Keystone's Morning Wake-Up and Midday Market Action 9/20/13; Quadruple Witching; Fed Speak

The harvest moon lights up the overnight sky. Farmers can harvest all night long with the bright light. Today is POW/MIA Day. Best wishes to all these folks who's fate was to fight others' wars. Today is OpEx Quadruple Witching so volume may be elevated at the open and at the close. Atlanta Fed expectations are provided at 10 AM. A barrage of Fed speak is on tap today to spin Chairman Bernanke's comments; George (she is an uber hawk) at 12:30 PM, Tarullo at 12:40 PM, Bullard at 12:55 PM and Kocherlakota at 1:45 PM. Looks like a tag team Studio Wrestling approach today where they all tag each other out and keep taking turns pumping the markets. DRI earnings will indicate if folks have the discretionary dough to go out to dinner these days.

Markets meander flat yesterday soaking up the upside energy from the Fed pump Wednesday afternoon. The Fed may want their money back since all the hoopla results in a paltry move in the SPX from 1705 to 1722. Bernanke did not receive much bang for the buck; 17 handles for digging a deeper hole of fiscal and monetary trouble for the United States. The bulls are driving the bus and the bears are stuffed into the luggage department. The 8 MA remains above the 34 MA on the SPX 30-minute chart (reference this morning's chart) signaling bullish markets for the hours ahead, however, the bears will attempt to curl the 8 MA lower for a potential negative 8/34 cross. Market bears got nothing until the negative 8/34 cross occurs. The CPC and CPCE put/call ratio's continue to signal a significant market top at hand (reference this morning's CPC chart).

The SPX begins at 1722. Bulls need to touch the 1730 handle and a strong upward acceleration will occur to new all-time highs. The SPX all-time high is 1729.86 so pay close attention to this number moving forward. Any move above likely leads to a day or three more of upside buoyancy. The bears have an easier road ahead today, only needing two negative points, to drop under 1720, and a downside acceleration will occur into the 1710's. The 1710 would be targeted due to the red descending triangle on the 30-minute chart. A move through 1721-1729 is sideways action to finish the week. Futures are currently flatter than a newlywed's souffle.

Keybot the Quant remains long. Bears need at least one of the following three parameters to turn bearish; GTX 4888, UTIL 483-487 and/or VIX 14.60. If all three parameters remain bullish, then markets will continue floating higher. If any one of the three turn bearish, a lid will be placed on the equity upside. GTX 4888 may be the best chance for bears since price is testing the 50-day MA at 4927, bounce or die time. SPX S/R at these levels are 1730, 1728, 1726, 1725, 1723, 1721, 1720, 1718, 1716 and 1705. Keystone added to the SSG long position (short semi's). Care must be exercised since SSG is a thinly-traded ETF.

Note Added 8:55 AM:  DRI lays an egg and is receiving a -4% beating pre-market. Looks like folks do not have the discretionary dough to go out and eat. The wealthy are wealthier courtesy of Uncle Ben Bernanke so they must have the restaurants all to themselves, and likely the fancy French establishments, they would surely not be seen in a Denny's or a Mickey D's. The separation of the classes (rich richer and poor poorer), created by the Federal Reserve, continues.

Note Added 2:28 PM:  Utilities tumble lower today with UTIL dropping under the important 486.89 at about 10 AM which places a lid on the market upside and ushered in selling. If UTIL falls under the 50-week MA at 483.35, equities will weaken further. UTIL is now printing 485.73.  Keybot the Quant, Keystone's trading algo, will be tracking UTIL 485.33 as a key number next week, 485.33 and 483.35 will be the two key numbers for next week, so at the 4 PM close check to see where UTIL ends, above or below 485.33 since that will provide an early hint on Monday morning's broad market direction. The UTIL 486.89 number only matters until 3:59 PM today. GTX is wrestling at the 4889 bull-bear line in the sand right now failing minutes ago but now trying to recover. UTIL 486.89 and 483.35, and GTX 4889, dictate market direction into the closing bell today. Market bulls will send equities higher into the close if they can push GTX above 4889 and/or UTIL above 486.89. Bears want to drive UTIL lower under 483.35 preferably, and also keep GTX under 4889. The 8 MA stabs down through the 34 MA on the SPX 30-minute chart at 1:30 PM today signaling bearish markets for the hours ahead. The SPX moves down towards the 1710 target for the red descending triangle pattern discussed in this morning's chart. Keystone took tiny profit on DXD exiting the trade. Also bot DNDN opening a new long trade.

