Keystone's Morning Wake-Up 2/14/13; Claims; GM; PEP

Happy Valentine's Day and in honor of the occasion, the markets are printing red. Futures were up three hours ago, now down, the S&P's off about six points. The 10-year yield hit 2.06% threatening to fill the gap from ten months ago, but pulled back at this resistance now at 2.03%.  The big news overnight is Europe in the can.  Even the weak GDP estimates across the Eurozone were not weak enough, Europe is clearly in a sustained long-term recession and depression period. The funny thing is everyone else is printing money while Dragh stands silent with his hands in his pockets. Nonetheless, the euro drops through 1.44 and is now at 1.3324 perhaps threatening 1.33 today. Down euro = down equities markets. Italy is particularly disturbing with its far weaker than expected economy occurring as they prepare to vote. Debt places Italy between a rock and a hard place, trying to pursue austerity to show responsibility and accountability, and a desire to do what is right, but the austerity chokes off any growth and recovery hopes. This occurs as civil unrest grows. This is where the central banker and political actions lead nations.

Technically, the 8 MA fell short of the 34 MA on the SPX 30-minute chart (scroll back to review yesterday's cahrt), so the bulls were happy, but, as they watch this mornings action, they see the writing on the wall that the 8 should stab down through the 34 MA as the opening bell rings. The SPX displays several H&S patterns on the minute and hourly charts; a head at 1525 and neck at 1518 would lead to 1511. A head at 1525 and neck at 1515 would lead to 1505. The 1505 and 1503 levels are very strong support, if lost, guarantees sub 1500 and lower. Another H&S is head at 1525, neck at 1495 which is a target of 1465.  The argument can be made that the last true strong support was 1460-1461. Above that the markets have become funky, simply running higher on orgy moves, on light volume, complacency, no fear of a major pull back, only worry of missing even the tiniest pull back to go long, all these factors have created air under the markets so any move lower will be interesting to watch. For today, with the SPX starting at 1520, the bulls need to touch 1525 today and an upside acceleration occurs to 1530. The bears need to push under 1516, four points lower, to create a downside acceleration to test 1511 in short order. The futures currently show this outcome on tap. A move through 1517-1524 is sideways action. The SPX printed a doji candlestick on the daily chart yesterday indicating a potential trend change; today would need to see follow-through to the downside. The BPSPX poked out a slightly higher high at 83.20 so the bears would need to see 77.20 in the days ahead for a market sell signal to occur.

Watch UTIL 469.78, UTIL 468.14 and JJC 46.45. Bears got nothing unless they can touch at least one of these numbers. If the markets sell off today but none of these three parameters occur, the bulls will recover into the weekend. Jobless Claims are 8:30 AM. Natty Gas Inventories 10:30 AM.  Fed's Bullard will spin some yarns at 12:50 PM.  The 30-Year Bond Auction is 1 PM. Even though weakness is appearing, there is a three-day holiday weekend ahead so markets tend to be buoyant into the happy holiday. Thus, a market low either today or Friday morning will likely lead to buoyancy as the week ends and traders take a rest until next Tuesday morning. GM, the national embarrassment  and PEP, are two key reports on tap this morning. CSCO displayed wild and violent up and down action last night after earnings and the weakness continues today.