The Keystone Speculator™

Keystone's Midday Market Action 3/5/12

2012-03-05T11:45:00.011-05:00

The bears came to play today, that was apparent from the futures overnight. China lowered its projected growth rate to 7.5%, now under the coveted 8% and higher that held for many years. The news hurts commodities such as copper and is creating market weakness. In addition, with growth rate under 8%, China social unrest is a major worry moving forward. The dynasty's each ended in wild riots and mayhem typically brought on by short term food inflation. China car sales are decreasing as well.

So the bears received a little help from China to start the week off. SPX 1366 was key so as all of you saw that fail, you knew several handles lower was on tap. The LOD thus far is 1359.13. Interestingly, referencing Keystone's SPX S/R, 1361 and 1358 are targeted as support levels. The SPX is now teasing 1361. Thus, by puncturing well under 1361, the test of 1358 should come. More importantly at these levels, the 20-day MA is 1358.02. There you go, serious street cred for 1358 today; a big battle at 1358 should occur and one side will win, the other will lose.

Volatilty is spiking, VIX is printing 18.53, here we are back at the saga where the VIX is fighting to hold the 20-day MA at 18.39 as support. Bears win today iwth VIX above 18.40, bulls win today with VIX under 18.40. The Nasdaq is leading the broad markets lower which gives the move credibility. AAPL is receiving the negative divergence slap down that Keystone has projected in the charts the last few days. This subtle weakness in Apple thus far sees a 10 handle loss on the SPX, just think what it would look like if/when AAPL starts cooking to the downside. AAPL weakness obviously creates the overall tech weakness which provides bear fuel to push markets lower. Keystone's SPX:VIX Ratio Indicator is at 73, well above the critical 68 level, so the bulls continue to hang on.

There is a situation with semiconductors, SOX, today. Watch SOX 410.35, price came down to tap it today and now is less than a point above. All Hades will break loose in markets if SOX loses 410.35.

Note Added 3/5/12 at 21:31 PM: SOX fails. Markets are in trouble, the last thing holding it together is SPX 1359, if that fails, the broad markets will extend the downside substantially. If 1359 fails, price will likely stab thru 1358 support as well as the 20-day MA. Lots of drama on tap now.

Note Added 3/5/12 at 12:49 PM: High drama today. Watch SOX 410.10 and SPX 1359.13, these two characters will tell you everything you need to know today. Bears are winning with SOX, bulls winning with SPX currently. Whichever side pulls the other over, that side will win today. The bears have it in their grasp right now, do they have the strength to get the job done today? Keybot the Quant, Keystone's proprietary algo, is on the verge of going short, but, not yet, if SPX 1359 is lost, however, Keybot (at the left margin) will likely go short. Buckle up, hang on tight, and keep your hands inside the car, this afternoon may become dramatic.

Note Added 3/5/12 at 2:37 PM: The standoff continues. The bears are happy keeping the SOX down under 410, and as this is typed, SOX now has a 408 handle. But, the market bulls are not giving up the ship yet. The SPX teased 1359 at 1 PM but recovered. If SPX drops under 1359.13, substantial down side should kick in for the broad markets. The drama continues. SPX now printing 1362 after a goofy pop to 1363 that only lasted a few minutes. The broad markets are erratic and unstable. Further AAPL weakness will kick in the down side as well.

Note Added 3/5/12 at 4:17 PM: The bears had enough juice to push the semiconductors into the bear camp today to create broad market weakness, but, when it came down to laying it on the line and pushing down thru 1359, the bears folded like a cheap suit. No reason the bears cannot thrust lower tomorrow, since the markets will pick up where they left off. Tomorrow's main event will be SOX 410.10 and SPX 1359.13 which will determine broad market direction moving forward. The bears have semi's in their camp but the bulls have the SPX in their camp. Both sides will rest tonight and tomorrow one side will win. The importance of the semiconductor sector collapsing lower today cannot be understated. The SOX dropped 2.6% today and this is a significant market event, and obviously, a huge feather in the bears cap. It is only a game of pennies so focus on the SOX at the open tomorrow, it is the most important thing to watch, SOX 410.10. This evening's close is 409.65.

JNK High-Yield Junk Bonds Daily Chart Overbot Rising Wedge Negative Divergence

2012-03-05T11:11:00.000-05:00

The junk bond daily chart shows a textbook blue rising wedge which is bearish, as well as the overbot conditions and the negative divergence (blue lines). This is a chart that firmly wants price to head lower and could care less about price coming back up again. A bounce is shown for the projection to satisfy the weekly chart. This daily chart is firmly bearish across the board so price will be smacked.

A pink inverted H&S pattern is highlighted but before junk bond junkies become too overly bullish, the target of 43 is unlikely. Keystone only uses inverted H&S's after long down moves. JNK, however, has been in a long up move, therefore, the pink inverted H&S holds no credibilty with Keystone. It is presented here since you will hear other technicans comment on this pattern for other stocks and indexes, and Keystone's opinion goes for them as well. Perhaps in the summer if there is obscene money printing by central bankers, sure, maybe JNK sneaks upwards to 42-43, but, with the factors described above, take the money and run. In fact, do not look back.

The money flow low in November is very ominous. Price never came back down after the November low to rectify this 'situation' with the money flow. Therefore, price will eventually need to make its way down to tie up its loose ends. JNK is topping currently, there is nothing here that is attractive from the long side, projection is lower prices for the months ahead. This information is for educational and entertainment purposes only. Do not trade based on this information. Consult your financial advisor before making any investment decision.

JNK High-Yield Junk Bonds Weekly Chart Overbot Rising Wedge Negative Divergence Topping Action Ahead

2012-03-05T10:59:00.000-05:00

Here is another high-yield junk play showing a blue rising wedge, overbot conditions for money flow and stochastics, and firm negative divergence desiring a smack down for price. In the shorter term note the short green lines that do show a long and strong profile and want to see price come back up to test these highs again after the spank down occurs. This is topping action.

After the smack down price should come back up to test 40-42 but the smart traders that made the dough from the easy money rally since the Fall are likely jumping ship now. Projection is a smack down on tap, the price will come back up for another look at these highs, then roll over. Sideways to sideways lower prices are projected for the remainder of the year although further quantitative easing will require reassessment. This information is for educational and entertainment purposes only. Do not trade based on this information. Consult your financial advisor before making any investment decision.

HYG High-Yield Corporate Bonds Daily Chart Overbot Rising Wedge Negative Divergence

2012-03-05T10:50:00.000-05:00

HYG daily charts displays a textbook rising wedge. The red lines show the negative divergence now in place that requires a hard smack down for price. The long term picture is very bearish as HYG tops and rolls over. Note, however, that RSI green line which is the HYG bulls' best friend. That RSI wants to see another matching high for price so any long player that sees a spank down to say, the 20-day MA, should have a second chance to jump ship as price will experience some buoyancy due to the RSI. Do not overlook your good fortune if long and you stick it out in the couple weeks ahead. When price prints a higher high and you see that green RSI line become a red negatively diverged line, pull the rip cord and jump, ohterwise, you will ride her down. Projection is, after a down-up move, sideways to sideways lower prices for the weeks ahead.This information is for educational and entertainment purposes only. Do not trade based on this information. Consult your financial advisor before making any investment decision.

HYG High-Yield Corporate Bonds Weekly Chart Overbot Rising Wedges Negative Divergence

2012-03-05T10:39:00.000-05:00

High-yield corporate bonds weekly chart shows a strong rising wedge in place. The red lines show negative divergence that wants to see a spank down now. In the shorter term time frame, however, the short green lines show some desired long and strong action is still needed. Thus, after a spank down, price will want to come back up for another look at these highs. When price comes back up, watch the broad-based rising wedge's top rail, price may tuck itself there before negative divergence will show leading to more extensive downside moving forward.

High-yield is a crowded trade now and in the event of market turmoil, the slightly tighter liquidity, as compared to other asset classes, will spank it down harder. The regular Ma and Pa traders need to tread softly since the traders that rode the easy money rally from November-December are looking for bag-holders to come along, and Ma and Pa are getting caught up in all the high-yield hype. Every top needs a bigger fool and the search is currently ongoing for these fools. Projection is a 92.20 top with prices moving sideways to sideways lower form there the remainder of the year; although once QE3 hits we will have to reassess. This information is for educational and entertainment purposes only. Do not trade based on this information. Consult your financial advisor before making any investment decision.

LQD Corporate Bonds Daily Chart Overbot Rising Wedge Negative Divergence Potential Island Reversal

2012-03-05T09:50:00.000-05:00

LQD daily chart shows how price was fighting the 20 and 50-day MA's in November-December, deciding to roll over, when the easy money printing presses started dropping money from helicopters. Note the island formed now above 115 since price gapped up from 114 to 115. Thus, an island reversal pattern may be on tap on the way down where price collapses back down thru the same gap. At any rate, the 114-115 gap is juicy and will require filling at some ponit forward.

The blue lines and rising wedge create the negative divergence smack down, price dribbled off the top. Note the money flow green line, thus, price is performing a little stutter step higher to satisfy the money flow, but, in quick order, she should roll over and test the 20-day MA for starters in the days ahead. This information is for educational and entertainment purposes only. Do not trade based on this information. Consult your financial advisor before making any investment decision.

LQD Corporate Bonds Weekly Chart Overbot Rising Wedge Topping Action Moving Forward

2012-03-05T09:48:00.000-05:00

Corporate bond weekly chart shows a rising blue wedge with negative divergence across the RSI, MACD and stochastics, so a spank down is in order. Note, however, the green lines, especially money flow, with a long and strong profile, thus, price will need to come back up after a short sell off. Nonetheless this is topping action ongoing. A move back up to 118 would be on the table. A price close above 118 would be somewhat of a game changer since LQD will want to venture to 120 should that occur.

Projection is that price is topping in this area, reassess chart at 118 a couple weeks or so from now. Chances are that all indicators will show negative divergence when price comes back up signaling the top. The bag-holders are entering LQD now, so think long and hard about any long LQD positions. Price will probably provide a chance to jump ship when it comes back up, but considering the strong run upwards, again fueled by easy money starting in November-December, traders should take the money and run for it. If you sit it out a bit longer, do not overlook a gift where price comes back up to give you a second chance to exit. This information is for educational and entertainment purposes only. Do not trade based on this information. Consult your financial advisor before making any investment decision.

MUB Muni Bonds Daily Chart Oversold Potential Positive Divergence Set Up Long Term Negativity

2012-03-05T09:32:00.000-05:00

The red lines show the negative divergence smack down. The ECB's LTRO1 program began on 12/21/11 right where the launch move occurs. The pink ascending triangle targeted 110 but price did not stop there. Price is now testing the 50-day MA as support and making a decision currently. Price has not made a lower low from a few days priior but if price will drop a wee bit more and make a lower low, the uber low MACD histogram positive divergence, as well as stochastics and RSI will bunce price back upwards.

Note the red lines for the MACD line and money flow, however, that are announcing loud and clear that they want to see lower prices in the future after a bounce occurs. Price may bounce back up and test the 50-day MA from the underside moving forward, then likely head lower over time to meet with its destiny at testing the 200-day MA.

The RSI has not been oversold in a long time, so price can meander south all year long from here, same with money flow. The 110.0-110.5 zone is an important S/R test area for price moving forward, above and bulls are happy, below and bears are happy. Projection is a slow sideways move with a downward bias for the weeks and months ahead. This information is for educational and entertainment purposes only. Do not trade based on this information. Consult your financial advisor before making any investment decision.

MUB Muni Bonds Weekly Chart Overbot Rising Wedge Negative Divergence

2012-03-05T09:21:00.000-05:00

We have not looked at muni's since the Fall spike higher. The blue lines show the negtive divergence spank down that occurred but instead of leading to further downside action, Chairman Bernanke's Fed, the BOE, BOJ, and the ECB with the LTRO 1, China, even other emerging countries, all created easy money that had to move somewhere and this is one of the places. Note the launch in December as the LTRO1 party began.

Keystone was looking at the 108's as a top as 2011 ended, but once the money printing machines were in gear, all bets were off. Money has chased into divvy stocks, muni's and high-yield corporate bonds creating new bubbles. The red lines show the rising wedge in place and negative divergence that creates the smack down. The green line for the MACD line, however, is showing a long and profile, thus, price will want to bounce after this sell off finishes. Perhaps a bounce off the 20-week MA in the 108-109 area will be in order now and a move back up to satisfy the MACD line.

Then all indicators should be negatively diverged, clearly spelling muni's fate for the remainder of the year. Keystone has a muni bubble top in this year's predictions and it appears the top is forming now. Projection is sideways to sideways down for the remainder of the year. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

European Bond Yields 3/5/12

2012-03-05T05:37:00.000-05:00

10-Year Yield Summary:
Greece 36.54%
Portugal 13.79%
Hungary 8.43%
Italy 4.96%
Spain 4.96%
Belgium 3.47%
France 2.80%
Netherlands 2.24%
U.K. 2.12%
U.S. 1.96%
Germany 1.79%

Yields in general are behaving themselves as the new trading week begins. Portugal remains elevated approaching 14%. Spain and Italy are the exact same yield now, this is due to Spain moving higher. Late Friday, in the U.S. session, Spain yields were popping higher. The money continues to love Germany, however, now under 1.8% showing a flight to perceived safety. The drama this week will involve Greece, Spain, Portugal and perhaps Hungary.

Keystone's Key Events and Market Movers Week of 3/5/12

2012-03-04T12:15:00.001-05:00

Keystone presents the following underlying market currents, sometimes subtle, sometimes turbulent, that move global markets in real time. The key dates and times below typically correspond to market pivot points.

Summary for the New Trading Week Ahead:

The SPX has moved thru a 20 point sideways range, 1356-1376, for the last 11 days. The tech sector, XLK, then Nasdaq 100 and Nasdaq Composite, then Dow Industrials, then SPX all have printed multi-year closing highs, but the small cap Russel 2000, RUT, has not. Curiously, the RUT weakness in the Friday session had a lot of traders talking. In a strong growth economy, small caps should be much stronger. For the new trading week, we find out if the broad indexes are rolling over, or, if they have additional fuel in the tank.

The previous post concerning the NYSE Circuit Breakers highlighted the strong negative indications that currently exist in the markets (read the red print in that message), so the items will not be repeated here. Suffice it to say, stay on guard, the majority of the long traders in this market are complacent, without fear. Do not listen to any analyst or pundit in media waxing worry since the actual indicators show that the bulls simply expect the good times to last forever. This lack of fear is a contrarian indication so the markets are ripe for a pull back. If you trade over a more relaxed time frame and avoid the day trading and hectic short term trading, Keybot the Quant, Keystone’s proprietary algorithm, motors along on the bullish side. Thus, simply watch the left margin, if/when Keybot flips short that would be an important market development.

Earnings continue with more second tier type companies this week. Biotech, pharma and retail are prominent this week. RTH is important so watch the retail earnings carefully. For Monday, China legislative news may occur. More importantly, Portugal 10-year yields are blowing out and this may become a major issue again before anyone expected. In addition, Spain yields started to climb late day Friday placing concern on trader’s faces. The Super Tuesday election results may effect Wednesday trading, keep an eye on the futures markets as the results come in Tuesday evening, especially to see if there are any effects on the dollar.

ADP Employment numbers on Wednesday are important since this number is used to fine tune the estimates for the Friday Jobs Report. Note how the excitement builds into the end of the week. Finish your errands and family commitments early in the week since Thursday and Friday may develop into intense trading. The fun will begin Thursday with China CPI data that will impact the dollar, euro, copper, commodities and the futures markets. Then the early morning fun with the BOE and ECB rate decisions. Quantitative easing will be front and center questions for each central banker. The ECB rhetoric will impact the euro; reference the asset relationship shown a few paragraphs lower depending on which way the euro goes. Jobless Claims will provide another ingredient for the market soup. These events occur before the U.S. opening bell rings and will set the tone for Thursday.

Then the fireworks start to explode on Friday with lots of Greece drama on tap. At the same time, the U.S. Jobs Report hits at 8:30 AM EST and will show if recent improvements have staying power, or, if it was all a flash in the pan. Thus, hold on to your hat from Thursday morning into and thru the Friday morning trade. By noon, traders may be hoping for an early happy hour. The stress may continue when they realize they will lose an hour of sleep on the weekend as Daylight Savings time begins.

High gasoline prices remain a worry and, referencing the March Seasonality, this is the time of year when gasoline prices move up due to winter to summer grade changes as well as scheduled maintenance. Folks need this like they need a hole in their heads because this seasonality will make it more difficult for prices to retreat. However, any positive news from the Middle East will cause a large drop in oil since at least about $20 in premium is built into price currently, WTIC had pegged 110 while Brent was over 128. Oil and the broad markets move together. Thus, like copper, commodities, gold and silver, if the dollar strengthens this week, this should move oil and the SPX lower.

Continue watching AAPL since as AAPL goes, so goes the markets. As Keystone points out with the Apple charts in recent days, the negative divergence is in place requiring a spank down for price. As AAPL moves lower, so will the broad markets. Keystone has been looking for a reversal in AAPL from 525-550, so this week will tell a lot. The last three candlesticks on the daily chart show a doji, hanging man and doji again for Friday, all three pointing to a trend change, all that has to occur is one day of follow-thru to the down side to confirm the current highs as a temporary top, thus, Monday is key.

Watch the Nasdaq versus S&P 500 percentage moves in real-time. If the Nasdaq 100 and Nasdaq Composite start to lag the broad market, the SPX, that will show tech running out of gas and thus affect the broad markets negatively. Tech leads overall market direction. Traders enjoying the technology rally will likely take profits moving forward. A pull back in AAPL will negatively impact the tech sector, Nasdaq, and the broad markets, as well as the 90% of fund and money managers that own the stock. Traders enjoyed the parabolic ride up in Apple, will everyone enjoy the ride down as much?

Market bulls have made serious gains in the broad markets in 2012, overtaking the moving average lines as well as other key levels indicating a return to secular bull markets. The bulls are in good shape as long as they stay above SPX 1290 and NYA 7650. The dollar and euro dictate the markets, up dollar = down euro = down commodities, copper, gold, silver, oil = down markets and down dollar = up euro = up commodities, copper, gold, silver, oil = up markets.

