Keystone's Midday Market Action 1/17/13

The blow-out Housing Starts, 945K, not seen since July 2008, ignited the futures.  The Algerian terrorism incident is creating buoyancy in the oil and commodity markets. Also, since the China data is only a few hours away, many traders are likely front-running the numbers, fully expecting continued fudged data and a rosie picture. WTIC oil leaps higher well over 95. Oil up = markets up.  The 10-year is 1.87%.  The euro 1.3335. The GTX moved above 4935 and the JJC shot above 45.68 which creates the bull fuel (commodities and copper, respectively).

The SPX jumps at the open setting itself free of the strong 1472 S/R and immediately attacking the strong 1476 resistance, which did not put up much of a fight, price went straight to the 1475.83-1478.49 gap fill from 12/31/07. Sometimes years will pass but price always goes back to fill the gaps be they higher or lower. There is another gap at 1496. The SPX has taken out the 2012 intraday high at 1475, a major win for bulls, now the SPX is officially at a five-year high.   Once price breaks thru 1476, the 1485 level is the next strong resistance. A break thru of 1485 will likely lead to the 1520's.  The bears will need to hold 1485 at all costs.  SPX S/R is 1511, 1505, 1500, 1499, 1496 (gap fill), 1489, 1485, 1481, 1479, 1476, 1472 and 1468. The SPX is currently trying to poke up thru the 1479 R.

Note Added 1/17/13 at 12:18 PM: Status quo. GTX and JJC remain elevated so the bulls are breathing easy. Oil is over 95. The SPX is traveling sideways thru the 1479-1481 S/R for the last hour so a move from here is important, above 1481 and the 1485 test will surely come, or, under 1479 and the broad markets will explore lower support at 1476 or 1472. The charts remain negatively diverged but the large momo push this morning creates near term strength in the VST time frame that will likely keep prices elevated into the holiday weekend. The 1485 resistance test is definitely in play. The interesting aspect is that the banks are down, and these were expected to be the driving force for markets moving forward, but the markets bounced anyways.  The oil, copper and commodities markets are deciding the action now and China's data release this evening will either reinforce the bullishness, or cause a quick reversal. Here's the test of 1481 resistance as this is typed ....

Note Added 1/17/13 at 12:31 PM:  The SPX punches up thru 1481 resistance, it is all going the bulls way today. Next test is 1485 R. The next leg up in the markets would be created if the utilities, $UTIL, move above 466.39. UTIL is now at 459.63 about six points below. If UTIL moves above 466, the SPX 1500+ would be virtually guaranteed. Conversely, if the bulls cannot move UTIL thru 466 in the days ahead, the market upside will stall and reverse. The mixed signals continue with the TRIN at 1.61 moving thru 1.5+ all day, which is bear-favorable, but the markets are higher. Either the markets will drift lower in the afternoon, or, the TRIN will start to drop and move down to 1.00.

Note Added 1/17/13 at 2:12 PM:  SPX pushes up to test the strong 1485 R. Volume is running at only three-quarters of a day's regular volume, below average and light, the same relative pace as recent days. Markets continue a melt-up today and are making the case for SPX 1500+ and RUT 900+. A lot is riding on China tonight. TRIN is at 1.61 favoring the sell side even though SPX price keeps moving higher.  Oil is up towards 96 a big jump from 94 this morning. The SPX and Nasdaq are up the same percentage, tech is not leading the upside today, only moving coincidentally. Above 1485 is 1489 resistance, then the strong R and gap fill at 1496, which would close out all upside gaps that exist for SPX above. In other words, after 1496, price would have no need to move higher in reference to filling any gaps, 1496 closes out all the unfinished business above.

Note Added 1/17/13 at 2:24 PM:  HOD 1485.07.

Note Added 1/17/13 at 2:51 PM:  Note the bluster coming out of oil. The Algerian hostage situation appears to be coming to a head, good luck to those poor souls.  Perhaps traders are now removing some of the geopolitical risk premium, Brent is under 111 now, at 110.89, and WTIC is down from 96 to 95.32 right now. 

Note Added 1/17/13 at 3:33 PM:  The rumor mill says the republicans may not contest the debt ceiling. This no doubt creates some of today's market lift.  Three key thrusts; anticipation of China blow-out numbers tonight, blow-out Housing Starts this morning and avoidance of a debt ceiling conflict. Traders are completely ignoring bad news like the weak banks, that are supposed to be the market driver, the weak Philly Fed, complacency and low volume.

Note Added 1/17/13 at 4:10 PM:  The bears were beaten today. The SPX finally received the official clean five-year high print today since 1475 was taken out.  The HOD is 1485.16, write that one down since it is needed for reference moving forward, also the close at 1480.92. The bears are laying in the alley way today, all beat up, but manage to raise a hand with a thumb's up since they pulled the SPX back from the strong 1485 resistance and the 1481 resistance in the final minute. AAPL was down today. The SPX lost four handles in the last hour; the TRIN finally exerting some bearishness at day's end. Volume picked up strongly late-day to close above a days average volume, and the push came as the SPX dropped. INTC beats by three pennies but is right in line, a little light, with top line revenue. Earnings were released with a couple minutes remaining in the trading day, which is not what they should have did, but insiders surely made some quick dough from that move immediately jumping on the beat. AXP meets on top and bottom lines, stock is trading down.