Keystone's Midday Market Action 1/29/13

Copper was up strongly about four hours ago but turned negative a short time ago and drifts lower. JJC 45.80 remains key. JJC is creating bullishness now but see if it drops under 45.80 after the opening bell.  Utilities remain key as well. Watch UTIL 467.18. Bulls will move markets higher if UTIL remains above, but bears will increase market selling if UTIL loses 467.18.  If JJC loses 45.80 and UTIL loses 467.18, Keybot the Quant will likely flip short.  The 8 MA and 34 MA cross on the SPX 30-minute remains bullish. Bears need the 8 to stab down thru the 34, otherwise, they got nothing.

The VIX moved above 13. Market selling will become strong and steady if the VIX moves above 16. Overall, the bulls are not worried with VIX under 16. The CPC moved higher yesterday, now at 0.97. Along with the VIX, obviously some nervousness is developing as the SPX plays around with 1500. The best time to bring on longs is when the CPC spikes above 1.20 so watch this closely in the coming days if markets start to accelerate lower. The BPSPX keeps moving higher now at 82.20. A top should occur now where the six percentage point reversal signal can be monitored moving forward.  The SPXA150R is 85.80 moving thru the 85-90 zone for a few days. A bearish market signal would occur favoring bears with the SPXA150R dropping under 85. Bulls need to keep it above 85. The NYSI chart was highlighted this morning and it is consistent with where significant broad market tops occur. WTIC oil is 96.55 continuing to stumble sideways as the Egypt unrest deepens and starts to tumble out of control. Markets remain buoyant with buoyant oil. The 10-year yield is 1.96% off the 2% intraday pop yesterday. The TNX chart last evening points towards a pull back in yield which would correspond to weakness in equities.

Spain retail sales were weak and conditions appear to be deteriorating due to austerity measures. Spain will miss their budget deficit targets. With the ongoing European recession and the Spain and Greece depressions, one wonders why everyone is so giddy and happy at Davos waving the all-clear banner?  Obviously they are trying to instill confidence hoping traders buy into the vibe. So far they have. The bond bubble charts are interesting from yesterday (scroll backwards thru the pages or type the tickers into the search box above; LQD, JNK, HYG, MUB). Everyone understands that bond prices are elevated into bubble territory but the difference is that many expect a strong move lower in prices (huge up in yields) to occur while others, such as Keystone, expect a more gradual move, when the time comes. Keystone continues to entertain the disinflationary and deflationary outcome for the U.S. over the coming year or three, thus, yields may move sideways the whole time.  Unlike commodity or other asset bubbles, which collapse in dramatic fashion, when the bond bubble burst, it will be much less dramatic, more like a slow leak, similar to a limp, deflating air mattress.

For the SPX today starting at 1500, the bulls need three points, to punch up thru 1503 and an upside acceleration will occur, straight thru the strong 1505 resistance and onward to target 1511. The bears need to push under the 1496 level to ignite a downside acceleration. The 1495-1496 level is strong support which would immediately lead to a test at 1489 support. A move thru 1497-1502 is sideways today.  The S&P futures are down a few at this writing which hints at some weakness to begin the day for the SPX. Case-Shiller is on deck at 9 AM. This housing information will further impact the housing sector stocks highlighted yesterday such as WY, USG and SHW (type these into the search box to study the charts). DHI earnings beat which starts the sector off on a positive note today.

Do not forget to reference the Key Events missive posted on the weekend for each days itinerary   A market pivot point will occur at 10 AM with Consumer Confidence. F earnings look good but it is sold off pre-market. PFE beat and it is up. IP profit is down and it drops pre-market. Watch these key economic indicator type stocks such as paper, rubber, packaging, cardboard, shipping, etc...  Weakness in the paper markets (businesses have less of a need for paper) tell you that the underlying economy is not in that good of shape.  In a nutshell, JJC 45.80, UTIL 467.18 and SPX 1503 and 1496 dictate market direction today. Watch the 8 and 34 MA cross on the 30-minute since that immediately changes the game should the bears decide to flex their muscles.

Note Added 1/29/13 at 9:48 AM:  Flat markets. Copper recovered, JJC is up twelve cents to 46.25 well above the 45.80 danger level. Ditto UTIL at 469.38 well above 467.18.  Bears got nothing as the session begins. WTIC oil shoots up thru 97; buoyant oil means buoyant equities. The 8 MA on the 30-minute is 1500.94 and slightly curling over to the downside. The SPX is at 1500.12.  As long as the SPX remains under 1500.94 it will cause the 8 MA to move lower. If the SPX moves above 1500.94, the bulls will be driving markets higher again. Consumer Confidence should create a sharp pivot point for the broad indexes in ten minutes.