Key Dates and Times for the Week and Month Ahead:

· Monday, 3/5/12: The Europe debt crisis soap opera continues. Portugal 10-year yields are blowing out indicating trouble brewing. Late session Friday, the Spain 10-year yield started to move upwards again and requires close watching as the new week begins. This week gauge how much of the LTRO2 program is already priced into markets; by the look of last week’s action, a significant portion of LTRO2 appears to already be priced into the markets. Congress in session, as well as continued political rhetoric is a market negative. Listen for any China news from the CPPCC and NPC, national legislative and advisory bodies. The China CPI on Thursday is important. China news impacts copper and commodities markets which in turn effects the broad markets. Factory Orders and ISM Non-Mfg Index 10 AM. Earnings: ACUR, DPW, FTEK, NATR, NTRI, URBN, PAY.

· Tuesday, 3/6/12: Super Tuesday Election Day. Earnings: ACAD, AEGR, AVAV, ALTH, DKS, FCTY, HDSN, MAKO, ONTY, P, SHFL, SYNM, MTN.

· Wednesday, 3/7/12: Note the futures reaction, if any, to the Super Tuesday results. Mortgage Purchase Applications 7 AM. Challenger Job Report 7:30 AM. ADP Employment Report 8:15 AM. Productivity and Costs 8:30 AM. Oil Inventories 10:30 AM. Consumer Credit 3 PM. Earnings: ACHC, AEO, AHS, BONT, BWS, CLDX, CIEN, CWTR, FTK, GERN, HRB, HOTT, HOV, KWR, MFB, MW, MYRG, NANX, OPTR, OXGN, PLL, PLCE, SQNM, SIGM.

· Thursday, 3/8/12: China CPI. BOE and ECB Rate Decisions. Jobless Claims 8:30 AM. Natty Inventories 10:30 AM. Fed Balance Sheet and Money Supply 4:30 PM. Earnings: AONE, ACHN, ARO, AFFY, ALJ, ALTR, BKE, BQI, CECE, COO, CRTX, CYTX, DXGN, DYN, EPL, HEK, HITK, IDN, LUNA, MNTG, NGS, OREX, POWR, RENN, SFD, STP, ULTA, ESM, ZUMZ.

· Friday, 3/9/12: Greece debt swap results. International Trade and Jobs Report 8:30 AM. Wholesale Trade 10 AM. Earnings: ANN, ARNA, BDSI, CHDX, DCTH, HIBB, OSIR, PPHM, PTEK, URRE, USCR.

· Monday, 3/12/12: Euro Finance Ministers meet in Brussels. 3-Year Note Auction. Treasury Budget.

· Tuesday, 3/13/12: IMF decides on its contribution to the Euro debt situation. Retail Sales. Business Inventories. 10-Year Note Auction. FOMC Meeting.

· Wednesday, 3/14/12: Greece and its creditors are to sign the new lending agreement. Import and Export Prices. Chairman Bernanke speaks. Oil Inventories. 30-Year Bond Auction.

· Friday, 3/16/12: Major Bradley Turn date so watch for a major market trend change in the window between 3/9/12 and 3/23/12, especially the 3/13/12 thru 3/21/12 area. Interestingly, if you reference the previous post on March Seasonality, the OpEx week in March is typically a bullish week, up 85% of the time, and the FOMC meeting day this week is up three-fourths of the time. Simply monitor the market direction leading into and thru the week of 3/12/12. Perhaps any market move down over the coming days will then result in a broad market recovery as this 3/16/12 date approaches? Simply take it all hour to hour.

· Tuesday, 3/20/12: Greece deadline for financing.

· Friday, 3/30/12: Informal meeting of EU finance ministers in Copenhagen. EOM.

· Thursday, 6/28/12: EU Summit for heads of state in Brussels.

SPX S/R Week of 3/5/12

2012-03-03T12:28:00.001-05:00

The SPX moves higher but the recent price action over the last 11 days shows a sideways move thru 1356-1376, a 20-point range. The intraday high three days ago is 1378.04 which was only a few minute pop but now serves as overhead resistance. The fun begins on Monday starting at SPX 1370. The market bulls need to move up and over 1374.50, if so, an upside acceleration will kick in and price will attack the 1378.04 high in quick order.

The market bears have a slightly easier road to hoe needing a drop of 3 or 4 points. Note the confluence formed at 1366 with strong horizontal support, the 10-day MA, and Friday's LOD, thus, if 1366 is lost, the downside will accelerate with large block sellers entering the markets in force. The SPX will immediately test 1363.61 and likely fail, heading lower to see which support level at 1363, 1361 or 1358 can stop the drop. Once price drops under 1366, keep an eye on the 20-day MA since a test of this support is likely on tap. A move thru 1367-1373 is sideways action in Monday's trade.

· 1404

· 1399

· 1391

· 1389

· 1386

· 1378 (1378.04 HOD 2/29/12)

· 1376

· Friday HOD 1374.53

· 1372

· 1370 (5/2/11 Intraday HOD 1370.58)

· Friday Close 1369.83

· 1368

· Friday LOD 1366.42

· 1366

· 10-day MA 1365.95

· 1364 (4/29/11 Closing High 1363.61)

· 1363

· 1361

· 1358

· 20-day MA 1357.19

· 1356

· 1351

· 1347

· 1345

· 1344

· 1341

· 1339

· 1338

· 1337

· 1336

· 1333

· 1332

· 1331

· 1330

Keystone's March Seasonality

2012-03-03T10:35:00.000-05:00

Now that the month has rolled over once again, it's time to review March's typical seasonality. March is typically an up month (based on many decades data) with the markets gaining +0.8%. Interestingly, however, March has trended lower for most years over the last decade. In general, the largest gains in the stock market are made from November thru April with flat returns May thru October. Those traders aware of this seasonality entered the markets long after the November sell off and have been joyfully rewarded four months later. The greatest market gains occur in Q4, with Q1 next at 2.1% and Q2 after that with an average 1.8% return. Obivously, Q1 is on its way to blow out the average returns, unless March plans on ushering in ill winds.

The dollar is typically strong from January into April. This is not the case thus far for 2012 since the dollar is weaker, euro stronger, and commodities and equities markets rocking higher as a result. Perhaps the expected dollar seasonality will start to kick in and provide dollar buoyancy moving forward which in turn will cause selling in the commodities and equities markets. Up Friday's and up Monday's for markets typically indicate bullish markets while down Friday's and down Monday's typically indicate bearish markets. Thus, after a weak Friday yesterday, watch to see how Monday pans out, and then the all-important Jobs Report occurs on this coming Friday which will determine that day's fate.

Markets typically pull back three times a year with 5% sell offs, this is healthy behavior for a robust bull market. For 2012, however, the markets continue to inflate on the global easy money printing, quantitative easing, so various asset classes, such as commodities, and emerging markets, high yielding stocks, are floating upwards and have not even experienced a 1% pull back yet. Thus, caution is required, trees do not grow to the sky, as the old Wall Street adage comes to mind.

The markets tend to do poorly when Congress is in session, and do well when Congress is out of session. What a sad commentary it is, but it is what it is. Thus, for March, the Congress, and much of the political drama in general, is a market negative. On the first day of any month, new money typically rolls into markets and helps boost the indexes as shown by Thursday's action.

The full moon occurs on 3/8/12, Thursday, and typically markets are buoyant in this area. The BOE and ECB Rate Decisions occur 3/8/12. During OpEx week this month, markets are typically bullish on the Monday, 3/12/12, and also markets tend to be buoyant from Tuesday into Wednesday, 3/13/12 into 3/14/12, thus, if patient, sometimes a nice short one-day trade can be placed Tuesday, to cash out Wednesday, if you find a nice entry. The FOMC meeting is 3/13/12. This date is significant since FOMC day in March typically results in a market up day 76% of the time. OpEx Friday is 3/16/12 and markets tend to move opposite on Monday, 3/19/12, as compared to Friday's action. March OpEx week, 3/12/12 thru 3/16/12, is typically up 85% of the time, thus, also considering the full moon, the bulls may be favored from mid week into the following OpEx week, so if the market bears want to create mayhem and do some damage to the broad indexes, they better show up to play early in the week, on Monday, 3/5/12.

The new moon occurs on 3/22/12, Thursday, and typically markets are bearish in this area. The end of the month, EOM, occurs on Friday, 3/30/12, buttoning the week, month and Q1 quarter up in a succinct bow, thus, there are four weeks remaining in the month. This provides 20 days of trading, with no market holidays. St. Patrick's Day is on Saturday, 3/17/12, a day when everyone is Irish. The next market holiday is Good Friday on 4/6/12; Easter is 4/8/12. Markets are up about two-thirds of the time during Good Friday week which is 4/2/12 thru 4/6/12. Window dressing plays a key role this month, since it is the end of Q1, so the markets may be favorable to the bulls during the last week of this month.

March typically plays the role of a correction month where usually the month sells off where many traders then enter long at a market bottom to ride the last pop up in March-April before traders sell and go away in May. There is typically a cell phone conference in March so technology and telecom stocks may receive positive attention. Tech is always strongest in Q4, and this continued well into Q1 this year, so traders are likely to take profits in technology moving forward. Summer time is slow for technology and traders are sitting on a bundle of gains now that most do not want to lose.

The sadness over the tornado's hitting folks in the middle and southern States brings to light the coming Hurricane Season. March is typically a great month to do your homework on hurricane plays, power outage plays, oil and natty plays, since the hurricane watch coming in a copuple months will greatly effect trading in these sectors moving forward. Hurricane Season is June thru November. Tax refund checks start to trickle into lucky hands during March and April and with on-line filings growing, the time frame is shortened and favors March even more. Thus, this money windfall is typically spent which helps the economy, albeit in a minor way. Gasoline costs typically peak between March and May as the refineries switch from winter to summer grades and undergo maintenance. With the Midlde East drama ongoing, and WTIC Oil testing 110 and Brent 128, we may have to throw the play book out and take it all as it comes. The last thing motorists need is further gasoline price buoyancy but this is the time of year when it occurs.

Remember, seasonality factors simply provide a gentle background current for trading, and are never used as a sole basis for trading. Just as it is easier to swim with the current, not against it, it is easier and more advantageous from a risk-reward pespective, to trade with the seasonality current rather than against it. As in swimming, however, sometimes you must swim against the current.

Keystone's Trading Week in Review and Path Ahead 3/3/12

2012-03-03T06:15:00.002-05:00

On 2/25/12, Saturday, G-20 finance ministers and central bank governors meet in Mexico City. The IMF wants more money to help create a strong support system for Europe, a sturdy firewall, or ring fence, where the risks of contagion can be diminished. This is what Geithner is encouraging. But, Germany must continually pony up more and more cash to support the countries that enjoyed years and years of wine and roses. Thus, the soap opera playing out this weekend is LaGarde, the IMF, wrestling with Germany as the main event, and, in general, Europe and world nations meeting to find solutions to the European debt crisis and try to establish a strong firewall to prevent contagion, especially in reference to Italy and Spain.

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On 2/27/12, Monday, the communiqué of the G-20 leaders from Mexico City said a decision by Eurozone leaders is required to boost their own firewall before the IMF can step in with resources. Chancellor George Osborne remarked, “We have to see the color of the Eurozone’s money first—and, quite frankly, that hasn’t happened. Until it does, there’s no question of extra money from Britain or probably anyone else.” Germany is worried that Italy and Spain will lose their desire to place their houses in order without maintaining pressure on these countries, as well as Greece and Portugal. Markets rally as the opening bell is sounded. Dow moves above and below 13K and closes below 13K when the bell rings. Oil pulls back from highs, WTIC peaking at about 110 and Brent about 125.

On 2/28/12, Tuesday, futures are up strongly. Germany approves the Greece bailout without issues as many had expected. S&P lowers Greece to ‘selective default’ but markets have little response to the news, this move was expected. The economic data and housing data sours the markets but the Consumer Confidence boosts the bull’s spirits. AAPL takes off to the upside after the open and keeps the broad markets elevated all day long. Apple is the markets now. Markets move in a tight range of 1368-1372 and close at the high end as traders await the LTRO2 decision overnight. The LTRO1 program has greatly helped Spain and Italy recover over the last two months. The SPX closes above the 2011 intraday closing high at 1370.58 and the Dow Industrials close above 13K. GS is served with a Wells Notice concerning subprime securities.

On 2/29/12, Wednesday, the month ends, EOM, with the odd-ball leap year day today. The LTRO2 news meets expectations offering about 500 billion to 800 banks. The news appears to be priced into the markets. The Italy and Spain yields move sideways to lower, reducing contagion fears, since both are too big to fail and too big to bailout. Spain has now covered about 40% of their 2012 funding requirements which is a positive for Europe. The U.S. GDP prints a 3% handle which encourages the bulls. Chairman Bernanke testifies in front of Congress, and the markets turn sour as Bernanke does not mention QE3. Traders fear that the punch bowl of liquidity that is creating the broad market rally is ending. The dollar spikes higher and gold and silver plunge lower. The markets finish down on the day but the bearishness is contained. This was the best February since 1998. The Nasdaq punched up and over 3000 today before rolling over and falling on it sword. AAPL places new highs again, now in the 540’s, and is clearly propping up the broad markets.

On 3/1/12, Thursday, the China PMI data is over 50 indicating expansion but the HSBC China PMI, which is slightly more credible, is under 50 indicating contraction and weakness over the last five months. Many other countries release PMI data showing an unimpressive overall picture for the global economy. The reaction to commodities markets is muted. ISM Manufacturing Index is weaker than expected but markets remain elevated all day long. U.S. auto sales are surprisingly stronger than expected with sales matching 2008 numbers. In the afternoon, news hits that a major pipeline explosion has occurred in Saudi Arabia. Brent Oil jumps to 128 and WTIC Oil pops above 110. The broad markets start to drift lower but recover the losses before the close as word comes out that the Saudi news is a rumor and not true. European leaders meet in Brussels today and tomorrow to discuss funding for the ESM (European Stability Mechanism). Germany retail sales unexpectedly fall.

On 3/2/12, Friday, E.U. leaders sign a ‘fiscal compact’ that will come into effect 1/1/13 calling it a turning point. Other Euro leaders continue to stress the need for strong firewalls. Italy and Spain 10-year yields are under 5%. Portugal 10’s, however, continues to blow out and move towards 14%. The YELP IPO occurs. Markets drift sideways and end the day slightly down. The RUT (Russell 2000 Small Caps) drops sharply during the trading session making traders standup and notice. The ink is barely dry on the ‘fiscal compact’ document when Spain announces they will not be able to follow it exactly. Spain yields start to climb in the afternoon and the Spain 10-year moves above Italy. After the close, Moody’s downgrades Greece following S&P’s previous move. The rating agencies release these downgrades on Friday evening’s to avoid market drama.

On 3/3/12, Saturday, the Chinese People’s Political Consultative Conference (CPPCC), a national advisory body, begins. The Eurozone unemployment rate hits almost 11% this week, the highest since 1999. Italy unemployment rate is over 9%, the highest in over ten years. At the same time, inflation in the Euro area is at 2.7%, spending 15 months above the ECB-targeted 2% level. France’s joblessness rises to 9.4%.

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On 3/5/12, Monday, the Chinese National People’s Congress (NPC), the national legislature, begins meetings. Japan 30-Year Bond Auction. Factory Orders and ISM Non-Mfg Index.

On 3/6/12, Tuesday, Super Tuesday Election Day.

On 3/7/12, Wednesday, ADP Employment Report. Productivity and Costs. Oil Inventories.

On 3/8/12, Thursday, Full Moon. China CPI. BOE and ECB Rate Decisions. Jobless Claims. Natty Inventories.

On 3/9/12, Friday, Greece debt swap results. Jobs Report. International Trade. Wholesale Trade.

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On 3/12/12, Monday, Euro Finance Ministers meet in Brussels. 3-Year Note Auction. Treasury Budget.

On 3/13/12, Tuesday, IMF meets in Washington and decides its contribution to the Euro woes. Retail Sales. Business Inventories. 10-Year Note Auction. FOMC Meeting.

On 3/14/12, Wednesday, target date for Greece and its creditors to sign the new lending agreement. Import and Export prices. Chairman Bernanke speaks. Oil Inventories. 30-Year Bond Auction.

BOIL Ultra Long ETF Natty Gas Daily Chart Falling Wedge Positive Divergence

2012-03-02T13:04:00.000-05:00

BOIL is a dangerous ETF seeking to perform twice the move to natty gas on the long side. Keystone remains a fan of natty gas for 2012 and entered BOIL today on the nice positive divergence shown by the blue lines. The weekly chart is positively diverged as well. Note the blue falling wedge which also bolsters the bullish case. Note the large selling volume over the last few days, these are traders that can no longer take the pain of holding BOIL as it drifted ever lower, all they could yell is 'get me out!' That is typically the time to pick it up for a long trade since it looks like capitulation. There may be a stutter step here in the green circle but she should launch anytime.

Projection is for a bounce off the positive divergence and falling wedge and continued sideways to sideways up from here. Remember, these are dangerous plays and only to be entered if you are willing to lose your money. BOIL is somewhat thinly traded at 170K shares in today's current print so keep that in mind as well. Keystone likes UNG and BOIL. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

AAPL One-Minute Chart Descending Triangle

2012-03-02T12:46:00.002-05:00

Here is a quick real-time chart for Apple, each candle represents one minute of trading so obviously it is only applicable for say the hour ahead, but notice the descending triangle. Let's see if the bulls can drive price higher to pull out of this dive. If the base line at 544.50 fails, the downside target is equal to the vertical side of the triangle, thus, 546.75-544.50 = 2.25; 544.50-2.25 = 542.25 target if the base line fails. So, see if the bulls or bears win in the minutes ahead. Current print is 545.18, bulls are trying to push higher and this is also the top rail of that tight sideways channel at 545. This is very important for AAPL, and the broad markets. Hold 545, or die.

Note Added 3/2/12 at 1:21 PM: AAPL fails the base line at 544.50, now back testing to make sure it wants to head lower, high drama, major decision for AAPL here at 544.50.

Keystone's Midday Market Action 3/2/12

2012-03-02T09:52:00.006-05:00

The broad markets start off sideways on a sleepy Friday, void of economic data or earnings from any significant companies. Sometimes these sleepy days have a way of waking everyone up. The VIX is up, but that is not saying much, with a 17 handle in today's markets, this is bull-friendly. Bears need to venture up thru 18 again and move towards 23 to ignite strong negativity. The SPX targets for today are the 1376 handle for the bulls and 1366 for the bears. If 1376 is achieved, markets will launch higher. SPX 1377-1378 R is very important above. If the 1366 is lost and 1365 prints start to come across the ticker, the broad markets will accelerate the downside action. The SPX is now printing 1371.90, in the middle of the 1376 launch number and 1366 failure number.

