Keystone's Morning Wake-Up 2/11/13

There is no economic data today. European leaders are meeting in Brussels. MAS earnings will provide a gauge on housing today.  WTIC oil is weaker hanging at the critical 95.50 support level that was in play on Friday as well. A drop through 95.50 should lead to 92-93. Gasoline prices at the pump have jumped 25 cents in the last two weeks which will affect retail sales moving forward.  Brent is down from 119 to 118 so tensions may be slightly easing for the Middle East and Syria powder keg.  Lower oil should take the broad indexes lower but alas, the futures are slightly positive. The mixed market signals continue. Copper is weak today, bearish. The 10-year yield is inching up slightly now at 1.98%, bullish. The euro was sub 1.34 but is now inching back up above. The market bears were ripped-off on Friday since the euro dropped drastically but equities went up, another mixed signal. But today, the euro moving up is providing equity buoyancy. Do you get the feeling that no one likes the bears?

Pope Benedict is resigning on 2/28/13 due to health reasons. Good luck and best wishes to him. Italy is in transition mode, on the cusp of elections, with Berlusconi gaining momo and creating worry. India is selling off, the IFN dropping 3% in the last six days. The Year of the Snake begins as most of Asia is in party-time mode taking a well-deserved break from daily work with the major exchanges closed. Happy New Year to all our friends across the sea.  The utilities play a key role again this week. Keybot the Quant, Keystone's trading algorithm, has been long since the last day of 2012, perhaps the longest trend for the quant since it went live five years ago. Do you subscribe to 'the trend is your friend' philosophy, or, to the 'the trend is your friend--until it isn't' philosophy? Two key numbers, UTIL 469.78 (the close 15-weeks ago) and 467.71 (the 50-week MA) will determine broad market direction as the new week of trading begins. If the bulls keep UTIL above these two levels, now at 474.46 to start the week, the bulls rule. If UTIL 470 fails, the markets are in serious trouble and the bears will finally have their way. A drop through UTIL 467.71 will likely cause Keybot to flip short. Therefore, pay attention to the movement in UTIL for vital clues.

The 30-minute and 60-minute charts on the weekend show the negative divergence set-up which needs to slap the SPX down this morning, despite the higher futures. The daily, weekly and monthly charts remain negative moving forward as the Energizer Bunny keeps eeking out new market highs.  Watch the new H&S developing with head at 1518 and neck line at 1495. Watch the 8 and 34 MA cross on the SPX 30-minute chart now showing the 8 above the 34 signaling bullish markets for the hours and days ahead. Once the negative divergence spanks the SPX lower, see if the 8 stabs down thru the 34, or not. The new moon and lunar new year was on the weekend so some market weakness would be anticipated; the 1518 Friday high should lead to some lower numbers today.  For OpEx week, Monday's are typically buoyant so that will be fighting in the opposite direction trying to create a buoyant close today. For the SPX starting at 1518, the bulls need only a smidge of green in the futures to create an upside acceleration, and the futures are green, by a smidge, but not convincingly so as yet.  The bears need to push under 1509 to develop downside momo. A move through 1510-1517 is sideways action today.

Note Added 2/11/13 at 8:21 AM:  Look at that, WTIC oil drops to 95.25, failing the 95.50 support. Brent just dropped under 118, now 117.85. The euro loses 1.34 now printing 1.3390.  Gold 1649. AAPL 477. The 10-year yield pulls back now at 1.96%.