Keystone's Morning Wake Up 2/14/12

At about 2 PM EST yesterday, news hit that the Greece meeting scheduled for today was cancelled. Markets stumbled lower, then with minutes to go in the session, news said all is fine so markets recovered. Then, China says they will support Europe (for the umpteenth time) and Asia, Europe and futures markets jumped higher overnight.  Minutes ago, there is word of a Greece delay again, so the euro is falling.  Purely news-driven markets. If you do not like the market direction, simply wait a few minutes for a new headline.

Keystone's SPX:VIX ratio dropped under 68 signaling the large down day yesterday, until the end of the day when the ratio jumped back above leaping from 67 to 68 in a single minute. Thus, market bulls are in control, unless the ratio loses 68 today which will signal a large down day ahead.  Commodities have remained elevated helping keep the broad indexes elevated.  Watch copper, JJC, since the air is coming out of the balloon. If JJC, now at 49.18, falls under 48 that will signal bearishness for the broad markets.

The bulls wrestled back control yesterday and the main tell as to whether or not they actually have the juice to go higher will be shown by the utilities sector.  Watch UTIL 451.17.  If the bulls push price above, the broad markets will respond with another leg higher, the SPX likely heading for the 1360 gap fill. If UTIL stays under 451.17 today, that shows that the bulls do not have anymore upside strength.

For the SPX today, starting at 1350.50, bulls only need one point higher, and the futures show that to be the case currently, and that will further accelerate the upside. So if the 1351.30 level is achieved, which should occur, the SPX should quickly test the overhead resistance at 1354.  Remember how important this 1354 R is from last Friday? Behavior at 1354 is key. Breaking up thru that level opens the door to 1357 and likely a gap fill at 1360. Bears need to lose the 1341 level to accelerate the negative side and this looks like a long road to hoe considering the futures.  A move thru 1342-1350 is sideways action.

Keystone's proprietary algo, Keybot the Quant, flipped to the short side yesterday after a long two-month bull run, but a whipsaw may occur today with Keybot flipping back long.  If the SPX moves up and over 1355.42 and stays there for several minutes, Keybot will likely go long again.  But, interestingly, there are gap up rules that may affect the algo which would delay the whipsaw for an hour or so. An interesting day is ahead.

Empire State Manufacturing data was better than expected and gave the S&P futures a point of so bump up.  TIC data is in fifteen minutes, this will show the levels of foreign investment in the U.S. Industrial Production at 9:15 AM.  Fed's Fisher is speaking.  A Housing Index hits at 10 AM so look for a market pivot point then.  Oil Inventories at 10:30 AM then the afternoon drama with the FOMC Minutes at 2 PM.