Taking a look at AAPL to follow along from the charts posted, Apple is now printing 543.10, tucked perfectly back into the sideways symmetrical triangle. She should make a decision now on which side to exit. The bears would be favored but time will tell. The broad markets will move the way AAPL moves. The SPX is down -0.22% now while the Nasdaq is down -0.08%, thus, without tech leading, the bears got nothing today. AAPL is the key, if it moves lower now, it would likely accelerate the Nasdaq percentage lower relative to the SPX.

Note Added 3/2/12 at 12:25 PM: The euro drops below 1.32. The SPX moves sideways today, still waiting for a bull, 1376, or bear, 1366, decision. SPX now printing the lows of the day sub 1368, but the bears still need two more points if they want to enjoy some negativity in front of the weekend. The Nasdaq is down -0.48% while the SPX is down -0.43%, which now has tech leading the downside providing the bears some street cred for today, albeit only a slight lead downwards. AAPL continues to move sideways thru its channels shown on the 10-minute chart. The sideways triangle pattern petered out with price moving sideways straight out the apex, then popping briefly. AAPL price is now moving thru a descending triangle, which is bearish, with baseline at 544.50-ish, thus, if this level is lost, AAPL should fall at least three bucks. AAPL determines the broad market direction.

Note Added 3/2/12 at 1:24 PM: AAPL is losing the base line of a descending triangle at 544.50 currently (see one minute chart). AAPL now printing 544.12 so the back kiss after the base line failure was successful for bears. Note the weakness in the broad markets as AAPL slightly weakens. Friday may become exciting after all. Watch SPX 1366 as discussed earlier. The bears are trying to make a run at it, the SPX now printing 1367. Watch to see if AAPL remains under 544.50 which will usher in lower prices. Likewise, watch to see if the bears got the juice to move the SPX sub 1366, or not. VIX is perking up but still under 18 helping the bulls maintain market control. SPX losing 1366 will change the tone of the markets very quickly if it occurs.

AAPL Apple 10-Minute Chart Sideways Symmetrical Triangle Channel Island Reversal Negative Divergence

2012-03-02T07:09:00.000-05:00

The AAPL 10-minute chart has a lot going on technically over the last couple days. Each candle represents 10 minutes of trading time, thus, for a 6 1/2 hour trading day, each day contains 39 candles. On Wednesay morning, note the gap up opening which has now placed AAPL on an island that formed at 537 and higher. Therefore, when price pulls back down, watch for a potential island reversal where price drops back thru the 535-537 gap and prints a 534 handle and lower.

Even if an island reversal does not occur the gap at 535-537 is a powerful magnet moving forward. Note the black channel over the last two days with price moving thru 537-548. Note the tighter blue channel at 540-545. Use these upper and lower boundaries to gauge whether or Apple bulls, or bears, are winning moving forward. Note that price is at the top rail of the blue channel now so pay close attention at the open today. The pink line shows that price is matching the prior high but note the negative divergence across all indicators indicating a slap down of price on tap, but for these shorter term minute charts, the behavior can drastically change overnight. The closing bell yesterday saved price from drifting lower.

When price spiked two days ago the volume participation was at a peak. Note the spike at yesterday's open placed a higher high at 548 but less buyers show up, thus, the price dropped in quick order. Perhaps the bigger fool theory is running out of bigger fools? The neon green sideways symmetrical triangle shows a verical side of about 11 or 12 points. Thus, whichever way price breaks out of the triangle, the move should add a dozen ticks. Note that price poked up and out of the triangle in the last half hour of trading yesterday. A target would then be 543 + 12 = 555, triple nickels. But, the sideways triangles exhibit fake out moves often, where the intial move in one direction leads to price moving back into the triangle and out the other side. The pink divergence hints that this may be on tap.

The downside target should price decide to move back into the triangle and drop out the bottom side would be 543 - 12 = 531. Note the sturdy support at 532. The indicators reinforce the sideways symmetrical theme as they move sideways and are now tightening to decide on a direction. Projection is for AAPL to pull back as described in the previous daily chart. Use the channel ranges to gauge price movement today. 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.

European Bond Yields 3/2/12

2012-03-02T05:51:00.000-05:00

The Greece 10-year yield continues to blow out, now almost 200 basis points since yesterday at this time, now printing 37.76%, moving towards a ridiculous 40%. Portugal, the 900-pound gorilla in the room that everyone ignores, increases another 5 basis points over the last day to 13.78%. The round numbers gain attention so perhaps when it crosses 14% folks will take notice. The other European yields are all behaving themselves after the LTRO2 news. All yields are flat or lower, Hungary has moved lower to 8.40%. Italy and Spain 10-year yields are under 5% now; Italy is 4.97% and Spain 4.89%. Spain moving down towards 4.90% matches 2008 numbers.

In the land down under, Australia 10-year yields jumped 8 basis points since yesterday now at 4.12%.

AAPL Apple Daily Chart Overbot Rising Wedge Negative Divergence Island Reversal Gaps Channel Doji Hanging Man

2012-03-01T21:39:00.000-05:00

This AAPL chart is becoming a regular posting every couple days lately. Nothing has changed, except price moving higher, of course. The red lines show the negative divergence firmly remaining in place, desiring a smack down for price now. The RSI and stochastics indicators are overbot in nose-bleed territory while throwing off negative divergence at the same time. The rising red wedge is also bearish. The two candles over the last two days show a doji yesterday and hanging man printed today. These indicate a trend change occurring but they need a day that shows follow-thru, which would be tomorrow.

The neon green circles highlight the gaps left behind as price enjoyed an upside orgy, from 360 to 550 in 12 weeks, a truly impressive move of over 50%, or about 4 or 5 % per week for three months straight. What a powerhouse, or at least perceived powerhouse. Keystone has been looking for the reversal from 525 and higher; price now 20 bucks or so above that level. Similar to a parabolic commodity stock move, this will be quite spectacular to watch as it reverses. The strength in AAPL has provided the last step up for the broad markets so the implications from Apple selling off go far beyond simply one stock puling back. Apple is the market now.

Thus, a sell off is expected now, at any time, tomorrow would be an ideal start for a down move since it provides the confirmation follow thru that the doji and hanging man candles would like to see. Note the MACD line is sloping upwards (green line), this says that after some selling occurs, price will want to bounce again to satisfy this positive MACD line, then on that bounce back up, negative divergence should show across all the indicators including the MACD line and a more firm down move will then occur.

An island is formed above 444, so if price comes down to 444 and then gaps down to 430-ish or lower, that will create an island reversal pattern. The 430-440 gap area is a large target regardless. Projection is a move down to the 420-444 area in about the same amount of time it took to move up from mid-January, or sooner, since these moves can result in a dramatic drop/s. The impact of Apple selling on the broad markets is obvious. Watch Apple closely, AAPL is the markets. 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.

NYSE First Quarter 2012 Circuit-Breaker Levels

2012-03-01T20:38:00.003-05:00

The markets continue the upward trek. Considering the instability that underlies the broad indexes currently, a review of the NYSE's circuit breaker levels appears in order. Circuit-breakers represent the thresholds where trading is halted for single-day declines in the Dow Jones Industrial Average (DJIA). The circuit breakers are set each quarter by the NYSE and the last news release for this quarter is found at the link below.

For the first quarter of 2012, January-February-March, the following actions would take place in the event that the markets experience a strong waterfall selling event:

Level 1 Halt: A 1,200-point drop in the DJIA before 2 PM EST will halt trading for one hour; if the drop occurs between 2:00 PM and 2:30 PM, trading will be halted for 30 minutes; and if the drop occurs after 2:30 PM, there is no effect.

Level 2 Halt: A 2,400-point drop in the DJIA before 1 PM EST will halt trading for two hours; if the drop occurs between 1 PM and 2:00 PM, trading will be halted for one hour; and if the drop occurs after 2:00 PM, trading is stopped for the remainder of the day.

Level 3 Halt: A 3,600-point drop in the DJIA will halt trading for the remainder of the day regardless of when the decline occurs.

On April 2, 2012, the NYSE will release the new circuit breaker levels for the second quarter of 2012, April-May-June.

http://www.nyse.com/press/1325241963301.html

Thus, from the Dow's current round number at 13K, a Level 1 Halt would trigger if price dropped down to 11,800 during any given day. The Level 2 Halt would trigger at 10,600 while the Level 3 Halt would trigger at 9,400. Of course these levels would move up if the Dow continues upwards.

For comparison, the Dow dropped 1,000 points in the Flash Crash on 5/6/10 at about 2:45 PM EST. An SEC and CFTC report attempted to identify the factors at play during the crash, which remain somewhat of a mystery, but most folks blame it on the high-frequency trading (HFT) robots. Interestingly, the report "portrayed a market so fragmented and fragile that a single large trade could send stocks into a sudden spiral." The immensely-large participation of AAPL in the recent broad market rally cannot be understated, and with a parabolic negatively diverged daily chart in place now, is cause for serious concern.

Keystone can easily make strong bull and bear cases simultaneously for any market at any time. Currently, Keybot the Quant, Keystone's proprietary algo (continuously displayed in the left margin) holds the core position long. The algorithm moves thru the trading year with the smoothest path possible alternating between long and short. The bullish side has essentially been in place for the algo since 12/20/11. Keystone's technical analysis on this site targets the more speculative and dangerous side of trading, top and bottom calling, divergence trading, and other high risk-high reward strategies. At this point in time, Keystone's shorter term work continues to look for a market top in this zone, right now, and would not be surprised with a market pull back at any time. After the markets sell off, a move back up is likely to occur, but, first let's see the pull back occur and how the dip-buyers react.

The geopolitical concerns in place today across the Middle East, Syria, Iran, Iraq, North Korea, the ongoing wars that appear to be worsening not improving, the low market volume, the low volatility with VIX drifting lower each day, the low CPC Put/Call numbers, the bullish complacency, the Transportation Index diverging from the Dow Industrials (Dow Theory), the small caps underperforming the last few days, approximately 90% of S&P stocks are above their 150-day MA, the COT reports leaning bearish, uber bullish sentiment with minimal bearish sentiment, newsletter bullishness not seen in years, new highs trailing lower as price prints higher, strong insider selling, inflows to funds remaining weak, one stock--AAPL supporting this last leg up for the broad indexes, the seasonal tech selling that will be occurring now, traders avoiding the inverse ETF's, the short interest numbers, and the total number of folks employed are actually lower than prior years despite a drop in the unemployment rate, are all bearish indications, and all add up to a worrisome market picture moving forward.

Importantly, a Saudi oil pipeline explosion was rumored to occur in late session trading which caused a spike in Brent over 128 and WTIC Oil hit 110. In this technological age, we still do not know if it was a rumor or real event. This example occuring now illustrates the geopolitical turmoil. Meanwhile, the consumer staples sector, known for being one of the safer sectors that tend to fall less when markets sell off, were the worse performing sector in the markets today. This illustrates the complacency with traders; why would you buy defensive positions when you think the markets will continuously move upwards? Stay alert.

Therefore, it is always best to plan ahead for any outcome.

Keystone's Midday Market Action 3/1/12

2012-03-01T09:45:00.005-05:00

Will March come in like a lion or a lamb? Considering the opening minutes, a lion. The market bears only needed to push less than two points lower to 1364 to ignite downside accelerated selling, but the bears did not have the strength, at least at the start today. Bulls are running after the open, the SPX now printing 1371; watch the 1370.58 intraday high from 2011. The bulls got nothing today unless they touch 1378 so the early move up does not tell a lot.

The dollar is slightly buoyant which may cap the upside move. Volatilty, VIX, is back under 18, now printing 17.74, a weak showing for market bears and strong for market bulls. The ISM Manufacturing Index hits at 10 AM which will serve as a market pivot point and the energy sector is expected to react strongly depending on the news. Chairman Bernanke will dictate market direction as well, if he does not mention QE3, or downplays the use of QE3, markets will tumble lower. If Bernanke is influenced by yesterday's market behavior and says the Fed stands ready to use QE3 and it is very much on the table, these early market gains will likely stay in place. This current broad market action is noise for another fifteen minutes. The markets will tip their hand at 10 AM on the data releases and then, other than that, the fate of the indexes today is in the Chairman's hands and depends on what he says, or does not say.

Note Added 3/1/12 at 10:35 AM: The broad markets pivoted lower on a worse-than-expected ISM number, but overall, the broad markets remain buoyant today. VIX is staying under 18 showing the bulls regaining market control but the bulls need to touch SPX 1378 today to prove they are worthy of moving higher. For now, the markets are stumbling sideways after the opening pop in the broad indexes. Chairman Bernanke is in the Q&A (question and answer) period of his testimony on Capital Hill, so listen for what he does or does not say. The SPX provides support at 1363-1364 and resistance at 1377-1378; a break thru one of these ranges will indicate a winner. The SPX is now fluctuating across the 1370.58 level and this can be used as a mini-gauge of bullishness or bearishness depending on which side the SPX favors.

Note Added 3/1/12 at 2:07 PM: The SPX is now printing the highs of the day, 1376 has offered up resistance, and the 1378 the bulls need to create an acceleration move higher remains two points higher, thus, the SPX moves across the sideways range today. The Nasdaq is leading the SPX so tech is leading the broad markets higher. AAPL reversed some earlier minor weakness and is now on the plus side again by a couple bucks at 544. As AAPL goes, so goes the markets. The VIX is dropping all day long continuing to reinforce the complacency in the markets; the CPC print will be interesting tonight. The market bulls are giving Chairman Bernanke the benefit of the doubt and even though there was no change to Bernanke's stance in reference to QE3 today, the markets are accepting the fact that the Fed should be there to backstop markets for the weeks and months ahead. Technically, the markets are ready to roll over, but the Energizer Bunny moves higher. Keybot the Quant algorithm (at the left margin) remains long the broad market but Keystone continues to like the short side, looking for a turn in this shorter time frame. The retail sector is the largest surprise continuing to creep higher against high gasoline prices, low relative sentiment, low employment and the data showing the low-end customer is hurting. Consumer Staples, a highly defensive sector, is negative today among the bullishness, showing how traders are giddy with upside joy and not worried about any market pullback despite what they may say. Watch what traders do instead of what they say via the VIX, CPC, sector analysis and other indicators highlighted here by Keystone. As long as AAPL remains positive and the VIX remains under 18 the market bulls will remain happy. The bulls need to touch the 1378 handle to seal the deal, if so, the end of the day will be an upside orgy. The market bears need to prevent the SPX from going near 1377-1378 today while at the same time spank AAPL to the negative side and push the VIX back above 18. Bulls are cruising.

European Bond Yields 3/1/12

2012-03-01T05:34:00.001-05:00

The E.U. Summit begins. The LRO2 announcement is now in the rear view mirror. Italy and Spain 10-year yields are greatly improved but Portugal's is worsening. The Greece 10-year continues to blow out, now approaching a ridiculous high of 36%.

10-Year Yields:
Greece 35.84%
Portugal 13.73%
Hungary 8.57%
Italy 5.07%
Spain 4.90%
Belgium 3.57%
France 2.82%
Netherlands 2.32%
U.K. 2.18%
U.S. 2.00%
Germany 1.84%

The lower four countries continue to serve as a safer haven in this volatile world. Portugal has blown out 100 basis points over the last two days, from the high 12's to now the high 13's, which indicates trouble afloat. Portugal's 5's, 10's and 30's are all moving higher in yield, lower in price. The 2-year yield has dropped over the last couple days to 12.71%. Hungary pulled lower in yield but will likely pop back up in the coming days. Portugal and Hungary are major worries currently.

On the other hand, Italy and Spain, the large contagion worries, since these two characters are actually too big to fail, and too big to bailout, are doing much better these days. Spain is under 5% and Italy is headed there as well. Mario Monti is receiving a vote of confidence by markets since it appears that Italy austerity programs are being placed in motion, and, more importantly, the citizens realize their fate and are tolerating the changes, albeit for small protests from the cab drivers as they fear future competition hurting their business. Spain has now covered about 40% of their financing needs for 2012 so this is encouraging as well. Keeping Italy and Spain in check is the whole ball of wax for Europe and likely the globe, so temporary congratulations to the Eurozone for balancing on the tight rope. France is maintaining under 3% as well which is also encouraging. Watch Portugal, this is the next and current battle ground. LTRO's only help temporarily, the final Eurozone story has yet to be written.

Keystone's Evening Nightcap 2/29/12

2012-02-29T21:11:00.005-05:00

The move thru this turbulent two-day trading period laid out last evening continues. The bearish move down after the open today did not perform any market damage. The SPX could not hold the sub 1365 level which would have ushered in stronger selling, so the bears did not have the downside juice. The catalyst today was when Chairman Bernanke did not mention QE3, while at the same time, the markets discovered that LTRO2 was priced into the markets and the ECB did not make any mention of LTRO3. Yes, LTRO3, the ECB does not have the funds that is why it was not mentioned. The LTRO2 can still supply market juice moving forward, a few days time will be needed to note the effects on markets.

Chairman Bernanke's words sent the dollar higher with gold and silver markets selling off strongly. The Nasdaq actually punched thru the 3000 level before falling on its sword. The month ends today, on the leap day, and the markets experience their best February since 1998. AAPL is the markets and the markets are AAPL. Apple managed to punch out further highs in the 540's but the charts continue to forecast a spank down at the door step, perhaps for Thursday's trade.

The big news minutes ago is the China PMI, coming in at 51.0, better than last months 50.5, and above 50 indicates an expanding economy, albeit by a hair. On the surface, this will benefit the commodities trade and weaken the dollar but the question is how much, since the number is not exactly anything that requires a big party. More importantly, the HSBC China PMI, which is considered to be more reliable (in other words the China PMI is likely fudged data--they learned that off the U.S. Fed, but at least the HSBC data is likely a little less fudged than the main China PMI number; is not this a sad commentary? It is what it is.). More simply, the HSBC number should hit in a couple hours so listen up, and pay attention to that number to determine potential effects on the dollar, commodities, gold, silver, copper, and obviously, the broad markets.

