Keystone's Midday Market Action 1/18/13; Consumer Sentiment

China reported a beat on GDP so the move in oil, commodities and copper yesterday was justified. Copper remains elevated so the bulls are in full control. For the markets to continue higher, bulls need to push UTIL above the 50-week MA, now at 466.38. The way to SPX 1500+ must travel thru UTIL 466. If UTIL 466 does not occur, then the broad indexes will top out. UTIL is 460 now.  The bears need either GTX 4935 or JJC 45.68 but with the China happiness, commodities should remain elevated. GE, the global bellwether, beats on earnings and MS impresses the street as well which closes out the major bank earnings on an upbeat. Surprisingly, the futures had no positive reaction. GE's CEO Immelt brown noses the president each day so lucrative government contracts are a given.

The 10-year is at 1.85%, unchanged on the week overall despite the equity bullishness. So the market move higher is more due to new money, perhaps Joe Sixpack's Christmas money, helping boost markets, rather than a strong move from Treasuries to stocks. The euro is 1.3321 leaking a bit lower this morning which is reflected in the flat equity markets as the session begins. WTIC oil is 95.44 and Brent is 111 so bulls are happy with oil remaining elevated. The bulls need to top yesterday's high at SPX 1485 and an upside orgy will occur into the 1490's.  The bears need to retrace yesterday's move and drop under 1473 to accelerate the downside. A move thru 1474-1484 is sideways action.

Markets are flat to begin the last trading day of the week. Markets are closed on Monday in Observance of the Dr. Martin Luther King Day holiday.  The broad indexes tend to be buoyant in front of the holiday weekends. A market pivot will occur with Consumer Sentiment at 9:55 AM, minutes away. A Bradley turn date occurs on Sunday so we are in the main part of the window where a potential market trend change may occur. Thus, stay on guard now thru the middle of next week. With all the earnings releases hitting next week, there may be major fireworks on tap for markets, one way or the other, on Tuesday and Wednesday.

Note Added 1/18/13 at 10:02: Consumer Sentiment comes in weaker than expected at 71.3.  The last comparison number at that level is December 2011, a far cry from the pumped-up sentiment in the 80's during the Fall. Perhaps everyone saw their credit card bill from excessive holiday spending? That will make anyone depressed. Markets actually pivoted higher on the news, now meandering sideways. UTIL 459. GTX 4971. JJC 46.44. Status quo thus far. AAPL 500. INTC is down 6% today. TRIN is on both sides of neutral 1.00 thus far now at 1.40 favoring the sell side. VIX remains in the cellar. The CPC put/call ratio is in the 0.7's again verifying the ongoing trader complacency. Traders are already popping the corks on the wine bottles today and searching for lamp shades to celebrate continued bullish markets forever moving forward. Today may be quiet with the holiday ahead.  Volume will increase late day. Bulls need 1485. Bears need 1473. As Irving Fisher, the leading economist in 1929 said, 'we are now at a permanently high plateau'. The markets never returned to those levels until 1954, 25 years later.

Note Added 1/18/13 at 11:03 AM:  Does the typical morning launch occur today? (Reference last evenings SPX chart that shows the bullish rally that occurs every day of trading this year from mid-morning on except for only one day)  The SPX is drifting lower feeling the effects of the negative divergence on the hourly and daily charts but as seen all week long, the bulls come along and find a way to prevent any significant downside from occurring. Bears got nothing unless they test 1473. Watch the 8 and 34 MA cross on the SPX 30-minute chart, the 8 MA is curling over, will the bears play spoiler poking a hole in the bull balloon to end the week? The euro just lost 1.33. WTIC oil 95.06, watch to see if 95 is lost today, or, if the bulls push it higher.

Note Added 1/18/13 at 1:07 PM:  The Algerian terrorism and hostage-taking continues spooking the oil markets again, WTIC jumps from 95 to 95.50 over the last half-hour, Brent is making its way up towards 112 again. Oil up is reflected with the broad indexes moving up off the intraday bottom. Copper was leaking lower as well but turned around and is now moving up again. Buoyant oil, copper and commodities will keep equity markets buoyant. SPX 1481 is strong S/R and where the day started.