Note Added 2:33 PM:  UTIL is 485.76; under 486.89 so that creates negativity, but above 483.35 creating positivity, and sitting on top of the 485.33 number that will replace 486.89 at 4 PM and provide the early read for Monday morning. High drama. GTX 4897 which will create lift for equities since it is above 4889.

Note Added 2:56 PM: GTX 4896 so the bulls are keeping their heads above the 4889 danger line and preventing the equities from falling further today. UTIL 485.66 still dancing around the same area as described above and only 33 cents from the important UTIL 485.33 number for next week's trading. SPX LOD is 1711.46. The last of the five 65-minute daily market segments begins. Gold is down 36 bucks to 1332. The 10-year yield is 2.74%. Oil and copper is weak today, and commodities in general, as shown by the GTX drama.

Note Added 3:19 PM: GTX will end in the bull camp. UTIL is 485.50 continuing the dance around the key 485.33 on tap for next week. The UTIL closing print will tell a lot about market direction forward.

Note Added 3:25 PM:  SPX 1710 handle so the red descending triangle pattern highlighted in this morning's chart is satisfied. UTIL 485.16.  High drama.  Now under 485.33 which is a feather in the bear's cap for next week, if it holds. Bears would be very happy if UTIL loses 483.35 before the close. Bulls are not done, they need UTIL 485.33+ for a happy weekend.

Note Added 3:56 PM:  UTIL is printing 485.33.

Note Added 4:01 PM:  UTIL closes at 485.17, under 485.33, so this will cause market bearishness moving forward, but bulls keep price above 483.35 so this dance continues come Monday. On Monday, if UTIL moves above 485.33, the broad indexes will move up, if UTIL moves under 483.35, markets move down. Markets will move flat if UTIL stays between 483.35 and 485.33. Thus, interest rates will be important. The 10-year yield is 2.74%. If yields move down, utes move up. If yields move up, utes move down. SPX finishes at 1709.74 with a LOD at 1708.89. Perhaps the pesky recent CPC and CPCE uber low put/call ratio's are beginning to flex their muscles? BBRY cans 40% of its workforce, 4500 jobs, and the stock plummets -20%. BlackBerry is now smashed up to make blackberry pie. Where will these folks find new jobs? No where.

Note Added 5:35 AM on 9/21/13:  Isn't that something? UTIL was still settling out after the close and the closing print is 485.33 smack-dab on top of the 485.33 number highlighted by Keybot today. Amazing how the algo knows the numbers in advance. Anyone, however, can identify that number with the 15-week look-back technique. The old-timers pay a lot of respect to the utilities weekly trend and the weekly close is always compared to the close 15-weeks prior. If you go to YHOO, and bring up the Dow Utilities, then historical data, then the weekly data, count back 15 weeks and you will find 485.33. This number is key for all of next week. On Monday it will tell you market direction based on which way UTIL moves off the 485.33, up or down. The utility 50-week MA is the other important number useful in gauging markets. This is 483.41. Keybot projects the intersection points of price and the parameter and uses a 483.35 number currently. The 50-week MA is referred to as the trap-door for markets if it is lost. This was a big win for bulls by moving UTIL above 483.35 on the Bernanke rally. So UTIL 485.33, 483.35 and GTX 4889 are key parameters that will dictate market direction on Monday. CPC moves up to 1.05 hinting that there is a tiny whiff of worry in the air. The reason that UTIL parked at 485.33 is because the markets are traded mainly by robots. Most algo's have the above utility parameters programmed into their models, as Keybot does, so the computers simply shut her down directly on top of the key 485.33 number which will be sorted out next week.