We continue thru this Wednesday-Thursday gauntlet area with the HSBC number imminent, and the E.U. Summit begins tomorrow, Euro leaders will be looking for their jelly donuts and orange juice in a few short hours. Here is the schedule into noon tomorrow when the smoke will start to clear and we can see how the broad markets start to line out, exiting the gauntlet;

Thurs; 4:00 AM EST and on; E.U. Summit begins
Thurs; 7:00 AM EST and on; Motor Vehicle Sales
Thurs; 8:00 AM EST; Fed's Pianalto speaks
Thurs; 8:30 AM EST; Jobless Claims and Personal Income and Spending data
Thurs; 10:00 AM EST; Construction Spending and ISM Manufacturing Index
Thurs; 10:30 AM EST; Natty Inventories
Thurs; 12:30 PM EST; Fed's Lockhart speaks

Use volatility, VIX, as a gauge for broad market direction tomorrow. VIX is on top of the 20-day MA at 18.42, thus, above 18.42 and moving higher will cause the bears to rejoice. The VIX, however, will not cause any significant bear damage unless the 23 and higher level is achieved. If 18.42 is lost, then the bulls will be wrestling back control of the broad markets. If the VIX drops back under 18, the bulls are pouring booze back into the punch bowl because the upside party is ramping up again.

Watch CRB 313, now at 321, about 8 points higher. Remember when we watched this a week or two ago and then it took off to the upside to signal one of the market bull legs higher? It's time to watch it again to see if it drops down into the bear camp again, or not. The dollar behavior is very important; dollar up = CRB down. As mentioned above, the HSBC China PMI number is important as well and will directly impact the CRB.

For the SPX for Thursday, starting at 1365, the market bears have an easier road to hoe, only needing less than two points lower, to drop the SPX under the 1364 handle, and the market downside selling will accelerate. The SPX 10-day MA at 1362-ish would likely fail quickly as well and then the bears can show what they are made of. The bulls will not give up easy and need to retrace the Wednesday intraday drop, to touch the 1378 handle, if so, the bulls will regain control of the broad markets. A move thru 1366-1377 is sideways action.

In a nutshell, HSBC China PMI is imminent and will set the tone for tomorrow's trade, listen for news from the E.U. Summit as well. Jobless Claims, Personal Income and Spending, Construction Spending and the ISM Manufacturing Index are all important data points tomorrow. The ISM will greatly impact the energy markets. Watch VIX 18.42, SPX 1364, and CRB 313 to determine broad market direction.

Note Added 3/1/12 at 5:47 AM: The HSBC China PMI comes in under 50, signaling manufacturing weakness for about the last five months. This number carries more weight than the China PMI, note how China is keeping the data above 50 while the more pertinent HSBC data continues to print under 50 indicating economic contraction. Copper is up only two pennies indicating that traders are taking direction off the HSBC number. Also, the media outlets are not highlighting the HSBC number which tells you that a happier face is trying to be painted by stressing the China PMI number and pushing the HSBC number onto the back pages. The commodity reaction is very subdued, thus, the market bears are keeping their claws dug into the markets. The data on tap this morning is very important and a market pivot point is likely at 10 AM. In additon, traders have ears raised hoping to hear Chairman Bernanke whisper sweet QE3 words. If Bernanke doubles down, and does not mention, or at least down plays, the use of QE3 moving forward, the broad markets should tumble lower. An exciting morning is on tap, especially the first hour or two of trading.

Keystone's Midday Market Action 2/29/12

2012-02-29T10:39:00.006-05:00

Happy leap day. Lucky folks who have a birthday today only age at one-quarter the rate as the rest of us. The LTRO2 excitment was a bit of a dud. Looks like a lot of the news was built into equities. The SPX moved up and over 1373, so price moved up to test 1377 R. SPX punched up thru, but then sold off, now coming down to likely test the 1373 level to determine if price has a right to move higher.

Same stuff each day. Nasdaq moves up and over 3000 so the new records continue. Watch the VIX, now at 17.97. The bears will need to overtake the 20-day MA at 18.4-ish, if so, they may not look back from there. But every journey begins with the first step and the market bears got nothing unless they first move above 18. Speak of the devil, as this is typed, there is a VIX 18.04 print so watch the 20-day MA next, and, of course, see if the 18 level holds. Chairman Bernanke is speaking now with the feed coming across the business networks.

Note Added 2/29/12 at 11:28 AM: The VIX is now printing 18.50 maintaining the 20-day MA as support. Market bears win above here, market bulls win if they push the VIX lower from here. Markets are significantly weakening, gold and silver pulling back, indexes now printing lows of the day. The Nasdaq was leading the downside for a short while, now the Nasdaq and SPX are moving down at about the same rate. Watch AAPL, it is the only thing holding the broad markets together. Apple showing a shooting star candle on the daily chart so we shall see if this marks the top. Moving forward, watch the SPX 10-day MA at 1362, that is important if lost and should lead to further weakness. If AAPL goes negative, still three bucks positive, that will usher in strong market negativity.

Note Added 2/29/12 at 11:37 AM: The SPX support/resistance is 1386, 1377, 1373, 1370.58, 1370, 1368, 1365, 1363.61, 1363, 1362 (10-day MA), 1361, 1358, 1356, 1352.62 (20-day MA), 1351. SPX now printing 1367 so operating between 1365 and 1368. Apparently the lack of any mention of further future QE from Bernanke or the ECB (LTRO3) is ushering in the market weakness. Markets need more crack cocaine and they were told this morning that the supplier is out.

Note Added 2/29/12 at 8:00 PM: Interesting how the VIX closed at 18.43, one single penny above the 20-day MA at 18.42. How does Keystone know those levels to watch ahead of time? Bears did no serious damage since they could not even break down thru SPX 1365, albeit for a few minutes, and the bears could not hold it below. The SPX 1364 handle is important for tomorrow, lose that handle and start printing in the 1363's, the SPX, and broad markets, should accelerate lower. So bears will want to see red futures. China PMI numbers are very important.

LTRO2 Amount is 529.5 Billion Euro's with 800 Banks Participating

2012-02-29T05:49:00.000-05:00

The LTRO2 news hit minutes ago. The amount is 529.5 billion euro's. 800 banks asked for the 3-year loans, about one-third of the banks in the Eurozone. 71 of those banks aked for a one-day bridge loan yesterday.

The market reaction is muted so far. European bond yields and equities and futures markets are all moving sideways. Traders appear to have a deer-in-the-headlight reaction, frozen in place not knowing which way to move. Futures dropped a couple S&P's but then regained the loss to sit at 2 or 3 points on the plus side, basically flatish. The reaction to LTRO2 is subdued thus far, not producing a major impact on markets.

The ECB does not make a reference to a third round, LTRO3, yet.

LTRO1; 12/21/12:
489 billion euro's in 3-year loans
523 banks taking loans (one-fourth of the Eurozone banks)

LTRO2; 2/29/12:
529.5 billion euro's in 3-year loans
800 banks taking loans (one-third of the Eurozone banks)

Thus, the 529.5 number is above the 500 billion consensus, so a slightly larger amount than expected, but does not supply the heaping pile of crack cocaine needed to keep the party going. Market reaction remains muted as traders digest the information. U.S. futures remain flat.

CPC Put/Call Ratio Signals a Significant Market Top

2012-02-28T21:41:00.000-05:00

This chart keeps highlighting a significant market top in place now. The low CPC numbers in the 0.7's verifies the complacency in the markets currently; do not listen to what traders say they are doing, this chart shows that they are fully comfortable staying long without any worry or fear. Note what happened in mid to late July last year when the complacency was at these levels.

The reason that traders are complacent is obvious; the wild orgy of money printing ongoing from the Fed, ECB, BOE, BOJ, China, and even emerging markets, is telling traders to not worry at all, go long and stay long, since the flood of liquidity says markets will grow to the sky. Interestingly, not one pundit has yet asked the question about what happens when every major central bank is easing at the same time? Is it really the major bullish event that traders think, or, is the entire boat simply rising and falling and the net benefit is not what would occur, say, when QE1 and QE2 occurred since this was mainly a solo U.S. liquidity program? The answer is that we do not know what happens when all CB's ease since this is the first time in world history that it is happening.

The 10 MA is above the 21 MA which is market bearish (CPC moving up), watch to see if the market bears can gain further credibilty moving forward if the 17 MA moves above the 25 MA. Note that the last high print was in mid-December which called the bottom in the markets (CPC 1.26). The CPC has not been above 1.1 ever since. The market bottoms are called as the CPC moves above 1.2, currently, we are at the other end, where market tops are called as the 0.7's are printed. Projection remains for a market sell off at any time. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your finanical advisor before making any investment decision.

Keystone's Evening Nightcap 2/28/12

2012-02-28T20:13:00.001-05:00

Tomorrow is the leap day for the leap year. The next two days of trading should prove quite dramatic. The LTRO2 news is the main event and it is only hours away tentatively on tap for 5 AM EST. Here's the playbill to keep track of the drama;

Wed; 5:00 AM EST; LTRO2 announcement
Wed; 7:00 AM EST; Mortgage Applications
Wed; 8:30 AM EST; GDP
Wed; 9:30 AM EST; Fed's Fisher speaks
Wed; 9:45 AM EST; Chicago PMI
Wed; 10:00 AM EST; Chairman Bernanke Testifies
Wed; 10:30 AM EST; Oil Inventories
Wed; 12:00 PM EST; Fed's Plosser speaks
Wed; 2:00 PM EST; Beige Book
Wed; 3:00 PM EST; Farm Prices
Wed; 4:00 PM EST; Monthly charts receive month-end prints
Thurs; (Overnight): China PMI and HSBC China PMI
Thurs; 4:00 AM EST and on; E.U. Summit begins
Thurs; 7:00 AM EST and on; Motor Vehicle Sales
Thurs; 8:00 AM EST; Fed's Pianalto speaks
Thurs; 8:30 AM EST; Jobless Claims and Personal Income and Spending data
Thurs; 10:00 AM EST; Construction Spending and ISM Manufacturing Index
Thurs; 10:30 AM EST; Natty Inventories
Thurs; 12:30 PM EST; Fed's Lockhart speaks

Oy vey! Good ole Keystone better start taking some Excedrin to get ready, hopefully the ticker holds out. Perhaps the defibrillator should be placed on stand-by. This is a major market inflection point, melt-up versus collapse for markets. By noon Thursday the smoke will be clearing. Farm Prices will impact the ag trade. The ISM Mfg Index will greatly impact the energy markets and tickers such as XLE, ERX, ERY. Note the Fed heads out in force; they probably have contingency speeches ready so they can spin the news any way necessary.

The pundits and analysts have avoided making a market call in reference to the LTRO2 news. Chickens. Those brave enough are split with the outcomes. The consensus is about 500 billion (Bloomberg reporting 632 B) but it will not be a surprise to see a larger number. Markets probalby have the 500 bilion already priced in, we will know in a few hours. Some pundits say a higher number will show that the economy is weaker than thought which would worry traders. Keystone says the markets have rallied on crack cocaine, so the more crack that is supplied, the more bull fuel is available, so a higher number should buoy the euro and the markets. 500 billion or lower and the markets should sell the news.

The Dow Industrials closed above 13K which has no meaning technically. Of more import is that the SPX clsoed above the 2011 intraday high at 1370.58, thus the major indexes have all placed multi-year highs now, XLK, Nasdaq Composite, Nasdaq 100, Dow and now SPX. A big feather in the bull's cap. Keystone was surprised that the SPX highs were achieved, not that they were taken out, but that they were taken out without a substantial pull back first then a ride back up for markets to place the new highs. The move from mid-December is about 175 spoo points, from SPX 1200 to 1370's, 16 points per week for eleven straight weeks. The power of money printing is truly impressive. The RUT (Russell 2000 small caps), however, say not so fast bulls. The small caps have not joined this party so watch RUT 860+ moving forward.

The left margin shows Keybot enjoying the bull run from mid-December, only pausing a couple weeks ago for the stutter step whipsaw fake out move. Keybot remains long and the bears can only breathe easy when the left margin shows the red short signal. Keystone's top calling for shorter term trading, playing the short side in the indexes and sectors, continues to languish although the chart set-ups remain constructive for the bears. The next two days tell the story.

AAPL is the markets now. In this day and age, 2012, it is interesting to see that one single stock makes up such a vast majority of the markets, and is held by almost every money manager, fund and hedgie out there. The markets have a way of lulling many into a single position like that when one day everyone wakes up and looks around and realizes, typically all at the same time, that the boat is fully loaded to one side as the ship lists. Who would have thought that sophisticated markets could be so fully exposed to one single stock? The recoil in Apple and the effect on the markets will be very dramatic. Oil was down today so we will see if the SPX follows since oil and the indexes move together, part of the asset relationship; lower dollar (due to global easing by central bank's) = higher euro = higher commodities, gold, silver, copper, oil, equities.

Gold and silver ran higher today as traders are front running the LTRO2 decision, expecting a weaker dollar and more commodity buoyancy. Silver was up over 4%. The movement in oil, gold and silver is very interesting in reference to potential CME margin hikes. Remember in 2011 how we would watch for the CME raises that resulted in spank downs of silver and gold? The April 2011 silver spank down was brought on by the CME raising margin requirements. Thus, keep the wax out of your ears and listen carefully for any margin requirement news moving forward.

Watch RTH 39 and XLF 14.40 for any signs of bearish strength. The bulls remain comfortably above these danger levels. The GS Wells Notice news may effect the financial sector negatively. Make no mistake that traders are complacent currently. Despite any traders waxing worry and concern lately, the CPC prints 0.78 tonight, the bullish euphoria and lack of fear continues (this is a contrarian indicator). The low volatility where the VIX could not even close above 18 today also reinforces the complacency. The NYHL, although at high numbers, cannot regain the early February highs as yet, which is bearish. Keystone's SPX:VIX Ratio Indicator is 76 well above the danger level at 68 making bulls gleeful.

For the SPX today, starting at 1372, the market bulls need only one point. If 1373 is pierced and held higher for several minutes, the bulls will launch another upside run. Bears need a seven point drop to lose the 1365 handle to ignite bearish acceleration lower. A move thru 1366-1372 is sideways action.

To keep it simple, watch SPX 1373, if taken out, SPX moves upwards to test 1377 R. Bears need to lose the 1365 level. Watch the dollar and euro reaction after the LTRO2 announcement. Chairman Bernanke is taking a back seat to the LTRO2 news but listen for information on the end to the Operation Twist program in late summer and any blurbs concerning QE3. Enjoy the evening since the two-day battle begins in a few hours. Watch AAPL since as Apple goes, so goes the markets. The AAPL daily chart continues to highlight the 325-335 zone as a nice short entry due to the negative divergence now in place. The LTRO2 decision will be known about four hours before the open so set your alarm clock early to watch the theatrics unfold but guard your Cheerio's since something may be dumped in them before the open.

SPX One Minute Chart Overbot Rising Wedge Negative Divergence

2012-02-28T11:42:00.002-05:00

The same theme continues thru the daily and minute charts, note the rising wedge profile, overbot conditions and negative divergence, all are bearish. She's ripe to roll over but the Energizer Bunny keeps moving upwards. Look for price to potentially place another high along the top rail of the rising wedge. If price moves back up to that small pink line and moves above, check the indicators to see if the negative divergence remains. This is a minute chart so it is only applicable over the next hour. The SPX is supsended in mid air now. The LTRO news will be dramatic but perhaps today's market action will kick off the show. The important 1372 and 1370.58 levels are highlighted.

Keystone's Midday Market Action 2/28/12

2012-02-28T10:21:00.006-05:00

SPX popped at the open and promptly rolled over on its sword after the Consumer Confidence data, which was actually better-than-expected. Perhaps more and more traders are noticing the froth at these lofty levels. AAPL continues higher, trees do grow to the sky afterall, but, the negative divergence remains so for the last five bucks Apple remains a nice shorting opportunity now. There is no doubt that AAPL is holding up the tech sector which keeps the Nasdaq outperforming the SPX and reinforces continued market buoyancy. The markets are AAPL and AAPL is the markets.

VIX is the little engine that could for the market bears. Since the major sectors remain in the bull camp, the bear hope starts with the VIX regaining the 20-day MA at 18.5-ish. VIX now printing 18.33 trying to muster up strength. The bulls attacked SPX 1370.58 but it only held for a few minutes. The bulls have been unable to attack the 1372 handle which is what they need for a bullish acceleration higher, so keep watching that today. The technical indicators and charts, as presented this morning, show the indexes ripe for a sell off, but, traders cling on to the positive outcome for the LTRO2 news coming in the hours ahead. The LTRO2 is the main even this week. Today is all sideways action so far. Watch VIX, if bearish, you will be happy seeing 18.5 and higher. If bullish, you want to stay under 18.5.

Note Added 2/28/12 at 12:07 PM: The bulls keep running with the ball. SPX 1370.58 and 1372 was taken out which opens the door to 1377 R. The bears are having a hard time keeping the VIX at 18 let alone overcome 18.5. AAPL remains an attractive short now over the last 5 to 7 bucks to 532. Lots of trading remaining today, keep yourself strapped in as we approach the LTRO2 announcement.

Note Added 2/28/12 at 3:31 PM: The SPX is playing around in sideways mode today, the 1370.58 and 1372 S/R are key today. VIX made a try for 18.5 today but then rolled over and is now trying to maintain 18 into the close, so the bulls are in charge. Today is all AAPL, which boosts tech and the Nasdaq, and when tech leads the broad markets go up. Gold and silver jumping today front-running the LTRO2 announcement in the hours ahead. Dow keeps teasing 13K but this is of no significant importance. Markets are likely idling sideways into the LTRO2 announcement; traders are content to roll the dice and see what happens. Watch VIX and AAPL into the close.

Keystone's Morning Wake Up 2/28/12

2012-02-28T08:54:00.003-05:00

The economic data hit minutes ago causing futures to pare gains that were enjoyed all morning long. The euro is higher, and the Nasdaq futures are above the S&P futures, thus, the bulls have two feathers in their caps still yet. The SPX, starting at 1368 today, is set to challenge the 2011 intraday HOD again at 1370.58. If the 1372 handle is touched, the bulls will enjoy more upside fun. The market bears have to drive lower to yesterday's lows at 1355 if they expect to create any negativity. A move thru 1356-1370 is sideways action today.

Watch the semiconductors, retail, financials and copper moving forward; SOX 412, RTH 39, XLF 14.40 and JJC 48.50. The bulls enjoy prices above all these levels. The market bears need at least one of these sectors to fall, otherwise, they got nothing. Watch volatility, VIX, today since this soap oepra has surfaced again. Volatilty should spike at any time, which would be in concert with the equities markets selling off. To gauge if this action occurs, watch the VIX 20-day MA at 18.54, the bears win a big fight if VIX moves above the 20-day MA. Market bulls win by keeping the VIX under the 20-day MA.
However, the bears will not be able to perform significant market damage unless VIX 23 and higher is printed.

