Keystone's Midday Market Action 10/23/13

Watch UTIL 498, JJC 40.21, SOX 488.95 and VIX 14.79. Semiconductors collapse today which is ushering in market weakness. Utilities continue higher on lower Treasury yields. Keybot the Quant flips to the short side today but the move is tentative so far. SOX is already staging a come-back above 488.95, see if the bulls can recover semi's today, or not. Keystone took profits on the SSG long trade (short semi's) exiting the position that was entered yesterday for an overnight +6% profit. Will look to reenter.

Note Added 11:32 AM:  SOX 489.49 above the 488.95 bull-bear line in the sand. Bulls are trying to recover. JJC 40.13 under the 40.21 bull-bear line in the sand. TRIN 1.34.

Note Added 12:05 PM:  UTIL 503.93. SOX 491.09. JJC 40.05. VIX 13.90. Market bears stay in the game on the short side and are not concerned as long as copper remains weak (JJC under 40.21). Bears need to turn the green parameters red to push markets lower while the bulls need to push JJC above 40.21 and they can pop the corks on the wine bottles again.

Note Added 12:13 PM:  The 8 MA drops under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead. Monitor this cross to see if it holds today, or not. JJC 40.05.  SOX 490.86 one-point on the bull side supporting the broad indexes, like a lamppost propping up a drunk on the street corner.

Note Added 2:48 PM:  UTIL 504.37. SOX 490.04. JJC 40.00. VIX 13.54. Status quo. Markets will not leak lower with SOX above 488.95. Chairman Bernanke keeps the VIX beach ball underwater today (reference Keystone's Sunday Funnies comic by typing 'vix beachball' into the search box to the right) which is the main goal of the Fed--crushing volatility to keep equities pumped up.  Note the drop in the VIX over the last hour that creates the slight buoyancy in equities. SPX 1748. The bulls are turning the 8 MA upwards on the SPX 30-minute to try and create a positive 8/34 MA cross, but, for now, the 8 remains under the 34 signaling bearishness for the hours ahead. Bears need SOX 488.95. Bulls need JJC 40.21.

Note Added 3:31 PM:  SPX 1745. A standoff between copper and semi's continues. Keystone shorted RTH opening a new short position that shorts the retail sector.

Note Added 3:36 PM:  Keystone bot EUO opening a new long position which is a 2x inverse ETF that shorts the euro. Reference this morning's chart for the euro ($XEU). The weekly chart on the euro likely wants another high ($XEU) which corresponds to another low for EUO, and the dollar likely wants another low ($USD) to correspond to the higher high for the euro, however, a quickie bounce is perhaps on tap for EUO (spank down for euro, pop for dollar). EUO would have to be a nimble trade, looking for a bounce, then exit, then reload maybe a week from now. If the trade goes the wrong way (if the euro keeps going higher to 1.38, 1.39 non-stop), then likely hold EUO and add to it a week or two from now.

Note Added 3:43 PM:  UTIL 502 on verge of a 501 handle. If you are bearish the markets, you want SOX under 488.95, but also, you want UTIL sub 500, and sub 498, and lower, into the 480's, since this will indicate major trouble for equities moving forward. If bullish, you need to keep pumping semi's, utes and copper higher and crushing volatility lower. The 8 MA remains under the 34 MA on the 30-minute signaling bearishness ahead but it is touch and go with both moving averages traveling parallel to each other. This means the opening bell tomorrow will have huge importance for markets. SPX sits at 1746. SOX 489.99.