Keystone's Midday Market Action 1/22/13

The earnings lollapalooza is off and stumbling. DD beat, VZ missed. JNJ limped to the finish line requiring their own bandages.  CAT is down on the negative China news they released under the cover of darkness on Friday evening. The 787 Dreamliner bucket 'o bolts will likely remain grounded since the finger pointing has now begun. BA sells off.  The Dow Industrials poked up thru the 10/5/12 high at 13661.87 so the bulls officially have taken out all price points going back to 2007. The new intraday high for 2013 is 13682.99. This is a feather in the bulls cap, so all that is needed is a move above 14K now to place all-time highs and provide a confirmation signal a la Dow Theory. Not so fast, however, since the bears prevented a break thru the SPX 1485-1486 resistance so far today. The SPX dropped to test the strong 1481 support and bounced. Thus, watch the HOD 1486.34 (intraday high for 2013) and LOD at 1481.16. The exit out of either side will tell you who is winning.

UTIL is 463.40. The critical 50-week MA is 466.71.  If the bulls push UTIL up thru 467, then SPX 1500+ will be on the way.  The bears must defend the remaining three point difference. The Nasdaq is down 0.33% while the SPX is off 0.18% so the bears have a feather in their caps since tech is leading the broad market lower. GOOG and AAPL, key tech bellwethers, are negative. The market bulls are feeling fine since JJC is above 45.68 (copper) and GTX is above 4935 (commodities) which creates market bullishness. The 10-year yield is higher today to 1.87% which helps the equity bulls. Oil is flat to up today remaining elevated. The euro drops under 1.33 which is bear-friendly. Mixed signals continue.  Markets receive the negative divergence spank down highlighted on the hourly and 30-minute charts on the weekend. The 8 MA remains above the 34 MA on the 30-minute chart so the bulls remain in charge and are fairly relaxed to start the week despite the slight market negativity. Let's see if the 10 AM to 11 AM market pump occurs today.

Note Added 1/22/13 at 11:18 AM:  TRIN is flat at 1.00 neither favoring bulls nor bears. The 10-year yield is down to 1.84%, dropping yield is equity bear friendly. Keystone bot more SRS adding to this ongoing long position which is short real estate. Existing Home Sales were a slight negative surprise today. The inventory of homes available is very low. Foreclosures are tied up in paperwork problems at the banks. As supply falls, house prices may jump higher too quickly, creating bidding wars for properties and then setting up a new problem moving forward that may actually stall the market, pricing potential buyers out of the picture. Also trying to short RTH but broker cannot find any shares available.

Note Added 1/22/13 at 12:14 PM:  Markets continue in the same malaise as last week, weakness to start the day, then the morning 10-11 AM money pump occurs again today.  The SPX hourly and minute charts are lining up with negative divergence once again as price prints the high of the day at 1487 breaking thru the 1485-1486 resistance. The coming minutes are important. The SPX would be anticipated to roll over from the negative divergence today. The euro is back above 1.33 showing the bulls fighting back today. The TRIN is 0.83 firmly in the bulls camp and providing the buoyancy in the markets over the last hour. The mixed signals remain in the markets. UTIL is at 465.21 now only a buck-fifty from the 466.75 that will provide the market bulls further oomph. Tech continues to lead the markets lower. One signal says up the next one down, mixed markets.  AAPL and GOOG are red today, GOOG broke thru 700. Keystone bot more SKF adding to this ongoing long position which is short financials. RF had robust earnings and is popping 4% today giving banks a confidence lift. XLF is flat. Keystone also shorted more EWG which is the position shorting Germany.

Note Added 1/22/13 at 3:06 PM:  Markets continue floating up. UTIL is now 466.28 only about fifty cents away from UTIL 466.77 that will supply bull fuel for markets. The SPX battled for the 1489 resistance and burst thru which created a HOD at 1491.17. The break thru of the 1485-1486 resistance today led to the 1489 resistance test, now higher.  The 1496 is the next strong resistance level, as discussed on the weekend, and is the last gap fill remaining above. Once 1496 gap is filled, price has no other reason to go higher based on gap theory. The 10-year is flat at 1.83%.  The euro is 1.3316 above 1.33 helping bulls. Oil is up today providing bull fuel. TRIN is at 0.83 providing bull fuel, watch to see if this heads higher back towards 1.00 into the close, or not. The TRIN minute and hour charts hint at positive divergence that would send it higher while the SPX minute and hourly charts are negatively diverged, so the closing hour will be interesting today. Tech continues to want to lead lower not higher. AAPL and GOOG remain flat or negative all day long. Keystone bot FXP opening up a new long position which is short China.