Keystone's Wake Up 4-25-11

The Easter bunny hops away but the stomach pain from eggs and candy remains.  The markets now hop into a week of high drama.  The FOMC two-day meeting begins tomorrow, the rate decision is after lunch on Wednesday, no change expected, but the larger event is the first Q&A session by chairman Bernanke at 2:15 PM EST.  The question about a weak versus strong dollar will move the markets in a big way.  More dovish talk, weak dollar policy, means higher commodities and equities, but, any blurbs about an end to QE, hawkish talk, will lead to dollar strength and commodity and equity weakness. No one knows, the drama will have to play itself out.

Congress remains out of session until next Monday, and equites are typically bullish when the fools are not at the controls, as last week showed.

Copper, financials and utilities are important today.  Gold and silver continue to move higher but copper not so much this morning.  When gold closed above the 1480, Keystone's 80 20 Rule targeted 1525 and gold is not wasting any time to get there.  Utilities, UTIL, must remain above 410.87, call it 411, all this week, otherwise, the broad markets will sell off. UTIL starts at 418+ comfortably 7 or 8 points above this danger zone.

Watch AAPL as well, 352 was the level at the iPad2 release when Steve Jobs made his last media appearance, and 355 is sturdy resistance, so the 352-355 zone was identified last week as a major test for Apple.  Price jumped big last Friday but then fell on its sword, reversing, and closing at 350.70, almost 5 points off the high and below this critical 352-355 zone.  If AAPL does not get above 355, this would be viewed as bearish for the broad markets overall.

Earnings started off weak with AA but last week most companies posted acceptable numbers, lots beating by the proverbial penny.  There were issues to add to the drama such as Apple, a mixed bag on tech and the railroads disappointed. RSK meets earnings estimates a few minutes ago but has poor guidance.  JCI beats by a penny.  SNDK saying good things about flash memory. Thus, looks like the mixed earnings bag will continue. 180 of the S&P are reporting this week.

China has been very quiet lately but view them as a wild card capable of releasing news at any time that may move markets. New Home Sales hit at 10 AM.

Look for the gap fill at SPX 1340 to close out business up top.  Watch the potential triple top forming.  If SPX moves up even only a handle at the open this will lead to testing of 1339, 1340, 1341, 1343, 1344 resistance levels.  Market bears will need to see the 1333 level lost to have any hope today, if that occurs, then tests of 1331, 1328 and 1325 support would be in order.