Keystone's Midday Market Action 5/2/13

This morning's drama results in the SPX jumping to near 1590 after the opening bell. HOD is 1589.64.  VIX is 14.39 trailing lower but staying above 14 which helps the market bears.  TRIN is 1.27 favoring bears today despite the up markets. The 10-year yield is at a steady 1.64%. The euro is 1.3077 weakening on Draghi's comments. The dollar/yen is 97.78. Use the 10-year yield, euro and dollar/yen numbers as pivots today. Bulls want higher yields, higher euro and higher dollar/yen. Bears want lower yields, lower euro and lower dollar/yen. Germany 10-year yield is now 1.17% testing the all-time lows at 1.16%-1.17%.

The 8 MA remains under the 34 MA on the SPX 30-minute chart as the session begins. A move through 1582-1597 is sideways action today. S/R is 1593, 1589, 1586, 1579, 1576, 1574.07 (20-day MA), 1569, 1565, 1563, 1561, 1556, 1555.55 (50-day MA), and strong support at 1552-1553. The day begins with the bulls punching up through 1586 and now attacking 1589 R. The 1593 resistance test is next if 1589 gives way. The 20-day MA and the strong floor at 1576 form a confluence at 1574-1576 so this support level may serve as both a magnet to draw price lower and an important test for the markets where a bounce or die moment will occur.  The markets may idle along sideways today as trader's begin to set their sites on the Monthly Jobs Report at 8:30 AM now less than 23 hours away. Time for a walk to enjoy the beautiful summer-like day in scenic Pennsylvania.

Note Added 12:36 PM:  The VIX falls through 14 and the TRIN dropped under one, thus, the broad indexes move higher. The SPX went through 1589, then 1593 R, then up to test the all-time high at 1597.57, managing to print a new all-time high and HOD today at 1597.86.  The bulls are unstoppable and can taste the 1620's. The 8 MA moves up through the 34 MA signaling bullish markets for the hours and days ahead so the bulls frustrate the bears once again not allowing the bears to shine. The bears need to drop the SPX quickly, moving price under 1593 and lower, to reverse the 8/34 cross. The euro is 1.3061 moving flatish to a bit lower so this is a hair of downside pressure for the market indexes. More importantly, the dollar/yen is at 98 moving up, which means weaker yen, and higher equities. So the bulls have the BOJ to thank again for today's move which recovers yesterday's loss. The 10-year yield remains low at 1.62%-1.63% so obviously money is not rotating from bonds to stocks but instead, new fresh money, easy money from the central bankers, continues to float into the stock market. TRIN is 0.96, neutral. For such a strong up day the TRIN should be 0.7 or 0.8. VIX is 13.87 so the bulls will continue pushing markets higher. The bears will stop the upside if the VIX moves back above 14 and/or the TRIN above one. The high print today in the SPX creates a triple top over the last three and one-half days with price continuing to bump up against 1598, not yet able to print the 1598 handle. Watch VIX 14, dollar/yen 98 and SPX 1597.86.

Note Added 1:18 PM:  VIX 13.78. Dollar/yen 97.98. SPX 1597.28.  TRIN is 0.89 dropping lower to help the bulls.

Note Added 3:03 PM:  VIX is 13.66 at lows of the day so the broad indexes are at the highs of the day.  SPX prints a new all-time high and HOD at 1598.60. TRIN is 0.97, neutral, which is odd, as well as the low 10-year yield, since the TRIN should be lower and yield higher for such a bullish day. The low volatility and higher dollar/yen provides the bull fuel today, as well as the typical morning pump by the Fed.  Note the dollar/yen leaking lower, now at 97.90, down from 98. The euro is 1.3055 dead flat today so the ECB does not have much affect today.  The main thrust is the Fed, BOJ and weaker volatility. Crude oil is regaining the 3% loss from yesterday although copper can barely make back one-half of yesterday's drop. Semiconductors, SOX, are up +1.3% today moving above 447, providing market fuel. Utilities are lower for two days in a row. The bulls are focused on the 'increase' word in the Fed statement which hints at continued QE. Traders do not appear worried about any negativity from the Jobs Report in the morning.

Note Added 3:30 PM: VIX is at the lows today at 13.61 so this keeps the broad indexes elevated; the lower vol provides the juice. Dollar/yen is at 97.95 idling sideways. The euro idles sideways. Volume is below average today running at about 70% of a day's average expected volume so this trend of lower volume up days continues. If VIX keeps dropping below 13.60, and 13.50, and lower, the SPX will run over 1600. The VIX 50-day MA is 13.83 so pay attention to the final print today. TRIN 0.98. The 10-year yield remains stuck at 1.63%. A new all-time high is printed today at 1598.60. The all-time closing high is 1597.57 so watch this number. SPX is now printing 1597.53 only pennies away.

