Keystone's Midday Market Action 3/15/13; Italy and Cyprus

The Cyprus bailout is very important. Any new rules for bond holders will ripple through the entire Eurozone. The Cyprus banking system is the main key to its economy. In addition, the Russian money is involved heavily in the Cyprus banks. This back drop creates event risk. At the same time, Italy is currently trying to form a coalition government, otherwise, a new Italy vote will be required in May-June.  Most economic data was in line this morning. The Industrial Production was a strong beat to the upside but the Consumer Sentiment is far weaker than expected. Gloomy Gus and Negative Nancy consumers do not run out and spend money. The high gasoline price fatigue is likely setting in. The negative divergence discussed yesterday on the 2-hour, 1-hour and 30-minute charts creates the smack down to start the trading session.  The Fed's pump is creating a market recovery right now with the SPX at 1559.  Watch the 8 MA and 34 MA cross on the SPX 30-minute chart as previously posted, currently bullish, to see if the bears can take over today, or not.

The TRIN spiked to 2.06 at the opening bell which helped create the down move in the broad indexes to begin the day. The TRIN is at 1.11 now deflating off the initial bearishness. The selling will continue if the bears keep the TRIN above one today, especially above 1.10. If the bulls push the TRIN under one, then the SPX will take out the all-time closing high at 1565. The GTX is 4905.  Dr. Copper is weak today.  The VIX moved higher to 12 to create market selling but the Fed is stomping on volatility's neck again and the VIX is now at 11.58 allowing the SPX to recover. The euro is 1.3073. The 10-year yield is 2.00%. Yields are moving down with equities as would be expected.

Note Added 3/15/13 at 11:17 AM:  The 10-year yield lost the 2% level now printing 1.99%. The TRIN is at 1.03, near dead neutral now; bears need higher and bulls need lower. VIX is 11.43. GTX is 4910. The SPX is 1560. The bulls are trying to keep the SPX above 1560 to stop the 8 MA on the 30-minute chart from moving lower.

Note Added 3/15/13 at 1:17 PM:  Note the weakness in semiconductors today, $SOX and SMH, falling from their rising wedges and negative divergence on the daily charts. The weekly charts may want to see one more recovery bounce after some downside before rolling over for an extended down move. Keybot is tracking SOX 421 and at 435 now, the socks remain 14 points above the bull-bear danger line, but the semi's may play a key market role next week. A chip is in almost anything you buy these days. The broad indexes churn sideways today. The Fed saved the day this morning but the broad markets are languishing sideways overall. The SPX hourly and minute charts are developing an H&S vibe with a right shoulder forming now. VIX remains low at 11.44 but up a few pennies on the day. TRIN is 1.01 reflecting a wishy-washy market unable to choose direction; it will likely choose before the closing bell. Three seasonality factors were in play this week.  First, the new moon on Monday where market weakness was expected, and occurred. Second, the Tuesday to Wednesday market buoyancy that occurs during OpEx week each month, which occurred. Third, this week overall, March OpEx week each year, is up well over 80% of the time and it looks like the markets are running with this seasonality ball as well this week.  The SPX started the week at the 1551 palindrome so a close at 1552 would satisfy the up-week seasonality. The SPX is printing 1560.80. The 8 MA remains above the 34 MA on the 30-minute chart, bullish. The 8 MA is 1560.18 so if the bears can push the SPX under 1560 they can get the downside moving, otherwise, the bulls will push the indexes sideways into the weekend.  The TRIN will tell you the story this afternoon. Volume is strong today due to OpEx and the financial sector rejiggering after the stress test results last evening and will pick up into the closing bell.  Volume is already running at a days average expected volume.

Note Added 3/15/13 at 1:54 PM:  JJC (copper) breaks through 44 moving towards lows printed one week ago.  Dr. Copper is in sick bay for one month and the equity markets do not care. This is a remarkable disconnect. TRIN 1.01 walking the tightrope. Come on TRIN, pick a side already.

Note Added 3/15/13 at 3:09 PM:  TRIN is 1.07 showing a wee bit of buoyancy so the SPX drifts a couple handles lower. No great shakes. VIX is 11.64. The mini H&S pattern on the 30-minute chart shows head at 1563, neckline at 1556, so the downside target is 1549. A downside acceleration will occur if 1555-1556 gives way. The SPX is now printing 1559.

Note Added 3/15/13 at 4:01 PM:  The bulls push the SPX out sideways into the weekend. The TRIN would not commit today. VIX remains sub 12 but the volatility charts are set up for a move higher next week. The charts favor the market bears moving into next week and the bears will have to come to play since the last week of March is typically bullish and window dressing will likely occur. In the days ahead, there is event risk with Cyprus, Italy and the FOMC. The Continuing Resolution deadline is 3/27/13, only 11 days away. Dr. Copper is ill.  The 10-year yield is 1.99%. Time for the Friday fish dinner with a slice of apple pie. Sunday is St. Patrick's Day, a day when everyone is Irish.  With spring here, it is also time to release that famous Irishman, Pat-i-o Furniture, from the storage shed out back.