Looks like the opening bell will provide drama at SPX 1370.58. Watch the 1372 which is the trigger for bullish acceleration higher. Consumer Confidence at 10 AM is very important and will create a market pivot point. Thus, the first half hour's action is not that telling but by 10:15 AM, the market tone will be set for today. AAPL continues to play a key role; the negative divergence should kick it south now and the broad indexes should move lower in sympathy.

The LTRO holds the key to the markets fate this week as mentioned in the Key Events and Market Movers missive on the weekend. The consensus is about 500 billion euro's. Traders have been talking about LTRO2 for a month now, there is positively some amount of LTRO2 priced into the equities markets already. To handicap the drama, an LTRO2 of 500 billion or lower should result in a market sell off. Any words from ECB leaders that try to back off the program will cause heavy market selling.

An LTRO2 of 500 or 600 billioin euro's will likely provide a market bounce, but the euro and the markets will probably be sold on the news resulting with markets leaking lower in the days following. The big market plus would be shock and awe, making a statement with a 600 billion, 700 or even higher LTRO2. This is enough crack cocaine to explode markets higher in a wild orgy that will, at least, last until the next fix is needed in the near future. The expected 500 billion-ish number looks likely and the broad markets will probably leak lower in response to the news, barring perhaps a quick pop on the news. Traders have had a month to think about LTRO2 and thus buy the market day after day for a month expecting the announcement that occurs within the next 24 hours. Lots of drama ahead over the next day or two.

Note Added 2/28/12 at 9:01 AM: Case-Shiller housing data dissapointed, thus, the S&P's dropped a bit more now showing red. The bulls filttered away their upside move for the open. The Nasdaq remains elevated above the S&P futures, however, so the bulls still have the strong tech feather in their rally cap's. AAPL behavior is critical today. The Consumer Confidence at 10 AM is extremely important today now that the economic data and Case-Shiller both disappointed.

SPX 30-Minute Chart Potential H&S Overbot Negative Divergence

2012-02-28T07:10:00.000-05:00

Keystone's fave chart to monitor the SPX, the 30-minute chart with 8 MA and 34 MA's. Each candle represents 30 mintues of incremental time, so each day is comprised of 13 candles since the trading day is 6 1/2 hours. Yesterday's action shows the big opening sell off, then bounce. Note how the 8 MA was headed lower to stab down thru the 34 MA which is bearish, but before that could happen the markets were goosed higher after the open. Thus, keep watching for the 8 MA and 34 MA cross moving forward. Also watch the RSI 50% level where above is bullish and below is bearish.

The red lines show the negative divergence we watched a couple days ago which resulted in the Friday slap down. The pink lines show that negative divergence remains in place as higher highs occur in price, so nothing has changed, the chart indicates that a move down is in order. The price dropped under the 8 MA which is always a first step for the bears. The ADX shows a stong uptrend in place mid month (over 25) leading to higher highs but look at the paltry 14 number now, indicating that the uptrend has pooped out.

Lastly, watch the blue lines which show potential H&S patterns in play. If the currentl levels serve as the head, say 1370 (or use today's close if the bulls run a bit higher), the neckline at 1354 targets 1338. The thin blue line at 1358 may serve as a neck line as well which would target 1346. SPX 1341-1344 from mid-month is strong support so price will likely test those levels moving forward.

The bulls are the Energizer Bunny moving higher each day but the rally is very long in the tooth as this analysis shows. Projection is a move down for the SPX with an intial move to 1358-1362, the thin blue support line, since this is the price level of the large volume candle from a few days ago. 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 financial decision.

SPX Daily Chart Upward-Sloping Channel Overbot Rising Wedge Negative Divergence

2012-02-28T06:33:00.000-05:00

Price continues to respect the tight purple channel, for now. The overbot conditions, rising wedge and negative divergence forecast that a spank down should easily rupture the lower rail at 1360-ish. The blue line shows the volume participation by bulls is continuing to trail off as the index rises. This is a market negative. In strong bull markets, the volume should steadily rise as prices rise. The coming days should offer up plenty of market excitement.

The projection is down, with an initial test of the 1355-1360 area, a confluence of horizontal support and the 10-day MA. Then the big test of support with the 20-day MA, now at 1346.87. The behavior at the 20-day MA, as it always is for any index or individual ticker, is extremely important and will determine if bulls or bears win. The table is set. 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 financial decision.

SPX Daily Chart Overbot Rising Wedge Negative Divergence

2012-02-28T06:12:00.000-05:00

The market bulls continue the party but this chart is not happy. Note the green lines for the RSI and money flow indicators that were long and strong and wanted to see another higher high in price--they received that higher high now and it occurs as the red lines for the indicators show negative divergence across the board. This divergence, along with the overbot conditions, and textbook rising blue wedge, show that a spank down is on the doorstep, it is simply a matter of how much of a pull back is received.

Note the volume candles continue to show lower participation as the markets move up. Probably the same traders and hedgies selling stock to each other to float things up, but one of them will end up as the last fool, that always holds the bag. Note the 150-day MA, the light green moving average line, the slight upward slope shows that the bulls are in control. Should markets start to sell off, bears will do no real damage, on a longer term secular basis, unless the slope of the 150-day MA flattens then slopes negatively.

Yesterday's candle has a small tail sticking up above the body so it is not a true hanging man candle, that typically forecasts a trend change, but we will say its a cowlick a la Alfalfa from the old-time television show Our Gang sticking up from the head, and watch today for follow thru of this candle which signals that a trend change is on tap. Projection is a spank down for the SPX at any time, it is simply a matter of how far down she will want to sell off before the dip-buyers come in. The Consumer Confidence at 10 AM plays a key role this morning and of course the LTRO news will be the main driver over the next 48 hours. 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.

European Bond Yields 2/28/12

2012-02-28T04:59:00.001-05:00

Italy 10-year yield dropped since yesterday now at 5.35%. Spain dropped under the 5% level briefly, now at 5.00%. France popped up over 3% briefly, now at 2.95%. The two main concerns are Portugal and Hungary. Portugal moved up another ten basis points yesterday, now at 12.79% approaching 13%. Hungary jumps 20 basis points since yesterday to 8.86%, now only 14 bips from 9%, but the media ignores Hungary, for now. Money continues to seek safety in Germany with the 10-year yield now at 1.84%.

Keystone's Midday Market Action 2/27/12

2012-02-27T10:32:00.008-05:00

The week begins with the bears growling but they are not producing any damage to the broad indexes. The SPX was either going to touch 1369 for bulls to win today, or 1363.61 for bears to win, so bears won, for now. Keystone's SPX:VIX Ratio Indicator is at 73, five points above the 68 danger level so bulls do not appear worried. AAPL is a couple bucks off the top but remaining somewhat buoyant. The slight Apple weakness is helping the Nasdaq lead the broad markets downwards, which provides bearish street cred for today.

The retail sector, RTH, remains above 39 so the bulls are not concerned overall, the LOD is 39.36 so the bears need to push 36 cents under today's low before the bulls start to panic. TRIN at 1.22 favors sellers although this is orderly steady-eddy stye selling without panic. The NYAD printed a low at -1700 so not yet near the -2000 and lower that is more in tune with signaling a temporary washout so this favors the steady-eddy selling type vibe today sa well.

The SPX support and resistance indicates that the 1363.46-1363.61 zone is now a resistance ceiling and bulls can only develop positivity if they punch back up thru this zone and remain above. Support below includes 1361 (where the SPX is battling now), 1358, 1357.49 (10-day MA), 1356, 1355 (important support the last few days--and today), 1351, 1347, 1346.54 (20-day MA), 1345 and 1344. The battle for 1361 S/R continues.....

Note Added 2/27/12 at 10:45 AM: Here is the test of the 1363.46-1363.61 zone, bulls punched up thru, see if it holds for seven to ten minutes, or not. This fight will likely determine today's action. Bulls must keep price elevated moving forward. Bears need to push back under this zone, if so, they can push lower to retest the 1355 support from this morning. Current print is 1363.58, smack dab in the middle of the zone, here we go, who will win today, bulls or bears? The bears appear to have the upper hand today, but this spike higher in the SPX shows that the bulls are trying to stop the down slide. The next few minutes are critical.

Note Added 2/27/12 at 3:15 PM: Bulls took the ball and ran with it from 11 AM on. The 1369 level was targeted and that gave way about a half hour ago. The table is now set for the fight for the intraday HOD from 2011 at 1370.58, so there will be drama around this level into the close today. Interestingly, tech is not leading the upside, so you would expect the bullish move to peter out; tech is somewhat coincidental with the broad markets, however. AAPL punching out a new high is helping the broad indexes explore these upper levels. The negative divergence remains for Apple so it is only putting off the inevitable downside spanking for a few hours, or a day or so. Would not be surprising to see Apple sell off into the close today. TRIN is 0.84, bullish. Lots of drama ahead for the last 45 minutes. Would not be surprising to see markets move lower again. Watch SPX 1370.58.

Note Added 2/27/12 at 3:30 PM: Watch to see if volatilty, VIX, can punch up thru the 18 level. There it is, VIX 18.01. Remember last week we watched the struggle for the 20-day MA at 18.53. This fight may be front and center again as the markets move to the close today and in tomorrow's session. Bears need to move above VIX 18.50 if they want to get something started, otherwise, they got nothing. The VIX has jumped form 17.62 to 18.00 in the last 20 minutes which has ushered in some minor market negativity. VIX now printing 17.97, if this moves up, the broad indexes move down, or visa versa for the bulls that want to stay under 18.

Note Added 2/27/12 at 4:20 PM: SPX did not close above the 1350.78, so that is a feather in the bears cap. VIX closed at 18.18, so we will call that in the bulls camp for now, and tomorrow we see if the VIX can move above the 18.50 level which will provide a feather in the bears cap if it occurs. The sectors remain bullish overall. RTH is at 39.75 well above the 39 danger level. The semiconductors require watching. The SOX is at 424, watch to see if the 412 fails which would signal market danger, today the SOX ventured as low as 418. Bulls need to be given their due, they are keeping the rally alive this year and are trying to burn off the overbot conditions and negative divergence by moving sideways. Any Europe or LTRO news leading to the Wednesday announcement is very important. Consumer Confidence is at 10 AM tomorrow and this data will serve as a market pivot point.

ZSL UltraShort Silver ETF Daily Chart Oversold Falling Wedge Positive Divergence

2012-02-27T09:17:00.000-05:00

The inverse silver ETF continues to bottom. Keystone has liked this one from 10 and under, so he must love it at 9.18. The positive divergence remains (blue lines), as well as postive divegence on the weekly chart, and the falling blue wedges, as well as oversold stochastics and RSI, all point to price launching at any time, which would be in concert with the silver price falling.

The red lines show a potential inverted H&S that may be in progress now, using these current low prints at 9.18 as the head. A right shoulder will be needed moving forward so the chart can be monitored as the days and weeks play out. ZSL is an extremely dangerous ETF, and generally, you do not want to hold these for a long time.

Projection is a price bounce to occur at any time, inital target would be the gap fill at 9.7-ish, then a gap fill at 10.3-ish, then over time, an assessment of the potential 10.8-11.0 neckline can be made. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

WTIC West Texas Crude Oil Daily Chart Diamond Continuation Pattern

2012-02-27T08:56:00.000-05:00

Oil is the big story nowadays. The yellow lines show a diamond pattern after the first leg up in price. Typically, bull flags or pennants will form in this area, the diamond patterns do not occur as often. The diamond signals either a drop off and collapse in price coming, or a second leg launch higher. Typically when diamond patterns occur after long moves up that will be in concert with a pull back, and visa versa, diamonds may signal bottoms after a long move down.

On this oil chart, the diamond occurrs after a first leg move from 77 to 102. When price broke above 102 it was obvious that the bulls were starting to run with the ball and the diamond resolution will be higher. When the breakout move up out of the diamond pattern occurred, that was the tell that a second leg up is likely on tap. Since the first leg moved 25 ticks, and the second leg begins at 97, thus, 97 + 25 = 122 price target.

This would sync with Keystone's 80/20 rule when a price breaks the 80 level it seeks the 20 level, thus when price was closing above 80, this always left the door open to 120. Also, 118 leads to 122. This strong spike higher needs to take a rest but looking at the green lines for the indicators, all show long and strong profiles and signify that price will want to see another new high after a pull back occurs. Thus, the 120-ish, to satisfy the diamond pattern, is very much in play for the days or weeks ahead. The 20 MA above the 50 MA is bullish. The Middle East turmoil obviously providing the premium in oil price.

Projection would be a move down to 102-103 only to bounce upwards again to target 120-122. At that time the chart can be referenced to see if negative divergence forms. Continued buoyancy in oil price means the M.E. turmoil should linger on. China PMI will also add drama this week since it will help gauge how much of the oil price is due to global growth projections. Chances are, the high oil prices are mainly due to the ever-increasing dangers in the M.E. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

USDJPY Dollar/Yen Daily Chart Inverted H&S

2012-02-27T07:28:00.001-05:00

The orange lines show an inverted head and shoulders (H&S) pattern with head at 76-ish. The thicker line shows the neckline at 78-ish, which was broken, so a target of 80 is in forecasted, and already achieved. Another inverted H&S can be forecasted with the same head but using the thinner neck line at 79-ish, thus, that target would be 82. Price is currently receiving a pull back from the 81 area. With the momo in place now, 82 should be tagged, then price can pull back and likely move sideways thru the 78-82 channel going forward. Note that the necklines are ruptured without any back kiss yet taking place, thus, price should come back down to 78-79 for a test and bounce to show that it truly wants to head higher. If looking at the FXY chart, simply use the inverse analysis and project a H&S breakdown for that chart, the reverse of this analysis.

The weaker yen causes the dollar/yen to move higher, a higher dollar causes the dollar/yen to move higher. The white lines, and yellow lines, show the positive divergence that launched price, the chart easily told you at these junctures that you do not want to be playing the downside. Speculators buy at the white and yellow arrows to call bottoms. From March to the bottom in early November, note the falling wedge that gave a bounce projection more street cred as well. Projection is a move to tag 82, then back down to 78-79, then sideways thru 78-82. 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.

AAPL Apple Daily Chart Overbot Rising Wedge Negative Divergence

2012-02-27T05:21:00.001-05:00

The AAPL chart has been setting up with negative divergence over the last 3 or 4 days. We were looking for a 520's print to top it off, it's there. Note the textbook blue rising wedge forecasting a spank down. The blue lines show the negative divegence and along with overbot RSI and stochastics, all want to see a smack down.

Looking at the indicators thru January into February, note the green lines all showing a long and strong profile for price; this behavior demanded to see another higher high in price--and we now have that higher high in price. Of interest is the MACD line which punches out a tiny higher high, thus, after price receives this spank down, price will come back up for some buoyancy due to the MACD line, then likely roll over.

The neon green circles show all the juicy gaps left open as price made its parabolic move recently. These gaps will likely be filled at some point in the future. The 444 level represents the bottom level of the island that formed above. Thus, price may come down and collapse thru the gap to create an island reversal, that will be fun to watch as the days and next couple weeks or more tick by. For this near term, the projection is a spank down for price now, intial targets are provided by the open and closing prices of that high volume candle at 514-ish and 498-ish. As AAPL goes, so goes the markets. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

European Bond Yields 2/27/12

2012-02-27T04:55:00.000-05:00

Greece 10-year yield continues higher, now at a ridiculous 34.42%. Here are the current yields as a new trading week begins.
10-Year Yields:
Greece 34.42%
Portugal 12.69%
Hungary 8.65%
Italy 5.46%
Spain 5.05%
Belgium 3.67%
France 2.95%
Netherlands 2.36%
U.K. 2.05%
U.S. 1.95%
Germany 1.89%

Portugal up a few basis points since Friday, so the focus and concern will increase each passing day. Hungary pulled back down since Friday by almost 20 basis points, but, as we have watched over the last month, it is a beach ball under water and sure to explode higher again. For now, there is no talk of Hungary as a concern, perhaps 9% will signal trouble. Portugal and Hungary are the two major concerns right now. The other yields are moving sideways. Germany and the U.S. are back under 2%.

Keystone's Key Events and Market Movers Week of 2/27/12

2012-02-26T09:57:00.003-05:00

Summary for the New Trading Week Ahead:

The low volatility confirms the complacency (along with the low CPC and other indicators) in place as the majority of traders do not anticipate any pull back in markets. For the traders that do expect a pull back, they only reference a minor rest for markets of 3 to 5%. The Barron’s cover advertises Dow 15K a week ago. Jeremy Siegel, Professor at the Wharton School, toured the cable business outlets to tell everyone Dow 15K and higher is coming. There is no denying the positive market impact of the LTRO program provided by the ECB, as well as the Fed announcing low rates thru 2014. This crack cocaine has supplied the bull fuel, and this week, we find out how much more crack cocaine is on tap.

The estimates and projected outcomes from the imminent LTRO decision are all over the map. To perhaps keep a simple approach with the announcement, since simple is always better, if 500 billion euro’s or lower are announced, equities markets will likely be disappointed, even though the consensus is in this area. If the amount is from 500 billion to 600 billion that will likely please traders and provide an initial pop but the steam will probably come out of markets thereafter. We will find out how much of the LTRO announcement is already priced into the markets. If the LTRO program is a shock and awe event, with an 800 billion bazooka or higher, the equities markets will take off like a rocket, since that crack fix will be plenty to keep the addicted markets happy. The LTRO announcement is the main event this week and will have the greatest impact on markets.

The broad indexes continue to print new multi-year highs. The Dow Industrials keeps testing 13K and the SPX closed above the 2011 high at 1364. Markets always strive to hurt the maximum amount of traders. Right now, the bulls are back-slapping and telling each other how smart they are for riding the bull rally the last two months. Bulls have no fear of the markets going down, many say that even if the markets do pull back, there will be plenty of time to cash out and take profits, or the pull back will be so minimal that there is no need for concern. The bears are frustrated from shorting the market beast, having to cover the shorts as markets rose, only to provide short-covering bull fuel to keep pushing the indexes higher. Many short players are sitting out now, they would rather wait and see markets drop first so then they can be more sure of a committed down move.

Therefore, considering the bulls are complacent with their feet up on the desk, and bears do not want to sell the market, the best outcome to hurt the maximum amount of traders is for an overnight event to occur that causes the equities markets to open down large, perhaps even lock limit down. That way, bulls that enjoyed the upside will immediately cry foul since a huge drop would erase much of the profits and long players that jumped in over the last two or three weeks would be under water. At the same time, the short sellers that were waiting for the move down, got it, but the magnitude and speed of the move down leaves many short sellers in the dust, not holding short positions, now having to decide to chase the downside or simply accept the missed move. Stay on guard, as this example illustrates, markets are very unstable currently.

