Keystone's Morning Wake Up 1/4/12

The bulls came to play to start 2012.  Semiconductors and copper did a lot of the heavy lifting yesterday. The drama centers around the SPX 12-month MA--Keystone's Secular Signal.  Price came up and over this 1280-1281 level, only to tumble back thru as the session came to an end. 

Keystone discussed a potential Dividend Stock Bubble now topping in recent posts.  Interestingly, MCD jumped yesterday only to place a key reversal by the end of the day.  SBUX was another stock that collapsed yesterday.  After hours, APKT warned with lower guidance. This reinforces the thought that tech may languish moving forward; some tech sales were pulled forward into 2011. Keep listening for pre-announcements, so far companies are coming out with lower guidance.

NYAD spiked over +2200 yesterday typically indicating that the markets need to pull back for a rest. Some market weakness did appear into the close.  NYHL is at a very lofty 228, with negative divergence, indicating that the markets need to snap back and sell off to take a rest.  CPC put/call ratio printed a 0.76. Any 0.7 handle print or lower is where markets are topping. CPC at these lower levels indicates too much optimism and no fear, therefore, the markets recoil in the opposite direction to punish the crowd on the bull side of the boat.  NYMO printed 46.65 for an M-top with negative divergence, thus, this indicates that markets want to pull back and take a rest. So these indicators want to see the markets pull back for a rest.  The BPSPX, however, remains on a bullish signal.

The CRB is key today.  Watch the CRB 315.00 level closely.  If the market bulls attain 315, the broad markets will be taking another big leg upwards.  If CRB 315 holds, the market bears are still in the game.  Other important levels to watch to gauge broad market direction are JJC 44.75 (copper), and SOX 368.00 (semiconductors).

For the SPX today, starting at 1277, if the market bulls can push upwards to touch the 1285 handle, the upside will explode higher. If CRB is over 315, the party will be a wild bullish upside orgy.  The market bears need to retrace yesterday's move back down to 1258 to regain negative momo. This is a formidable task so the bears will focus on preventing the CRB from attaining 315 and at the same time driving JJC and SOX lower.  A move thru SPX 1260-1283 is sideways action.

Keystone took profits on NAT, SDP, RIG and RIMM and will consider reentry. Added SDS, SCO.  Copper and gold jumped 3% yesterday.  Oil was up 4%. Iran should step down from its bluster and oil price should pull back.

The only economic data of interest is Factory Orders at 10 AM which creates the potential for a market pivot point. Vigilance is required.  Markets remain in Keystone's Eclipse window currently and are susceptible to a large market selloff.  The Bradley major turn date was 12/28/11, last Wednesday, so the window for a major trend change via this technique will close today. If the market bears are going to make a push lower, today would be a likely target for that to begin. The shorter term tools such as NYAD, NYHL and CPC are agreeable to see some selling today.