Note Added 3:52 PM:  VIX 13.60. TRIN 1.04. SPX 1596.82.

Note Added 4:02 PM:  VIX goes out at 13.59 at the lows under the 50-day MA, a big plus for market bulls. The SPX prints a new all-time closing high and new all-time intraday high today.  The SPX all-time intraday high is today, 5/2/13, at 1598.60 and all-time closing high is today, 5/2/13, at 1597.59 (a new closing high by two measly pennies).

SPX 30-Minute Chart 8 MA and 34 MA Cross H&S Pattern

The 8 MA stabbed down through the 34 MA signaling bearish markets for the hours and days ahead.  The 8 MA is at 1587 so as long as the SPX stays under 1587 the bears are in good shape.  The bulls are obviously trying to launch markets higher again to reverse the 8/34 cross so they can take the SPX above 1600. The red lines show the negative divergence we watched set up over the last few days. The drama results in three negative divergence spank downs (red arrows); the last one resulting in the drop to the current closing print at 1583. The MACD and RSI maintain a more bearish stance while the stochastics and money flow are agreeable to a quickie bounce today. The RSI is not oversold as yet so additional price action to the downside would be anticipated moving forward. A lot depends on if Draghi (ECB) announces any new monetary programs at the press conference only minutes away.

The H&S pattern is in play and even though the right shoulder printed at the same highs as the head at 1597-1598, let's call it a Quasimodo H&S and consider it in play. The neckline at 1579 support targets 1560-ish and the 1576 neck line targets the strong 1552-ish support. The strong areas of support below are 1576, 1563 and 1552-1553. The 8 and 34 MA cross is the most important thing to watch on this chart. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 1:20 PM:  The 8 MA moves above the 34 MA at noon time signaling bullish markets for the hours and days ahead. The bears are not allowed to shine.  The bears need to push the SPX lower, under 1594 and lower, to get the 8 MA to curl back over to the downside. The bulls are cruising today recovering all of yesterday's losses.

Keystone's Morning Wake-Up 5/2/13; ECB Rate Decision Imminent

The HSBC China PMI verified the official PMI showing slower growth in manufacturing activity. Commodities are stumbling along sideways today, trying to base, with copper and oil receiving dead cat bounces after the -3% drubbings yesterday. The ECB Rate Decision is 7:45 AM EST followed by the Press Conference at 8:30 AM. Draghi's words today will move markets. Germany's DAX is back above 7900. The market bears flexed muscles yesterday with the higher volatility but will need to see weakness in other sectors such as financials, retail and/or semiconductors to begin a more substantial market down move. The Fed's announcement provides something for everyone; bulls are waving the 'increase' word for QE and the projection that the economy will remain weak while the bears are waving the 'reduce' wording for QE and the need for Congress to become more involved. Chairman Bernanke must realize that the Fed's programs are not helping and may actually be hurting the economy; many analysts now expect GDP to drop to 1.0% or 1.5% for H2 2013. Bernanke also bowed out of Jackson Hole this summer which should send a message that the Fed will likely stay status quo or taper away as time moves along, however, the Fed is backed into a corner now and the doves (Bernanke, Yellen, Dudley) may simply increase QE until the wheels fall off.

VIX 14 remains key; bears win if the VIX stays above 14, bulls win if the VIX drops under 14. For the SPX starting at 1583, the bulls need to recover to 1598 to accelerate the upside and begin the move to the 1620's.  The bears need less than two points lower, under 1581, to accelerate the downside. A move through 1582-1597 is sideways action today. S/R is 1593, 1589, 1586, 1579, 1576, 1572.60 (20-day MA), 1569, 1565, 1563, 1561, 1556, 1554.00 (50-day MA), and strong support at 1552-1553. The SPX initial move today either above 1586 R or below 1579 S will set the tone. The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours and days ahead so watch this closely for market direction today. The 8 MA is at 1587.31 so as long as the SPX stays under 1587, the bears will maintain market selling pressure.

The Challenger Job-Cut Report is minutes away. At 8:30 AM, futures will be impacted by Draghi's press conference in Europe as well as Jobless Claims, Productivity and Costs and International Trade data in the States. Natty Gas Inventories are 10:30 AM. The earnings parade continues with CBI, GM-auto's, GNRC-generators, HK, IP-paper, K, LNKD and MHK-housing, all of interest.