Earnings continue along in force with many second tier companies reporting. The AZO earnings on Tuesday and Vehicle Sales data on Thursday will provide automobile data to help gauge the health of the U.S. and global economy. ODP and SPLS will provide information on small business activity. Early in the week, the LOW earnings and the Case-Shiller data will affect the housing market. Lots of energy earnings are on tap, including the popular MLP’s, and the ISM data hits on the first, Thursday, as it does each month. The XLE, oil and gas stocks will respond strongly to the ISM data.

The high gasoline cost is becoming a serious issue and now that the general public is taking notice, the effects on the retail sector are probably not far behind. Gasoline prices are already at or near $4 working towards $5 per gallon in the U.S. in the area where demand destruction occurred a few years ago. When cars are parked in the driveway, people are not shopping, and, not earning money to go shopping.

Aside from the LTRO main event this week, Chairman Bernanke’s testimony in front of Congress this week is important. The Consumer Confidence data at 10 AM Tuesday should provide a market pivot point. The Beige Book provides another market pivot point at 2 PM Wednesday. Note how the economic data is centered in the mid-week time frame Tuesday thru Thursday. Friday is set up as a slow day but perhaps the excitement this week will have all traders crying for a slow day by then. The Mexico City communiqué is the direct news that traders are focused on tonight, Sunday night, into the start of the week. The LTRO talk takes precedence over anything else occurring this week. China and HSBC PMI numbers on Thursday are very important since the copper and commodities markets, and in turn, the equities markets, will react on the news.

Continue watching AAPL since as AAPL goes, so goes the markets. As Keystone pointed out with an Apple chart last week, and the chart can be updated and reposted over the next day or so, the AAPL daily chart is set up with negative divergence setting up a nice short trade since a spank down is on tap. In fact, the traders that went in to short AAPL on Friday may look smart come Monday. As AAPL moves lower, so will the broad markets.

Watch the Nasdaq versus S&P 500 percentage moves in real-time. If the Nasdaq 100 and Nasdaq Composite start to lag the broad market, the SPX, that will show tech running out of gas and thus affect the broad markets negatively. This occurred Friday, 2/17/12 thru Wednesday 2/22/12 for the first time this year. Traders enjoying the technology rally will likely take profits moving forward. February is typically a month where tech traders take profits since the strong Q4 seasonality has now passed and this week we will be moving into March already.

Market bulls have made serious gains in the broad markets over the last month, overtaking the moving average lines as well as other key levels indicating a return to secular bull markets. The bulls are in good shape as long as they stay above SPX 1284 and NYA 7650. The dollar and euro dictate the markets, up dollar = down euro = down commodities = down markets and down dollar = up euro = up commodities = up markets. Chairman Bernanke crushed the dollar with extending the low rate Fed policy into late 2014. Thus, Bernanke’s testimony this week will impact the dollar, and markets, again. The euro moves opposite the dollar and in the same direction as equities. Thus, the LTRO decision this week will impact the euro, and, in turn, one of the relationships highlighted will play out.

For the SPX, starting at 1366, the market bulls need to touch 1369, if so, the intraday HOD from 2011 at 1370.58 is tested next, which leads to 1377. The market bears need to push the SPX back under the 1363.61 (2011 closing high), if so, the broad market selling will accelerate. A move thru 1365-1367 is sideways action. Since the projected range is very tight for Monday’s trade, the markets will likely commit to one side or the other, thus, watch 1369.00 and 1363.61. Keep an eye on retail this week as well, the RTH 39 may play a key role. We also find out if March comes in like a lion or a lamb.

Key Dates and Times for the Week and Month Ahead:

· Monday, 2/27/12: Traders are awaiting the communiqué from the Mexico City meeting which will help assess the struggle between LaGarde and Germany. Listen for news concerning the second LTRO program over the coming days. Watch the European 10-year bond yields, especially Portugal and Hungary. Congress will return from a one week holiday recess which is a market negative. Listen for any China news, especially growth projections, which affect copper and commodities markets, and in turn, equities markets. PMI is important on Thursday. Markets remain in a Bradley turn window thru Wednesday so watch for a potential market trend change to occur early in the week, if it occurs. Pending Home Sales 10 AM. Dallas Fed Mfg Survey 10:30 AM. Earnings: AONE, ACHN, AEGN, AMRS, ATLS, CCC, CECO, DPM, DNDN, EGLE, EP, GXP, HGSI, HOGS, JAZZ, LOW, MRX, MELA, OXGN, PBT, PCLN, KWR, KWK, SOL, SJT, SWN, SVNT, SINA, JOE, TIE, UHS, URS, VTUS, VISN, VVUS, ZAGG, ZIOP.

· Tuesday, 2/28/12: Durable Goods 8:30 AM. Case-Shiller 9 AM. Consumer Confidence 10 AM. Richmond Fed Mfg Index 10 AM. Fed’s Pianalto speaks 7:15 PM. Earnings: AMED, ANGN, AZO, CERS, CRZO, DPZ, DSX, DWA, FSLR, FE, GTLS, HFC, MWE, NKTR, NRG, ODP, STEC, PANL, VRSK, VPHM, WNR, WTR.

· Wednesday, 2/29/12: Leap Day for Leap Year. EOM. The announcement of the second LTRO program is the major market mover for the week. Mortgage Purchase Applications 7 AM. GDP 8:30 AM. Fed’s Fisher speaks 9:30 AM. Chicago PMI 9:45 AM. Chairman Bernanke speaks 10 AM. Oil Inventories 10:30 AM. Fed’s Plosser speaks at noon time. Beige Book 2 PM. Farm Prices 3 PM. Earnings: BID, COST, EIX, EVEP, FNSR, ISIS, JOY, LIZ, MDR, NOG, PETM, SIGM, SODA, SPLS, YGE.

· Thursday, 3/1/12: E.U. Summit begins. China PMI and HSBC PMI data. Motor vehicle Sales data. Pianalto speaks 8 AM. Jobless Claims and Personal Income and Outlays 8:30 AM. Construction Spending and ISM Mfg Index 10 AM (watch the energy markets). Natty Inventories 10:30 AM. Fed’s Lockhart speaks 12:30 PM. Fed Balance Sheet and Money Supply 4:30 PM. Fed’s Williams speaks 10 PM. Earnings: GMO, JRCC, KR, FL, FLOW, LORL, MITL, SATC, SPPI.

· Friday, 3/2/12: Fed’s Bullard speaks 8 PM. Earnings: ALTI, BIG.

· Thursday, 3/8/12: ECB Rate Decision and Press Conference.

· Friday, 3/9/12: Monthly Jobs Report 8:30 AM.

· Monday, 3/12/12: Eurogroup meeting of euro zone finance ministers in Brussels.

· Tuesday, 3/13/12: Ecofin meeting of European Union finance ministers in Brussels.

· Tuesday, 3/20/12: Greece deadline for financing.

· Friday, 3/30/12: Informal meeting of EU finance ministers in Copenhagen.

· Thursday, 6/28/12: EU Summit for heads of state in Brussels.

SPX S/R Week of 2/27/12

2012-02-25T09:35:00.000-05:00

The SPX closed above the 2011 closing high at 1363.61 which is a feather in the bulls cap. The tech strength this year started the trend in the indexes making new multi-year highs. The XLK, COMP, and then the Dow Industrials last week took out the multi-year highs. The single lonely number target remaining above now is the SPX 1370.58 intraday HOD from 2011.

For the SPX, starting at 1366 on Monday morning, the bulls need to touch 1369, if so, the move to test 1370.58 will occur quickly. Note that a break up thru the 1371 resistance will lead to a move to test 1377, so the 1370.58 is an important line in the sand. The G-20 meeting ongoing as this is written will affect the euro, and thus the dollar inversely, for Monday's trade. Euro up = up markets. Euro down = down markets.

The market bears need to push lower to regain their composure and this is very difficult with the dollar losing steam. Thus, bears need to see a stronger dollar = lower euro = lower equities. If the bears can push back under the 1363.61 number, the downside will accelerate lower. Watch the 10-day MA since this moving average has served as strong support for this bullish rally since mid-December. Any rupture of the 10-day MA to the downside is bear-friendly. A move thru 1365-1367 is sideways action. Note the tight range projection for Monday, thus, it is highly likely that price will commit to one side or the other; watch SPX 1369 to see if the bulls win, or, 1363.61 to see if the bears win.

· 1399

· 1391

· 1389

· 1386

· 1377

· 1371 (5/2/11 Intraday HOD 1370.58)

· 1370

· Friday HOD 1368.92

· 1368

· Friday Close 1365.74

· 1365

· 1364 (4/29/11 Closing High 1363.61)

· Friday LOD 1363.46

· 1363

· 1361

· 1358

· 1356

· 10-day MA 1355.65

· 1351

· 1347

· 1345

· 20-day MA 1344.30

· 1344

· 1341

· 1339

· 1338

· 1337

· 1336

· 1333

· 1332

· 1331

· 1330

· 1329

· 1327

· 1326

· 1323

Keystone's Trading Week in Review and Path Ahead 2/25/12

2012-02-25T08:31:00.001-05:00

On 2/17/12, Friday, the markets remain buoyant and traders focus on Dow 13K and the 2011 highs for the SPX. The Dow closes above the intraday HOD from 2011 at 12928, this is now the highest level for the Dow since 5/19/08, four years ago, and a big feather in the bulls cap. The SPX, reflecting the broad market better, however, remains stubborn, falling short of closing above the 2011 closing high at 1263.61. Watch SPX 1263.61 like a hawk as this drama picks up again next week.

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On 2/19/12, Sunday, Eurozone leaders begin meetings, thru teleconferencing, to resolve the Greece crisis by Monday.

On 2/20/12, Monday, U.S. bond and equity markets are closed for Washington’s Birthday and President’s Day holiday. The Greece drama plays out when an agreement is reached in the wee hours of the morning. The new Greece bailout package helps to calm markets and create buoyancy with the euro.

On 2/21/12, Tuesday, the U.S. markets reopen after the holiday and after a happy start due to the Greece resolution, the broad indexes leak lower. Traders realize that Eurozone growth remains a worry as well as implementation of the Greece austerity measures. In addition, European leaders are already saying that further discussion on Greece will need to occur in the near future which sours the perception of the bailout deal. The Dow Industrials poked above 13K intraday but closed below. The euro leaks lower and since the euro and U.S. equities markets are joined at the hip, the markets move lower.

On 2/22/12, Wednesday, the tech sector leads further market downside, from Friday thru today, this is the first time during 2012 that tech is showing a negative face. AAPL, however, continues to move upwards. Since 80 to 90% of the funds or more own Apple stock, it cannot be understated the bullish impact the run in AAPL is having on the broad markets. The broad indexes moving higher are deceiving. Apple stock is a main reason behind the bullish move in the markets. This serves to lull traders deeper into complacency, and low volatility and low put/call ratio’s verify the bull euphoria. Interestingly, despite the analysts and pundits saying they are worried about a pull back, or some commenting that a 3 to 5% pull back is expected in an unconvincing tone, they are not doing what they say. Traders remain happily bullish on the markets and do not appear to be concerned about the downside risk. The broad indexes place the lows for the week in late Wednesday early Thursday trading.

On 2/23/12, Thursday, the E.U. says that Europe’s economy is expected to shrink in 2012, with Italy and Spain a major concern. Fitch rating agency downgrades Greece’s debt to C from CCC. The euro remains buoyant, however, so the markets head higher printing new highs but the SPX is unable to close above the 2011 high at 1363.61 and the Dow Industrials are not yet able to close above 13K. At the close, oil prints a 9-month high at 108. The weaker yen is also an important story this week, the dollar/yen now battling with 80, not seen since last July.

On 2/24/12, Friday, the big focus is oil prices with WTIC printing over 108. The general public is talking more and more about the high gasoline cost, parts of the country now paying over $4 per gallon, which should damper spending. Other countries around the globe would be ecstatic about gasoline at this price but in the States, where larger vehicles are used and longer distances over land are traveled each day, gasoline moving above $4 per gallon creates demand destruction. Talk of an SPR (Strategic Petroleum Reserve) release is bandied about as always occurs when oil prices run higher. The question is will WTIC oil at 110 trigger a release? Perhaps 120 per barrel? Or perhaps Brent up and over 120? Sunday evening trading will show if the 110 level is breached, or not. Treasury Secretary Geithner is encouraging Europe to boost their firewall and make the backstop credible and strong. The Dow Industrials poked above the 13K level again and remained above for about one-half the session, only to leak lower into the close. The SPX closed above the 2011 closing high of 1363.61 and is now at levels not seen since mid 2008, 3 ½ years ago. AAPL finished at the highs of the week up over 522. As AAPL goes, so goes the markets. The charts are set up with negative divergence indicating a smack down for AAPL is on tap now which would take the broad markets lower. The SPX ended the week up one-third of a percent for the week closing at 1366. Portugal and Hungary 10-year yields continue higher all week long indicating future trouble ahead.

On 2/25/12, Saturday, G-20 finance ministers and central bank governors meet in Mexico City. The IMF wants more money to help create a strong support system for Europe, a sturdy firewall, or ring fence, where the risks of contagion can be diminished. This is what Geithner is encouraging. But, Germany, must continually pony up more and more cash to support the countries that enjoyed years and years of wine and roses. Thus, the soap opera playing out this weekend is LaGarde, the IMF, wrestling with Germany as the main event, and, in general, Europe and world nations meeting to find solutions to the European debt crisis and try to establish a strong firewall to prevent contagion, especially in reference to Italy and Spain. The German political talk will noticeably ratchet up in the coming days.

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On 2/26/12, Sunday, the G-20 meeting says……bigger resources? ……bigger firewall?

On 2/27/12, Monday, Pending Home Sales. Watch European bond yields, especially Portugal and Hungary.

On 2/28/12, Tuesday, Durable Goods Orders, Case-Shiller, Consumer Confidence.

On 2/29/12, Wednesday, the odd-ball leap year day today, and EOM. GDP, Beige Book. Chairman Bernanke testifies in front of Congress. The LTRO decision is critical today and the most important trading item for the week. The first LTRO created a 10% jump in the SPX and 20% jump in the DAX over the last couple months. If this second LTRO is under 500 billion euro’s the markets will not be happy since this is not enough crack. The euro will likely weaken. Between 500 billion and 600 billion would satisfy traders but provide limited upside for equities except for an initial pop. Shock and awe should occur above 600 billion euro’s since this is plenty of crack cocaine for markets to continue higher in the near term. Much of the LTRO is probably priced into markets already. Estimates and outcomes are all over the place, only a couple weeks ago the trillion number was bandied about.

On 3/1/12, Thursday, Jobless Claims, Personal Income and Outlays, ISM Manufacturing Index (watch the energy market). European leaders meet in Brussels today and tomorrow to discuss funding for the ESM (European Stability Mechanism).

On 3/2/12, Friday, …..

Keystone's Midday Market Action 2/24/12

2012-02-24T10:20:00.014-05:00

Groundhog Day was three weeks ago but, like the Groundhog Day movie, each day repeats a similar pattern. Markets are bumping along sideways in early action. The SPX moved up thru the 1363.61 number and touched the 1364.25 number so the upside acceleration occurred. The highs of the day are printing as this is written, the SPX now testing the 1368 resistance level highlighted in the SPX S/R numbers a couple messages back. If 1368 gives way, the intraday HOD from 2011 at 1370.58 will become the focus.

As mentioned this morning, the key sectors to watch that are most impacting the broad markets currently are the utilities, retail, copper and commodities. The pattern continues with the utilities helping the bears and retail and copper helping the bulls.

The Nasdaq and SPX are both up about 0.30% so even though tech is not leading the broad markets, it is concidental which is supportive of the upside move today, thus far. Of no surprise is AAPL moving higher, now at 520, which provides the tech boost which takes the markets higher. Apple is a highly attractive short now and this 520 appears as a fine entry, but not a trade for the faint of heart, since AAPL is a freight train momo stock. The negative divergence as pointed out in the daily chart a couple days ago has now set up properly so AAPL should sell off from this 520-ish area. AAPL moving lower should take the broad markets lower as well. The euro is the Energizer Bunny with limitless energy, now at 134.7 in the midst of an upside orgy, providing the bullish thrust today. The dollar is lower as would be expected with the euro higher, and the market bulls are running. Watch the euro and AAPL since they will dictate today's action. The euro, XEU, chart from last evening remains in play today. Negative divergence remains on the MACD histogram, stochastics and ROC, wanting to see the euro receive a spank down. The RSI is long and strong, however, so after the euro pulls back, for perhaps a day or three, the euro will need to move back up to these levels to satisfy the RSI (reference last night's XEU chart).

Note Added 2/24/12 at 10:47 AM: Note that UTIL came up to take a look at 452.91 again, now printing exactly on top of that. Keystone told you to watch this number a week ago, and here we are, watching it print. The 452.91 is only important for another five hours. At 4 PM today and for all next week, the UTIL number to watch changes to 442. The Nasdaq is now lagging the SPX so without tech leadership, the market upside is limited. SPX HOD so far today is 1367.76, so the 1368 R has held, so far.

Note Added 2/24/12 at 11:48 AM: Markets always have a way of surprising traders. Just when today looked like a slow day, Keystone's algorithm is signaling a desire to move to the short side; reference the Keybot link in the upper left margin for the skinny. The bears can develop serious downside mojo if they print SPX 1352 today, which is a formidable task from current levels at 1367. Watch UTIL 452.91 to gauge the bull-bear sentiment today. This afternoon's trade may be dramatic. UTIL now maintaining back above 452.91 for several minutes, the SPX keeps bumping its head agains the 1368 R. Bulls are trying to push utes higher to gain market strength, UTIL now 453.28, whoa, now 453.40, the bulls are ramming the utilites higher to try and punch the SPX over 1368 R. High drama. There it is, SPX 1368, the bulls win above, the bears win below.

Note Added 2/24/12 at 12:18 PM: Markets receiving a large goose over the last half hour. UTIL leaped up over 454, now comfortably above the 452.91 level; keep watching. This pushes SPX over 1368 R and price remains above 1368 for 25 minutes. This behavior opens the door to test 1370.58. Thus, for today, watch SPX 1370.58, 1368, 1364.25, 1363.61. The Nasdaq strengthened which is helping push the markets higher; AAPL printing the highs of the day.

