Thursday, May 22, 2014

Keystone's Morning Wake-Up 5/22/14; PMI's; Retail Earnings Barrage; Existing Home Sales; Leading Indicators; HPQ

The drama with XLF 21.83 continues (see this morning's chart). Keybot the Quant is short but will likely flip to the long side if the SPX moves above 1889 and higher. The bears must push XLF under 21.83 or they got nothing and face a long day of pain ahead. For the SPX starting at 1888, the bulls only need one point higher, to touch the 1889 handle, and it is off to the races higher with an upside acceleration that should take out the strong 1891 resistance in quick order and set sights on 1897 R. Bears need to push under the strong 1884 support and the 20-day MA at 1880.03 or they got nothing.

Jobless Claims are on tap shortly at 8:30 AM. Existing Home Sales and Leading Indicators are at 10 AM and will create a market pivot point. There is a barrage of retail sector earnings today including BBY, SHLD, ARO, BKE, BONT, DLTR, PLCE GPS and ZUMZ so by this evening the story will be written on the health, or lack thereof, of the great American consumer. BBY and SHLD have already laid eggs and are trading lower pre-market. HPQ reports after the bell and will set the tone for the Nasdaq for tomorrow. Futures are flat. Copper is strongly higher due to the positive China PMI number so this aids the bull case. Markets are also typically bullish in front of a three-day holiday weekend. Monday is Memorial Day and markets are closed.

The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Bears need the negative 8/34 cross or they got nothing (see this morning's chart). In a nutshell, simply watch XLF 21.83 to determine the direction and fate of the broad markets. The daily charts show tight standard deviation bands so a strong and quick move is coming for markets over the days ahead. The SPX should move from 20 to 40 handles so either to the 1920's, or to the 1840's (see this morning's chart) over the next couple weeks going into June.

Bulls can monitor resistance above at SPX 1891 and 1897 as they pop champagne corks and celebrate a sharp move higher if XLF remains above 21.83 and moving higher. Bears can celebrate if XLF drops under 21.83 and the SPX loses 1884 support then the 20-day MA support at 1880. Markets are in a near 4-month sideways range through 1815-1891, or 1815-1902 if you prefer, and in the coming days price either decides to break out above 1891-1902 and march to 1920's and higher, or, collapse from current levels and set sights on the starting year number at 1848. XLF 21.83 is what matters. As financials go, so goes the markets.

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