Keystone's Morning Wake-Up 5/3/12

GMCR is geting roasted, pun intended, down over 40% pre-market after reporting disappointing earnings.  GM earnings appear in line but what a travesty, a stock that IPO'd at 33 and now at 23, a result of governmental intervention run amuck that simply prolongs a cancerous agony for the U.S. economy. The dollar is up a smidge this morning, copper is lower, the euro is lower. This action favors bears. The ECB rate decision and press conference is imminent.  Traders are talking that Draghi may hint at quantitative easing which would punish the euro so lots of drama ahead.

Today is a cage match between JJC 48.30 and SOX 418.50, two will enter the cage but only one will exit, and the broad indexes will follow the winner.  Yesterday morning the bears were growling, pushing JJC under 48.30 but by late morning the bulls had pushed JJC back above. Late in the day the bulls pushed SOX higher but the bears spanked it back down by the close. If JJC drops under 48.30, the broad indexes will favor the bears moving forward.  If SOX moves above 418.50, the broad indexes will favor the bulls moving forward.  Status quo, where JJC stays above 48.30 (bullish), and SOX stays below 418.50 (bearish), results in the sideways market funk continuing.

Copper is down about 0.75% currently and extrapolating this percentage to the JJC projects that JJC may print about 48.05 after the opening bell which would strongly favor bears today. But, the open remains two hours away and we have to see what the ECB is up to as well as how the Jobless Claims look before then.

For the SPX starting at 1402, the bulls need to see 1405.50 to accelerate the market upside. The futures project a two or three point gain currently which places the SPX in this territory but a smidge shy at this writing.  The market bears need to push lower to the critical 1394 support level. Price bounced here on Friday and yesterday. Third time is a charm? If 1394 fails, the broad indexes will accelerate to the downside.  A move thru SPX 1395-1404 is sideways action today.

If JJC loses the 48.30 level after the opening bell, the market bulls will try to stop the 1394 from failing with all their might, but, if JJC fails, followed by the SPX 1394 failure, the broad indexes will be in serious trouble and Keystone's algorithm, Keybot the Quant, that constantly displays status at the left margin on this site, will likely set up to flip to the short side. Of course if JJC does not fail and the SOX overtakes 418.50, and SPX overtakes 1405.50, there is nothing but blue skies above, the bulls will begin a strong upside market move. Also watch XLF 15.20 and VIX 18.10 since Keystone's algo continues to track these sectors as well.  The stage is set, JJC 48.30, SOX 418.50 and SPX 1405.50 and 1394 determine broad market direction today.