Short and sweet today. Watch VIX 15.79, XLF 15.77 and RTH 44.35. The VIX is contributing bearishly to markets, the XLF and RTH are contributing bullishly. Thus, the bulls need to move the VIX under 15.79 so they can regain mojo. The bears need to push either the XLF under 15.77 or the RTH under 44.35 to accelerate the market selling and likely push down thru the 200 EMA at 1411 on the 60-minute chart as discussed this morning in the prior post. Also watch the 50-day MA at 1415.73.
For the SPX starting at 1419, the bulls need to punch up thru 1431 to accelerate the upside. The bears need to push under the strong 1416 support to accelerate the downside. A move thru 1417-1430 is sideways action. CPI data hits in a few minutes. The fiscal cliff drama continues today. If the XLF or RTH fails as described above, and the SPX is under 1416 and dropping, Keybot the Quant will flip short. If the XLF and RTH remain in the bull camp all day long, then Keybot will likely remain long.
Note Added 12/14/12 at 12:03 PM: The 1416 support held all morning long, giving way a short time ago to print the 1413.44 LOD but now the price runs higher again back kissing the 1416 that perhaps becomes resistance now. The SPX is attacking the 50-day MA at 1415.14. The VIX remains in the bear camp and RTH and XLF in the bull camp so this promotes the sideways malaise in the markets. The TRIN is 0.90, under 1.00 favoring the bulls even though the indexes are negative. AAPL drops towards the 505 low after UBS cuts its rating. Remember the AAPL weekly chart with the long-term H&S pattern and 520 neckline. Apple is in trouble right now and has to start moving up fast or it will lose its grasp with the 470's on their way. AAPL LOD is 507.66. The Apple LOD on 11/16/12 is 505.75 so this is where the real drama would begin in the markets today should the bears decide to poke down thru 505.75. Apple dropped like a stone today and created an island at 516 and lower, so obviously 516 is important resistance now.
Note Added 12/14/12 at 12:37 PM: The SPX regains 1416 and uses it as support. Some Friday market buoyancy may creep in as the afternoon moves along. The euro is 1.3170 testing the high from September right now, this is very important. The upper BB is 1.3183 also adding to the drama. Very simply, the market bulls win big if the euro moves higher thru 1.3190 and onward to 1.32. If the euro runs out of gas here and reverses, dropping down thru 1.3160 and lower, the bears win big since down euro = down equities. This will likely need to play out thru Monday. AAPL is keeping its head above water right now but it still has a long way to swim to shore today.
Note Added 12/14/12 at 3:08 PM: The SPX finally receives the downside acceleration under 1416, now printing 1412, under the 50-day MA and attacking the 200 EMA on the 60-minute chart at 1411.41. The euro fell under 1.3160 so this helps the bears. The VIX is over 17. XLF and RTH remain elevated, however. SPX 1412.06, 1411.88, ..... well, bears, do you got what it takes? A drop thru the 200 EMA changes things and creates much stronger bearishness moving forward. Apple just tested 506 punching out a lower low today at 506.40 only 65 cents away from the low in November. The tension mounts. Looks like some drama into the close after a long sleepy day.
Note Added 12/14/12 at 3:38 PM: The SPX bounced off the 200 EMA. The XLF and RTH remain elevated so the bears do not have the juice today. The fight into the close should revolve around the 50-day MA at 1415.12. The SPX is now printing 1415.07.
Note Added 12/14/12 at 3:47 PM: Keystone took profits on the DRYS long trade exiting the position. Will look to reenter but that kind of jump could not be passed up to lock in profits. Also bot EUO opening a new long position which is short the euro. Also selling EWG opening up a new short position which shorts Germany.
Note Added 12/14/12 at 3:56 PM: Apple held on. The SPX is under the 50-day MA but above the 200 EMA reflecting the ongoing indecision and mixed signals. The 10-year yield moved lower to 1.70%. VIX at or over 17. SPX 1413 support is important. Euro is 1.3155. Keystone bot more EUO. Traders finish up the weekend only to run home to practice their coin-flipping to prepare for next week. Speaker Boehner is in Ohio with his feet up on the ottoman next to the Christmas tree. The president is busy planning activities for the Hawaii vacation only days away. What fiscal cliff? They do not appear worried. Don't worry, be happy is the trader mentality, complacency rules.
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