Keystone's Midday Market Action 12/31/12; Last Trading Day of 2012; EOM; EOQ4; EOH2; EOY2013; Happy New Year's Eve

China was up overnight on the positive 51.5 PMI news so a global cascading market event was not on tap. With the holiday, some markets are closed, such as Japan, and others are closing early in Europe, so today may be a push into Wednesday where the new year in trading begins.  The futures are up but compensating for the big drop on Friday evening and fair value, the SPX may drop about 5 to 8 points at the opening bell.  Watch the support levels as described in this morning's SPX chart and on the weekend in the SPX Support, Resistance and Moving Averages missive.

The euro is under 1.32, by a hair, so sub 1.32 is a negative for equity markets and above 1.32 is a positive for equities. The 10-year is at 1.70%, use that as a pivot, above 1.70% is equity market friendly, below 1.70% is friendly to the equity bears.  Watch Keystone's SPX:VIX Ratio Indicator to see if it remains under 68, if so, the markets have big problems moving forward. Watch the 12-month MA at 1384.53 that represents the waterfall edge for the markets, the point of no return. Today provides the month-end, quarter-end, half-year-end and year-end prints today (EOM, EOQ4, EOH2, EOY2012).  Check the SPX monthly chart after the close to see if a negative month is logged.  The months were all up thru September, then October logged a negative month closing at 1412.  In November the markets recovered and the month ended at 1417 allowing the bulls to walk around with puffed chests. Thus, the market bears want to see the SPX close under 1417 to log a negative monthly print and further verify market sickness ahead.  Starting at 1402 today and heading lower should lock this in but you have to let the whole game play out today.

SOX 377.15 is key, ditto JJC 45.36, XLF 15.85 and RTH 43.65. Any changes to these four parameters will move markets in that respective direciton.  The fiscal cliff drama continues and has deteriorated into a chaotic circus. The latest is that Leader McConnell and Vice President Biden are talking. They are probably deciding what type of donuts to have delivered. Markets remain somewhat resilient and hopeful for a solution. Watch to see if the BPSPX drops under 70%, or not, as well as how low the NYMO moves, and if the CPC put/call moves above 1.20.  Markets are closed tomorrow for New Year's Day. Old Man 2012 is stumbling out the door while Baby New Year 2013 enters. The New Year celebrations are now rotating the globe. Quick, call an Aussie and ask if 2013 is any different than 2012.

Note Added 12/31/12 at 9:10 AM:  The euro is back above 1.32 at 1.3220. The 10-year is 1.72%. Note how these subtle changes add buoyancy to equities.  A confluence of support exists for the SPX at 1394 with strong horizontal support, the 10-month MA and the 150-day MA. Thus, price may be attracted to test 1394 support this morning.

Note Added 12/31/12 at 10:28 AM:  AAPL is receiving the positive divergence bounce today from the daily chart.  Semiconductors and copper strength, due to the China PMI, are providing the bull strength in the broad indexes.  SOX is over 377.15, bullish.  JJC is over 45.36, bullish. The broad indexes are moving higher today but note that Keystone's SPX:VIX Ratio Indicator remains under 68 and bearish. The SPX now up over 1407.  If the SPX moves above 1418 and holds that level, Keystone's algo, Keybot the Quant will likely flip to the long side.  The markets must be anticipating a positive fiscal cliff deal more and more as time moves along. The Senate is back within the half-hour, at 11 AM, so traders are pulling out the pointed colored hats, noisemakers and confetti, anticipating happy talk, and an opportunity to begin the New Year's celebration early.

Note Added 12/31/12 at 10:52 AM:  The big shots are arriving at the Capital to reconvene the Senate. The negotiations are now expected to continue today.  Watch SOX, now slipping at 377.15. Euro losing 1.32.

Note Added 12/31/12 at 11:09 AM:  The Senate reconvenes and announces that the fiscal cliff talks continue. Markets bounce clearly wanting to believe in the bull case. The SPX punches out another high at 1409 with a +1200 TICK. The TRIN is 1.10 actually favoring the sell side. The SPX:VIX ratio moves back above 68 showing that the bulls are making headway to the upside. SOX is above 377.15. The bulls have the upper hand as the day motors along but the action is very much a mixed bag. SPX HOD is 1409.17.

Note Added 12/31/12 at 12:24 PM:  The SPX moves up after Leader Reid coughs, but then moves back to the flat line when Senator McConnell adjusts his glasses.  SOX above 377.15, bullish.  JJC above 45.36, bullish. SPX:VIX ratio back under 68, bearish. The SPX is 1406.64. The 50-day MA is 1411.10. Tech is leading the upside today so the semiconductors and AAPL are important. VIX drops today but is now only a few pennies away from regaining 21.

Note Added 12/31/12 at 3:48 PM:  Keybot the Quant flipped to the long side at SPX 1419. The fiscal cliff resolution is creating a party atmosphere. Markets want to close on an up note but the fiscal cliff bill has to be passed by Congress in the hours ahead. The bulls mounted a serious recovery today regaining serious technical levels. Keystone took profits on BBY exiting the trade. Will look to reenter.

Note Added 12/31/12 at 4:05 PM:  That was perhaps the wildest last day of trading to close out a year in the market's history.  The broad indexes experience a dramatic 2% up move today.  The semiconductors, SOX, and copper, JJC, led the way, then retail, RTH, by the bell, most everything was participating in the upside. The SPX closes above the 200 EMA on the 60-minute chart. The 8 MA crosses above the 34 MA on the 30-minute chart. The SPX:VIX ratio is over 68. The bulls ran with the ball today and did not look back. Considering the recent down days, give-back would be expected.  VIX was crushed back down to 18.11. Reference this morning's chart and see that the VIX was spanked down from the 200-week MA.  The House does not plan on voting on the bill tonight but the markets were unaffected by this news in the final minutes of trading. The 10-year yield is 1.76%. Interestingly, the euro is under 1.32. The TRIN is at a ridiculous 0.22 low identifying excessive bullishness. Ditto NYAD printing +2200. Ditto the TICK printing a high at +1428, this is a huge number. The CPC put/call and NYMO prints will be interesting. Some market selling will be needed to remedy the uber bullish pressure displayed today. The SPX monthly chart prints a positive month for December. Happy New Year.