Keystone's Midday Market Action 1/3/12

Perhaps some leftover fireworks launched the markets at the opening bell for 2012.  The SOX blew up thru 368.60 and is now printing a 372 handle.  Copper jumped at the open causing the broad markets to move higher as well.  Note that the SPX is above the 12-month MA at 1280.35. The SPX 1280-1281 level is very importnat today.  One day does not change a market but if the SPX stays above 1281, the markets will be steadily bullish moving forward.

A fly in the ointment is the utes.  Keystone harps about the utilities often and note that they are the only sector red today, UTIL is down almost 4 points. Remember that a strong sustained down move for the broad markets begins with the utes rolling over.  So, on one hand, we have a joyous bullish start with traders throwing confetti, while at the same time the utes are urging caution. The NYAD shot above +2100 so after this bullish orgy today, the move needs to pull back for a rest, either later today or tomorrow. Interestingly, the TRIN is at 1.03, dead flat even between bulls and bears.  If the upside had a lot of additional strength, a 0.7 or 0.8 number would be more expected.

PPG was downgraded today. Chemicals are the building blocks of recoveries with all the paints, plastics, resins, etc... GR was downgraded as well which supplies lots of parts to defense and aerospace sectors.

The bulls are running today.  SPX 1280-1281 will be important into the close today.  The FOMC Minutes at 2 PM will serve as another pivot point for markets.

Note Added 1/3/12 at 11:09 AM:  UTIL is now down five points at 459.67. TRIN has now dropped to 0.88 more in line with todays bullishness. The Nasdaq is leading the SPX on the upside so this will help maintain these higher levels in the indexes.  Markets may travel sideways into the 2 PM drama.

Note Added 1/3/12 at 11:48 AM:  SPX may be coming down for a look at that 12-month MA at 1280.32. This is high drama, a struggle for secular control of the markets.

Note Added 1/3/12 at 12:18 PM:  SPX fails the 12-month MA.  Continue to watch 1280.32.  UTIL down 8 points, printing 456.75. SOX running out of gas printing a 370 handle.

Note Added 1/3/12 at 1:56 PM:  SOX dropped under 368.60 before 1 PM but has recovered. UTIL is down 10 points, down over 2% today, to 455.31. SDP, the ute inverse, is up 4.40% today. FOMC Minutes release at 2 PM is only minutes away.

Note Added 1/3/12 at 2:49 PM:  SPX is back up to the 12-month MA at 1280.32 for another test.

Note Added 1/3/12 at 5:30 PM:  SPX closed under the 12-month MA (1280.00) but over the 10-month MA (1270.70). Utilities were beaten today.  Look at that. How does Keystone know these numbers in advance?  The SOX closed directly on top of Keystone's algorithm's number of 368.60. View this as market bullish unless the SOX now drops under 368.00. Copper was up 3% today adding bull fuel.  If the commodities, CRB, move a point or so higher, it will create an upside thrust in the broad markets. Thus, for Wednesday trading, watch SOX 368.00, JJC 44.75 and CRB 315.00. Watch the SPX 10 and 12-month MA's, especially the 12-month MA.  SPX 1285 overhead resistance held as a ceiling. The SPX LOD today was 1258.86 and the 200-day MA is 1258.81 serving as support.