Keystone's Midday Market Action 7/1/14; Q3 and H2 Begin; Dow 17K Watch

The bull party continues to start Q3 and H2. Equities are in pure melt-up mode catapulting higher. The bears are in full retreat giving up all hope for a market pull back. The SPX prints new intraday all-time highs and likely a new all-time closing high. HOD is 1976.90. The Nasdaq prints a new 14-year high. TRAN prints a new all-time record high above 8280 and the Dow explodes higher to print a new all-time high above 16991 only nine points form 17K. The bulls are running using the new money coming into the market for the new quarter and month as fuel. The seasonal bullishness expected this week ahead of the three-day holiday weekend is occurring faster than anticipated. The bulls are already planning the barbeque menu to celebrate later in the week.

Keybot the Quant remains long for the last five weeks. The bears cannot develop any downside juice. Watch RTH 59.10, VIX 13.40 and GTX 5030. Despite all the euphoria, note that GTX is dropping like a stone now at 5088. The bears would need GTX 5030 to stop the market upside. If the retail sector, volatility and commodities remain in the bull camp, equities keep floating higher.

The bulls are choosing the prior scenario described where equities stay buoyant for a few more days or week or two when volume would return. The media and traders are on edge right now with a circus-type environment developing as all eyes fixate on Dow 17K. HOD 16998.70 only a couple points shy. VIX slips below 11 briefly as the Fed keeps its boot on volatility's neck. TRIN is 0.95 on the bull side of one. The dollar/yen is 101.55 moving up from the 101.30's so the weaker yen fuels the NIKK gains overnight and the US stock market today. Banzai!! The 10-year remains relatively calm at 2.56% not moving. Money is not flowing out of low-risk Treasuries into high-risk stocks but instead new money for the new Q3 quarter is coming in from the outside; free money provided by the ongoing Fed's QE and other central banker policies. Market bears need to push GTX under 5030 to plan a celebration later this week.

Note Added 1:42 PM: The circus environment grows as all eyes focus on Dow 17K. Traders stop at the wall of television sets at the local Times Square appliance store cheering for 17K. The secretaries prepare confetti and the Dow 17K hats just arrived from the screen printer. The joyous celebration continues and traders and media are convinced that Dow prints 17K today. The Dow drops to 16990 to gather up a new head of steam. Older brokers reach for their heart pills to ease the emotional roller coaster. Flags are waving and champagne corks are popping. Media pundits are all claiming credit for calling the bullish market and all proclaim far higher numbers ahead. The Boy Scouts arrive on the trading floor ready to erupt into song with a joyous rendition of the Star Spangled Banner as soon as Dow 17K prints. Everyone waits for the bells to ring and angels to sing at Dow 17K. Only one thing; the Dow slowly ticks lower .... 16991.... 16989 ... 16987 .....  GTX 5086. VIX 11.04. TRIN 0.92.

Note Added 3:53 PM: The crowd is waiting for Dow 17K hoping for some end of day euphoria. GTX moves higher to 5098. VIX is 11.00 on the dot. TRIN 0.98 dead flat not favoring bulls nor bears today. Dow is at 16970 thirty points from Dow 17K. The Boy Scout troop is starting to disband and the scout master is asking the traders what happened? Everyone said Dow 17K was guaranteed. Dollar/yen 101.54.

Note Added 4:04 PM: The bears prevent Dow 17K, barely. The high print is 16998.70 only 130 pennies away from confetti, dancing girls and joyous music. The Fed pumping creates the theatrics and choreographed stock market ascent. There are two trading days remaining this week. The trading path ahead may be a lackluster to flat day tomorrow that allows the Dow to idle into the Thursday morning Monthly Jobs Report for a bounce or die decision. At 8:30 AM EST Thursday morning, Caesar will stand from his marble throne at the Colosseum, out stretch his right arm with clenched fist, expose his thumb, and then provide an up or down decision for equities. That way, the Dow would print the 17K after a joyous jobs number into a summer holiday weekend. This also provides the weekend newspapers easy headlines to write as the sweet barbeque aroma's fill the neighborhood air. Of course, the jobs number may create the opposite effect clutching the Dow 17K trophy from the bull's hands, and instead begin an extended market move lower.

Note Added 4:15 PM: The SPX prints a new all-time intraday and closing high. The Dow prints a new all-time intraday and closing high. The Nasdaq prints new 14-year intraday and closing highs. The RUT prints a new all-time intraday high but not a new all-time closing high. The trannies, TRAN, print a new all-time intraday and closing high. The Dow Industrials and Transports both print new highs confirming from a Dow Theory perspective. The future is so bright you gotta wear shades. Fed Chair Yellen is passing out rose-colored glasses at the Eccles Building. Pick up a pair today and sip some of that magical Fed wine while you are there. It is an intoxicating elixir that sings a siren song of stock market pleasure. Fed Chair Yellen speaks tomorrow. She just picked up her top hat and tails at the dry cleaner's in preparation for her tap dance tomorrow.