Keystone's Morning Wake-Up and Midday Market Action 12/2/13; Cyber Monday; ISM

The Black Friday retail sales are off -13% compared to last year and the weakest sales since the Fall 2008 market crash. If you combine Thursday and Friday, retail sales are +2% compared to last year. This hints that the folks that continue to suffer through structural unemployment ran out on Thanksgiving to grab bargains to help the family budget. The wealthy are not concerned about sales since Chairman Bernanke's obscene QE money-printing has made the rich richer as well as making the too-big-to-fail banks even bigger. Retailers are likely pulling sales forward and the heavy discounting will pull down margins. Retail stocks typically top right now each year; the first week of December. There are only 22 shopping days remaining before Christmas. Today is Cyber Monday the busiest Internet shopping day of the year. The dollar/yen is 102.75 this morning so the stock markets remain elevated although the price is more due to a stronger dollar than weaker yen. The weaker yen has fueled the stock market move higher over the last month.

Bulls need UTIL 491 and JJC 39.75 to finally confirm sustainable market upside, however, the 10-year yield jumps to 2.80%, which should cause utes to drop, and copper is lower in early trading. Bears need UTIL 483 and VIX 13.89 to start the market downside. If UTIL moves under 483 (a market trap-door) and VIX moves above 13.89, the markets will be selling off in force. If all 4 parameters remain as is, markets will stagger sideways. For the SPX starting at 1806, the bulls need to touch 1814 today to send the SPX to the 1820's in quick order. The bears need to push under 1804, only 2 points lower to accelerate the downside. A move through 1805-1813 today is sideways action. Key support below is 1807-1808, 1803, 1798-1799, 1796 and 1791. December begins at 1805.81 so write this number down for reference this month. New money typically enters the markets the first few days of the month, however, the new moon occurs today and markets are typically bearish through the new moon. The month of December is typically up about 80% of the time since the 1940's.

China PMI's continue to show expansion, albeit slightly, call it perceived stability. European PMI's all show improvement. The central banker money printing is doing its job. Construction Spending and ISM Mfg Index at 10 AM will create a market pivot point. The 8 MA remains above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Bears got nothing until they receive the negative 8/34 cross. Watch UTIL 491, 483, JJC 39.75, VIX 13.89 and SPX 1814 and 1804 to determine market direction. Bulls need higher utilities and copper while bears need lower utilities and higher volatility.

Note Added 12:57 PM: The bears made a push but did not eat enough Wheaties for breakfast. Note how UTIL came down to tease the trap-door at 483, and bounced. VIX printed above 14 above the bull-bear line in the sand at 13.94 (use this instead of 13.89) providing the bears a go signal but alas, volatility is pushed lower to VIX 13.79, as well as the TRIN, now down to 0.65, to create the lift. The Fed is pumping and of course, Banzai!!! The dollar/yen moves above 103 to 103.07 with the weaker yen counteracting any bearishness today creating the market lift and recovery. DXJ is up +0.6%. Look at the fight on the SPX 30-minute chart; the 8 MA stabbed down through the 34 MA signaling bearish markets ahead, however, the bulls are running higher courtesy of Uncle Banzai, and are about to send the 8 MA back above the 34 MA. This drama may continue moving forward. If the SPX drops sharply within the next hour that will show that the bears do mean business after all. The SPX ran up to the 1807-1808 resistance and broke through so a test of 1813-1814 is not unreasonable today. The HOD is 1810.02. UTIL is non-committal remaining between 491 and 483. The bulls need UTIL 491 and/or GTX 4806 to receive strong upside market fuel. The bears need UTIL 483, the market trap-door, and/or VIX above 13.94 to receive strong downside market fuel. The 10-year yield remains elevated above 2.80% so this makes it difficult for bulls to move utes higher. Gold and gold miners are bludgeoned today but remain attractive on the long side. Miners should be a success story for 2014. Much of the gold and miner selling is likely tax loss selling. Traders are taking profits on the big gains this year in equities and throwing these overboard to offset the gains. The band plays on.

Note Added 3:27 PM:  VIX 13.96; can the bears hold it this time? UTIL 485.33 only 2 points above the trap-door. GTX drops to 4766. Equities hang on floating sideways. Bears have it on a silver platter only needing to keep VIX above 13.94 and push UTIL under 483 and there would be nothing but downside ahead. Surprise, surprise, the 8 MA remains under the 34 MA on the 30-minute chart signaling bearish markets for the hours ahead. Dollar/yen is 103.06 losing some gas from the 103.10+ levels, hence, a stronger yen, and some of the air deflates out of equities. TRIN 0.78.

Note Added 3:33 PM:  VIX 14.10. UTIL 485.22. TRIN 0.80 moving up. Your chance is here bears; stab the utilities 2 more points and you will receive the much-awaited market downside.