Keystone's Midday Market Action 1/23/13; Debt Ceiling Vote; AAPL Earnings

Market bears breathe a sigh of relief since the utilities immediately retreated after the opening bell. UTIL is now 464.71 creeping back upwards about two points away from the critical bull bear line at 466.74 (50-week MA) that would create an upside market thrust.  Reference this mornings UTIL chart for further study.  Dr. Martin Luther King Day was Monday; today is dubbed Columbus Day since the SPX is spending lots of time around 1492.  Price has started to drift higher as the debt ceiling vote takes place. The vote to kick the debt ceiling can to mid-May is going thru without a hitch creating some market buoyancy. Remember the pop and run higher for markets starting last Thursday was in a large part due to the rumor about the debt ceiling solution, which came to be.

The SPX HOD is 1494.85 only a hair away from touching the last remaining upside gap fill from 2007 at 1496. Sometimes it is a game of pennies. Bears would probably be best served if the gap fill occurs right now and the SPX falls since there would be less reason for price to return to these highs.  If the SPX drops from here, one of the lower support levels will likely hold and then the SPX will probably want to come back up for the 1496 gap.  The TRIN was 1.4-ish all morning long favoring steady-eddy selling, but at noon, the bottom fell out with the TRIN now at 1.11, on the sell side but very close to neutral 1.00 which provides neither bulls or bears an advantage.  Copper is dropping one-half percent today so this is a feather for the bears cap. The JJC 45.75 bull-bear line may come into play quickly with price now at 46.50. The bears will create significant downside if JJC 45.75 is lost; the bulls are fine if copper remains elevated. The 10-year yield is stuck at 1.83% reflecting the flat markets like equities. The euro is 1.3315; the 1.33 level serves as a handy bull-bear gauge, above and equity bulls win, below, bears win. WTIC oil is leaking a bit lower today at 95.88 keeping a lid on the broad indexes. Markets are idling ahead of Apple.

The big show is at 4 PM EST with AAPL earnings where traders and analysts are looking for 46-48 million iPhones. 48 million is the consensus. If 50 million or higher markets will explode higher. If 46 million or lower the broad markets will sell off. The consensus is for 23-24 million iPads. The EPS is estimated at 13.35 with 54.6 billion top line. Also of major importance is the margins where Apple guided to 36% but the Street expects 38.5% and higher. If the margins miss, AAPL will sell off hard.

Note Added 1/23/13 at 2:02 PM:  The 10-11 AM money pumps continue to buoy markets, today no exception as the markets creep higher all day long. SPX is testing today's HOD right now. The action is met with negative divergence across the 10, 15, 30-minute, and 1 and 2-hour charts across nearly all indicators so the close may be interesting today. The debt ceiling vote supplied some positivity but most of that juice was already consumed.  UTIL is 465.30 creeping higher towards the important 466.74.  Apple earnings are less than two hours away. Programs and tee shirts are on sale now in the lobby as the crowds form awaiting results.

Note Added 1/23/13 at 3:16 PM:  SPX fills the gap from 2007.  Taking a trip in the time machine, also known as the way-back machine, since you go way back and it may be hard to find your way back, the 12/26/07 close was 1497.66.  The next morning, 12/27/07, price gapped down to open at 1495.05.  The same day as the high occurred, the opening print was 1495.12. Therefore a gap exists from 12/27/07 at 1495.05-1497.66. More specifically, and using the candlesticks on a daily chart for a guide, the true gap, the last one remaining, is 1495.05-1495.12. Price has now filled this gap five years later. Gaps are always filled, be them high in the charts, or low in the charts, even if it takes months or years for the fill to take place. Price now no longer has a reason to move any higher based on gap fills alone. This is important considering it was a multi-year gap fill and the price action now is bumping along at multi-year tops. Every tiny pull back continues to be bot today. The indexes should roll over into the close from the continued negative divergence in place this afternoon but with AAPL imminent, the bulls may push it out sideways and try to run out the clock. Then we all watch in awe as the Apple tablets are brought down from on high to determine the markets fate. The 10-year yield sits flat on 1.83% all day long. Money is neither flowing into, or out of the bond market today so it provides no read on equities. TRIN is 1.09 providing the bears a slight edge into the final minutes. VIX is flat at 12.45, no worry or fear.  Traders are convinced that Apple will beat the lowered estimates and handily enough for the bulls to be happy for a joyous market day tomorrow.

Note Added 1/23/13 at 3:40 PM:  UTIL is 464.67 giving the bears something to smile about since it remains in bear territory. The kettle corn is popping and folks are taking their seats for the grand show, Apple, now only minutes away. Watch the falling wedge on the AAPL daily chart as mentioned here with the last couple Apple charts (type 'AAPL' into the search box above to bring up the Apple charts for further study). Price is at the top of the wedge at 530-ish, the bottom of the wedge at 475-ish.  Falling wedge patterns are bullish, it is a matter of where price wants to bounce from. If earnings beat, obviously the move out of the wedge is in place now and AAPL will explode up thru 530. If earnings miss, AAPL likely drops thru 500 which opens up a potential long play from the 450-485 range to then fulfill the wedge pattern and would create an attractive long trade.

Note Aded 1/23/13 at 3:54 PM:  TRIN moves up to 1.18. Note that the strong SPX 1496 resistance has held today, so far. The HOD is 1496.13.  This is another fulfilled goal for price since once 1485-1486 gave way, 1496 was the next strong R to tag, and that can now be checked off the list. The bulls need to punch thru 1496 and hold it and they will be given 1505. The bears simply need to start applying downward pressure now, the door is opening for the bears, will Apple slam it shut? UTIL 464.84.

Note Added 1/23/13 at 4:52 PM:  NFLX hit the ball out of the park jumping thirty bucks. They need to give that money to Apple since its stock is dropping that much now printing under 490. Apple bottom line EPS was 13.81, a beat, but top line was 54.51 billion a miss. The iPhones are 47.8 mill, disappointing since traders would have preferred a five handle, iPad's are 22.9 million missing the 23-24 range highlighted above. MAC's are 4.1 million far short of the 5.2 million last year. Margin guidance is 38% in line. Thus, all products were on the light side including top line revenue. Instead of a healthy crisp apple, the markets were given applesauce that has been sitting out in the sun for three-days.  AAPL is 486 down 5.6% in the AH's. This action should set up nicely with the falling wedge pattern over the next few days.