Friday, August 1, 2014

Keystone's Morning Wake-Up 8/1/14; Monthly Jobs Report; Consumer Sentiment; ISM Mfg Index

At 8:30 AM EST, the Monthly Jobs Report is 209K jobs and an unemployment rate of 6.2%. The consensus was 233K with a range between 200K and 280K. Many traders were looking for 220K so the number is on the weak side less than expectations. Last month the markets celebrated the 288K blowout jobs number. The unemployment rate is 6.2% compared to last month’s 6.1% and the 6.1% expectation so detractors on the economy will say the unemployment rate is rising, which is correct, while the cheer leaders for the economy will say that the jobs numbers above 200K for six consecutive months prove a sustainable recovery is underway, which is correct.

Digging deeper, the labor participation rate increases a single hair from 62.8% to 62.9% remaining at multi-decade lows. People cannot find jobs and have given up. Average hourly earnings and the average hours worked are flat so traders feel no pressure to higher workers. Wage growth remains absent and does not agree with yesterday’s Employment Cost Index data. Inflation cannot exist without rising wages. The absence of inflation indicates that the five-plus year Keynesian policies by the Fed are failing. Personal Income and Outlays data show a +0.4% increase in Personal Income as expected and a +0.4% increase in Consumer Spending in line with expectations.

The 10-year Treasury yield drops from 2.58% to 2.53%. US futures improve towards the flat line after the Goldilocks (not too hot not too cold) jobs number. Fed’s Fisher calls for rate hikes sooner rather than later but he is a hawk so this comment is expected. At 8:48 AM, US futures are positive albeit at the flat line so the jobs data create a 12-point bounce in the S&P’s. The economy shows a rise in the unemployment rate with flat wages so the Fed will remain comfortable in providing easy money accommodation so stocks rally. The 10-year settles in sideways at the sticky 2.55% S/R level over the last couple days.

Markets will pivot at 10 AM-ish on the Consumer Sentiment and ISM Mfg Index data. A relief rally is expected as discussed in this mornings charts due to the uber low -2600 NYAD print. Overall, however, using the NYAD weekly chart, a more tradeable bottom may still be 1 to 4 weeks away. For nimble traders, the relief rally may offer a short term trading opportunity. If remaining short, pay attention to the 200 EMA on the 60-minute chart at 1963-1965 level which can be used as a stop against the short. The SPX is under the 200 EMA on the 60-minute at 1964.51 signaling bearish markets for the hours and days ahead. Market bears are on easy street beating the bulls with a baseball bat as long as the SPX stays under the 1963-1965 level. Above SPX 1963, and the market bulls will regain control and mount a very strong recovery rally. Note that the RUT 150-day MA slope is now dropping negatively for 3 consecutive days indicating the start of a cyclical bear market for stocks (scroll backwards to reference the previous RUT chart or type 'RUT' into the search box).

Utilities must be watched closely moving forward. Type 'UTIL' into the search box at the right to bring up the prior charts to come up to speed with using the utes as a forecasting tool. The closing price for utilities, UTIL, 15 weeks ago, is very important and programmed into Keybot the Quant, Keystone's trading algo. This week, only applicable for today, the UTIL number to watch is 543.00. More importantly, for all of next week, the 15-week look-back number is 551.66. UTIL begins today at 541.82. Therefore, if markets recover, watch for UTIL 543 which will verify that the relief recover rally bounce is underway. If UTIL stays under 543 the selling pressure will remain in equities. At the 4 PM close check UTIL to see if it is above or below 551.66. Below and market weakness will continue into Monday while a recover in utilities today above or near to the UTIL 551 level will indicate that Monday will set up rosier for the market bulls.

Keystone bot ARO yesterday opening a new long position and continues to like Aeropostale as a long-term long play as well as a nice trading stock on the long side. ARO shows nice positive divergence on the charts. Ditto AEO and COH so these retail stocks are worth a look on the long side as well. Keystone also bot DCTH opening a new long position which is an extremely dangerous and speculative long play. Positive divergence is in play for Delcath but this company can be here today gone tomorrow.

