Volatility, copper and commodities are the key market drivers today. Watch VIX 13.12, JJC 41.76 and GTX 4800. Volatility is now helping the bulls while copper and commodities are in the bear camp. To keep things straight forward and simple, if the VIX stays under 13.12 and the JJC moves above 41.76, the bulls will rule the day and new all-time highs are on the way once again. If JJC stays under 41.76 and VIX moves above 13.12, the bears will have their turn. Copper was down a few hours ago but has strongly rebounded and is now running higher so that will send the JJC higher giving the bulls the nod. All Tuesday's are up days as well so the good news keeps on coming for market bulls. There is no economic data today so the HD earnings are key for setting the market tone and they hit the ball out of the park. This creates market lift especially since HD is a Dow component. As a rule of thumb, multiply any Dow component move by 8 and that is the contribution that stock makes to the Dow overall. For example, HD closed at 76.76 so say it moves up 4 today to 80.76. Thus, 4 times 8 is 32 so HD will create 32 positive Dow points today just on its own.
The 8 MA remains above the 34 MA on the SPX 30-minute chart signaling continued bullishness for the hours ahead but the 8 MA is curled over to the downside moving toward the 34 MA for a potential negative cross. The bulls need a strong upside open to curl the 8 MA upwards again and keep the drunken bullish party going. The 8 MA is 1668 so bulls win above 1668 and higher, bears win below 1668 and moving lower. SPX S/R is 1673, 1667-1668, 1661, 1649-1650 and 1633-1634. For the SPX today starting at 1666, creating a new all-time high at 1672.84 yesterday, but not a new all-time closing high, the bulls need to touch the 1673 handle and it is off to the races higher once again with the SPX setting sites on 1680. The bears need to push under 1664 to accelerate the downside immediately to 1661 support and likely lower. A move through 1665-1672 is sideways action today.
The bulls will sing a happy tune with JJC moving above 41.76 and SPX above 1673. The bears will sing a happy tune if the VIX moves above 13.12 and the SPX drops under 1664, which also would be in concert with Keybot the Quant flipping to the short side. At this writing, the futures are up a smidge and copper is moving higher, thus, looks like the bulls will at least start the day with Dr. Copper leading the way higher. The SPX hourly and minute charts continue to set up and display negative divergence so any new price highs should lead to weakness and roll over, however, if Chairman Bernanke or any Fed head so much as coughs, and it sounds like QE, markets will run higher. Boiling it down to the bare bones parameters, bulls win with with JJC above 41.76. Bears win with VIX above 13.12 and the 8 MA stabbing down through the 34 MA on the SPX 30-minute chart. The 10-year Treasury yield is 1.97% moving up from 1.95% giving the nod to the bulls today.
Note Added 9:59 AM: The bulls win the day so far with copper moving higher, however, JJC is dancing to and fro around the 41.77 bull-bear line so this drama will need to play out today. Ditto the VIX now at 13.01 only eleven cents under the 13.12 bull-bear line in the sand. Markets can go either way today. The 10-year yield is up a tick to 1.99% giving the bulls a thumbs up. HD is up 1.8 points so 1.8 times 8 is 14.4 so HD alone is responsible for 14 of the Dow 52 positive points today. TRIN is 0.92 helping bulls by a smidge. SPX HOD is 1671.99 one point from the 1673 that will create a stronger upside move. Markets may walk the tightrope created by JJC 41.77 and VIX 13.12 until the Fed heads provide direction today.
Note Added 3:09 PM: Volatility and copper rule the day today with lots of drama around VIX 13.12 and JJC 41.77. Keybot the Quant was a hair away from flipping short this morning but remains long. Keybot is in position to go short right now but the internal programming rules are not lining up properly to trigger the short side. VIX is above 13.12 and JJC is under 41.77 so both are in the bear camp causing market negativity. Keybot will flip short if the SPX drops under 1663 and holds it for five minutes, otherwise, Keybot will remain long through the closing bell. TRIN is 0.95 favoring bulls by a smidge. The 10-year yield drops to 1.94% so the slight move lower in yield is equity bear friendly. The SPX touched the 1673 handle which popped price to a new all-time high at 1674.93 before retreating. An upside acceleration should occur once 1673 was touched but has not, as yet, so this hints that the upside may be running out of gas. Watch VIX 13.12. Bears need to move under 1663 or they will fall short again after having the markets delivered on a silver platter today. The Fed saved the day again; Bullard in the morning when the markets were tanking, and Dudley in the afternoon to add the gusto for the SPX to print above 1673 since both are pumping the virtues of QE. The 8 MA remains above the 34 MA on the SPX 30-minute chart continuing to give the bulls the thumbs up for the hours ahead.
Note Added 3:23 PM: JJC 41.42. VIX 13.27. GTX 4729. TRIN 0.96. SPX 1671.47. The bears are set, all they need is the SPX to drop under 1663 to change the market trend.
Note Added 3:50 PM: JJC 41.38. VIX 13.33 showing upside spunk. GTX 4730. TRIN 1.05. SPX 1669.14. The 10-year yield is 1.93%. Bears are not pushing hard enough. Tuesday's remain bull-friendly again.
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