Keystone's Weekend Reconnaissance 2/23/13

Friday was a wild finish to a holiday-shortened four-day wild week. The SPX hit the 50% Fibonacci retracement level yesterday. From the top at 1531 to the bottom at 1499 places 1515 as the 50% Fib, where the SPX closed.  The SPX is moving through a range of 1497-1531.  The e-mini's range is 1495-1530. Volume was lighter on Friday as compared to the Wednesday and Thursday down days.  The TRIN and VIX fell into the close helping the last minute thrust higher. Keybot the Quant remains short but will likely flip long at Monday's opening bell as long as the upward move continues.  The BPSPX is 81 coming off the 83.40 top and the bears will receive a market sell signal if the BPSPX drops under 77.40. The signals remain very mixed in the markets and the broad indexes remain highly unstable. The 8 MA moved up through the 34 MA on the SPX 30-minute chart so this gives the bulls the upper hand for the coming hours and days. The SPX came down to test the 200 EMA at 1498 on the 1-hour chart, only for a minute, and bounced, holding this support, which is a feather in the bulls cap. 

The UPS 20/50-Week MA Cross Indicator shows the 20-week MA crossing back above the 50-week MA signaling the return to the cyclical bull market for this critical shipping indicator. However, the UPS charts are negatively diverged indicating a reversal back down as the days and weeks play out. The SPXA150R is 84.60 traveling through the 80-85 zone, thus, if price moves back above 85, the bulls will receive the all-clear signal, if price drops under 80 that shows the bears growling stronger. The CRB Rind Index requires watching since the 13-week MA cross has marked all the recent ups and downs in the equities markets and the Rind is now a hair away from crossing down through the 13-week MA. Mixed signals everywhere, one says up, the other down.

Markets fell on Wednesday afternoon after the FOMC minutes talked about varying the QE, which means less QE, and that members are concerned over the excessive risk-taking occurring due to all the obscene money-pumping. On Friday morning, the Fed's Bullard, typically hawkish, instead joins the money-printing club and says the easy money will continue a long time. This staged the Friday market rally.  The markets are a casino that simply reacts to each Fed move and mannerism.

The retail sector was weak on the ANF and JWN news and may stumble moving forward. Pay close attention to RTH all next week especially considering the large number of retail earnings hitting. Copper and commodities are key and created the majority of market weakness last week. The dollar was up and euro down so commodities, oil and equities dropped. China Flash PMI is on tap Sunday evening as the new week of trading begins and this number will dictate the copper and commodities direction and push the equities markets in the same direction. Italy elections are Sunday and Monday.  If two or three of the candidates all receive the same amount of votes that would likely spell trouble.