Keystone's Midday Market Action 12/24/12; Christmas Eve; Markets Close Early

Merry Christmas Eve. It is a white Christmas in Pennsylvania. Christmas Eve is typically a bullish day on light volume.  The fiscal cliff drama, however, leaves you guessing. The futures are on the negative side by a a few S&P's. Consumer Confidence on Thursday morning is the key data for the week. A full moon occurs on Friday so this would hint at market buoyancy moving into the weekend. The fiscal cliff solution, perceived as good or bad, should occur on Thursday or Friday when the politicians return, all sun tanned and hungover.

The CPC put/call continues to move higher but is not at 1.20 as yet so the door remains open for more market selling until a more attractive bottom can be placed in the markets. Scroll back a few posts to see the CPC and SPX charts. The NYAD dropped to -2100 on Friday showing strong decliners so this would favor some market buoyancy today to snap back. The TRIN jumped intraday on Friday to 17 and finished at 1.72 showing uber bearishness and favoring market buoyancy today. Watch to see if the BPSPX continues to move up from 71, or rolls over. The SPX:VIX ratio may come into play moving forward, now at 80.17, where 68 is a major bull-bear line in the sand. The euro is 1.3217, the 1.32 level now serving as a bull-bear line in the sand. The 10-year yield is at 1.77%.

RTH 44.44, VIX 15.90 and XLF 15.78 are key. RTH and XLF are contributing bullishly to markets while volatility is contributing bearishly. Any change to these three parameters will send the broad indexes in that respective direction. The bulls need to punch up thru SPX 1444 to create an upside acceleration that will open the door to 1460-1461 resistance.  The bears need to push under 1423 to accelerate a downside move making a run at the critical 200 EMA on the 60-minute chart at 1418.46. Bad things will happen to the broad indexes if SPX 1418.46 fails. The markets close at 1 PM EST. The S&P futures are down more than the Nasdaq futures so tech is not leading the downside, thus, even though a negative start may occur the bears do not appear to have much oomph at this juncture. Happy Festivus.

Note Added 12/24/12 at 11:18 AM: The euro drops thru the 1.32 level.  Volatility continues higher with the VIX moving towards 19.  The RTH, retail, is in a bad mood today, dropping under 44.44, and this is creating market negativity. The television news outlets show light traffic in malls, perhaps the retailers will be writing a sad story come January. The 10-year yield is 1.77%, flat, so there is not a whole lot going on this low volume holiday-shortened day. The markets will close in less than two hours. Here's the SPX coming down to test the low at 1425.06. And bounce. The bears need to push under 1423 to create a downside acceleration which would test the critical 1418.46 described above. Tech is leading the broad indexes lower by a hair so this is a small feather in the bears cap. Both bulls and bears are likely content with riding the markets out sideways and pick things up after Christmas.

Note Added 12/24/12 at 12:08 PM:  Sideways is the order of the day as thoughts of figgy pudding fill the air.  Keystone sold USG opening a new short position. Daily and weekly charts are negatively diverged. This is the strong gypsum darling where everyone believing in the housing recovery is tripping over themselves to buy it so it will be an interesting one to watch moving forward.

Note Added 12/24/12 at 12:16 PM:  Lots of traders are sneaking out the back door.  There are tumbleweeds now rolling down Wall Street as many folks already left town to spend time with families and friends. There's the door slamming shut again, it looks like Keystone may have made a run for it. Merry Christmas to all.