Before Draghi carries the tablets down from on high, and delivers the message to the waiting masses, the S&P futures are up +4, Dow +37 and Nasdaq +7. The 10-year yield is 1.64%. The euro is 1.3157. The dollar/yen is 97.32.  WTIC crude oil is 91.47.  Gold is 1457.

Note Added 7:50 AM:  The ECB cuts by one-quarter point lowering the rate to 0.50% as expected. The markets yawn, so far.  S&P futures are up +6, Dow +51 and Nasdaq +12.  The 10-year yield is unchanged at 1.64%. The euro is 1.3199 (moves higher).  Thus, the higher euro = higher equities asset relationship (and lower euro = lower equities) is in in tact. The dollar/yen is 97.29 (flat). Crude oil is 91.67. Gold 1458. Draghi's press conference at 8:30 AM will tell the tale since he will either announce more programs to help the flailing European economy, or not.

Note Added 8:53 AM:  Jobless Claims are lower. Draghi hints at keeping the door open to additional programs but is playing coy as the Q&A begins.  Without a firm commitment to more easy-money good news, the S&P's drift a touch lower from near +10 to now +7. The 10-year yield inches up to 1.65%. The euro is 1.3158, very jumpy, up to 1.32 then back down; note that it is exactly where it started at before today's ECB drama.  The dollar/yen is 98.12 experiencing a robust move higher over the last hour reflecting the weakening yen, and, considering the buoyant futures over the last hour, the BOJ is once again pumping equities higher with the weaker yen.  Crude oil is 91.37.  Gold is 1464.  There is a slight market exhale on Draghi's comments with European equities moving a touch lower.

Note Added 9:17 AM:  The euro drops to 1.3086.  Note the asset relationship down euro = down equities.  The dollar/yen is 97.95 moving down (stronger yen). S&P's are now +5.  The 10-year yield has dropped back down to 1.64%. Gold 1572. The following asset relationships should serve as a guide today; happy bulls are higher euro, higher dollar/yen, weaker yen, higher 10-year yield, higher commodities, higher equities, and, happy bears are lower euro, lower dollar/yen, stronger yen, lower 10-year yield, lower commodities, lower equities.

European Bond Yield Summary 5/2/13; ECB Rate Decision

The ECB rate decision and press conference are on tap over the next couple hours.  European yields continue to drop and set records.  The OMT program, as well as the BOJ easy money, has served to calm yields over the last few weeks. However, the low yields are producing a complacency and lack of urgency in developing the necessary structural reforms to handle the European debt situation; a faux confidence that may lead to more trouble in the future.

10-Year Yields:
Greece 11.04%
Portugal 5.74%
Spain 4.13%
Italy 3.90%
France 1.70%
U.K. 1.68%
U.S. 1.64%
Netherlands 1.56%
Finland 1.47%
Germany 1.20%
Japan 0.57%

Greece was over 12% about one month ago and now down at 11%, 100 basis points lower. Portugal was well above 6% only about three weeks ago, now 25 bips under 6%. Across the board, all yields have moved lower over the last month except the U.K. which is flat in the 1.6%-1.7% range. Spain is now down near the 4% level and Italy is under 4%. Germany is only a few basis points from its all-time historic low. Despite the lower yields, Europe remains highly challenged moving forward. Slovenia's rating was cut to junk yesterday. The Greece and Cyprus woes continue. The Italy election escapades continue as their debt escalates. Portugal and Spain remain troubled. Any changes to yields will be watched in light of the imminent ECB decision.

Keystone's Midday Market Action 5/1/13; FOMC Decision

The Fed decision is imminent.  SPX is 1586.18.  VIX is 14.49.  Commodities are getting crushed today; copper, oil, gasoline, steel, iron ore, gold, silver, any commodity on the screen.  Oil inventories are at historic record highs. 'No one need's that steenkin oil' since the global economy is slowing. The China HSBC number this evening around 10 PM EST is important in light of last evening's China data since it will either confirm the weakness, and further hurt commodities tomorrow, or not. The 10-year yield is down another tick to 1.62% sinking further into deflation.

Note Added 2:00 PM:  The Fed leaves the rates unchanged as expected. The 85 billion per month purchases continue until the labor market improves. The Fed may increase or reduce the purchases as the economy improves, or not.  Unemployment rate remains elevated. The committee sees downside risk. The Fed says inflation is below their targets but does not appear to address the deflation situation that Keystone has highlighted.  Market reaction is muted and does not know which way to turn.  Analysts are stressing the 'increase' word as a hint of more QE, as well as downside risk, so the bulls are hanging their hat on that.

