Keystone's Morning Wake-Up 1/10/13; ECB Rate Decision

The BOE left rates unchanged to no suprise. The ECB also left rates unchanged. Only 10% of economists and analysts expected a cut, 90% did not, so this time the 90% was correct. More importantly, the ECB's press conference begins at 8:30 AM, minutes away, and Draghi's words will be studied to see if he provides any hint about easing at the next meetings.  The euro is back above 1.31 and moved higher on the news.  Ditto the futures showing a positive start on tap at this juncture, the S&P's are up five.  China reports blow-out export numbers overnight surprising everyone, especially since there is very little growth in Europe (China's number one customer) and the U.S., but commodities, oil and copper explode higher adding to the bullishness.  Upon closer inspection, the increase in exports appear to be more of the one-off short-term variety and do not indicate sustainability forward, but, for today, the party hats are on.

Jobless Claims hit at 8:30 AM as well. Wholesale Trade is 10 AM so markets may pivot on that release. Natty Gas Inventories are 10:30 AM; the northeast is headed for a unseasonably warm weekend.  Fed members are speaking today so they may provide interest. The HLF circus continues, best to stay away from that mess from a trading perspective.  A CVX Interim Update is on tap so watch the integrateds such as XOM and the oil sector in general. Speaking of oil, up oil = up markets. Down oil = down markets. Oil is higher today, WTIC (West Texas) now over 94 after under 93 yesterday. Watch USO as a proxy for oil and BNO as a proxy for Brent Oil.

Many executives sold shares in their own companies in the Fall under the guise of saving money due to the tax increases hitting this year. This is interesting since it hides insider selling, the executives simply cite the tax laws as the reason for the selling. In general, there was an increase in insider selling during the Autumn.  The VIX is at the lows which identified the September-October market top.  The CPC put/call is 0.85 continuing to linger in the complacency camp. Traders are simply not concerned over the markets, the Fed will always be their to back-stop, just as Europe is now believing that the ECB will always serve as a back-stop, so markets will go up forever. In fact, the new mantra in Europe now is "don't fight the ECB." As we all know, things do not work out this way. A nice bounce in the markets today may be an attractive area to further reduce the long side and increase the short side.  An attractive bottom in the markets where long plays can be brought on and held for an extended period of time will not occur until the CPC moves above 1.20 to identify panic and fear in the markets. Until then, the float up in markets is akin to picking up nickels in front of a bulldozer.

There are many attractive chart set-ups in play, many short trades especially as tickers top out with negative divergence on both weekly and daily charts, a very ominous signal. The 2013 Positions and Picks page on this site provides an ongoing list. SRS is set up very nicely now for a long, the inverse real estate ETF, and this would hint that there is disappointment on the horizon for the housing sector.  Other very attractive ETF's, which are very dangerous trading vehicles, include FAZ, ERY, HDGE and SJB. Interestingly, HDGE is a short fund and one of their holdings on the short side is TIF which will receive a slap in the face today placing a feather in their caps. On the long side, BBY is setting up for a long play again and CEP looks interesting.

The markets are stuck in a sideways rut, perhaps Draghi will provide a direction ahead. The SPX launched higher on the first day of the trading year, one week ago, but moves across a 1450-1465 sideways channel ever since.  UTIL and GTX remain in the bear camp although watch GTX to see if the commodity juice today sends it above 4950, if so, the broad indexes will take another leg higher to 1472.  RTH, JJC and VIX remain in the bull camp although TIF reported weak guidance this morning and it should receive a beating today which may drag down the retail sector.  For the SPX starting at 1461, the bulls need to touch 1465 to ignite an upside acceleration to 1468 and 1472. The bears need to push under 1457 to create a downside acceleration to 1453 and then 1444. A move thru 1458-1464 is sideways action today.

Note Added 1/10/13 at 8:31 AM:  Claims are in line, no great shakes, the S&P's are up 6. The 10-year Treasury yield is 1.89% bumping up a few ticks with money flowing from bonds to stocks.  The euro is 1.3118. Draghi downs a glass of orange juice and begins speaking.

Note Added 1/10/13 at 8:51 AM:  The S&P's are now projecting up 9 points. This would handily push the SPX to test the strong 1468 resistance, then on to the strong 1472 resistance, and these numbers are in the zone of multi-year closing and intraday highs.