Mortgage Applications are up, barely, this week finally one up week in a sea of down weeks. Refi's are flat. Ramadan ends so the Middle East and Northern Africa violence and terrorism may increase. President Obama just cancelled his trip to Russia to meet with Putin in retaliation for the Snowden affair. Putin will likely not lose any sleep over the matter and probably seize the opportunity to poke another stick in America's eye. The president will attend the G-20 meetings. Oil Inventories are 10:30 AM. The 10-Year Note Auction is 1 PM.
The Nikkei drops -4% overnight as the yen strengthens and dollar/yen drops under 97, now printing 97.05. Copper, commodities and volatility remain the key drivers of market direction. Watch JJC 39.00, GTX 4795 and VIX 14.20. Copper starts the day bearish (and copper is very weak in early trading today), commodities are bullish, and volatility is bullish, respectively. Keybot the Quant is long but if JJC stays under 39.00, which appears likely, and the SPX drops under 1693, and stays there, the algo will likely flip short today. Watch the bear flag pattern on the 30-minute chart last evening which targets the low 1680's. The SPX 20-day MA is 1688.14 and the 50-day MA is 1650.02. The 8 MA is under the 34 MA on the 30-minute chart signaling bearish markets for the hours and days ahead. Futures appear to weaken after the president cancelled the Russia trip a few minutes ago. Watch JJC 39.00, GTX 4795, VIX 14.20 and SPX 1693-ish. If GTX fails 4795 today, that will add further bear fuel to create a sustainable downside market move. DIS and RL are trading lower pre-market.
Note Added 10:31 AM: Keybot the Quant flips to the bear side today at SPX 1691. Watch JJC 39.00, now causing bearishness, and GTX 4795, now causing bullishness. Bears need GTX under 4795 to know that the downside is here to stay. Bulls need to push JJC above 39.00 and they can create a whipsaw back to the long side for Keybot. Markets remain shaky, staggering in more of a sideways direction despite the selling today. TRIN is 0.86 indicating that the bulls are gathering strength to make a run higher today. JJC and GTX will tell the story. SPX is at 1685.87. LOD is 1684.91. This 10:30 AM timing is when the POMO pumps kick in so we shall see what the bulls got. UTIL dropped through 500 printing a 499 handle but is now at 501.63. VIX is at 13.86, near the highs, inching up towards the bull-bear line at 14.20. If VIX moves above 14.20, the bears are guaranteed the downside. Bulls are trying to keep volatility under 14.20 with all their might; Chairman Bernanke is holding the VIX beach ball underwater but his fingers and hands are getting wrinkly and tired.
Note Added 10:41 AM: Whoa, GTX LOD is 4790. The 4795 failed but only for three minutes, the bears could not hold it. Here is your chance bears, you need to push GTX down the steps immediately and the market slide south will be sustainable. Now or never. A GTX bounce and move higher may indicate that the bulls will recover today. JJC is 38.91 moving up.
Note Added 11:16 AM: JJC at 38.98 sitting on the 38.98-39.00 bull-bear line in the sand. GTX keeps tapping on 4795 and dipping under but bears cannot keep it under. GTX 4799. The bulls and bears are fighting it out. TRIN 1.00 dead neutral so now it will not even pick a winner today. Call it the coin-flip market; it can still go either way. SPX 1688.
Note Added 1:11 PM: The drama continues. JJC is 39.00 sitting exactly on the 39.00 bull-bear line. GTX is 4798.90 above the 4795 bull-bear line in the sand. Semiconductors are now important to market direction. SOX is 474.22 above the 473.36 bull-bear line in the sand. A failure at SOX 473.36 will cause another leg lower for equities. VIX is smashed down to 13.15 and TRIN to 0.89 to create market lift. Same-o operation that the bulls perform each day to pump the broad indexes higher. JJC 39.00, GTX 4795 and SOX 473.36 are the three key inflection points right now and dictate maket direction. SPX is 1691.
Note Added 1:31 PM: JJC 39.16 on a big push higher now in the bull camp. GTX 4798.40. SOX 474.75. VIX 13.14. TRIN 0.93, bullish but up off the lower readings today. SPX 1691.40. SPX is flat as a pancake through 1690-1692 since lunchtime. Bulls are fighting back since they know they can lose complete control today if JJC, GTX and/or SOX turn down.
Note Added 1:41 PM: GTX failure now at 4787. 'Houston, we have a problem'. Copper and semi's remain on the bull side. SPX 1691.
Note Added 2:32 PM: Lots of blustering for position is going on. Bulls and bears, both with chests puffed out, each telling the other that they are 'da man', but neither has the energy to assume full control forward. JJC 39.09 creating market bullishness. GTX 4787 creating bearishness. SOX 473.89 creating bullishness but slowly leaking lower. VIX 13.24 continuing to create bullishness. Bulls will lose the markets when VIX moves above 14.20. TRIN 0.98. SPX 1690. Looks like semi's may create some late-day drama so watch SOX. If SOX 473.36 fails, only about fifty cents away, the SPX will drop into the mid to low 1680's. If bulls can push GTX back above 4795, today's negativity will disappear in a warm summer wind.
Note Added 3:21 PM: Status quo with JJC bullish, GTX bearish, SOX bullish. Markets float slightly higher since the bulls go to the first page of the playbook once again crushing volatility. VIX drops under 13. SPX 1693.
Note Added 4:00 PM: SPX 1691. Status quo into the bell. Copper, commodities and semiconductors will dictate market direction tomorrow.