Note Added 2:07 PM: So far, markets drop, then jump, then drop, now price is where it was seven minutes ago before the announcement. VIX is weaker at 14.24. TRIN 1.42. Bulls receive a tiny market lift but overall the Fed decision appears to be a non-event, so far. The 8 MA remains under the 34 MA on the 30-minute. The 8 MA is 1590 so watch this level since the 8 MA can only curl higher if the SPX moves above 1590. If the SPX stays under 1590, the bears should cruise into the closing bell.

Note Added 2:29 PM:  Look at VIX fall under 14 again, but, recovers. SPX is 1589.01.

Note Added 2:35 PM:  The Fed using the 'increase' word for QE does not appear to be helping the equity bulls. Perhaps folks are staring at Chairman Bernanke, with eyes bulging like frogs, for now they see the Emperor is not wearing any clothes. SPX 1588.05. VIX 14.15. TRIN 1.37. LOD is 1584.70 so watch that number.

Note Added 3:33 PM:  Markets are lower now than before the Fed.  SPX has a 1583 handle with a LOD at 1582.40 losing the prior low. VIX 14.53. TRIN 1.65. Dollar/yen 97.29 flatish all day long. The SPX, Dow and Nasdaq are all down -0.8% while the RUT (small caps) and Trannies (Transportation Index) are receiving beatings today both down -2.2%. The RUT and TRAN monthly charts printed a negative month for April yesterday so traders are throwing them overboard today. Utilities, UTIL, are down -1% experiencing a rare down day.

Note Added 3:52 PM:  The SPX prints a new LOD at 1581.28. FB earnings are on tap after the bell. Zuck is practicing his tap-dancing routine in front of the mirror. FB continues to develop the handle for a C&H on the weekly chart, the break out line is 32-33 that would take it back to the IPO price over time. The gap at 24-ish, however, were never filled.

Note Added 4:05 PM:  The bears win one today.  Maybe the NYMO chart identified the market top. AMD has a huge up day; that one finally played out with a happy ending for the long side, for those that were patient. Keystone was not and took a loss in AMD to start the year which now, only a few weeks later, would have been a nice profit. No sign of FB earnings; the stock closed at 27.47. Maybe Zuck is hiding under his desk.

Note Added 4:08 PM:  FB misses by a penny with top line revenue in line. What happened to all the growth? Traders must like it, however, with the stock trading up +2.5% AH's. FB is 27.92.  Whoops. Now up +1%.  FB is slipping on a banana peel.  There goes the upside print, now negative.  FB printing 26.95 losing a buck in about one minute.  FB is jumpy it will need time to settle out which will allow time for Zuck to come out from under the desk to see if the coast is clear.

SPX 30-Minute Chart 8 MA and 34 MA Cross H&S Pattern

The 8 MA crosses down through the 34 MA signaling bearish markets for the hours and days ahead. The Fed is on tap in minutes, will the bulls try to reverse the bear move and ruin the bear's day as usual? The black lines show an H&S in play. To keep the math simple, a head at 1597 and neck line at 1587 would target 1577 now that the 1587 ruptured. The 1576 is strong support so call the target 1576-1577. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Morning Wake-Up 5/1/13; ADP; ISM; FOMC

ADP Jobs Report is much weaker than expected. The weakness appears across most sectors; the construction jobs are higher but not to the extent as should be expected. This dampens optimism for Friday's Jobs Report. The 25 million folks out of work or underemployed have a continued difficult road ahead. The top line revenue misses for companies shows there is no growth to feed a recovery. Companies make the bottom line EPS by laying off workers or whipping the current ones to work harder, so the structural unemployment problem escalates. The S&P futures were up a couple, now flat, now down.  The SPX begins at 1598 and the bulls only need a smidge of green in the futures to create a move through SPX 1600 after the opening bell.  The market bears need to push under 1587 to create a downside acceleration. A move through 1588-1597 is sideways action. The 8 MA remains above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead so watch this cross closely today. The 10-year yield is 1.64% continuing to slide lower and creating more of a disconnect between the bond and stock markets. 

Volatility remains key. Watch VIX 14.00 again today to gauge market strength versus weakness. China manufacturing data was weak overnight, the HSBC number is this evening. China markets were closed due to holiday. Today is International Labor Day so the European markets are closed. On this May Day, protesters are taking to the streets in Greece and across Europe. Folks cannot celebrate Labor Day, the pride of having a job, if they do not have a job. Markets will pivot at 10 AM on the ISM Manufacturing data. The Fed statement is 2 PM which may be a non-event today. The Fed will stay the course and Chairman Bernanke may strive to not make waves. Keystone's Inflation Deflation Indicator continues to signal deflationary woes so this would bolster the idea of more QE, however, Bernanke must be aware of all the damage being done now with the easy money policies causing more harm than good. So look for a market pivot at 2 PM although the reaction may be muted as traders immediately focus on the more important ECB rate decision at 7:45 AM EST, less than 24 hours away. In a nutshell, VIX 14 and SPX 1598 and 1587 will dictate market direction.