Note Added 9:33 AM:  UTIL is 542.42 moving higher to test the 543 as described above. Equities begin on the negative side.

Note Added 9:41 AM: Whoa. UTIL takes the 543 level but is spanked back down by the bears now at 541.64. Equities recover to the plus side but will not stage much of a comeback if UTIL stays under 543. Use the UTIL 543 as the rudder steering the market directional ship today. Bulls need UTIL above 543 otherwise more pain is likely. TRIN is 0.81 favoring bulls.

Note Added 10:02 AM: Consumer Sentiment is lackluster at 81.8 but can easily keep the party going. The ISM Mfg Index is a robust 57.1. Stocks rally and are firmly positive on the day. TRIN 0.80. There you go. UTIL 543.72. See if this piercing through 543 holds, if so, the recovery rally is verified for today. Bears need to push UTIL under 543 in the minutes ahead to resume the downside selling.

Note Added 10:04 AM: UTIL 544. SPX is 1937 now up 6 points. UTIL 543.93 ... 543.87 .....

Note Added 10:51 AM: Pay attention to UTIL 543 and 551.66 today. UTIL is now printing at 543.11... whoopsies daisies .....now UTIL drops under 543 to 542.79, this saga will likely continue today.

SPX 60-Minute Chart 200 EMA Cross Falling Wedge Oversold Positive Divergence Developing

Stocks are bludgeoned with price dropping into the green falling wedge (a bullish pattern). Price loses the 200 EMA at 1964.51 ushering in the market mayhem as forecasted in the prior chart. The market bears will slap the bulls silly day in and day out--unless the SPX recovers above the 200 EMA. Price is violating the lower standard deviation band so a move back to the middle band, at 1961.49 and dropping, is expected at a minimum going forward. There is strong S/R over the last day at 1942-1943 so it is reasonable to expect a recovery bounce to this level especially with the uber low NYAD.

The indicators are oversold and stochastics and money flow are positively diverged which will create the initial bounce. The falling wedge also points to a relief rally near. The RSI, histogram and MACD line, however, are weak and bleak so a lower low in price would be anticipated after the initial bounce. The indicators should then set up with possie d across the board leading to the recovery move to 1943 then to the 1955-1961 area. The SPX would be expected to place a near-term bottom today so traders can catch their breath. Bears rule the markets for the hours and days ahead as long as the SPX stays below the 200 EMA at 1964.51. The market bulls will regain control above the 200 EMA.

Due to the critical importance of the 200 EMA on the 60-minute, a back test is definitely expected either today or Monday where price will either bounce or die. With the 200 EMA drifting lower at 1964 a serious battle zone is in place at 1955-1965. Bears win big if they remain under 1955 into early next week. Bulls will recover and slap bears in the face if they move above 1965. 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.

NYAD NYSE Advance-Decline Weekly Chart

The advancers-decliners plummet yesterday to a multi-year low indicating that there was indiscriminant selling yesterday. The baby, the bath water and the kitchen sink were all thrown out the window. Decliners are off the chart and advancers are few creating the drastic drop to -2600. A NYAD above 2000 indicates a market top is coming soon while a sub 2000 number indicates a market bottom will be coming soon.

The prior stock market bottoms (signaled by green circles) all occurred from 1 to 4 weeks after the low NYAD print and leaning more to the 2 to 3 week range. Thus, a market bottom would be anticipated in mid to late August. In the meantime, markets will want to bounce off the low NYAD so a relief rally is expected but markets should pulse lower making new lows for several days and perhaps 1 to 3 weeks forward where the tradeable bottom should occur. 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.

