The utilities led the upside parade yesterday breaking thru UTIL 466.79. The action continued to and fro across this level which corresponded to the ups and downs in the broad indexes yesterday. UTIL is at 467.27 forty-eight cents above the bull-bear line. Bears have no hope unless they push UTIL under 466.79 today. On the bullish side, if UTIL stays above 466.79 and hits 475.48 today, the market upside will be explosive. Next week, the 475.48 number is void and replaced with 483.76. The next upside leg in the markets that would produce SPX 1520+ will occur if UTIL moves up thru 484 next week. But staying in the here and now, for today, keeping it simple, the UTIL 466.79 will dictate the broad market direction.
Friday afternoon buoyancy typically appears to end the week. The full moon is occurring now so markets tend to be buoyant in front of the full moon. But these seasonality factors may take a back seat considering the non-stop upward action in recent days. The trend is your friend as long as the short term minute and hourly charts are showing long and strong profiles for the indicators but currently the charts favor negative divergence. The VIX showed signs of life yesterday moving above 13 but then falling on its sword again. Volatility does appear to be basing now wanting to move higher.
The 10-year yield moves to 1.90% today, the euro is over 1.34, oil is up, copper is up, so the bulls are already drinking booze and looking forward to a happy weekend, everything is going the bulls way day after day. AAPL's big drop yesterday has everyone talking about how little affect Apple has on the broad indexes. Last year, 'as Apple goes, so goes the markets'. The inflection point occurred as December 2012 began. AAPL bounced from mid-November, helping lead the markets higher off that bottom, but Apple took a turn for the worse in December. The broad indexes, however, move higher. Chances are, the money that left AAPL did not leave the market. It was pushed into small cap and speculative stocks, especially high short interest plays, creating the wild short squeezes in the market now with stocks such as NFLX. This action is launching markets like a rocket. Six weeks do not change a long-term trend. The jury remains out on the extent of Apple leadership. Give it another month to see if Apple is losing its leadership role. It would not be surprising to see the broad indexes reverse to the downside and the Apple/SPX relationship resume. 18% of the Nasdaq is Apple so 'as Apple goes so goes the Nasdaq' but about 3% of the SPX is Apple having less of an affect. Perhaps once the short squeezes flame out, and all the short sellers are gone, sitting on the sidelines, like now, a clearer picture may emerge.
Also of interest is the Fed and other central banker money printing that has traders sleeping well at night with zero fear of any market downside. The gold action is down and if the 'do not fight the Fed' mantra was running on all cylinders, gold should be catapulting higher. There are many ongoing mixed market signals. There is no geopolitical risk at all priced into markets. Ditto the ongoing political battles since traders fully expect can-kicking to occur without any disruptions moving forward. New Home Sales hit at 10 AM EST so a market stutter step may occur. Secretary Geithner steps down ending his four-year stint. Mr. Softy earnigns wer in line last evening. PG and KMB earnings beat this morning which helps fuel a bullish mood. The Fed meets next Tuesday and Wednesday. The last couple days of January tend to be weak seasonality-wise.
The SPX printed the doji candlestick discussed last evening so that may indicate a trend change to the downside today. For the SPX starting at 1495, one tick below the strong 1496 S/R, the bulls need to punch thru 1502, if so, a test of the strong 1505 will occur in quick order and the 1505 will likely decide if the SPX intends to move to the 1520's. The bears need to push under the strong 1489 support to accelerate the downside to 1485 which will occur quickly. A move thru 1490-1501 is sideways action today. The S&P futures are up four as this missive is typed which would send the SPX towards 1500 to start the day. Watch the 8 and 34 MA cross on the 30-minute chart highlighted this morning, the bulls are currently in charge. In a nutshell, watch UTIL 466.79, SPX 1502 and 1489 to gauge market direction today. Keybot the Quant remains long for the entire year thus far while Keystone maintains a negative outlook on markets moving forward.
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