Keystone's Morning Wake-Up 3/25/13; Cyprus Agreement; Italy

Word on an initial Cyprus agreement occurred at 7 PM EST last evening and then at 9 PM the agreement was announced. Everyone expected it. Traders know that politicians will always find a way to wall paper over things and kick the can. The agreement is messy and details require attention. Cyprus banks were to open tomorrow but that may be delayed. Accounts remain frozen. The Russians appear to be taking the brunt of the pain so there will likely be some sort of retaliation in the future. Cyprus remains on the radar screen this week. Italy continues to try and form a coalition government so in the next couple days it will be known if a new election is required, or not. A new Italy election will be detrimental for markets.

Futures are up on the Cyprus solution, however, far less than would be expected. Typically, these bailout events push the S&P's ten to thirty handles higher, the S&P's are currently up six. This places the SPX on track to test the all-time closing high at 1565.15 at the opening bell today. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours and days ahead. The euro was over 1.30 but has lost ground now at 1.2995. The market bears need to see either VIX 14.95 or SOX 421 but with the happy Cyprus news the bulls continue to drive the bus without fear or worry. 

The Chicago Fed Activity Index is released at 8:30 AM. Dallas Fed Survey at 10:30 AM.  Both will provide a gauge on the manufacturing sector. The BRIC's Summit begins. Fed's Dudley talks at 12:30 PM followed by Chairman Bernanke speaking at 1:15 PM.  Markets are usually bullish the last week of March. Window dressing should help the bulls as well. Ditto the full moon and also the pre-holiday buoyancy late week. It's all going the bull's way. U.S. markets are closed for Good Friday so this week is a holiday-shortened four-day trading week. The month of March is strongly higher thus far which typically leads to some give back at the end of the month so the bear's have one tiny feather for their caps. The Continuing Resolution was approved in Congress and President Obama should sign that with no problem so any potential shutdown of government is now pushed off until September.

DG earnings are of interest since they represent the low-end consumer.  The 10-year yield is 1.96% up a tick or two in yield from 1.94-1.95% reflecting the equity bullishness to start the day. Crude oil is 94.17. Brent oil is 108.32 showing that traders are not worried about the current Middle East turmoil. The Brent-WTIC spread is 14 well off the spreads of 23 two or three weeks ago.  Copper is negative. The snow is falling creating another Currier and Ives winter scene but the calendar says it is springtime.