Keystone's Midday Market Action 6/6/13

Copper fell through the bull-bear line in the sand at 41.40 like a hot knife through butter helping the bears. The utilities remain front and center with UTIL 477.91 and 480.83 continuing to dictate broad market direction.  UTIL popped above 477.91 at the opening bell and is now printing 479.18. Thus, the bulls receive upside market oomph since utes are above 477.91, but, the bears keep pressure on the markets since the utes remain under 480.83.  Keybot the Quant remains bearish and will likely remain on the short side all day as long if the SPX stays under 1629.

The BOE and ECB rate decisions were yawners. The euro is 1.3190 moving higher. Europe needs a lower euro to bolster their exports and manufacturing sectors and did not receive any help from Draghi today. The dollar/yen is 98.45 now firmly under 99. This should place a lid on any market upside today.  Same with the Jobless Claims. Fed's Plosser, a hawk, is on tap to speak at noon. He will likely make the case for tapering QE so this may create a slight pall on markets. Perhaps markets will then develop a recovery move in the afternoon after Plosser's comments are digested. Traders will think about market positioning this afternoon in front of the all-important Monthly Jobs Report in the morning. The new moon is on Saturday so markets tend to be bearish moving through the new moon. The SPX is under the 200 EMA at 1629.00 on the 30-minute chart signalling bearish markets for the hours and days ahead so pay attention to this forecasting tool. Ditto with the 8 MA under the 34 MA  on the SPX 30-minute chart now signalling bearish markets for the hours ahead. Watch for a potential positive 8/34 MA cross moving forward. The SPX closed under 1620 so the 80/20 rule opens the door to a print in the 1580's.  Strong support exists at 1593, 1589, 1586, 1583, 1579 and 1576. Therefore, a potential downside target is 1576-1583, where a more substantive market bottom may occur, after a dead-cat recovery bounce plays out. If UTIL 477.91 gives way again, the 1576-1583 target may occur a lot quicker.

The SPX drops down to test the 50-day MA at 1605.12 and bounced. Another test may be on tap today. The 50-day is a logical place for a dead-cat bounce and the NYMO chart provided this morning verifies this area as having potential for a market bounce. The BPSPX triggers a market sell signal as highlighted in this morning's chart. The TRIN is 1.09 today, slightly bearish.  As mentioned yesterday, the 1.80 TRIN was not a panic number considering the strong market sell off. A TRIN of 2, 3, or higher would have signaled that fear and panic was rampant but instead, it was an orderly selling day.  The CPC put/call ratio backs this notion since the CPC is at 1.18 not even over the 1.20 fear and panic line. Considering the strong sell off, the CPC would have been expected to show panic by spiking to 1.3 or more signaling a more firm bottom is in place for markets. Instead, the TRIN and CPC say that traders are not particularly worried about the sell off as yet. This hints that further selling is probably on tap for markets, until the fear and panic develops with the CPC spiking above 1.20 to print a firm market bottom. Keystone bot OSUR, a speculative biotech play, opening a new long position.

Note Added 11:46 AM:  Dollar/yen 98.43.  Euro 1.3196 approaching 1.32. JJC 41.04.  UTIL  479.74 between the two critical levels for UTIL, 477.91 and 480.83. TRIN 1.03, a hair bearish despite positive markets. SPX 1612.64 moving higher to test 1614 R.

Note Added 12:01 PM:  The SPX came up to test the 1614 resistance and the robots sold off with price now down to 1607 in a heartbeat setting up another test of the 50-day MA at 1605.03. UTIL remains above 477.91 so the markets have limited downside. A break of UTIL 477.91 today and the SPX will be in the 1590's testing key support at 1597 then 1593. Dollar/yen now loses 98 to 97.71. The euro is 1.3244 exploding above 1.32. Europe can kiss any job growth good-bye.  The higher euro drives the dollar lower which in turn is helping to create the weakness in the dollar/yen. Since the dollar/yen is affected more by the dollar component today the overall affects the dollar/yen has on equities is somewhat muted. VIX at 18.