BPSPX Bullish Percent Index Triggers Market Sell Signal

The BPSPX confirms the stock market rally through May and June into the July top. The BPSPX peaks at 84.60-ish so a six percentage-point reversal will trigger a market sell signal and confirm that down is the new trend direction. The 78.60 level failed yesterday triggering the market sell signal. The next step for the BPSPX is the critical 70% level. A drop under 70 triggers the double whammy market sell signal and firmly guarantees far lower equities going forward. The market bulls can limit the downside damage as long as they prevent 70 from failing. The bears rule the markets if 70 collapses.

The bulls can save the day with a six percentage-point reversal to the upside with BPSPX moving from 76.40 to 82.40. Thus, the bulls and bears are in a battle now in the 70.0-76.4 range with the Monthly Jobs Report number imminent. Bulls win above 82.40. Bears win big with BPSPX under 70 since this will begin locking in a far longer and more sustainable market correction of weeks and months. Type 'BPSPX' in the search box at the right to bring up the prior charts for further study with this technique of forecasting. 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.

Wednesday, July 30, 2014

SPX 60-Minute Chart 200 EMA Cross Downward-Sloping Channel Falling Wedge Oversold Positive Divergence Developing

We watched the neggie d form a couple weeks ago (red lines), with the rising wedge and overbot stochastics all forecasting a spank down, which occured. Price is now dropping into the falling green wedge with oversold stochastics and possie d for the histogram and money flow. The RSI is a toss-up printing a matching low as price dropped but that would be deemed positive divergence. The RSI did not reach oversold territory so that is on the table still yet.

Keystone's two key ST market signals are the 8/34 MA cross on the 30-minute (see previous chart) and the 200 EMA cross on the 60-minute. The SPX failed the 200 EMA at 1966.14 this morning ushering in bearish markets for the hours and days ahead, however, the bulls fight back and now are maintaining price above the 200 EMA signaling bullish markets for the hours and days ahead. Market bulls must send price strongly higher immediately or they are in for some significant pain ahead for days and weeks under 1966.14. Price is perched exactly at the 1966.14. Bounce or die.

Bulls are okay and equities will recover going forward as long as SPX price stays above 1966.14. Market mayhem will begin in earnest if the SPX drops under 1966.14. The indicators hint that even though a recovery bounce should occur, lower lows in price are desired afterwards so the stochastics and MACD line can set up with positive divergence. The Fed statment is only one-half hour away so it is folly to make too much of a guess on direction. Whatever the Fed says is going to send markets wildly one way or the other. Watch the 200 EMA cross at 1966.14 since it tells you who wins, and who loses, moving forward. 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 1:30 PM: SPX 1964.68 falling under the 200 EMA on the 60-minute at 1966.14. VIX 13.83. RTH 59.76 safely above 59.62. TRIN drops to 0.73 which is very bull friendly. Fed statement is on tap in 30 minutes. The insider's are likely receiving the information ahead of time right now. Utilities are collapsing today and will require more attention going forward. Type 'UTIL' in the search box and study previous charts since the weekly closing price for UTIL 15 weeks ago, and the 50-week MA, will become extremely important going forward; utes are an excellent forecasting tool.

Note Added 1:35 PM: SPX 1966.37 above the 200 EMA on the 60-minute at 1966.14. Easy come easy go as the big fight at the 200 EMA continues. Have to wait until after the Fed statement to see where she wants to go. One side is going to be very happy and the other very sad depending on how price pivots from SPX 1966.14.

Note Added 1:42 PM: SPX 1966.01.

Note Added 1:44 PM:  SPX 1967.03. TRIN is 0.73 strongly favoring bulls today so the Arms Index is a big help for the bulls allowing them to keep equities elevated. VIX 13.68. RTH 59.80. The 10-year yield is 2.56%. Dollar/yen 102.92 up one handle over the last day a huge currency move. Stronger dollar thwacks commodities. GTX down -0.6%. Higher yield on 10-year buoys financials, tech and consumer discretionary while hurting utilities, consumer staples and homebuilders. UTIL -1.8%. XHB puking -0.8%.

