Keystone's Morning Wake-Up and Midday Market Action 8/29/13; GDP

The EOM is tomorrow and August began at 1686. GDP is 2.5%; most everyone expected a number in the 2's. The S&P futures were up 5 early this morning, then dropped to flat, and are now +5 again. The 10-year yield jumps strongly higher to 2.83% after the GDP and lower Jobless Claims news. The markets are very indecisive right now and utilities and copper will light the way. Watch UTIL 483.32 and JJC 40.07. UTIL is printing below which is creating market negativity. JJC is printing above which is creating market bullishness. Bulls will drive markets higher with higher utilities. Bears will drive markets lower with lower copper. If UTIL stays under 483.32, and JJC above 40.07, the markets are moving sideways unable to decide on a direction. The higher yields should hurt the utilities and other interest rate sensitive stocks. Copper is weak in early trading.

For the SPX starting at 1635, the bulls need to push above 1641 to create an upside acceleration. If the SPX moves above 1641, and UTIL moves above 483.32, and both stay above, Keybot the Quant would likely flip to the bull side. The bears need to push under 1627.50 to accelerate the downside. A move through 1628-1640 is sideways action. The CPCE put/call is very interesting printing an uber low at 0.34 indicating that there is zero fear in the markets despite all the ongoing macro problems. Traders are complacent and simply not worried at all. The low CPCE indicates that the markets are at a significant top that, once confirmed to the downside in the weeks ahead, may continue lower for months or a year or more. The print may be an outlier but it is interesting none the less. The CPC put/call remains tame as well, dropping slightly yesterday now at 1.01.

SPX S/R is 1686 (August begins), 1685, 1673.55 (20-day MA), 1669, 1666, 1664, 1661, 1659.50 (50-day MA), 1659, 1655, 1654, 1652, 1651, 1650, 1649, 1647, 1643, 1642.67 (20-week MA), 1640, 1639.43 (last week's low), 1638.27 (100-day MA), 1636, 1634, 1632, 1629, 1627, 1626, 1624, 1623, 1618 and 1614. The 62% Fibonacci landing zone based on the June-July rally is 1616-1624 which serves as strong support, especially since it encompasses the strong horizontal support at 1623 and 1618. The SPX bounced off the strong 1627 support yesterday. The 1614-1624 zone is a serious support area. Bulls will recover and float markets higher as long as this area is not violated. Bad things will happen to markets if price drops under 1614. For Thursday, watch UTIL 483.32, JJC 40.07, SPX 1641 and 1627.50 to determine market direction. Futures trailing lower to the flat line and negative in the time it took to type this missive.

Note Added 9:37 AM:  JJC drops to 40.06 but Keybot is now tracking 39.96 as the bull-bear line in the sand. The higher yields are sending utilities lower. UTIL 478.25. So markets move sideways until either UTIL or JJC makes a decision. If JJC drops another dime under 39.96, the markets will noticeably sell off. Otherwise, another sideways malaise today. SPX is 1636 remaining under the 100-day and above the strong 1627 support. TRIN is 0.82 favoring the bulls today so far.

Note Added 2:14 PM:  The beat goes on. UTIL 477.97. JJC 40.02. Note that UTIL remains five points from the 483.32 bull-bear line but JJC has been knocking on the 39.96 bull-bear level all day long. The bears do not have the oomph as yet to push down under JJC 39.96, so markets stagger sideways. VIX is 16.77 moving higher. TRIN 1.05 favoring bears. It is surprising to see equities as elevated as they are today.  The dip-buyers and complacent traders believe in the Fed. SPX is 1641.64.  HOD 1669.51.  The 20-week MA is 1643.01. The 100-day MA is 1638.99. Last week's key low print was 1639.43. So price has to choose between 1643.01 and higher, or 1639.43 and lower.

Note Added 2:36 PM:  Here's the test of the 20-week MA, bounce, or die.

Note Added 2:48 PM:  SPX 1643.08. The 20-week MA is 1643.08. Bounce or die.

Note Added 3:23 PM:  Die. SPX 1641.51. Price continues through the sideways 1639-1643 range, however, so no great shakes. Copper keeps hanging on by pennies. JJC 40.01. UTIL 477.89.

Note Added 3:30 PM:  SPX loses both last week's low and the 100-day MA. JJC 39.99 keeps holding above 39.96 by a hair on its chinny chin chin.

Note Added 5:44 AM on 8/30/13:  EOM today. August started at 1686 so a down month should be logged at 4 PM EST.  The monthly charts all receive new prints today. It took the whole day but JJC (copper) finally gave it up in the final minute of trading falling to 39.96. It is amazing how Keybot the Quant algo can identify these important levels before they occur. Watch JJC  39.97 since it is now a key pivot. Equity markets move higher if JJC moves higher and will move lower if JJC moves lower. Copper is down in early morning trading. SPX is 1638.17. The 100-day MA is 1638.96. The 20-week MA is 1642.83, a sturdy ceiling. Last week's low 1639.43. BPSPX is now a market sell signal. Markets receive a couple-day pop from the high TRIN and uber low NYAD discussed earlier this week. It is surprising to not see equities far lower and weaker. Traders believe strongly in the Fed and worship at Chairman Bernanke's feet; the junkies need the drug-pusher. CPC and CPCE put/calls continue to show complacency. VIX is climbing towards 17 but still not near 20 so overall, traders continue to lack fear. Politicians, the Fed and other central bankers always save the day and kick the cans down the road, supplying infinite easy money, so why worry? As Alfred E. Neuman says, "What, me worry?" So there are dip-buyers in the market more worried about missing the next big run-up in stocks rather than worrying about the markets selling off in any substantive way. Copper is key. S&P futures are +3.5. If copper is weak, markets should be weak.