Keystone's Wake Up 4-11-11

A new week begins with market bulls in control.  Key elements to watch at the bell include volatility, financials and semi's.  The tiny gap fill above at 1340 remains open above so a print in this area will close out any loose ends on the top side.

If SPX hits a 1340 handle the buying should accelerate.  Conversely, if SPX 1323 handle is lost, then the market bears will accelerate the selling.  1341 has served as formidable resistance the last few days.

Vapor volume continues along with some of the lowest volume numbers in the last ten years.  The professional traders are in this market; Joe Sixpack is on a milk carton.  Joe, however, is caught up in the commodity, PM (precious metals), gold and silver hype and is participating in this arena.  The instituitons that enjoyed the nice run in this area the last few months are very happy to pass off shares to enthusiastic Joe.

Many traders reference a wall of worry but this is not the case.  Volatility tumbled lower, and along with the low CPC put/call ratio, this proves the opposite case, there is no fear in the markets whatsoever.  Traders are complacent.

Double A, Alcoa, kicks off the earning season fun after tonights close.  The chart was posted on the weekend so check out the negative divergence which says the earnings, or guidance moving forward, will not be the happy news all are anticipating.

The economic data is back week weighted, as well as Fed speak from several Fed heads, so the markets will heat up and probably become more volatile as each day plays out this week.

Tomorrow at 2 PM EST the New York Fed releases the new POMO pump schedule and this will be a market mover.  80 billion has been targeted for the previous schedules so use this as your guide on the affects.  Lower than 80 billioin means the fed is finally buying into the inflaiton concerns and Chairman Bernanke the dove is moving towards the hawkish direction.  Bernanke's main goal since the Fall 2008 crash is to kick the can down the road so the prudent thought is he keeps the 80 billion level in place and does not rock the boat either way.

Retail sales data is released Wednesday morning before the bell.  Considering that the retail sector is setting up again for a nice short, perhaps the timing will be to enter short before the sales data or at least on the news.  Business inventories at 10 AM EST, oil inventories a half hour later, 10-year note auction goes off at 1 PM and Beige Book at 2 PM, so Wednesday will be a fast moving day. 

Last two days of the week will be riddled with Fed speak and PPI and CPI will provide a gauge on inflation.  Manufacturing, production and consumer sentiment data hits on Friday as well.

To project market direction today, watch VIX, RTH and SOX at the open in an hour.  Always keep an eye on utilities as well as they will lead the broad markets. Broad markets are unstable so stay close to your mouse.