Keystone's Morning Wake-Up 7/13/12

Do not let a black cat cross your path today, on Friday the 13th.  China GDP comes in at 7.6% staying one tick above China's 7.5% target for 2012. The number is the worst in thirteen quarters. For the year thus far, Q1 was 8.1% and Q2 is 7.6%. This averages 7.85% well above the targeted 7.5% for the year so it is a mystery why global markets are running up today.  Copper is catching a strong bid this morning up well over one percent, now showing a 1.5% gain.  This is due to trader's expecting more China stimulus. At an 7.85% average this year, however, there is no reason to expect immediate Chinese action. China will likely perform one interest rate cut in Q3 but that provides over ten weeks of time for them to act. Watch copper closely this morning.

The main drama begins in less than one hour with JPM at 7 AM EST.  JPM and WFC earnings will dictate today's market tone.  If the numbers are happy, the markets will be happy, if the earnings are sad, the markets will be sad.  Trader's want to know the status of JPM's 5 billion trading mistake as well.  Sticking to the technicals, yesterday's action clearly shows the give and take bull and bear struggle ongoing. One minute the bulls push, the next minute the bears.  The financials this morning will provide clarity.  XLF 14.41 is uber important.  If the XLF stays under 14.41, the markets will remain weak into the weekend.  If the bank earnings are positive, the XLF will catapult above 14.41 and the markets will rally into the weekend.  If the XLF moves above 14.41, and the SPX moves above 1341, it is very likely that Keybot the Quant, Keystone's proprietary trading algorithm (shown in the left margin on this site), will likely flip to the long side. The importance of the JPM and WFC earnings cannot be understated, they will likely set the tone thru today into next week.

Aside from XLF 14.41, watch copper, volatility and retail as well, JJC 44.15, VIX 18.75 and RTH 41.65, respectively.  JJC is contributing negatively to markets right now while the VIX and RTH are helping the bulls.  Any changes to these four parameters will push the broad indexes in that respective direction. Simply put, the bears want to see XLF and JJC stay bearish while seeing the VIX rise and RTH fall.  The market bulls want to see the XLF move up and over 14.41 and the champagne corks will immediately pop. The bulls also want to see copper run higher, the VIX to stay under 18.75 and the RTH to stay over 41.65.

For the SPX starting at 1335, the 1341 level is key today.  If the bulls push up and over 1341, an upside party will result.  The bears need to push under 1325 to start an accelerated downward slide.  A move thru 1326-1340 is sideways action today. The banksters are all back-slapping each other right now, gathering around the free buffet table, elbowing their way to the jelly donuts and orange juice. The fun begins shortly. XLF 14.41 will tell the story today. The first one-half hour of trading is important since a market pivot point should occur at 9:55 AM upon release of the Consumer Sentiment number.