Note Added 1:56 PM: SPX 1966.60 at the 1966.14 pivot point. Bounce or die. Who will win? The Fed decides who wins.

SPX 30-Minute Chart 8/34 MA Cross

The bears create the negative 8/34 MA cross on the SPX 30-minute chart by only twenty cents at the end of yesterday's session signaling bearish markets for the hours ahead, however, the GDP is a blowout 4.0% and futures are catching a strong bid, so the bulls want to turn the negative cross into a positive 8/34 cross and seize back control. Price pierced the lower standard deviation band at 1972 so a move back to the middle band at 1978 at a minimum would be expected going forward.

The indicators are weak and bleak (red lines) wanting to see lower lows in price after any bounce in price occurs. The stochastics are oversold which will help create the price bounce higher at the opening bell. Key S/R is shown by the brown lines at 1986, 1985, 1980, 1976, 1973, 1968, 1963, 1961 and 1960. Depending on how the price action settles out today a sideways path through 1968-1986 may develop. The FOMC announcement is 2 PM which will impact markets. Watch the 8/34 cross today. Bears are fine if the negative cross remains. If the SPX stays below the 1985-1986 resistance today, the bears could maintain control. If the SPX starts moving above 1985 the bulls are likely going to run to new all-time highs.

Keybot the Quant algo is bearish currently and VIX 12.69 is a major bull-bear line in the sand. As markets rally to begin the day, if VIX stays above 12.69 the bears are fine and markets will weaken and sell off. If the VIX drops under 12.69, the bulls have upside fuel available and markets will continue higher. If both the VIX moves below 12.69, and the SPX moves above 1985, Keybot will likely flip to the long side. Today should be a wild day. 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 12:52 PM:  It is a wild day. Big up move at the opening bell but you saw the VIX above 12.69 and heading higher off the initial lows so you knew that equities would weaken and sell off which they did. VIX is now above the 200-day MA at 13.57 which is extremely bearish. Carnage will result if the VIX stays above 13.57. Reference previous VIX chart to study volatility. The key market bull-bear lines in the sand that are influencing broad market direction are VIX 12.69 and RTH 59.62. Bears need RTH under 59.62 but the bulls are maintaining the retail stocks above with RTH at 59.73. Equities will sell off in force if RTH loses 59.62. The market bulls can recover if the VIX drops under 12.69. If the bulls can simply keep RTH above 59.62 this will stop the downside selling and prevent the bears from making significant headway lower. The 8 MA remains under the 34 MA on the SPX 30-minute signaling bearish markets for the hours ahead, however, the 8 MA is 1968 and price is creeping higher towards 1968 which would curl the 8 MA higher. The Fed statement is 2 PM one hour away so markets are idling waiting for the reading of the tablets brought down from on high. Watch VIX 13.57 and VIX 12.69 and RTH 59.62 to gauge market direction forward.

Tuesday, July 29, 2014

RUSSELL 2000 SMALL CAP INDEX 150-DAY MA SLOPE TURNS NEGATIVE SIGNALING THE START OF A CYCLICAL BEAR MARKET

The RUT 150-day MA slope highlighted here over the last three weeks finally rolled over today. This is a major market event. The 150-day MA has sloped higher for over two years correctly prognosticating the cyclical bull market rally, until today. Yesterday's 150-day MA is 1154.09; today's is 1154.05. The slope of the 150-day moving average now falls by four pennies turning negative for the first time in years. As the astronauts said decades ago, "Houston, we have a problem." The bears pop champagne corks since the long awaited major market multi-year pull back and potential negative finish to the secular bear market 2000-2018 has likely begun.

