Keystone's Morning Wake-Up 2/5/13; ISM Non-Mfg; DIS

Today is the Anniversary of Mexico's Constitution. Congratulations to all our friends south of the border. The bears finally showed up for the first day this year creating a bearish engulfing candlestick off the top, a key reversal vibe, and the first triple digit down day for the Dow Industrials this year. Last evening the euro fell under 1.35 and WTIC oil dropped under 96 but have since recovered.  Futures are up strongly pointing to a  higher open. For the SPX, the bulls need to retrace yesterday's move to regain mojo, a formidable task but not impossible. Simply look at yesterday's solid reversal of Friday's move. The bears need only one point lower, to move under 1495, and a test of 1489 should occur quickly.  A move thru 1497-1512 is sideways action today.  SPX S/R is 1517, 1514.41 (intraday high for 2013), 1513.17 (closing high for 2013), 1511, 1509, 1505, 1503, 1500, 1498, 1495, 1489, 1485.45 (20-day MA), and 1485.

The Italy and Spain yields are escalating higher renewing concerns over the European debt crisis. Japan's Shirakawa will resign 3/19/13 from the BOJ and be replaced with a more dovish member so the yen weakens more today. The dollar/yen moves up thru 93 setting new highs day after day. The euro/yen pair is of concern. The U.S. and Japan are destroying their currencies as fast as possible while Europe stands by watching. The pressure on Draghi is mounting and the ECB Rate Decision and Press Conference will be the biggest event this week, Thursday morning before the U.S. opens.

Keystone's algo identifies UTIL 475.49 and 467.65 as the two key market moving numbers this week. UTIL sits exactly in the middle to start the day today.  The bulls need 475.49 and higher, and the booze will flow like water with the broad indexes moving higher once again.  The bears need 467.65 and lower, and the broad markets will begin to decay at a quicker pace. If UTIL cannot choose today, and stays in the middle, then the markets stumble through a sideways malaise.  VIX is up over 14 but the bears need to see 16 or higher before it will create strong market negativity.  The CPC put/call jumps to 1.10 signaling a bit of fear coming into the markets after yesterday's down draft, but remains under the 1.20 and higher which would show that fear is rampant in the markets. It is typically best to bring on long positions when the CPC spikes above 1.20 since this snags an attractive short to intermediate term market bottom. With futures showing a bounce on tap today, traders appear ready to embrace complacency again (CPC would move down). NYMO is -22, not exactly where a bounce would be expected; a move towards -40 and lower typically occurs before a market bounce. Therefore, if today is a recovery move, it may be short-lived followed by more downside.  The SPX likely wants to test the 20-day MA at 1485 to see how strong the upside is, or not.

ISM non-Manufacturing Index hits at 10 AM so look for a market stutter step. YUM was beaten last night and this should continue today. Poor ole Colonel Sanders did not make it through the night.  ADM earnings are important from the ag and commodities sector perspective today. ADP is important for payroll information. The Mouse House (DIS) reports at 4:15 PM. Will Disney earnings be Happy or Grumpy, or perhaps Dopey? One thing for sure, the markets will be Goofy.