Keystone's Morning Wake-Up 6/21/13

Happy first day of summer and summer solstice. S&P futures were up over +10 but now leak back to +4. OpEx Quad Witching is today. Volume should be robust at the open and the close. Watch to see if the open is sold off since elevated prints will occur at the open. The full moon is Saturday to Sunday and stocks tend to be bullish through the full moon so a low today may provide a long opportunity into Monday. The major Bradley turn is tomorrow and it has not disappointed since the window has created the big drop in stocks this week. Likewise, Keystone's Eclipse indicator targets 6/10/13 give or take a couple weeks or so as a potential market top and that may have come to be as well. The markets are fickle so you can only take the action hour to hour and see how the drama unfolds.

Quarter and one-half year end (EOQ2 and EOH1) window dressing should appear for the remaining days of June perhaps helping create some market buoyancy. Traders will be squaring positions for these important schedule dates. The week after OpEx in June is typically negative but the negativity appears this week and is likely more due to the calendar in June where June starts later than normal. Of interest is to what extent traders will take their long chips off the table and go home. The volume is strong as stocks are thrown overboard the last two days. Many of these traders are likely taking the summer off and booking the big long-side gains on the year. This may create a lack of buyers during the summer time.

The weakness in utilities is a very bearish indication for stocks moving forward. Watch the UTIL 50-week MA at 481-ish. Equities will remain in deep trouble as long as UTIL remains under 481. For today, watch RTH 51.46 (causing bearishness now), XLF 19.27 (causing bearishness now) and SOX 456.10 (causing bullishness now). Any change to these three parameters will move the broad indexes in that same direction. Keybot the Quant is back to the short side. For the SPX today starting at 1588, the bears need to push under 1584 and that will accelerate another leg lower where the SPX will likely make a bee-line for the strong and important 1576 support. Bulls will try to stop the bleeding by sending RTH and XLF above the levels listed. Watch the SPX 20-week MA at 1582.17 as support.

The CPC put/call chart last evening shows a print at 1.39 so nibbling on longs from the long shopping list can begin, however, the market selling likely has a need to continue over the next one to three weeks to place a proper market bottom. NYMO is at -79, a low number indicating that a market bottom is at hand or near. The NYMO can definitely drop lower but again, some nibbling on longs that you have done the homework on may be prudent. Watch the SPX:VIX ratio since a drop under 68 and all bets are off since the markets will be headed to the low 1500's and panic and fear will definitely return to the markets. Earnings season is coming so pay attention to any pre-announcements and of course, companies must deliver the goods. If earnings are weak, this verifies the global slowdown, and flies in the face of the Fed that thinks the economy is improving. Lots of drama is in store over the next couple months. In a nutshell for today, watch RTH 51.46, XLF 19.27, SOX 456.10, UTIL 481 and SPX 1584 to determine market direction.

Note Added 9:31 AM:  SPX moves higher to test the strong 1593 S/R and punches up through. RTH 51.55. XLF 19.24. UTIL 469. SOX 464. Wow, uber bullish TRIN at rarely seen numbers, plummeting to 0.12 now at 0.30. Wild action these days.

Note Added 9:35 AM: SPX up to test the 1597-1600 resistance zone. RTH is allowing the market buoyancy to occur while the XLF is placing a lid on the market move higher today, so far. TRIN 0.67. ORCL is down -9%.

Note Added 11:15 AM: RTH is 51.24 slipping on a banana peel so the markets stumble lower. SPX LOD 1585.45 so pay attention to this number and of course today's lower number of interest 1584 since the SPX will likely collapse to 1576 if 1584 fails. If RTH stays under 51.46 and the XLF under 19.27, the bulls got nothing.

Note Added 12:08 PM:  The SOX drops to test the lower boundary at 456.35 (use this as the bull-bear line in the sand rather than the 456.10 mentioned above) and bounces so that shows that the bears do not have further downside juice. But RTH and XLF remain bearish so the bulls do not have any juice either, hence, sideways markets ahead until one of these three parameters make a decision. SPX LOD 1577.70 near the strong 1576 support and bouncing exactly off the 100-day MA at 1577.64. SPX is dancing with the 20-week MA at 1581.93 which is an important signal for the path ahead as well. SPX S/R is 1607, 1600, 1599, 1598, 1597, 1593, 1589, 1586, 1583, 1581.93 (20-week), 1579, 1577.64 (100-day), and the strong floor at 1576. The action will ramp up in the last hour of trading today.

Note Added 1:13 PM:  SPX is up to the 1593 S/R again. Note the RTH rising now at 51.46 on the dot. This rise creates the upward lift in equities. If RTH moves above 51.46, bull fuel is provided and the SPX will move to the 1597-1600 resistance zone again. If RTH 51.46-51.47 holds as a resistance level and price drifts lower again, so will equities. The broad indexes may want to float along sideways with an upward bias until 3 PM and then the dice will be rolled for the final hour of trading.

Note Added 1:28 PM:  Whoopsies. RTH down to 51.42 so equities drift lower again. The retail sector is the most influential force on market direction right now.

Note Added 3:19 PM:  RTH sneaks above 51.47 so the SPX floats higher towards the 1597-1600 resistance zone. RTH now printing dead-on the bull-bear line at 51.46 - 51.48. Whichever way retail goes, so goes the markets. SPX sitting above the 1593 support. VIX drops from 19.30 to 18.30 over the last hour providing the bull oomph this afternoon. TRIN 0.82.

Note Added 3:31 PM: RTH 51.54 firmly in the bull camp. SPX up to 1598. XLF 19.22.  Bulls would need XLF 19.27 and higher to send the SPX above 1600 into the weekend.

Note Added 3:51 PM:  RTH 51.39. XLF 19.14. SOX 460.95. SPX at 1593 S/R.

Note Added 4:00 PM: Markets stumble sideways since retail and financials stay in the bear camp and semi's stay in the bull camp. One of these three will flinch and send the broad markets that way. This drama will continue Monday morning. The bounce today is off the 100-day MA at 1577.75 so this number carries clout moving forward. SPX parks itself at the strong 1593 S/R.  Will be interesting to see if a China 'banking crisis' occurs over the weekend, or not.