Keystone's Morning Wake Up 3/8/12

The Fed showed up with a large bag of crack cocaine yesterday and the party is raging on thru the night. News was leaked yesterday that the Fed is considering a sterilized quantitative easing program.  Traders have not even taken a look at the particulars yet, and the program may not even occur, but that does not matter. What matters is that the leaked news is perceived as crack so the markets recovered yesterday and are set to open up higher today experiencing another QE rally.

The SPX:VIX is over 68 so the bulls are favored.  SOX moved above 410.10 which helped the bulls recover.  Copper, however, JJC, finished the day remaining bearish, but, with a large jump at the open, JJC will probably move back above the critical level of 48.43.  CRB came down to threaten 313 which signals increased market bearishness but price recovered here as well to help the bulls.

AAPL continues to support the markets. Even though the iPad3 is a lackluster release, the response appears positive. The Apple daily charts posted here showed the spank down coming, and the weekly chart showed that price will want to come back up, which it has or is in the process of doing now, then should roll over. So lots of drama ahead since the markets will go the way of AAPL.

Markets are reminiscent of July 2011 where the markets topped, dropped, then recovered, and then rolled over on the bounce. The NYAD chart previously posted showed the uber low -2500 which needed to see a market recovery. Likewise, the very high TRIN readings.  Yesterday we received the market bounce that satisfied the NYAD and TRIN.  NYAD now printed +2000 which actually favors the bear side. Traders remain complacent with a continued total lack of fear; the Fed news only serving to feed this no worry mentality. Daddy Bernanke will always be there to pat your behind. The lack of fear is also reminiscent of July 2011. The low volatility, low CPC put/call and lack of fear will not last.

On Friday, an M-class solar flare occurred. The activity on the sun is heating up with an X-class solar flare released hours ago which may impact electrical grids and GPS devices, as well as perhaps effect trading.  Interestingly, the early August waterfall selloff began at the same time as a solar flare. The full moon occurrs last night and as presented here numerous times, markets tend to be buoyant into the full moon (3/8/12) and tend to be bearish into the new moon (3/22/12). These esoteric type tidbits are not to be traded directly but, like seasonality factors, they help identify the underlying currents flowing in the markets.

In a nutshell today, to keep things simple, watch JJC 48.43, now at 48.41. JJC moving above 48.43 will add bull fuel. If the SPX touches 1355, and it holds for about 7 to 10 minutes, Keystone’s algorithm, Keybot the Quant, shown in the left margin, will likely flip back to the long side. Watch the market action in the opening minutes to see if markets gap up and then maintain a sideways to upward bias, or, if markets leak lower after an opening pop. Watch the SPX 20-day MA at 1358.39.  If price pops to test the 20 MA, see if price hits its head and receives a spank down, or, if price catapults up thru to show the bulls in full control. Bulls stay in control if SPX:VIX ratio stays above 68.  When the ratio drops under 68, if it occurs today, tomorrow, or next week, will result in a large down day just like Tuesday.

The ECB rate decision and press conference occurring shortly is important. No surprises are expected but you never know.  Jobless Claims hit in about an hour. The Greece debt drama plays on.