Note Added 2/24/12 at 12:39 PM: SPX now back kissing the 1368 breakout level. See if the bulls hold it and launch to test the 1370.58 R, or, if the bears punch back and force the SPX to collapse back under 1368 S/R. UTIL remains elevated so you would have to give the market bulls the advantage for now. The Nasdaq is leading the SPX higher today, so tech is providing the bullish support for markets. AAPL in a vertical move now, an 80 cent move in only 13 minutes, now printing 521, daily chart continues showing beautiful negative divergence set up indicating that this is a temporary top for AAPL and a smack down will occur at any time. Markets will remain elevated until the Apple falls from the tree.

Note Added 2/24/12 at 12:48 PM: The SPX successfully back tested 1368, and launched, now printing 1368.38. Price should make a try for 1370.58. The utilities remaining elevated is supporting the bulls, along with tech. Volatility, VIX, is printing 16.46, new lows, but, on both the daily and weekly charts, the postive divergence is indicating a launch is on tap from this area. Up VIX = down markets. The VIX launch move will likely occur in concert with the AAPL spank down move. This afternoon may supply exciting market drama.

NYHL New Highs-New Lows Daily Chart Diverging from the Broad Markets

2012-02-24T07:56:00.000-05:00

The NYHL shows the recent market bottoms as green circles and recent market tops as red circles. Note how market bottoms occur when the new lows far outweigh the new highs, and, visa versa, the market tops occur when the new highs far exceed the new lows, like now. The broad markets have been in this bullish trend since mid-December.

The recent action shows a descending triangle which is bearish. But instead, focus on the downward-sloping red trend line. The NYHL is dropping, leaking away as the broad market makes new highs. The three peaks on that trend line correspond to the market tops over the last three weeks. This divergence is bearish showing exhaustion in the upward move; the markets are moving higher but the number of new highs continues to trail lower. Projection is that the broad markets are topping and a pull back should occur at any time. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your finanical advisor before making any investment decision.

Keystone's Morning Wake Up 2/24/12

2012-02-24T07:16:00.000-05:00

Interesting action lately with the bulls and bears fighting each day with neither side able to land the knockout punch. The stronger euro (euro now over 1.34 as this is written), weaker dollar, is continuing to run commodities, copper, gold, silver and oil higher, as well as equities. Technically, the broad indexes are bracketed by the utilities on the upper side and copper and retail on the lower side. For the bulls to push the broad markets higher they need to push UTIL above 452.91, and since that task has proved difficult this week, the market upside has been limited. Starting Monday, however, the market bulls will have an easier path ahead since the UTIL only has to remain above 442.01 to affect the broad indexes positively. This changes the dynamics of the indexes and favors the bulls next week. Watch UTIL closely and see where it closes today in relation to 442. Utility weakness in today's session would be viewed as extremely bearish since UTIL will be starting to work its way towards 442, but if UTIL remains flatish today, next week will set up as favorable for the market bulls.

Copper, measured by JJC, remains above 48 and this prevents the market bears from making any headway south. Likewise commodities, CRB. JJC and CRB are propped up by the weaker dollar which is occurring in concert with the stonger euro. Market bears need to see a weaker euro and stronger dollar, otherwise, the pain will continue. Since the utilities, UTIL, appear to want to stay above 442 for next week, at this juncture, the market bears need other sector indexes to cooperate to create broad market weakness. This weakness may appear in JJC and CRB--if the dollar strengthens. Another sector that Keystone's algo is increasing focus on is the retail sector, using the RTH as a measuring tool. If RTH would drop under 39, that will spell trouble for the broad markets and take precedence over the affects of copper and commodity weakness.

The previous SPX S/R message provided the road map for the SPX today, watch 1363.61 and 1370.58 on the top side, and 1354 on the underside. The move in the SPX today takes somewhat of a back seat to this ongoing drama described above with the utilities, copper, commodities and retail. Watch UTIL 452.91 for today and 442.01 at 4 PM today and all next week, JJC 48 and RTH 39.00. One of these three will tip its hand and that will indicate the path forward for the broad markets. The bulls may have weathered the storm over the last few days since the utilities sector is coming back their way, but, the numbers have to play out in the days ahead.

Interesting, Fitch just cut JCP to junk, with earnings hitting within the hour.

SPX S/R 2/24/12

2012-02-24T05:57:00.000-05:00

The SPX closed near the highs at the end of the Thursday session. If the market bulls touch 1364.25, and hold it for a few minutes, another upside bull party should launch. The green futures project this rosie path but the open remains three and one-half hours away. Note that the SPX poked back above the 2011 closing high in yesterday's trade but could not close above, so obviously 1363.61 is very important in today's session. If the 1365 resistance is breached, which is likely if the SPX touches 1364.25, the SPX will likely test the 1370-1371 level, specifically, the 1370.58 intraday HOD from 5/2/11.

The market bears continue to receive a slap in the face each day. The stronger euro leads to a weaker dollar which leads to higher commodities, copper, gold, oil and equities markets. Market bears need to see a stronger dollar if they want to create the spank down that the negative divergence on the daily and minute charts forecast.

The SPX 1354 level is strong support forming a confluence with horizontal support, the 10-day MA and this is also the neckline level of an H&S pattern shown in last evening's charts.

For the bulls, if 1364.25 is touched after the open, price should poke back up thru the 1363.61 and also the 1365 strong resistance. SPX 1368 resistance may put up a small fight but if price is moving upwards, the 1370.58 provides the true overhead resistance test. The bears need to take the SPX down to test the 1354 level again and see if they can create failure at that level.

· 1409

· 1407

· 1404

· 1399

· 1391

· 1389

· 1386

· 1377

· 1371 (5/2/11 Intraday HOD 1370.58)

· 1370

· 1368

· 1365

· Thursday HOD 1364.24

· 1364 (4/29/11 Closing High 1363.61)

· Thursday Close 1363.46

· 1361

· 1360

· 1357

· 10-day MA 1354.27

· 1354

· Thursday LOD 1352.28

· 1351

· 1347

· 1345

· 1344

· 20-day MA 1341.94

· 1341

· 1339

· 1338

· 1337

· 1336

· 1333

· 1332

· 1331

· 1330

European Bond Yields 2/24/12

2012-02-24T05:27:00.000-05:00

The European bond yields are remaining calm these days. Portugal and Hungary are blowing out, however, and are the two key countries to watch moving forward. The Portugal 10-year yield jumped 25 basis points since yesterday to 12.62%. The spread between the Portugal 2-year and 10-year has narrowed to 20 basis points with the short end yield moving down 10 bips and the 10-year yield moving up. The Hungary 10-year yield is 8.83%.

Italy auctions a few minutes ago went off without problems. The Italy 10-year yield is at 5.48%, continuing to inch lower for the last seven weeks. The Spain 10-year is 5.06% starting to tease the 5% level. The U.S. 10-year note is at the 2% level.

Keystone's SPXA150R Indicator

2012-02-23T21:24:00.000-05:00

This chart allows market short sellers to sleep easier at night. Keystone's SPXA150R Indicator uses the 80, 85 and 90 levels as a guage for how a rolling top is progressing for markets. This chart now shows nearly 90% of the S&P 500 stocks are above their 150-day MA. This is where market tops occur and at these values and higher there is typically no reason to worry about holding shorts. Markets may roll along sideways a while longer but this level of 88 and especially above 90 is a highly attractive area to short the broad markets.

Keystone's indicator attempts to assign order to the price movement in this market bullish zone. When price moves above 80, this signals a Bullish tone moving forward. This occured in February. If the price drops under 80 then the markets are selling off, if the markets head above 85, the bulls are running. The SPXA150R punched above 85 which is Strongly Bearish; the higher price goes the closer it comes to reversing hard which means you should view the broad markets more bearishly.

So at this area, if price falls back under 85 the markets will be selling off, if the price moves above 90 this enters an Uber Bearish zone and the markets would be susceptible for a stumble lower at any time. Thus, as a tool to gauge broad market direction, check this chart after the close each day forward to see if 85 or 90 is attained first. Bulls want to see 90 since that at least keeps them afloat a while longer. Bears want to see sub 85 since that will signal broad market selling occurring. Note the red lines showing firm negative divergence across the board which should spank price down at any time, thus, a chart to help the bears sleep easier. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

XEU Euro Daily Chart Channel Gap Negative Divergence

2012-02-23T20:40:00.000-05:00

XEU euro daily chart shows price moving above the top rail of the downward-sloping channel. A back kiss would be in order and the red lines show the negative divergence in place across all indicators except for the RSI that is ever so slightly sloping upwards. Euro should receive a spank down from the negative divergence, which can provide a back kiss of the channel. Then a likely bounce again to satisfy the RSI. The U.S. equities markets move in the same direction as the euro.

The 20 MA above the 50 MA is bullish but the downward sloping 200-day MA is very ugly and bearish for the euro moving forward. Note the neon circle showing the gap fill that occurred today. This closes out an upside target for the euro. Projection is for a sideways euro moving forward but in the days ahead a move down in price is likely which will correspond to the broad markets moving lower. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

SPX 30-Minute Chart Overbot Negative Divergence

2012-02-23T19:49:00.000-05:00

Two H&S patterns are in play. The pink H&S was set up yesterday with a target in the low 1340's if the 1355-1357 neckline gave way, which it did today, but note that when price came up for the back kiss, price continued higher and the neckline failure was negated. The neon green H&S is now in play with a new right shoulder. Head at 1367, neckline at 1352-1354, targets 1337-1341.

The red lines show the negative divergence top identified on Tuesday that caused the spank down. Note the blue lines that then provided positive divergence for a price bounce. But the RSI and MACD line (teal lines) printed lower lows and were not positively diverged. This suggests that price needs to come back down to test the 1354 neckline area to satisfy these two indicators. For the move higher today, the purple lines show a long and strong profile that says a higher high will be needed after a pull back. The stochastics, however, are negatively diverged and will help create price weakness early tomorrow (gray line).

The 8 MA moved back above the 34 MA which is bullish. Note, however, the weakness in the slope of the 34 MA which is bearish for price action moving forward. Projection is more sideways but price needs to take a look at 1354 again and this may happen as early as tomorrow. Failure at 1354 opens the door to 1340-ish. 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 financial decision.

SPX Daily Chart Overbot Negative Divergence Channel

2012-02-23T19:20:00.000-05:00

Price now poking up for a matching or higher high and note the negative divergence that remains in place. Price tapped on the bottom rail of that channel today and bounced. Considering the negative divergence, it would not be surprising to see price fail below the bottom rail tomorrow.

Despite this three month rally, the 200-day MA remains flat as a newleywed's souffle, which is bearish moving forward. Bulls need to see that 200-day MA perk upwards if they want to smile. The volume is trailing off as it is harder and harder to find bag holders. Projection is smack down any time due to negative divergence, initial target is the horizontal pink support line at 1340-1344. 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 Midday Market Action 2/23/12

2012-02-23T09:40:00.013-05:00

SPX falls to test 1355.50 after the bell rings. UTIL is remaining under 452.91, bearish. JJC is above 48, bullish, but has a 48 handle now, 48.96. Volatility is jumping over 3%. Remember the VIX fight with the 20-day MA yesterday at 18.72? VIX now printing 18.76, on the top side of the 20-day MA is market bearish, under the 20-day MA is bullish for markets. Tech is not leading the broad markets lower as the day gets underway. The Nasdaq remains flat to slightly negative. This is surprising since the last two days presented lackluster DELL and HPQ earnings and guidance.

Today picks up where yesterday left off. Here comes UTIL up for a look at 452.91. The SPX failed the 1355.50 level, therefore, 1354 should test in quick order and the downside should accelerate. First, watch to see if the SPX stays under 1355.50 for another five or ten minutes, or not. Remember, from last evening's 30-minute chart, 1355-ish is an important level, should the bears now convincingly push down thru.

Note Added 2/23/12 at 9:45 AM: SPX collapsed thru 1354. UTIL came up to within two pennies of 452.91, and died, collapsing, now about one point lower. JJC is 48.58 inching its way towards the 48 level that will signal increased market bearishness. VIX is at 18.91 now moving up above that critical 20-day MA, market bearish. It's all going the bears way right now. If the Nasdaq can step up the game a bit, the bears will start to cruise lower. The housing data in ten minutes may pivot the markets--or accelerate them lower. SPX may have to come up to back kiss 1355.50 at some point. For now the bears are growling, but, with Keystone's SPX:VIX ratio at 71 still above the 68 level, bears need not become too enthusiastic over this move lower. Watch to see if the VIX can move above 19 which would signal further market bearishness.

Note Added 2/23/12 at 11:04 AM: The bears ran out of gas. Since AAPL is up and the Nasdaq is remaining elevated today, the broad indexes did not make any headway to the downside. VIX reversed course and now moved under 18, lower volatility = higher markets. UTIL remains well under 452.91 which is market bearish moving forward. JJC 48.84 remaining 84 cents above danger thus helping the market bulls. The market bulls need to touch SPX 1363 if they want an upside expolosion to occur, the HOD thus far is 1360.63. Market bulls are happy and bears have a tough road to hoe if AAPL remains elevated. If AAPL rolls over, then the downhill sledding will be easy. Here comes the SPX up to test the HOD, this test is important.

Note Added 2/23/12 at 11:17 AM: The SPX fell thru the 1355-ish neckline highlighted in last evening's 30-minute chart. But, instead of a back kiss at 1355-ish and failure, price back kissed and jumped back above the neckline now printing the highs ofr the day which may serve as another right shoulder for the H&S pattern. Today's action places a new neckline in place at 1354, where the bounce occurred this morning, thus, head at 1367, neck at 1354 targets 1341. Using the highs and lows, head at 1268, neck 1352, targets 1236. Thus, today's action for the SPX forecasts a move towards 1236-1241 should the 1354-1355 level give way again.

Note Added 2/23/12 at 2:15 PM: The euro is green, currently printing above 1.33, say no more, the markets remain elevated. Interestingly, even AAPL pulling back from earlier gains, since an anticipated dividend announcement did not occur today, is not having much of an affect on the indexes, although the move in Apple is small. The SPX has placed a HOD thus far at 1362.46. The market bulls need to touch the 1363 handle to ignite an upside orgy. Thus, for now, the market bulls ran out of gas. Neither side wants the ball and when one side receives the ball they hand it back to the other side. UTIL is 450.66 and the negativity of this number cannot be understated. This print is over two points under the critical 452.91 level thus casting a pall over the broad markets, despite any appearances of upside bias in the markets currently. UTIL at this level moving forward is very negative for the broad markets. Since the euro is green today, the dollar is weaker, thus equities are higher. Interestingly, however, is that commodities and copper would be expected to be higher but both are languishing. Perhaps CRB is running out of gas and JJC, now printing 49, has been weak all day, although it remains one point above danger. Oil, West Texas, is approaching 108, and silver and gold are running higher on the weak dollar and continued Middle East tensions. Volatility, VIX, fell under 18 today to bounce the markets. VIX now languishing across 17.5. The complacency remains extremely high in markets, traders are simply not worried about the downside risk at all. This is the type of market where any long position trader tells him or herself that 'there is no reason to worry and if the markets start to pull back there will be plenty of time to exit'. That makes the possibility of a large news-driven event occurring overnight, on any given night moving forward, a very interesting risk to manage.

Note Added 2/23/12 at 3:17 PM: SPX touched the 1363 handle, see if price holds above for seven to ten minutes, if so, the markets should stay higher into the close. The bulls keep running. SPX 1363.61 is the closing high from 2011, price is testing now....right on the dot, 1363.61. See if price can overtake and close above 1363.61 in this final forty minutes.

Note Added 2/23/12 at 4:45 PM: SPX held 1363 into the close. It was surprising a larger upside move did not result after 1363 gave way. Perhaps the 1363.61 closing high from 2011 held price back and the SPX could not close above this critical number once again, falling pennies short. The key force behind the move today is the stronger euro. The euro, $XEU, is now at levels not seen since early December, almost three months ago. Market bears are not able to develop sustainable downside without the euro moving down. Euro down = dollar up = commodities down = equities down. Obviously today was euro up = dollar down =commodites up = equities up. Everyone, including the shoe shine boy, and the cab driver, are shorting the euro creating a buoyancy since the boat was fully loaded to the downside. Today's one percent move higher for the euro flushed some of those weak shorts out of their positions. UTIL closed at 450.75 which contributes market bearishness moving forward. JJC, copper, is a point above 48 contributing bullishness. AAPL finished the day up, the daily chart's negative divergence remains firmly in place so that move is not sustainable at this juncture. As AAPL goes, so goes the markets. As frustrating as these markets are for the market bears, if the euro decides to drop, dollar pop, and AAPL roll over, the broad indexes can turn ugly very fast. As long as the euro is green, however, the SPX will run sideways with an upward bias. Volatility was a bear killer today, the VIX closing under 17. Today's print on the CPC must be referenced to note the complacency in relation to the VIX. The utilities are rolling over, same-o for trannies, and extreme trader complacency is occurring, all three are short to intemediate term bearish indications, but equities float upwards.

Keystone's Morning Wake Up 2/23/12

2012-02-23T06:36:00.001-05:00

Futures markets are active this morning, bouncing strongly when Germany's IFO was happier than expected a couple hours ago but now trailing lower after the E.U. projects slower growth ahead for the Euro zone. HPQ laid an egg last evening with weaker guidance. This news comes on the heels of DELL's drag on the tech sector. Tech led the broad market rally this year until last Friday, and now for three days in a row, tech has led the downside, although the market bears have not been able to take advantage of this shift in trend.

Technology traders typically exit positions in February since they milked the Q4 (best quarter for tech) profits for all their worth as the February winds blow. Thus, tech should not be the leader moving forward that it was to start the year and this should dampen the broad market upside. The utilities and copper sectors are the two key sectors dictating market direction currently. Continue watching UTIL 452.91 and JJC 48. Yesterday, the utes crossed back and forth across the UTIL 452.91 line eight times. How does Keystone know these numbers to watch ahead of time?

The euro moved above 1.33 this morning. This buoyancy in the euro, at least in part due to the large short positions held, prevents the dollar from gaining any significant headway higher, thus, a weak relative dollar boosts commodities and copper and keeps the broad markets elevated. Of interest is that China says that lower growth estimates will be provided in a couple weeks. This should cause copper to drift lower even before China provides the actual projections tentatively scheduled for 3/5/12. China is in danger of serious social upheaval if the growth rate drops under 8%.