The green box shows the slope of the 150-day MA moving higher as it has for month after month after month continually verifying the cyclical bull market rally, until today. The only way bulls can stop the failure is to jam markets higher immediately beginning tomorrow. The remainder of trading this week could not be any more important. If bulls plan on maintaining the cyclical bull rally, they must send markets strongly higher from now into the weekend. If the 150-day MA prints negatively tomorrow (Wednesday), then Thursday, and also Friday, the small caps are lost and the broad indexes will follow the small caps lower; markets will break down. This is an important day in market history for you are witnessing the exact inception of a cyclical bear market for the RUT index. We will know over the coming days if it sticks and is official moving forward. Keystone uses the 150-day MA slope on the SPX as the 100% confirmation that a cyclical bear market is occurring and worsening and the RUT 150-day MA slope rolling over paves the way forward for the SPX to follow in the future. 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.

Monday, July 28, 2014

VIX Volatility Daily Chart 200 MA Cross

Volatility jumps higher today above 13 but is languishing on each side of this psychological 13 number. As a rule of thumb for the VIX using it as a tool, market carnage is guaranteed with the VIX above its 200-day MA now at 13.60. The market bulls can make a come back and recover if they can keep the VIX under the 200-day MA. Note that eight days ago price ran above the 200-day MA but it was a one-day event. Keystone described the market selling then as a volatility event. No meat and potatoes sectors had rolled over so once fickle volatility dropped markets would recover and that is what happened. Since late last week, however, for this recent three-day market sell off, volatility moves higher but this time with a semiconductor sector that has broken down and a weakening retail sector. Note that the VIX ran higher today to test the 200-day MA printing a HOD at 13.64 but it could not stay above and was spanked lower.

Keybot the Quant remains short with RTH 59.62 and VIX 12.70 the key bull-bear lines in the sand that control market direction currently. Both are bearish, but only by pennies, hence the broad indexes stagger sideways unwilling to commit either way. These two parameters will point the way ahead. RTH is printing at 59.59 only three pennies on the bear side causing market negativity. VIX is 12.99 bearish by 29 cents (remember volatility moves inversely to equities).

The VIX 12.70 line is identified by Keystone's algorithm, Keybot the Quant. So use the 12.70 level and 200-day MA at 13.60 as the two key indicators on this chart. Markets will remain weak and drift lower with the VIX above 12.70 and bears win big above 13.60. Equities will recover and move higher if VIX drops under 12.70. The red lines above encompass the 200-day MA over the last few months, all of this year, so use the 13.6-14.5 range as a key resistance area for VIX. Market trouble occurs above VIX 13.60 and serious trouble, with the SPX dropping into free fall when VIX moves above 14.5. The VIX is printing at 12.95 as this message is typed. The RTH is 59.58. The SPX is down barely three points to 1975.75. 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 1:26 PM: The RTH moves higher to 59.65 above 59.62 so equities will recover today and move higher. VIX is 12.82. A big rally will occur if VIX drops under 12.70. Bears will resume selling pressure if RTH drops under 59.62.

Note Added 1:31 PM: RTH 59.64. VIX 12.80. SPX 1977.56. TRIN is at 1.20 representing a preference for steady-eddy selling today so if the Arms Index had its way it wants to see RTH, the retail sector, weaken again.

Note Added 1:55 PM:  The market price action displays more drama than a Shakespearean play; comedy and tragedy all at the same time. The VIX drops under the 12.68 bull-bear line in the sand (use this number instead of 12.70--Keybot is constantly calculating numbers in real-time) creating a further move higher in the stock market. The bulls recover today meeting the RTH 59.62 and VIX 12.68 goals. Keep watching these levels since the movement above or below these two key levels for these two parameters will tell you which way the market is going.

Note Added 1:58 PM: RTH 59.68. VIX 12.67. SPX 1980.49. TRIN 1.27. The beat goes on. Keystone took profits on the JJG trade exiting the long position. JJG likely has some more near-term juice (days) but is tricky since the weekly chart remains weak. No use turning down a profit and moving on especially after catching the exact bottom.

