Keystone's Midday Market Action 1/3/14; Chairman Bernanke Speaks

Interesting start to the day. UTIL collapses under 482.19 so market weakness on par with yesterday is anticipated, however, the bulls are jamming volatility lower to prevent the market move lower. UTIL is 481.71. VIX is 13.94 under the 14.12 bull-bear line so this enables bulls to hang on and move equities sideways with a slight upward bias. If VIX moves above 14.12, and UTIL remains under 482, and perhaps under 480-482, markets should have another big down day like yesterday. If UTIL begins moving higher to 483, 484, 485 and higher, equities will run higher into the weekend.

Chairman Bernanke speaks at 2:30 PM so that may cause a market stutter step. Knowing that Yellen is on deck, Bernanke will likely not make any waves. He wants to sneak out the back door as soon as possible, like Greenspan did. Other Fed heads speak as well today so the market cheer leading begins anew for 2014. Use VIX 14.12 (now bullish) and UTIL 482.19 (now bearish) to gauge market direction today. Bulls need higher utes and bears need higher volatility. Markets are at a stand still until one of these 2 parameters flinch.

Note Added 9:36 AM on 1/4/14: The SPX fell through lunch time on Friday from 1837 to 1830 as the VIX moved above 14.12 but alas, Chairman Bernanke cheer leads the markets again promising continued easy accommodation and ZIRP Forever. VIX drops under 14.12 and markets catapult higher to 1837. The Fed is the markets. Going into the close, however, traders must be second-guessing all these Fed shenanigans since the SPX dropped back down to 1831. UTIL closing under 482.19 is very significant and hints at market weakness come Monday morning. If VIX moves above 14.12, equities will take another leg lower. The lower volatility enabled the long traders to defeat the UTIL trap-door, for now. Monday is another day.