Keystone's Morning Wake-Up and Midday Market Action 8/9/13; Wholesale Trade

Wholesale Trade numbers hit at 10 AM so a market pivot point should occur. Thus, the markets may shift direction at 10 AM as compared to the intial move during the first one-half hour of trading.  Markets are at a key inflection point. Keybot the Quant is short but the algo is sitting virtually flat neutral waiting for a confirmation move in one direction or the other. Bears win with weaker semiconductors and the SOX losing 473.36.  Bulls win with a weaker dollar and higher commodities with the GTX moving above 4795. So SOX and GTX tell the market story today. For the SPX starting at 1697, the bulls need to push up through 1700 and it is blue skies and rainbows above with an acceleration to 1707 and 1710 on tap. The bears need to push under 1688 to accelerate the downside. As shown in this morning's charts, a failure at 1685-1688 is very dire for markets since it represents the sideways channel failure and a neck line failure for an H&S pattern that would point the way to the 1660's. A move through 1689-1699 is sideways action. The robots and algo's did all the trading yesterday as evidenced by the major indexes all moving in sync. The Dow trailed lower as the day moved along but for the most part, all the major indexes, SPX, INDU (Dow), COMPQ (Nasdaq) and RUT (small caps) were all up about 0.4%.

The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Bears will need to curl the 8 MA downwards again and create a negative 8/34 cross if they want to perform downside damage. The SPX daily chart shows tight standard deviation bands and indicate that a big move in equities is on the doorstep of about 20 to 60 SPX handles in the coming days, up or down. By Tuesday, it will likely be obvious who won. Watch the dance around the important 20-day MA at 1691.18. For today, SOX 473.36, GTX 4795, and SPX 1700 and 1688 tell the story. Pay attention to the sideways range this week since bulls win above 1700 and bears win if the 1685-1688 support fails. Many investment professionals will be distarcted by the PGA Championship. Tiger and Phil are off to a slow start. Justin Rose takes a massive divot in the first round which is worth viewing (just google it). It was the size of a throw rug, a hilarious mop-like clump. Trader's also tend to pare back shorts on Friday afternoons which creates market lift but perhaps more of the shorts may stay in place today as equities continue to tease all-time highs.

Note Added 10:19 AM:  The circus is in full swing today with calliope music in the background. How comical is it that the SOX collapses into the bear camp while the GTX leaps into the bull camp at the same time at the opening bell? Weak semi's carry a slight bit more importance than stronger commodities. Everyone knows about the weak China story concerning commodities but if semi's slide, that is trouble. Tech and financials go hand and hand, and traders buy equities since they see financials holding up. This would change with a weaker semi sector. Also, a chip is in nearly every product you buy nowadays, so lower semi's says folks aren't buying anymore. The 10 AM pivot resulted in a downward move. Watch SOX 473.36 and GTX 4795 closely today. If the SOX moves back above 473.36 and the SPX moves above 1700, and both hold these position changes, Keybot the Quant will likely flip long. However, if SOX stays under 473.36 today, the bears will start to cruise and Keybot will likely remain short into the weekend. Too bad the Rochester weather is rainy for the PGA Championship but the golfers are on the course.

Note Added 10:38 AM: SOX spiking higher back above 473.36, see if it holds for 7 to 10 minutes. The timing is not surprising since the launch occurs in the typical 10:30 AM time frame. VIX 13.12. TRIN 0.69. Bulls are mounting a come back with stronger semiconductors and a lower TRIN.

Note Added 11:12 AM:  SOX drops under 473.36 again and note the weakness in equities. This circus will likely continue all day long. SPX bounces from a LOD 1689.51 so the bears did not have the strength to push under 1688, and more importantly 1685-1688, so far, to unleash market mayhem. SOX is now recovering again at 472.88.  The beat goes on.

Note Added 11:28 AM:  SOX is puking now at the lows. SPX now testing the critical 1685-1688 support area highlighted in this morning's charts and commentary. Bounce or die.

Note Added 3:10 PM:  The bulls keep trying to push SOX above 473.36, but fail. SOX is at 471.75. GTX 4836. VIX 13.15. TRIN 0.82. President Obama is speaking and equities leak slightly lower. The weak semiconductors create a steady heartbeat of market negativity. The 8 MA stabs down through the 34 MA on the 30-minute chart signaling bearish markets for the hours ahead. Watch to see if the bears can maintain this negative 8/34 cross into the closing bell, or not. The 8 MA is at 1693 so as long as the bears keep the SPX under 1693 they will dance a happy jig into the weekend.

Note Added 3:52 PM: SPX 1690.82. SOX 471.47. GTX 4836. VIX 13.35; the underwater beach ball may be starting to pop above the surface. TRIN 0.83.  The bullish TRIN should help the bulls salvage a sideways move to end the day.