Note Added 2:06 PM: The VIX back kissed the 12.68 critical level and failed now at 12.61 so the bulls may plan to run further today.

Note Added 10:36 PM: The VIX ends at 12.56 in the bull camp sticking a thumb in the bear's eye. The bears, however, declare victory by pushing RTH back under 59.62 which created the broad market weakness into the closing bell during the last one-half hour of trading. So Tuesday is very simple. Watch VIX 12.69 and RTH 59.62 to determine market direction. Bears will rejoice as equity markets crumble if the VIX moves above 12.69 and above 13. Bulls will toast victory ahead if they push RTH above 59.62. If VIX stays under 12.69, and RTH remains under 59.62, then markets stagger sideways like the town drunk unable to make a decision. The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead, however, the 8 MA is running upwards, and the 34 MA is dropping downwards, so a potential positive 8/34 MA cross may occur placing the bulls back in charge. The 8 MA on the 30-minute is 1978 so the bears must send SPX price under 1978 and lower immediately after the opening bell to stop the 8/34 positive cross from occurring. If the SPX begins the day hanging around 1979-1983, say for the first hour of trading, markets are going to head higher and RTH will likely turn bullish. If the bears push the SPX lower from the get-go, under 1978 and down towards 1967, the long-awaited sustainable market selling event may be at hand with the VIX moving above 12.69. As explained and highlighted in the above chart, the VIX 200-day MA is key. Bears need VIX above the 200-day MA at 13.60 to growl strongly and guarantee sustainable market carnage. If the VIX stays under 13.60, the bears got buptkiss. Dollar/yen is buoyant at 101.88 moving higher so the weaker yen creates lift in the NIKK tonight and will help the bulls tomorrow. Market bears want to see the dollar/yen lower to 101.80, 101.70 and lower. Market bulls want to see the dollar/yen higher above 102. Use the 101.88 as a reference to see who wins overnight.

Note Added 11:04 PM: Scroll back to the RUT chart or type 'RUT' into the search box at the right to bring the chart up and study the 150-day MA slope cyclical indicator that is explained. For any stock or index, the slope of the 150-day MA tells you if the stock is in a cyclical bull, or cyclical bear, pattern. The RUT has enjoyed an upward-sloping 150-day moving average for many long months but in recent days the slope is flattening and may roll over. If the RUT 150-day MA slope rolls over to a negative slope you are witnessing the exact inception of a cyclical bear market that may last months or a year or two. The last four days result in the following 150-day MA prints for RUT; 1153.67, 1153.92, 1154.00 and 1154.09. The differences are 25 cents, 8 cents and 9 cents. Wow! This is intense and very important; one of the most important things you will witness. The 150-day MA slope is only 8 or 9 pennies from slipping negative for the Russell 2000 Small Cap Index. Obviously, by definition, if price continues printing under 1154.09, this will drag the 150-day MA lower to make for happy market bears. If you see the RUT starting to run higher tomorrow and this week, above 1154.09 the fix is in and the bears will get slapped in the face again as markets run to the all-time highs. It is a huge deal if the RUT 150-day MA slope turns negative; it cannot be understated. It would mean that all the bullish prognostications on the market are wrong. Watch it like a hawk.

Note Added 10:04 PM on 7/29/14: VIX regains 12.69 and higher creating market negativity. VIX is 13.28 and the 200-day MA is 13.58. Bears need thirty cents more to move VIX above 13.28 which will unleash market carnage. Bulls can stage a recovery if they prevent VIX 13.58. Note that the RUT 150-day MA is 1154.05. Bingo. Bears pop champagne corks after being kicked in the teeth for months, and years on end. The RUSSELL 2000 SMALL CAP INDEX 150-DAY MA ROLLED OVER TODAY PRINTING A NEGATIVE SLOPE FOR THE FIRST TIME IN OVER TWO YEARS. The CYCLICAL BULL MARKET NOW TURNS INTO A CYCLICAL BEAR MARKET. The expectation is that the small caps will roll over much more going forward and the Nasdaq and broad indexes will follow along lower each index then rolling over with its 150-day MA turning negative in the days, weeks and months ahead. The bulls must reverse this major negative market signal immediately and the only way they can is to drive markets sharply higher starting tomorrow. Bulls need a big rally to save the day and turn the RUT 150-day MA slope positive again.

