10:38 AM:  The SPX is now testing 1609 R so this serves as an important first test today, bounce or die. The LOD is 1601.06 so the 1600 support held. Whoa, big bounce and punch up through the 1609 R to over 1610.  The 1609 now becomes support.  The UTIL, XLF and RTH hint that the SPX should recover. TRIN is 1.13, however, favoring market bears today. Now the question is does price run up to play at the 1618-1623 resistance gauntlet right away, or, move sideways?

Note Added 10:49 AM:  Bulls are having trouble holding 1609 S now dropping back under. The VIX is dead flat so its movement higher, or lower, will move equities in the opposite direction.  With the SPX down, the VIX should be up, so this is a feather in the bull's cap. Bears must push volatility higher or they got nothing. UTIL 487.

Note Added 11:26 AM:  The SPX continues higher, as the VIX drops, overtaking the 1614 R but now falling back below. If the bulls can take out 1614 and turn it into support, the trek higher to attack the 1618-1623 resistance gauntlet comes next. TRIN is 1.10, bearish, and the VIX is trying to recover off the lows. UTIL 487.28. XLF 19.49. RTH 52.26. All three parameters remain strongly bullish which points towards a pending fight at SPX 1618-1623.

Note Added 12:44 PM:  It's a lazy hazy day of summer. TRIN is 1.22 and VIX floats slowly higher so the SPX drifts lower losing the 1614 support, testing 1609 support again, and bouncing, so the move is through the 1609-1614 range currently. UTIL, XLF and RTH remain bullish so the broad indexes will remain elevated. The 8 MA is nearing the 34 MA for a negative cross on the 30-minute chart which will provide the all-clear signal for the downside. Within the hour, the bulls must spike the markets strongly higher, straight up into the 1618-1623 gauntlet, to prevent market negativity from occurring. Otherwise, as the minutes move along, the bears will become stronger and will receive further strength if the 8/34 MA cross occurs. The beat goes on.

Note Added 2:01 PM:  The broad indexes develop lift over the last hour and note the stick save on the SPX 30-minute chart where the 8 MA has pulled a U turn and is now curling higher again avoiding the negative 8/34 MA cross by a hair and signaling bullish markets for the hours ahead as long as the 8 MA stays above the 34 MA. The bulls have stopped the downside with the UTIL, XLF and RTH remaining bullish today. TRIN 1.12. SPX is back above the 1614 S/R using it as support right now. Poking around looking for opportunities but markets have a sideways vibe ongoing so it is difficult to commit to any scalp trades. There are many interesting stocks worth watching like DBA as a long right here at 25 and lower, PBR here at 13.50 and lower for a long, CLF as a long at the 15.75 gap (gap is on the 30-minute or 1-hour chart), SSG long at the 26.70 gap, MYL short at 31.30 and higher, DNDN long  at the 50-day support at 4.16-ish (DNDN popped strongly today as the positive divergence continues to create buoyancy), JO as a long buying it all day long under 25, TLAB as a long under 1.9, FRO right here as a long under 1.80 and X as a long at the 17.10 gap. For now, simply watching the sideways struggle today.

Note Added 3:03 PM:  On the SPX 30-minute chart, the SPX, 8 MA and 34 MA are all on top of each other between 1610.40 and 1612.34, less than two points, so the move above 1612, or below 1610 is important. Keystone took profits on DRYS exiting the position and will look to reenter. Also bot SPXU opening a new long trade which is short S&P.

Note Added 3:13 PM: Sideways fight at 1610-1612 continues. Keystone took profits on part of the GDXJ long trade but continue to hold it and will likely add. Also took profits on the GLD trade but continue to hold it and will likely add. Also took profits on part of MUX long trade but continue to hold it and will likely add.

Note Added 3:18 PM:  SPX is sneaking above 1612. Keystone bot DNDN opening a new long position as it has come back to test the 50-day MA; it may drift lower in the coming days but it remains an attractive play moving forward.

Note Added 3:35 PM:  SPX punches above 1612 and up through 1614 R now above 1615 so the bulls are running with utilities, retail and financials continuing to help and semi's receiving a strong push higher now. Russell rebalancing may create some wild action to end the wild week.

Note Added 3:34 PM:  SPX testing 1614 support again. Bounce or die.

Note Added 4:00 PM:  It died. The broad indexes puke into the close due to the buying and selling with the Russell rebalancing. The SPX finally logs a negative month after the last seven.  SPX finishes at 1606 with prices settling out. The 8/34 MA cross drama will continue at Monday's opening bell. UTIL, XLF and RTH remain elevated so the bears need at least one of these three to move to the bear camp come Monday, otherwise, the move up to the SPX 1618-1623 resistance gauntlet will resume. Keystone took profits on SLV into the close exiting the position and will look to reenter next week.