Note Added 1/18/13 at 1:38 PM:  VIX is plummeting now at 12.53. Keystone's long volatility trades are slapped again. This is remarkable action in the VIX, now at six-year lows going back to the stock market top in October 2007.  This is interesting since the markets feel a lot like September-October 2007 right now.  Folks were all bulled up with the retail guy, office guy, the guy down the street, all becoming more interested in putting money in the markets back then. The sentiment in general was very happy and optimistic like now, well, if you have a job now, not the millions that are suffering because of unemployment and underemployment.  There were many folks back then unequivocal in their belief to simply keep putting money in the markets since the broad indexes are in fine, strong shape and there is nothing to worry about, like now. This time around, the beginning of the year helps give the markets extra oomph since new money tends to flow into markets this time of year.  Back then, the SPX:VIX ratio was at lofty heights, with a low VIX, a low CPC put/call ratio, all the same or similar stuff as now. Does that means a serious pull back occurs? Time will tell, the markets are green again today with a holiday weekend on tap.  As Alfred E. Neuman quips, "What, me worry?" The SPX is now testing the strong 1481 resistance. UTIL is 461.

Note Added 1/18/13 at 2:27 PM:  TRIN is not choosing a side today, smack-dab neutral at 0.98.  The SPX staggers across the 1481 resistance. Markets are meandering sideways into the weekend, traders are sneaking out the back door. AAPL 499. UTIL 461.  VIX 12.57. Oil 95.62 (inching higher again). Euro 1.3328. 10-year 1.85%. Broad indexes are positive, Nasdaq negative. The 8 MA was coming straight down to pierce thru the 34 MA on the SPX 30-minute chart but the market bounce with higher oil and copper over the last couple hours forced the 8 MA to steer upwards again and avoid the bearish cross. The intraday high for 2013 is 1485.16 and the closing high for 2013 is 1480.94. The markets are exhibiting odd behavior. Watch your wallet.

Note Added 1/18/13 at 3:56 PM:  HOD is 1485.16 the exact high as yesterday to the penny, so far, four minutes remaining.

Note Added 1/18/13 at 3:57 PM:  SPX powers up thru 1485.16 with a new high for 2013. UTIL 463. Big upside orgy at the end of the day as the volume came in to close the week out.

Note Added 1/18/13 at 4:05 PM: The bulls win this week and finish at a new intraday and closing high for 2013, at 1485.98. The SPX exploded from 1481 to 1486 in the final minutes. There is likely no one remaining short, it is all buyers in the market now. VIX 12.41.  Oil 95.48. Euro 1.3316. This is an interesting set-up into the long weekend, just like last weekend. Traders are locked in until Tuesday expecting three days of holiday bliss. Commodities, copper and oil were the big drivers yesterday and today. The Housing Starts drove copper higher as well as the happy China data last evening. Housing and auto's are the two major users of copper. The lower Claims yesterday also pointed to an encouraging job market. Seasonality says markets are bullish the two days in front of a holiday weekend so that was another plus for bulls. It is all going the bulls way this week since the Tuesday low to the Wednesday high during OpEx week worked again like magic. Bears managed to close yesterday under the critical 1485 and 1481 S/R levels, but today that was not the case with price taking out the important 1485 to the upside. This now opens the door to 1496 where the final gap fill exists from 2007. Tom DeMark also identified 1492 as a potential blow off top. The SPX resistance above is 1485, 1489, 1496 (final gap fills for the upside), 1499, 1500, 1505, and then on to 1524. Keystone's 80/20 rule says 1520's is now on the table since 8's (1480's) leads to 2's (1520's). The RUT is thru 880 so 920 is on the table for the small caps. The late-day orgy takes the minute and hourly charts back up into overbot territory with negative divergence once again on the 15-minute, 30-minute, 1-hour and 2-hour charts. This market momo move needs a bit of sideways action for perhaps an hour or so to burn off the bullish euphoric energy but the same scenario is in play to start Tuesday trading as played out this week. The negative divergence will spank the SPX back down on Tuesday but, will the bulls continue to show up and not permit any significant pull back? Traders are buying the dips creating short squeezes, and the markets walk upwards step-wise. These short traders are now avoiding the short side while the bulls continue to happily buy. Markets always take the stairs up and the elevator down. No one is worried about buying cheap protection since markets this bullish will likely not go down (said from a contrarian perspective). The Bradley turn date is Sunday. AAPL earnings are Tuesday which will have an epic impact on markets next week. The best time to catch everyone with their pants down would be first thing Tuesday morning since the bulls went home merrily long with no protection and the bears went home disgusted with the action and refusing to short the market during the late-day melt-up figuring it is best to simply wait until next week. Thus, the bulls are fully long and complacent, and the bears are out of the market now having given up this week.  As Arte Johnson, playing a German character, said on Laugh In many years ago, "Vellly  intelesting." Time for a slice of pecan pie.