The quantitative easing around the globe is out of hand. For QE to work, there must be only one or two countries following thru with these programs. As in currency trading, it is all about the relativeness of markets, the relationship of each individual market to another individual market. The interesting question to ponder is that if the entire globe is easing including the ECB, BOE, BOJ, the Fed, China, and even emerging markets such as Brazil and India, will the whole boat rise and fall in sync without QE providing the major push that each individual country desires? The U.S. eased in early 2009 with QE1 which launched markets out of the duldrums. China instituted easing as well in this period but other countries were happily continuing along with sustained growth. The no-brainer now, spoken by analyst after analyst, is that the unprecedented QE ensures higher equities markets for as far and long as the eye can see. What do you think? The fly in the ointment is that if every major nation is providing QE at the same time are the projected positive equity market affects overrated? The other worry is that QE causes asset bubbles, especially in commodities, and these always have sad endings. Lots of drama is ahead as winter flows to spring in the nothern hemisphere.

With unemployment and underemployment remaining high, and the housing market remaining in a funk, and banks not making loans, the economic malaise should continue. But, sticking to the technicals, the SPX had punched up thru the 1363.61 closing high from 2011 but has yet to close above. For the SPX today starting at 1358, the market bears can develop strong downside acceleration if the SPX loses the 1355.50 level. This 1355-ish level is also important since it is an H&S neck line as depicted in last evenings SPX 30-minute chart. Market bulls need to touch 1363 and that will surely shoot the index up thru the critical 1363.61 and send the SPX towards 1370-1371. A move thru 1357-1362 is sideways action.

Jobless Claims are a Thursday morning ritual so that will affect futures in a couple hours. Also, at 10 AM EST, a market inflection point may occur with the FHFA Hoousing Index data. Natty Inventories are 10:30 AM and Oil Inventories are 11 AM, delayed one-day because of the U.S. holiday on Monday. The odd ball 7-Year Note Auction hits at 1 PM so there is a regular pace of news occurring today. Retail earnings are a large focus today both pre-market and after the bell, so monitor RTH and XRT closely, as well as the individual retail companies reporting earnings. Does gasoline finally take a bite out of retail speniding? Are the low-end consumers getting crushed by gasoine cost? Are the wealthy folks continuing to spend money without a care?

In a nutshell, to determine broad market direction, watch UTIL 452.91, JJC 48, SPX 1363/1355.50, the euro, the dollar, and technology to see if it leads the markets up or down today. In addition, as AAPL goes, so goes the markets. If the bears begin to growl, watch SPX:VIX ratio, now at 75, to see if it drops under 68, when it does, a large market down day will result. Watch volatilty, the VIX, that ended stone-cold flat yesterday, today it will have to commit to a direction; up VIX = down markets and down VIX = up markets.

European Bond Yields 2/23/12

2012-02-23T04:51:00.001-05:00

The Greece 10-year yield continues higher each day now at 34.37%. Portugal 10-year is flat as compared to yesterday at 12.38%. Hungary yield blew out yesterday, the 10-year yield jumping from 8.49% to 8.82%, a 33 basis point increase, yet Hungary is rarely in the news. This move in Hungary is huge; perhaps bells will ring if/when the yield hits 9%? Portugal and Hungary are the two main concerns right now. Perhaps a reader knowledgeable on Hungary can comment.

Italy and Spain 10-year yields remain flatish at 5.58% and 5.11%, respectively. France 10-year continues to hang a smidge under 3%. A flight to Germany places its 10-year yield at 1.92%. The U.K. and U.S. remain over 2%. The Portugal 2's, 5's, 10's and 30's are 12.92%, 15.22%, 12.38% and 10.14%, respectively. Note the yield curve inversion from the 5's thru the 30's, also, the 2's are higher than the 10's and 30's indicating inversion. A complete inversion would occur with the short-end 2's climbing above 15.22%. Regardless, Portugal is in trouble.

SPX 30-Minute Chart Overbot Negative Divergence Megaphone H&S

2012-02-22T18:50:00.001-05:00

The megaphone pattern remains in play and targets the SPX 1260 area. The upward channel is in place for the last month and received a spank down from the top rail. This is where the rising price was met with negative divergence and overbot conditions and received its expected smack down. The 8 MA is now under the 34 MA which is bearish. The RSI and stochastics are under the 50% levels, bearish, ROC is under the zero line, bearish. The neon green lines show the universal negative divergence that was in place to mark the top Tuesday morning.

The red lines show a weak and bleak profile that want to see another lower low. The pink lines show an H&S pattern now in play, so a lower low would test the neckline at 1355-ish. SPX 1354 is sturdy horizontal support from the last couple years, so if price ruptures the pink neck line at 1354-1356, the SPX will be in big trouble with a target at the horizontal support at 1340-1344. The bears are in perfect shape to push the indexes over the hill. Watch the indications mentioned to see if the market bulls are able to push back tomorrow. 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 financial decision.

Keystone's Midday Market Action 2/22/12

2012-02-22T10:56:00.008-05:00

Lots of drama today. UTIL cannot make it's mind up about 452.91. The SPX fell to within 12 cents of signaling accelerated selling at 1358, only to bounce. Volatility, the VIX, is trying to maintain the 20-day MA at 18.72. Above 18.72 and the market bears will be happy. If volatility drifts lower again, bears will be happy.

AAPL is moving sideways into and thru a symmetrical triangle from late yesterday thru now. This sets up a potentilally large spike move higher, or collapse lower, on the door step. Last evening's chart would hint at a move lower but as this is typed, the move is a spike upwards, from 511.50 to 513.50. Thus, today's dramatics should continue along. Tech is leading the broad markets lower, for three days now, which is bearish for markets. The euro, however, remains buoyant, perhaps due to a gluttony of short players in the euro now, and with the euro buoyant, the dollar has difficulty moving up, since they typically move inverse to each other.

UTIL 452.91 and SPX 1358 are telling the story today. AAPL now printing 514, that symmetrical triangle shot it higher. UTIL 452.02 so market bears are winning. SPX 1360.34 continuing along sideways today. VIX 18.57 now under the 20-day MA so the market bulls are winning this fight. Markets are in a sideways funk today. UTIL now a point under 452.91 so this is a big feather in the bears cap.

Note Added 2/22/12 at 12:32 PM: UTIL gave up the ghost after its earlier attacks of 452.91 so the market bears will benefit. The SPX broke down thru 1358 which ushered in additional negativity. SPX 1354, 1351, 1347, 1345 and 1344 which is strong support, are downside targets. VIX continues today's fight for the 20-day MA at 18.72 with the bull's winning at 18.59. The bears are having difficulty with downside market mojo because the volatilty has not launched yet. If VIX jumps up and over 18.72 again, the market selling will noticeably increase. Otherwise, the bulls are limiting the downside. Tech continues to lead the markets lower today which is a strong force; as trading continues this may have a fatigue effect on the bulls.

Note Added 2/22/12 at 1:03 PM: UTIL coming back up for another look at 452.91, the bulls are not giving up. VIX 18.48, moving lower, that is bull friendly. Markets meandering sideways. Interestingly, look at an AAPL minute chart, the sideways triangle this morning resolved with an upside spike just before 11 AM. Now AAPL has morphed into another sideways symmetrical triangle and has to make a decision again now--either big spike skyward, or, a collapse in price lower.

Note Added 2/22/12 at 1:12 PM: AAPL sneaking out above the triangle.....513.06.....but watch, sometimes the initial move out of the triangle is a fake-out move and price will do a hard reverse. But UTIL jumps above 452.91 the bulls are on the run higher again. The saga continues. Neither side wants to give up and neither side wants the ball. AAPL moving sideways.

Note Added 2/22/12 at 1:17 PM: AAPL launch out of the triangle, 514.50, the market bulls have juice. UTIL 453 and VIX at 18.12 now. The bulls are pushing now and gaining ground.

Keystone's Morning Wake Up 2/22/12

2012-02-22T09:03:00.000-05:00

Short and sweet today. If UTIL stays under 452.91, bears are happy. Bulls need to move above 452.91 to bring in market positivity again. If JJC stays above 48, bulls are happy. Bears need to move below 48 to usher in strong market negativity. Market bears want to see the dollar stronger, euro weaker, so the commodities and equities markets are slapped lower. Bulls want dollar weakness to continue since it keeps the higher copper, gold, commodities and equities move in place.

AAPL is key, it is like Atlas holding up the globe, in Apple's case holding up the markets. AAPL is weaker in the early trade. Bulls obviously do not want the AAPL fun to end, since it keeps the tech sector leading the broad markets higher. Bears want to see a stumble, as the AAPL chart a couple messages back shows, since Apple moving lower takes the tech sector lower taking the broad markets lower.

For the SPX starting at 1362, the market bulls need to push up thru 1363.61 (last years closing high) then up to touch the 1368 handle, if so, the bulls will reaccelerate the upside party. Market bears need to lose the 1358 handle, if so, larger block sellers will enter the markets and the indexes will move strongly lower. A move thru 1359-1366 is sideways action.

The dollar, AAPL, UTIL 452.91, JJC 48 and SPX 1358 will show you the broad market direction today.

European Bond Yields 2/22/12

2012-02-22T05:28:00.000-05:00

Greece is up over 34% now but the number has been ridiculous for quite a while. The resolution yesterday is met with a yawn by markets. Greece festers each passing day. The Greek citizens have the right idea, however, simply pass the lotion and enjoy another day in the Mediterranean sun.

Portugal is a big focus now, the 10-year yield bounced 13 basis points since this time yesterday, now at 12.38%. The Portugal yield curve is inverted from the 5's thru the 30's but the 2-year at 13.63% remains lower than the 5-year at 15.32%. Nonetheless, it is obvious that Portugal has problems and is headed for or already in recession. Hungary is the beach ball that keeps bouncing up every time it is pushed under water, jumping 11 bips since yesterday, back up towards 8.50%, but Hungary is rarely mentioned in the news. Perhaps a European reader on the site here may comment on what they see in Hungary.

10-Year Yields:
Greece 34.06%
Portugal 12.38%
Hungary 8.49%
Italy 5.50%
Spain 5.12%
Belgium 3.62%
France 2.98%
Netherlands 2.42%
U.K. 2.17%
U.S. 2.06%
Germany 1.95%

Italy 10-year is up 8 bips since yesterday back to the 8.50% level. All is quiet with the remainder of the yields. The market crack addicts are all salivating over the coming LTRO announcement next week (2/29/12) which should provide a new fix. The question is how much the program will offer the next time around. Portugal and Hungary continue to appear under pressure moving forward.

AAPL Apple Daily Chart Rising Wedge Negative Divergence

2012-02-21T20:28:00.000-05:00

AAPL price is now up for a matching high compared to three days ago and the indicators are negatively diverged. The price action takes on the red rising wedge profile which is also bearish. Price can move up into the 520's which appears as an attractive short entry, but shorting momo stocks like this is highly dangerous. The weekly chart, however, still has considerable momo and strength so it will want to see price come back up again after a sell off.

Note how the 444 level and higher has now formed an island top so when price comes down it will either collapse thru the gap to create an island reversal, or simply come down to fill the gap at 430-444. The coming days may develop into a wild ride for AAPL; over the next day or two, the Apple appears to want to fall from the tree now receiving a spank down from the negative divergence.

This is important since AAPL has single-handedly helped support the broad markets. If AAPL sells off, the broad markets will as well. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

Keystone's Midday Market Action 2/21/12

2012-02-21T09:50:00.008-05:00

The cross currents continue in the markets. The SPX spiked above the 1363.61 closing high from 2011, the first penetration. Watch to see if price closes above here today, or not. This opens the door for several more handles higher and the 1370-1371 level, representing the 2011 intraday HOD is a likely target to test. SPX 1365 is sturdy resistance but price should have oomph to move thru since the breach of 1363.61 is so important.

The utilties spiked at the open as well, UTIL now printing 453.48 handily above Keystone's key number for this week at 451.92, thus, this ute buoyancy is helping the broad market bulls. Copper is popping as well, on the back of China's triple R easing, JJC at 49.09, well above the danger level at 47.60. Likewise, commodities continue higher on the weaker dollar, CRB at 320 well above the danger level at 311.50.

The Dow Industrials are looking at the 13K psychological level but the HOD remains short at 12983. The SPX:VIX ratio is 73.71 well above the danger level at 68. Volatility is higher which is not what would be expected with buoyant markets. VIX is up 4% today which is more consistent with the broad markets lower by a half percent or more. Thus, things are out of sync and one side is incorrect. The Trannies, TRAN, drift lower which is a bearish indication, the Dow and the Transportation Indexes continue to diverge.

Tech has lost its leadership for the bulls for two days in a row now, but, the day is young, this is bearish. The SPX is up 0.32% but the Nasdaq is up 0.29%. Watch this relationship since it is fluctuating currently. If tech does not lead, the broad markets have limited upside. AAPL is up on the day which makes market bulls happy.

Note Added 2/21/12 at 10:24 AM: The utes gave up the ghost, falling back under the critical 452.91 at 9:48 AM. The weakness in the utilities causing the weakness in the broad markets. Bulls cannot take markets higher without the utes moving above 452.91. The SPX fell back under the 1363.61 number but had spent the first fifteen minutes of the day above. Trading needs to play out for a couple hours to see if the SPX wants to come back up to test the highs today. If UTIL stays under 452.91, the market bulls will have difficulty. Copper is buoyant but not moving up strongly so much of the China easing appears to have already been priced in to copper. Tech is not leading the upside so the upside should be limited. Continue watching UTIL 452.91, JJC 46.90 (slightly higher number now) and SPX 1363.61. Here comes the utes, bulls are on the move, UTIL now printing 452.70.....452.80......452.84.....bulls need seven more pennies.

Note Added 2/21/12 at 3:19 PM: The utilities moved above and below 452.91 but failed at 1:18 PM, ushering in general market weakness. Copper and commodities are holding up on the weaker dollar, however, so the market bears are unable to gain steam to the downside. The SPX is back under the critical 1363.61. The Dow Industrials touched the 13K pinnacle today, and then promptly fell on its sword now printing 12942. Now that the utes are weaker, the market bears need to see the dollar strengthen so copper and commodities can move lower and take equities markets lower. The market bulls want UTIL to regain 452.91 so they can get their upside mojo back. Tech is leading the markets lower all day long, the second day in a row since tech also exhibited this weak behavior on Friday; this is bear favorable since the entire year was simply tech leading the broad markets higher day after day. Now there are chinks in the tech armour and February is also the expected month where many traders exit their tech positions. Thus the current battle is the bulls trying to attain UTIL 452.91 while the bears are trying to push JJC under 46.90. One side will win and take the broad markets in the same direction. The battle may run thru the close and have to be decided tomorrow.

Note Added 2/21/12 at 4:05 PM: The utilities, UTIL, finished under 452.91, bearish. JJC finished above 47.90, bullish. The SPX was not able to close above the 2011 closing high today at 1263.61 even though it poked up thru today. DELL just missed on the bottom line and met on the top line; it's giving up the ghost in the after hours thus far. Tech led the downside today and this DELL news should foster further negativity. AAPL was up over 12 points today, 2.5%, to 515, thus, the market bulls best friend is Apple. With the matching high today, the indicators are negatively diverged for AAPL which is bearish. The market bears will enjoy a broad market slap down if the dollar is stronger while AAPL is weaker. Market bulls will maintain buoyant happiness with a continued weaker dollar and an ever-higher shiny Apple.

QID QQQ (Tech) Inverse ETF Daily Chart Falling Wedge Oversold Positive Divergence

2012-02-21T07:38:00.001-05:00

QID is an inverse ETF against the Q's which are technology for the most part. RSI, stochastics and money flow are all oversold with no where to go but up. The blue falling wedge points to the launch pad for price. The green lines show strong positive divergence that wants to launch price now which means tech will weaken, which is very negative for broad markets.

However, it is not all rosie for tech bears, QID price needs to launch now but note how the money flow shows a lower low. Price will probably want to come back down to test these levels or slightly lower again to satisfy the money flow. The weekly chart is agreeable to a bounce with positive divegence but in the shorter term one month time frame the momo is down and it is agreeable to a pull back after a bounce occurs as well. Thus, the projection is for a zig zag move off these current levels.

Note the large buying a few days ago, where those traders are now a hair underwater. The bounce may target the doji candle and gap at 36; the 20-day MA is also sloping down to form a confluence at this area. Then perhaps the pull back and then she should have a more extended move higher in the weeks ahead. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

TZA Small Caps Bear 3x ETF Daily Chart Falling Wedge Oversold Positive Divergence

2012-02-21T07:13:00.000-05:00

TZA is the inverse triple magnitude small cap ETF; always a dangerous trade and not for the faint of heart. The blue falling wedge is a thing of beauty, rarely do they form so perfectly. The stochastics are oversold. The green lines show the positive divergence that bounced TZA a few days ago. The purple lines show the current positive divergence in place ready to launch price again along with the falling wedge and oversold stochastics. The pink lines also display the long and strong profile to the chart, bullish. The weekly chart is positively diverged as well providing further street cred for a move up in TZA, which means a move down in the small caps, and broad markets.

Note last Thursday when TZA price started to move south again, those traders that had been holding on panicked and sold as shown by the large red volume candle. This hints of a capitulation type move which also furthers the liklihood that TZA has washed out for now and will head higher from here. Note that the falling wedge allows a bit more downside before the launch, but, considering that the green lines already bounced price and this is more of a second thrust higher that will occur, the chart is prime to launch at any time.

The gap at 19.8-ish is an intial target. Price moving above the 20-day MA would be a very bullish indication, as well as the money flow, RSI and stochastics moving up above the 50% levels. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.

European Bond Yields 2/21/12

2012-02-21T06:32:00.000-05:00

The new trading week begins in the States. Greece announced an agreement in the wee hours of the morning but as the hours move along the futures markets are leaking lower. The Nasdaq, representing tech, is more negative than the broad markets which provides an early hint in favor of bears. Tech leads the broad markets. The European bond yields are relatively unchanged and flat since Friday. The Hungary 10-year yield dropped to 8.38%, still a troublesome high, however. Italy 10-year yield is 5.42% and Spain is 5.11%, down from last week.

France is up two tiny ticks to 2.99% playing around with the 3% level. Germany 10-year yields jumped from 1.90% to 1.97% since Friday. The U.S. and U.K. 10-year's are both over 2% at 2.04% and 2.23%, respectively. In the land down under, the moves are small, but Australia is ticking upwards now at 4.09%. Portugal is flat since last week, the 10-year yield now at 12.25%. Thus, all's quiet on the European front.

U.S. retail sales earnings will impact U.S. markets today. A 2-Year Note Auction occurs in the States at 1 PM EST today. Today we find out if any gremlins are at play in the markets due to the new moon and/or Bradley turn affects.