Keystone's Morning Wake-Up and Midday Market Action 6/4/13

The door was open for the market bears yesterday and they started to walk through, only to have the door close on their toes. The breakdown in UTIL 480.80, then with 477.91, set up a strong market flush lower but the bulls immediately recovered pushing utilities higher, as the Treasury yields fell, and the markets were saved from imminent failure. Copper and utilities are key again today. The bears need UTIL to drop under 480.80 and then 477.91 while the bulls need to push JJC above 41.38. Copper is higher this morning and since JJC is only pennies away from 41.38, it looks like the bulls will push to regain control of the markets today. The new money coming in for the beginning of the month helps buoy markets. The last 20 Tuesday's are all up so today will either continue the streak to 21, or not.

For the SPX starting at 1640-1641 closing at the highs, the bulls only need to touch the 1641 handle and the upside will accelerate with a test of 1649-1650 likely in quick order. If the JJC moves above 41.38, and the SPX moves above 1641, with utilities remaining elevated, it is likely that Keybot the Quant, Keystone's trading algo, will flip to the long side. The bears must push the SPX under 1623 to regain their mojo. A move through 1624-1640 is sideways action today. DG earnings are important since they reflect the middle to lower income spending. Motor Vehicle sales data is on tap today. International Trade hits at 8:30 AM. Fed's Williams said yesterday the Fed is committed to stimulus which helps create the market happiness for bulls. Three Fed heads are talking today; Raskin at 12:30 PM, George at 1:30 PM and Fisher at 8 PM. Watch the 8/34 MA cross on the SPX 30-minute chart, now signaling bearish markets for the hours ahead but the bulls have curled the 8 MA higher for a possible positive 8/34 cross this morning.  In a nutshell, UTIL 480.80 and 477.91, JJC 41.38, and SPX 1641 will dictate market direction and tell the story today.

Note Added 8:02 AM:  DG earnings match EPS estimates and are in-line with top line revenue but guidance is lowered moving forward. The stock is hit -6% pre-market. Obviously, the regular and lower income folks in America do not have money to spend. 25 million remain either unemployed or underemployed as a result of the ongoing financial disaster. Young folks are deep in debt with little job prospects. On the other side, the Fed pumps the markets higher each day to reward the wealthy and they continue to spend money like it is water, drinking champagne each day as they look down on the masses, watching the classes separate further with the middle class disappearing.

Note Added 10:41 AM:  JJC is above 41.38. UTIL remains above 480.80. Keybot the Quant wants to go long but is held back until SPX 1647+ can print and hold. Lots of drama right now. Watch the HOD at 1646.53.

Note Added 11:09 AM:  The SPX stumbles lower. One day is more odd than the next. It looked like a slam dunk for Keybot to flip long, it still may today, but for now, all bets are off. The SPX needs to move above the HOD at 1646.53 and hold it a few minutes for Keybot to move to the long side. JJC is 41.60, bullish, well above the 41.40 bull-bear line. UTIL is 481.30, bullish, but teasing around the 480.80 bull-bear line in the sand so watch that closely. Markets will become decidedly negative if UTIL 480.80 fails. For now, markets meander sideways. Time for a slice of apple pie.

Note Added 3:31 PM:  JJC remains bullish. The utilities keep threatening to break down, which creates broad market weakness, but UTIL keeps recovering as well. Watch UTIL 480.85. UTIL is 481.77 taking a spike higher over the last few minutes so that helps the broad indexes recover. The 8 MA remains under the 34 MA on the SPX 30-minute chart keeping the bears in control, for now. Keystone took profits on the SPXU trade exiting the position.

Note Added 3:34 PM:  SPX now testing the strong S/R at 1634. JJC 41.71.  UTIL 482.41.  TRIN 1.08. Keystone reentered the SPXU trade opening a new position.

Note Added 3:46 PM:  Utes recovered shooting higher from UTIL 480.70 to 482.85 in twenty minutes time sending equity markets higher. UTIL 480.85 and 477.91 remain key for the rest of the week so this drama will continue tomorrow. UTIL is printing 482.16. TRIN 1.05. SPX keeps testing 1634 support, see if it holds, or not. Note how the intraday and day to day price swings are becoming larger and more dramatic due to higher volatility. Just wait until VIX moves above 20; that will make these wild swings look like child's play.

Note Added 3:54 PM:  Whoopsies daisies. SPX lost 1634 support.

Note Added 3:56 PM:  SPX comes up for the back kiss of 1634, bounce or collapse, and......

Note Added 3:59 PM:  ......collapse. SPX ends with a 1631 handle. Dollar/yen is sitting exactly on 100.   UTIL 481.31. Fed's Fisher is on tap at 8 PM EST. He is a hawk like Esther George who created market drama this afternoon with her speech that supports tapering QE moving forward.