Note Added 1/29/13 at 2:12 PM:  The 10 AM number created a downward pivot for all of four minutes, which then marked the low of the day at 10:05 AM.  Consumer Confidence is the lowest since November 2011, over one year ago. Last month the number surprised to the low side and ditto this month, however, all bad news is ignored. The morning Fed pump sends the SPX thru the 1503, then the strong 1505 resistance gave way so the path to strong 1511 resistance is open. The SPX is now printing near the HOD at 1508.05. UTIL and JJC are running to the upside taking the broad indexes higher. The bulls will try to push UTIL above 483 this week to guarantee SPX 1520's. Financials are up today yet tech is down. Yesterday tech was up with financials down. These two should be in sync to the upside for a strong rally so consider it another head-scratcher in this cross-current market environment.  Tech and small caps are lagging today. Advancers and decliners are flatish and unimpressive by the bulls, much greater strength would be expected.  NYSE volume is below average at a run rate of only about 75% of a days average expected volume. TRIN has moved down from 0.92 at 1 PM to 0.79 now which provides bullish oomph. The 8 remains above the 34 MA on the SPX 30-minute chart which keeps the bulls in the drivers seat. Bears got nothing and the bulls are not taking any prisoners. The SPX 2-hour and 1-hour charts are set up with negative divergence once again. The 30-minute chart can live with sideways action. The 15-minute and 10-minute are negatively diverged. Thus, the VST charts say down but the bulls keep sweeping in and buying even the most subtle dip.

Note Added 1/29/13 at 2:41 PM:  WTIC oil is 97.46. If you recall the oil chart on the weekend with the sideways triangle, the chart obviously broke out to the upside which sent it towards 98. The Egypt, Syria, Iran, take your pick, and others, turmoil provides a bullish lift to oil and the equity markets want to move with oil. Brent oil is over 114. The dollar is lower testing 79.5 support from two weeks ago. Thus, the euro is higher, now approaching 1.35. The euro 200-week MA is 1.3528 which is strong resistance and may serve as the top. The euro daily and weekly charts are overbot and set up or in the process of setting up with negative divergence. For now, dollar down = euro up = equities up. The 8 MA on the 30-minute is 1506.18, thus, the bears do not have a chance unless they push the SPX under 1506.18 and lower so the 8 MA can curl down and move lower. VIX remains above 13 today. TRIN is 0.80. Bears got nothing unless the can move the TRIN back up to 1.00 and higher into the closing bell.

Note Added 1/29/13 at 7:41 PM:  Another upside orgy today. The jump in both the JJC and UTIL this morning was key, then when the SPX headed higher curling the 8 MA up on the 30-minute chart, the bears had to assume the position. Volume was below average today but came on stronger in the final hour posting a healthy volume number comparable to two other up days this month. Usually when a month is all up like this month, the month will finish in the opposite direction and there are only two days remaining. In addition, seasonality-wise, the last couple days of January are typically bearish. So the lonely and saddened bears can grasp two feathers moving into the end of the month, looking for a minimum of a couple days of selling ahead. The 10-year yield closed at 2%. BPSPX finally placed a top, so that is worth watching for the days ahead. The TRIN has printed several days with numbers below 1.00 on the bullish side, today at 0.77 is uber bullish, and needs to see a market pull back to burn off some of this over-the-top bullish euphoria.  Markets are prime for a sharp pull back like the mid-December selloff into the end of the year where the SPX dropped 50 handles in seven days. The bulls have been buying every tiny little pull back so the downside will be interesting once it begins. With the floating higher nature of markets lately, there is air underneath now, it is a matter of how much. Fifty handles would target the 1460-1461 support level as a potential bounce point. The CPC 1.2+ will come in handy as the markets sell off. Considering this non-stop bullish euphoric action, the best way to hurt the maximum amount of traders would be for an overnight event to occur, that way, markets would open far lower, perhaps LLD (lock limit down) in the case of something drastic, which would trap all the bulls that entered on the euphoric thrust and at the same time hurt the bears that will miss the shorting opportunity due to sitting on the sidelines, the shorting opportunity that they have been waiting for. The probability of an overnight event may be low but if a gremlin appears, right now would be the ideal time. Europe, and the Middle East will likely become more important in the the coming days. The thrust in oil is helping buoy the broad indexes as well. The euro is near 1.35.  GDP is in the morning. The FOMC decision is in the afternoon.