Friday, July 25, 2014

Keybot the Quant Turns Bearish

Keystone's trading algorithm, Keybot the Quant flips back to the bear side at SPX 1975 today. The collapse in semiconductors is a big deal. SOX 624 will be important at Monday's opening bell. Volatility and retail are also important for next week. As always, stay alert for a whipsaw on Monday but the bulls will need happy news and positivity in chips to regain the upside mojo. More information is found on Keybot's site;

Keybot the Quant

Keystone's Midday Market Action 7/25/14

The market drama continues. Semiconductors suffer a serious breakdown today. The news on chips has been weak over the last couple weeks. SOX collapses to a 619 handle. Keybot the Quant remains long but is in position to go short in part due to the weak semi's. Keybot is only hanging on to the long side by a thread and the algo will likely flip to the short side if the SPX drops under 1979 and holds this lower level for about five minutes time. The SPX is currently 1981.

If the SOX recovers today from 620 up to 622 and higher, equities will recover. Keybot the Quant identifies the SOX 624 level as a bull-bear line in the sand. SOX collapsed under 624 at the opening bell and this is what creates the majority of market directional weakness today. If the SOX drops further through 619, 618, etc..., the stock market will be falling like a stone. The VIX is 12.12 helping the bulls. Keybot identifies VIX 12.95 as the bull-bear line in the sand. Thus, the markets will fall apart if the VIX moves above 12.95. If the bulls can send the SOX steadily higher into the closing bell and keep the VIX tame at 12.12, equities will stabilize and float higher into the weekend. Any weakness in SOX or increase in VIX will send equities lower.

Interestingly, as this missive is typed, the SPX recovers to 1983 but the SOX remains flat across 619.49. VIX is 12.07 so the slight drop creates market lift. TRIN is 0.75 firmly bullish so it will help the broad indexes recover. Dollar/yen 101.82 dropping from the 101.90 plus highs only an hour or two ago so a stronger yen creates market weakness. The 10-year yield is 2.48% after teasing a hair above 2.50% earlier.

Keystone bot JJG opening a new long position. This long trade requires a nimble touch since a positive divergence bounce is expected from the daily chart but then weakness should return via the weekly chart. So perhaps a launch and gain of a few percent will be good enough to exit the trade quickly and move on. Reference previous chart on JJG a few posts back.

Note Added 10:36 AM: SOX 619.68. VIX 12.04. TRIN 0.76. SPX 1982.43The 8 MA stabs down through the 34 MA on the SPX 30-minute chart at the opening bell today signaling bearish markets for the hours ahead.

Note Added 5:51 PM: SOX 616.65 so semiconductors knock stocks lower. VIX rises to 12.69 but the bears need another 26 cents or so to create mayhem. TRIN came up to 1.03 a single hair on the bear side as the day worked out. Retail stocks are weak and will play a key role next week. The main market directional drivers currently are semi's, volatility and retail stocks. Listen for any news in chip land or retail land over the weekend. Dollar/yen 101.82 remaining steady during the session so equities remained steady. Keybot the Quant flips to the bear side today at SPX 1975 at the lows of the day. The new moon occurs tomorrow and stocks are typically weak moving through the new moon. The Russian sanctions play a key role in markets now. When the threat for the deeper Level Three sectoral sanctions is on the table stocks drop when the fear of sectoral sanctions subside, stocks move higher. Germany is getting whacked on sanction concerns. Late in the day the rumor mill says stronger sanctions are coming early or mid next week.