Keystone's Morning Wake-Up 1/17/13; Housing Starts

The central bankers are becoming worried about the obscene move higher in equity markets while bond markets remain strong. Sounds like the creators of a bigger mess are realizing they created a bigger mess.  The BA 787 Dreamliner bucket of bolts is now grounded in the U.S. and Japan. BA is down 2.50 pre-market so this will create 20 negative Dow Industrials points (multiply by 8) today. The markets are resilient with the SPX closing at the top of the 1468-1472 channel. The market action is flat due to the VIX sub 14. Volatility is kept low so the larger players have more time to distribute stock to the retail investor, as the little guy rushes into the markets with his Christmas money, ready and willing to hold the bag, caught up in the bullish market tone.

Jobless Claims and Housing Starts hit at 8:30 AM. Housing Starts are an uber important monthly data point and will impact futures.  Philly Fed is 10 AM which will create a market pivot point. There is a three-day holiday weekend ahead, markets are closed on Monday, 1/21/13, and markets are typically buoyant in front of a holiday weekend.  BAC (7 AM EST) and C (8 AM EST) are the big bank earnings on tap this morning and INTC, the tech heavyweight, releases this afternoon. Keystone remains negative on the banking sector since the majority of charts indicate topping now occurring. 

Broad market direction will be dictated by JJC 45.68 and GTX 4935.50. Both are bearish now, by pennies. Any change to the bullish side will help lift the broad markets higher. If both trend lower, the markets will sell off.  Copper is up in today's trading indicating that JJC may start the day by flipping to the bull side. For the SPX starting at 1473, the bulls only need to see one point higher, to touch the 1474 handle and markets will accelerate higher. The bears need to push under 1468 to accelerate the downside. A move thru 1469-1472 is sideways action today. If the JJC and GTX remain bearish today, and the SPX drops under 1468 heading lower, Keybot the Quant, Keystone's trading algorithm, continuously posted in the left margin, will likely flip to the short side.

The euro is 1.3362 well above the 1.33 level favoring equity bulls. The 10-year yield is 1.84% up a touch favoring the equity bulls. WTIC oil is above 94 helping the equity bulls. Type 'WTIC' into the search box above to bring up the oil chart and study how it continues to test the top rail of the sideways triangle. Use euro 1.33, 10-year 1.80% and oil 94 as bull-bear lines in the sand to gauge market direction. The commodities and copper sectors are the greatest influence on the markets right now and despite how today's action works out, China is dumping a large amount of data overnight tonight, and this data will greatly impact commodities and copper, GTX and JJC, respectively, for Friday's trade and most likely dictate the market trend for several days forward. The bulls appear in a positive mood to begin the day, however, BAC and C will set the tone over the next couple hours.

Note Added 1/17/13 at 7:20 AM:  BAC earnings hit and continues to result in mass confusion. BAC stock reacted down, then up, then down, then up, now down. The release is multiple pages of confusion, add this line, subtract this one, stand on your head. The release is analogous to a procrastinating business man that provides his receipts and tax records in a shoe box to the accountant, telling him to figure it out. Typically, earnings releases that a company is proud of are easy to understand, and, visa versa.  C is on deck.

Note Added 1/17/13 at 8:02 AM:  C earnings miss on top and bottom lines. C must have dyslexia since analysts wanted 96 cents EPS but they delivered 69 cents. Top line revenue came up short making Citigroup the official skunk at the banker's garden party. C is down 2% pre-market. BAC is now down 1.4%. Futures are flat.

Note Added 1/17/13 at 9:08 AM:  Housing Starts are 954K blowing out to the upside. A nine handle.  These levels have not been seen since July 2008 so the housing sector recovery will be proclaimed to be alive and well. Futures catapult higher. Oil, copper and commodities are catapulting higher this morning driving equities higher. WTIC oil jumps above 95. Copper is up huge. The 10-year yield is 1.88%. The euro at 1.3339. The bulls are coming to play today. The Algerian terrorism, geopolitical risk, is boosting the oil and commodities markets.