Keystone's Midday Market Action 1/9/13

VIX drops under the September-October lows that identified that market top. The bulls are trying to punch up thru 1462 to send the broad indexes higher.  The euro is at 1.3040. The 10-year yield is 1.86%. Oil is flat. UTIl drops to 456. GTX is at 4922 twenty-eight points away from the bull-bear line at 4950. So UTIL and GTX remain bearish.  RTH, JJC and of course the low VIX remain in the bull camp. Thus, sideways markets.  The Oil Inventories at 10:30 AM are key. Higher inventories means a weak global environment and equities will sell off with oil trailing lower. Lower inventories means a healthier economy in need of oil and equities will rally with oil price heading higher. The 10-Year Note Auction is 1 PM. Keystone took profits on the BAC short trade exiting the position. Credit Suisse downgraded BAC today which was great timing. It is always better to be lucky than good. The short trade remains in play for BAC moving forward, will look to reenter short.

Note Added 1/9/13 at 9:59 AM:  The SPX punches thru 1462. See if this holds, if so, price will want to move to 1468.  Keystone took profits on the PANW long exiting that trade, quite a pop in that one, will look to reenter. Keystone bot SPXL to play the long side since the minute charts may want to run higher and the 8 MA will likely cross up thru the 34 MA on the 30-minute chart.

Note Added 1/9/13 at 10:47 AM:  Oil and gasoline inventories were up but it looks like much of it was priced in. Oil is drifting lower and that takes a couple points off the SPX. The 8 MA is one single hair away from crossing up thru the 34 MA on the 30-minute chart--but not yet. If the market bears can flush the SPX strongly lower immediately, the bears may be able to stop the cross from occurring. The SPX is back kissing the 1462 now deciding if it truly wants to go higher to 1468, or, if it wants to collapse. Bounce or die.

Note Added 1/9/13 at 11:06 AM:  The SPX is still deciding to bounce or die. The 8 MA just pierced up thru the 34 MA on the 30-minute chart signaling bullish markets for the hours and days ahead. It would not be surprising to see this reverse today but for now, the bulls get the nod.

Note Added 1/9/13 at 12:23 PM:  The SPX is flat at 1462 unwilling to commit to a direction. Oil drifts lower and copper is well off earlier highs. GTX dropped under 4900.  Looks like continued sideways action until Draghi makes his appearance tomorrow.

Note Added 1/9/13 at 1:36 PM:  Copper turned negative. SPX remains flat. The 8 MA is curling over to the downside on the 30-minute chart so the drama continues. Draghi's head swells larger and larger as the day progresses since he knows he controls the fate of the markets with his words tomorrow. The euro is in a sideways move thru 1.30-1.31 for the last couple days. The mid point of that range is 1.3050 which it favors today. Thus, the 1.3050 level can be used as a gauge for markets. If the euro moves above 1.3050 and heads towards 1.31 the equity markets will move higher. If the euro drops under 1.3050 and heads lower towards 1.30 the equity markets will move lower. The euro is now printing 1.3056.  No great shakes on the 10-year yield now at 1.86%.

Note Added 1/9/13 at 3:17 PM:  Flat markets waiting on the ECB. The euro is 1.3062. The strong 1460-1461 S/R continues to see lots of action this week.

Note Added 1/9/13 at 3:42 PM:  Note how the 8 MA is coming down to stab thru the 34 MA on the 30-minute chart, isn't that something? The cross may not occur by the closing bell so this sets the stage for the Draghi decision which likely sends the SPX sharply up, or sharply down, at tomorrow's opening bell.  Traders must place their bets over the next fifteen minutes since at 9:30 AM tomorrow, the story will already be written. Whoa, big jump higher now.  Perhaps some positive imbalances exist into the close.  The one and five-minute charts are long and strong so perhaps some upward buoyancy into the close.

Note Added 1/9/13 at 4:02 PM:  Markets have idled sideways thru 1450-1465 for six days, directly beginning after the big upside spike occurred on the first trading day of the year. The broad indexes are focused on the ECB as the catalyst, now only about 15 hours away.