Note Added 10:28 AM:  The weak ADP Report, weak China data causing the collapse in oil (-2.8%), copper (-3.2%) and commodities today, and the weak MRK and MA earnings all create a negative vibe today. At the opening bell, the VIX moves above 14 which creates the selling pressure. TRIN is 1.42 favoring the sellers today. ISM Mfg was lackluster at 50.7, above the 50% contraction-expansion level, but weaker than last month, and markets pivot downwards at 10 AM. The SPX 1586-1587 support level is important today and has held so far. The 10-year yield drops to 1.63%.

Note Added 11:18 AM:  Markets flat-lining with Fed less than three hours away.  VIX keeping its head above 14 helping bears.  The 8 MA is moving downwards to the 34 MA for a potential bearish cross on the SPX 30-minute chart.

Note Added 11:39 AM:  VIX comes down for a back kiss of the 14 level and it holds as support, for now, favoring bears. Use the VIX 14 level as a gauge for bullishness versus bearishness.

Note Added 1:42 PM:  VIX printing at the highs for today at 14.50. TRIN 1.59, firmly bearish.  SPX breaks under 1586-1587 so several more handles should give way. The 8 MA stabs down through the 34 MA on the 30-minute chart at noon time today signaling bearish markets for the hours and days ahead, however, the Fed is on tap shortly.

SPX Monthly Chart 12 MA Cross Overbot Rising Wedge

The SPX prints six consecutive months of upside. The mid-November bottom turns out to be a pivotal market turn.  The fiscal cliff resolution to begin the year, and the Fed and BOJ easing, as well as money that was fleeing Europe in January and February, all create the upside. The economic data and earnings show that a robust global recovery is not occurring. China is slowing down which is dragging down copper and commodities. The Transportation Index, a key bellwether, logged a negative month. Nonetheless, the central bankers are determined to pump equity markets and they are succeeding.

The red rising wedge remains in play. Price popped above in the latest upside orgy due to the BOJ easing. The weak yen has also created the recent optimism in Europe boosting bonds and equities. Negative divergence remains across the indicators. The RSI is in overbot territory and the recent oomph, along with the MACD line, may want to create an up and down jog move as the markets top out and roll over. Volume steadily trails off over time.

The 12 MA is one of Keystone's key cyclical market signals (reference the Cyclical Signals page) and the bulls have maintained price above the 12 MA for the last half year signaling a cyclical bull market in play.  The October-November 2007 top was verified when the SPX fell under the 12 MA.  The recovery in spring 2009 was verified when the SPX moved back above the 12 MA. QE1 created the 2009 bottom.  Markets faltered in 2010, dropping under the 12 MA, but QE2 saved the day. Then in 2011, failure again, but Operation Twist and the ECB's LTRO 1 and 2 saved the day. Then in summer 2012, failure again, but Draghi pledged to support the euro by all means necessary, following up with the OMT program, and Chairman Bernanke chiming in that he will save the markets with QE3 Infinity, saved the day.  Then failure at the 12 MA again in November, albeit briefly, since the QE4 Infinity and Beyond program, which replaces Operation Twist with outright purchases, saved the day last Fall. What a twisted sordid market it is, purely pumped by the Fed, BOJ and ECB central bankers. Projection is for markets to top and roll over to the 1400's as spring moves to summer. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

SPX, INDU (Dow), RUT (Small Caps) and TRAN (Trannies) Monthly Charts

The monthly charts all receive new prints since April ends yesterday. The SPX, Dow Industrials and Nasdaq all log another up month. The SPX is up for six consecutive months. The Dow is up for five months in a row.  The RUT small caps, however, perform an about-face and print a negative month. Small caps typically lead the broad markets.  The Trannies also print a negative month, another key leadership sector. The cross-currents and messy asset relationships, caused by the central banker interventions, continue. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

SPX Daily Chart New All-Time Closing and Intraday Highs

Yesterday, 4/30/13, the month of April closes out with new all-time highs. The prior closing highs are the blue oval at 1593.37 which was taken out on Monday with the higher closing high (green oval) at 1593.61. The prior all-time high was 1597.35 (red oval). The new all-time closing high and all-time high is 1597.57.  The bulls found 22 cents in the couch cushions squeezing out the higher all-time highs (brown oval). All these numbers remain as key support levels. Short-sellers gave up late day yesterday providing the short-covering fuel into the closing bell goosing the indexes over the top. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.