Keystone's Morning Wake-Up 2/4/13; YUM

Look at the futures drop like a stone, very interesting. Tech is leading lower. The utilities are key to start the week. Remember all the excitement on Friday with UTIL 475.49?  This number is key all week long. The bulls must go though UTIL 475.49 to take the broad indexes higher. Bears must prevent UTIL 475.49 with all their might. At the same time, the bears need to push UTIL under 467.29 (50-week MA), which will accelerate the market downside. Type 'UTIL' in the search box to bring up prior ute charts for further study. The euro drops under 1.36.  Down euro = down markets. The currency moves are phenomenal. On Friday the euro explodes to 1.38 and traders are calling for 1.40+ any day. We wake up today far lower. Spain continues its move lower and Italy now follows along lower.  Spain markets are down over 7% over the last few days. European bond yields are starting to move strongly higher (which is a negative). Germany is down over 100 points today.

For the SPX, starting at 1513, the bulls need one point higher, to push through 1514 and the upside orgy will continue.  The bears need to retrace Friday's move and push under 1498 to regain their mojo, a formidable task, but not impossible by any means, and the futures are biting a chunk of this off to the downside. A move thru 1499-1513 is sideways action. The Superbowl indicator is stacked in the bulls favor since both the Baltimore Ravens and San Francisco 49er's are old NFC teams, which would guarantee bullish markets this year, however, in keeping with the spirit of the indicator, the AFC (Ravens) won, so this says bearish markets for 2013.

Watch the 30-minute chart to see if the 8 MA stabs down thru the 34 MA, or not. Bears got nothing unless they can make this happen.  Interestingly, a major Bradley turn occurred last Tuesday so the window for a major market turn remains open today and tomorrow. The spike on Friday hints that another market melt-up may be on tap but the deterioration in the futures may change the complexion quickly. The day after the Superbowl is typically a slow trading day, many folks are at home with the blue flu, donning a water bottle on their heads after party behavior all night long. SPX S/R is 1524, 1520, 1517, 1514.41 (intraday high for 2013), 1513.17 (closing high for 2013), 1511, 1509, 1505, 1503, 1500, and 1498.

Watch the 2% line for the 10-year Treasury note yield. The equity bulls want 2% and higher while the bears want to see below 2%. WTIC oil is lower at 96.53. Brent is pulling back as well. Copper is having a rare down day and it remains an important indicator moving forward.  Keybot the Quant, Keystone's trading algorithm, remains bullish from the last day of last year. Keystone, however, as the bulk of the analysis on this site shows, remains negative towards markets.

The YUM earnings are key today. YUM is a key barometer for China economic health. If YUM is expanding restaurants like gangbusters and cannot keep up with demand, that means that China is truly doing well and folks have disposable income that is freely spent on tasty chicken dinners. However, if the guidance is weak, perhaps the pace of new store openings may be decreasing, that indicates a malaise in China. So pay attention to YUM since it will affect overnight trading into tomorrow. As always, reference the Key Events missive from the weekends for each trading days road map.