Monday, March 10, 2014

Keystone's Morning Wake-Up 3/10/14

Weak China export data sours Asia's mood. Copper is dumping another -1.5% today now testing nearer the psychological 3.00 level. The dollar/yen dropped to 103.05 overnight sending the NIKK down -1% and the S&P futures were 10 handles lower a few hours ago. The BOJ weakens the yen sending the dollar/yen higher over 103.30 so the US futures recovered to the flat line. There are no economic data releases today. Fed's Plosser spoke early this morning. He is a hawk so he says stay on course with QE tapering no matter what. Fed's Evans speaks at 12:40 PM and he is a dove so he will say a slowing or pausing of QE tapering remains on the table. Evans words may create market upside after lunch.

Traders ignore Ukraine and Crimea. The bullish sentiment remains. The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead, however, price, the 8 and 34 are all on top of each other at 1876-1888 so anything can happen. Bears need to maintain the negative 8/34 cross but bulls will attempt to send the 8 MA back above the 34 MA. The SPX is above the 200 EMA on the 60-minute chart (see this morning's chart) signaling bullish markets for the hours and days ahead. Keybot the Quant is short. Volatility continues to rule the roost. VIX is 14.11 in bear territory, above the 13.98 level identified by the algo, creating market negativity. The VIX 13.98 provides the market direction answer. Equities will leak lower if the VIX stays above 13.98. If the VIX drops under 13.98, the SPX will run higher to test the 1884 all-time high and decide if it wants to go to 1890+.

The SPX 30-minute chart indicates a sharp large move coming due to contracting standard deviation bands; perhaps from 10 to 30 SPX handles into mid-week. For today, starting at SPX 1878, the bulls need to push up through 1883.50-1884.00 and the 1890 will occur in quick order and the path will be higher. The bears need to push down through 1870.50-1871.00 to accelerate the downside and the path will be lower. A move through 1871-1883 is sideways action today. Key S/R is 1884, 1878, 1874, 1870-1871, 1868, 1859, 1848-1851, 1841, 1828, 1808, 1803, 1800, 1796 and 1791. Watch VIX 13.98 since it dictates market direction. Pay attention to the 8/34 MA cross on the SPX 30-minute to determine equity direction as well. Dollar/yen 103.30. S&P -3. The 10-year yield is 2.79%.

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