Tuesday, February 11, 2014

Keystone's Morning Wake-Up 2/11/14; Fed Chair Yellen Speaks

Banzai! The Fed and BOJ continue colluding to keep the stock market elevated. Barclays bank announce 10K to 12K firings today and are mired in legal problems (civil lawsuits are now increasing) as well as security headaches with the data breach. The news sent S&P futures immediately lower from +6 to +4. The dollar/yen was under 102.20. Since the central bankers cannot tolerate any stock market weakness, the BOJ bludgeons the yen sending the dollar/yen from 102.20 to 102.32 in quick order which catapults the S&P's 4 handles immediately to +8. Weakness is papered over by the central banker easy money policies.

The dollar/yen now leaps to 102.45 as this missive is typed four hours before the US opening bell. Banzai! This sends S&P futures to +9. The critical S/R levels are 1828, 1808-1809, 1802-1803, 1796, 1791, 1788, 1781 and 1772. The 50-day MA is 1809.30. The 20-day MA is 1802.13. The 200 EMA on the 60-minute chart is 1798.76 so with price at 1799.84, pennies above, the bulls are in the drivers seat for the hours and days ahead. Bears must send price under 1798.76 pronto, otherwise, they will fold like cheap suit.

Traders are optimistic about Chair Yellen taking control of the Fed since she is a dove among doves that worships Keynesian economics. With the weak jobs and other economic data, traders anticipate a possible tapering of the taper (Yellen may slow down the $10 billion per month taper rate) so equities are goosed higher anticipating more free money. If Yellen maintains the current stance (as expected) or potentially talks a bit hawkishly, which would be a big surprise, markets should weaken. If Yellen hints that a taper of the taper may be a possibility, the stock market will catapult higher with the SPX running up through 1808-1809 on its way to 1828. Yellen's statement will be released at 8:30 AM EST so pay attention to the futures to see if any adjustment occurs.

Market direction is determined by financials, utilities and volatility today. XLF 21.37 is the key bull-bear line in the sand. If the bulls push XLF above 21.37, the stock market will continue higher for several days forward. Bears must hold XLF 21.37 with all their might. The bulls can also generate market strength by pushing the VIX under 14.20. VIX begins at 15.26. The bears can create market negativity with UTIL 504.65. For the SPX, the bulls only need a smidge of green in the futures, which is obviously in place today, and an upside acceleration will occur, which is already indicated. For today, watch XLF 21.37 and SPX 1808-1809 resistance since these two parameters will provide the market direction answer for the days forward.

Note Added 5:47 AM: The dollar/yen drops slightly from its peak minutes ago to 102.40 so the S&P futures drop one handle to +8. You can directly correlate the stock market movement to the ongoing collusion by the BOJ and Fed.

Note Added 6:55 AM: Dollar/yen 102.36 leaking lower, thus, S&P +6.

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