Note Added 12:09 PM:  SPX 1604.77. This is the test of the 50-day MA so the SPX will bounce, or die. UTIL is dropping like stone but still above 477.91. TRIN 1.43 and VIX 18.08 encouraging bears today. Perhaps some good ole fashioned fear and panic will surface today?

Note Added 12:12 PM:  Whoopsies daisies. UTIL 477.87. We are at a key point right now. Bounce or die. If UTIL stays under 477.91, SPX sub 1600 will occur quickly. Keystone added more SPXL which is playing the countertrend to the upside. The SPX hourly and minute charts are showing positive divergence which would be agreeable to a market bounce, however, UTIL is heading lower.

Note Added 12:25 PM: Dollar/yen 96.62. Holy smokes. Now 96.29. There may be an event occurring.  SPX now has a 1602 handle. UTIL 477.38.  Buckle up this may go down hard. Crash helmets required immediately.

Note Added 12:27 PM:  SPX loses 1600. Hang on. The 10-year yield is dropping like a stone to 2.02% (Treasury prices up, yields down). The 50-day MA's fail on both the SPX and Dow. Keystone's SPX:VIX ratio indicator is at 87; the 68 level triggers a crash signal.

Note Added 12:33 PM:  TRIN at 1.55 so no big panic; orderly selling continues. SPX 1600.24. UTIL 476.52 so the trap door for markets is open (under 477.91). Keystone needs some heart pills.

Note Added 1:11 PM:  Dollar/yen recovers back above 97 to 97.22 so the broad indexes recover. UTIL leaps higher now at 479.13 closing the 477.91 trap door. SPX is back above the 50-day MA at 1605.02. Nothing to see here folks, move along, move along. Markets resume a sideways path. SPX LOD is 1598.23 so pay attention to this number moving forward.

Note Added 1:16 PM:  Use the UTIL 477.91 and 480.83 to steer the market ship today. UTIL is now up to 480.01. Above 480.83 and the broad indexes are in recovery rally mode. Between 477.91 and 480.83 markets meander sideways. Under 477.91 and the SPX will drop for tests of 1597 and 1593.

Note Added 1:44 PM:  UTIL 478.90 so markets meander sideways. The SPX plays to and fro across the 50-day MA at 1605.04. Keystone took profits on JO exiting this long coffee trade and will look to reenter. Coffee should develop into the fave commodity for markets moving forward for the weeks and months ahead and is likely very near a strong move higher.

Note Added 1:50 PM:  Big spike in UTIL now at 481.44 overtaking 480.83 so the bulls are in  market recovery mode. Watch to see if UTIL 480.83 holds, if so, markets will move higher into the close. SPX resistance above is 1614 R. HOD is 1614.64 so watch this number closely the rest of the day. Bears need to push UTIL back under 480.83.

Note Added 2:47 PM:  UTIL 481.34 so the bulls push the broad indexes higher. SPX now testing 1614 resistance, bounce or die.

Note Added 3:21 PM:  UTIL 481.33 so bulls are happy. SPX continues the fight at 1614 S/R.  Bounce or die. Traders must place their bets for tomorrow morning; either long, short, or exit trades and sit in cash until after the Jobs Report.

Note Added 3:52 PM:  Bounce. SPX moves above 1614 targeting 1618 R which gave way to a move to near 1620. Markets are very erratic and unstable ahead of the Jobs Report tomorrow. Anything can happen in currencies tonight. UTIL is 482.29 so the bulls are set up to run higher tomorrow, if, they receive an acceptable Jobs Report. Keybot the Quant is also in position to go long so the stage is set for drama. Lots can happen in the next few hours.  The higher volatility continues to create larger and larger intraday point swings. Volume is below average today at a run rate of only about 70% of a day's average volume so this does not create confidence in the late day pop. Keystone took profits on SPXL exiting this long trade. Also bot JO, the long coffee trade, opening up a new long position. Also bot more DNDN and WLT adding to these ongoing long trades in biotech and coal, respectively.