Keystone's Morning Wake-Up and Midday Market Action 8/27/13; Consumer Confidence

Monday was interesting how the various tools discussed here signaled bull fun but then late-day the indicators reversed to favor the bears, except for the 8/34 MA cross on the SPX 30-minute chart, which should flip bearish after the opening bell (reference this morning's chart). The tools to watch are the 8/34 MA cross, the SPX 50-day MA at 1660.01, the SPX 8/21/13 LOD at 1639.43, the VIX 200-day MA at 14.61 and Keybot's areas and levels of interest currently which are VIX 14.33, UTIL 483.32, XLF 20.11 and RTH 53.91.  The 8/34 cross should turn bearish this morning, the SPX is under the 50-day, the big test at 1639.43 is on tap resulting in a bounce or die maneuver after the opening bell, the VIX is above the 200-day MA and all four of Keybot's metrics are causing market bearishness. Consumer Confidence will create a market pivot point at 10 AM. S&P's -17.  Dow -128.  Nasdaq -38. The 10-year yield is down to 2.76%. WTIC crude oil is 108.69 and Brent is 112.98 hitting 113 on the Syria tensions.

Note Added 10:24 AM:  The 8 MA slices down through the 34 MA  on the 30-minute chart signaling bearish markets for the hours ahead.  A line in the sand is drawn at the 1639.43 described above. The LOD is 1640.36 less than a buck away so a test should occur. Bounce or die. Keystone took profits on the SDS long trade exiting the position. Also added more JO and SCO to these ongoing long trades which are long coffee and short oil, respectively. WTIC crude is testing the recent resistance at 118.70-119.00 so crude either punches up through, or dies. The war strike talk is ramping up for Syria but it is not all that important from an oil standpoint. In general, the Middle East does not have the impact on the oil markets it once did. That said, any turmoil in the Middle East and North Africa will definitely send prices higher, like today.

Note Added 10:33 AM:  The 1639.43 is pierced to the downside. The battle for 1639-1640 support is now in progress. Bounce or die time for markets. The SPX 100-day MA is 1637.66 so watch this as support. The Whitehouse says it has not made a decision concerning a military strike on Syria. A huge POMO pump is on tap this morning. Keystone added more SPXL to this ongoing long trade that is long the S&P to play a countertrend move and help hedge against the heavily-weighted short portfolio.

Note Added 2:08 PM:  Bears are cruising along today, the SPX taking out the 1639.43 low and the 100-day MA at 1637.61, now printing 1636.38. The 20-week MA is 1642.64 where a lot of this morning's action occurred.  TRIN is 1.72 reflecting the selling. Bulls are trying to push utilities higher, taking advantage of the lower Treasury yields, with UTIL at 481.79. The markets would receive upside fuel at UTIL 483.32. Oil is a touch off the highs with WTIC at 108.68 (continuing to test the key resistance at 108.70-109.00) and Brent at 113.89 (Brent was over 114). Keystone took profits on the TLT long trade exiting the position.

Note Added 3:02 PM:  SPX 1633.33. LOD 1631.42. Stocks move lower and bonds move higher (yields lower) with a deflationary vibe. VIX up 13% today to 16.83. The intraday and day-to-day market swings will become much more dramatic going forward. Transportation stocks such as airlines, shippers FDX and UPS, and truckers such as R, are all hammered today on the higher oil prices. UTIL 480.63.  TRIN 1.68 representing steady-eddy selling, there is no panic to it at all, which is bear-favorable since the slow burn 3-week move lower should continue. Retail and financial sectors crumble. Bulls are hanging their hats on copper and commodities. On the short-term, or intermediate-term basis, say weeks and months, ideal long entries are made when panic and fear exists due to high put/call ratios, which is CPCE above 0.8+ and CPC above 1.2+, so they have a ways to go. Traders continue to not take the equity selling seriously despite all the waxing of worry today.

Note Added 3:20 PM:  The 1639.43 is also last week's low so price taking out a weekly low is bearish. The 100-day MA and 20-week MA are important overhead resistance. SPX is now printing 1632.10. LOD 1630.66 making a new low today. SPX S/R is 1634, 1632, 1629, 1627, 1626, 1624, 1623, 1618 and 1614. The 1627, 1623, and 1614 levels are the strongest support. If these give way, then 1606-1607, then sub 1600 is next at 1598. SPX is now losing 1632 support so it looks like 1629 is next and the strong 1627 test is more likely. Bulls need to move back above 1632 as quick as possible.

Note Added 3:32 PM: The 62% Fibonacci retracement for the rally from the June closing low to the 8/2/13 top is 1625. Using the June intraday low the 62% Fib is 1617. Thus, the Fib's create a landing zone at 1617-1625 as a potential near-term bottom.

Note Added 3:35 PM:  Bulls cannot hold SPX 1632 support so 1629 is next and more likely a test of the very strong line in the sand at 1627. The 10-year yield is 2.72% 20 bips off the 2.92% yields only a couple days ago.

Note Added 3:49 PM:  The SPX regains 1632. Keystone bot DNDN opening a new long position. This is a very dangerous and speculative trade. DNDN is receiving a beating but is setting up with positive divergence and should be basing and recovering moving forward.

Note Added 3:58 PM:  TRIN spikes to 2.63, now this is very elevated hinting that a recovery rally is needed to relieve the near-term bearish pressure. Ditto NYAD. NYAD prints a -2200 low so this hints at the need for relief. Note how the NYAD printed sub -2200 to mark a bottom about 8 days ago, then it ran up to print above +2000 to mark a top, now today back down at -2200 for a potential bottom at today's close or tomorrow. Bulls are having trouble trying to hold onto 1632, it keeps slipping from their fingertips into the closing bell.