Keystone's Morning Wake-Up and Midday Market Action 8/5/13

Markets continue to feel like October 2007 where the near universal sentiment is bullish. Pundits, analysts, and Wall Street persona parade across television sets daily with one universal message, 'Buy!'. Ralph Acampora, notable market technician, says buy with both hands at these levels. Plain and simple, the markets are kept buoyant through central banker easy money. This is evidenced by the weakness in commodities and the CRB Rind for several months but the Fed, BOJ and other QE money prohibits any negative market affects. The Trannies explode higher last week to reaffirm Dow Theory of higher highs in the Dow confirming higher highs in the Trannies and visa versa. However, the Transports have been lagging at times over the last couple years signaling weakness ahead for equities, that never occurs. Now the Trannies join the fun. This is due to the easy money providing support for equities. These examples are obvious in other places as well. The question is how much artificial elevated pricing is currently built into all asset classes due to worldwide central banker policy?

The Jobs number on Friday was weak but the markets run higher. It is Goldilocks where the data is weak enough to make sure the Fed continues printing money indefinitely, while at the same time signaling tepid growth, but growth it is no matter how tiny. It is a shame that the U.S., and the world, now strive for mediocrity, with high-fives all around for creating an economy supported by easy money. Today is an important day. Copper, volatility and commodities are key, as identified by Keybot the Quant, Keystone's proprietary trading algorithm, that remains long to begin the new week. Watch JJC 39.02, VIX 14.25 and GTX 4790. JJC is causing bearishness and volatility and commodities are causing bullishness, respectively. If JJC stays below 39.02 (and copper is weak today in morning trading), and the SPX drops under 1701, and stays under 1701, Keybot the Quant will likely flip short. If GTX loses 4790, and/or the VIX moves above 14.25, the broad indexes would move lower in force. The bulls need to move copper higher and keep the SPX elevated above 1701 all day Monday. If the SPX moves above 1710, a several handle pop to the mid-1710's is anticipated as well as lighting the way to a print at 1720+ in the day or days ahead. The VIX and TRIN (reference this morning's charts) want to see the market sell off to relieve the bullish euphoria that appeared late last week. The 8 MA is above the 34 MA on the SPX 30-minute chart (reference this morning's chart) signaling bullishness for the hours ahead. JJC 39.02, VIX 14.25, GTX 4790, and SPX 1701 and 1710 dictate market direction today.

Note Added 9:42 AM:  The broad indexes begin on the weak side but status quo overall. JJC 38.78 staying bearish. VIX 12.36 bullish. GTX 4843 only 43 points above the 4800 bull-bear danger line (use 4800 instead of the 4790 mentioned above). SPX is 1705 remaining four points above the 1701 bear danger line for today. So far it is a lazy hazy day of summer.

Note Added 3:01 PM:  The status is quo. A nice day to eat apple pie and relax in the hammock under the oak trees. The week starts off sideways. JJC is 38.85 under the 39.02 bull-bear line causing bearishness. VIX is 11.96 at the lows for today. TRIN 0.85.  Same-o, same-o. The bulls crush volatility and the TRIN to maintain market buoyancy day after day. GTX is 4859 above the 4800 bull-bear line causing market bullishness. SPX is 1706 on the dot. LOD 1703.55 so about four points away from the 1701 bear victory level. The bears could not bring it today, they did not eat their Wheaties, unless they muster up strength into the closing bell. The 2-hour, 1-hour and 30-minute SPX charts, however, are agreeable to rolling over. Well look at that. The 8 MA is near a negative cross of the 34 MA on the 30-minute chart (reference this morning's chart). The bears may have game after all, they are acting in stealth today perhaps ready to spring a surprise attack on the bulls. The 30-minute chart will print another candlestick in 20 minutes so the bears can create the 8/34 cross in the minutes ahead. If the bulls plan on stick-saving the markets, and preventing the 8/34 negative cross, as usual, you will see a thrust higher in the SPX now. The new moon is tomorrow so markets tend to be weak through the new moon.

Note Added 3:13 PM:  SPX 1706. JJC 38.84. VIX 11.97. TRIN 0.87. Status quo. Things may get interesting into the close.

Note Added 3:31 PM:  There's the thrust, a couple handles is all it takes to keep the 8 MA above the 34 MA to signal bullish markets ahead, with these moving averages now moving parallel to each other, as the bulls perform their 158th stick-save. Still lots of time remaining for further drama. VIX is 11.93 printing the low for the day so equities move higher. TRIN 0.79 more bullish as well.

Note Added 3:49 PM:  Markets staggering sideways with SPX at 1707.25.  JJC 38.89. VIX 11.93 unable to get up off the floor. TRIN 0.81. The status is quo all day long. The 8/34 MA cross will be front and center at tomorrow's opening bell so either the bulls show up and spike the SPX higher right away, or the bears will finally growl and push the SPX lower, creating the 8/34 cross, and ushering in market negativity moving forward.