Keystone's Midday Market Action 3/22/13; Cyprus Drama Continues

The bulls push higher today as the Cyprus drama plays out. Traders continue to look at the bright side of life (google 'bright side of life Monty Python'). A Fed head is passing out rose-colored glasses on the floor today.  The SPX is wrestling with the 1555-1556 resistance which is strong R (1556) and the upper trend line highlighted this morning on the 30-minute chart. For today, the bulls need to touch the 1559 handle and an upside acceleration will occur. If price move through the strong 1556 R a test of 1559 will occur. The SPX will move towards the 1565.15 all-time closing high if 1559 gives way.

The euro is 1.2988 bouncing off the 200-day and 50-week MA support levels as highlighted in this morning's charts, now up through the 1.2950-ish resistance, so the 1.30 level offers up the next resistance. The buoyancy in the euro creates buoyancy in equities. The TRIN is 0.75 so say no more, the bulls rule today. VIX is 13.29 well under the 14.95 bull-bear danger line. SOX is 431 well above the 421 bull-bear danger line. Thus, the bulls are pushing stocks higher towards the weekend. The afternoon will be interesting to see how traders position ahead of the Cyprus crisis weekend. Cyprus is searching for 5.8 billion euro's, overturning the couch cushions in the executive lounge, asking the cafeteria ladies for donations and checking under the seat cushions in the Bentley. Cyprus has three days to produce the dough and is in between a rock and a hard place. Cyprus citizens will revolt if their savings are confiscated, and if the wealthier folks' money is confiscated, well, let's just say that Vladimir will show up with a baseball bat and likely break some legs.

Watch the 8 and 34 MA cross on the SPX 30-minute chart, bearish for now, but the 8 should move above the 34 at anytime verifying the upside bullish fun for long players on tap today. The bears need to push the SPX lower immediately at least under 1553 to prevent the 8/34 MA cross. Interestingly, the 10-year yield is 1.93% not sharing the enthusiasm to the upside that equities show thus far today. Copper continues to receive a relief bounce the last three days. CPC put/call is 0.86 remaining complacent and this is reflective of yesterday's trading action where traders are either sitting out, or were quick to buy the dips, remaining optimistic and bullish despite any Cyprus or other negative news. Keystone misplaced his rose-colored glasses.

Note Added 3/22/13 at 11:37 PM:  The SPX is testing the strong 1556 R right now. The euro is 1.2994 testing 1.30 R. This is a critical juncture today and will tell you a lot. The SPX strong S/R is 1556, 1552-1553, and 1548.

Note Added 3/22/13 at 1:05 PM:  The SPX just tested 1556 R for a second time. The bears are holding resistance, for now. Ditto the euro now printing 1.2998 with 1.30 R holding. The 8 MA just crossed above the 34 MA on the SPX 30-minute chart to signal bullish markets for the hours and days ahead, however, the move is tentative since the 8 MA, 34 MA and price are all printing at 1554-1555. The 1556 resistance is very important. TRIN is now 0.89 so the bulls are not as strong as earlier today. VIX is 13.73 up towards the highs for today but remaining a point away from VIX 14.95 that will cause strong market selling. Thus, the sideways stumble continues today. Traders are sanguine despite the Cyprus situation looking more sketchy each hour. Of interest today is the 10-year yield sitting at 1.92%. For such a joyous move in equities today, the yield should be at 1.94% maybe 1.95% and happily moving higher, instead, bonds maintain preferred status. One of them is wrong. Either yield will move higher as the afternoon moves along to verify the equity market buoyancy, or, equity markets will drift lower into the close to verify the yield staying low at 1.92%.

Note Added 3/22/13 at 1:32 PM:  The SPX punches up through 1556 R so here comes the move where the bulls will try to touch 1559 which would lead strongly higher. HOD is 1557.74. The TRIN is 0.75 providing bull fuel. VIX 13.56. The 10-year yield is 1.92%.  The euro is 1.2983 oddly remaining under the 1.30 R not yet reinforcing the bullishness. The markets have an eerie feel since typically in front of the major events (Cyprus) traders become worried, the situation resolves, and a big rally occurs. But now, the rally is already occurring, and the complacency and fearlessness is rampant.  Traders are already drinking ahead of happy hour and simply buying stocks without fear or worry, fully convinced that Cyprus will have a happy ending and all will be fine, no need to worry.  Traders are now programmed to think that the day will always be saved, therefore  always look on the bright side of life and buy stocks. This is a different set up then prior events and will make for interesting action into early next week.

Note Added 3/22/13 at 3:09 PM:  TRIN is 0.99, flat neutral now, so the bulls lose their oomph.  VIX is 13.64 not wanting to go down and instead staying buoyant. The 10-year yield now actually drops a tick to 1.91%.  In these erratic markets you have traders now buying both stocks and bonds today.  With the TRIN up, and VIX hanging in there, and the yield actually dropping, what do you think will happen with the SPX? Yep, it should drop, and price leaked lower from 1556 to a 1553 handle but is now popping again. Looks like today may be a day where the markets are simply pushed out sideways into the close. If the TRIN moves up over 1.00, then the bears will growl into the close.

Note Added 3/22/13 at 3:25 PM:  TRIN 1.07. VIX printing HOD at 13.83.

Note Added 3/22/13 at 4:06 PM:  Markets idled along sideways all day through the 1552-1553 support and 1556 resistance managing to close above the 1556 R. Now the wait begins for Cyprus news. Traders have made their decision, they are completely fearless about Cyprus and fully expect a happy solution and happy days next week, a holiday-shortened week, only four days since U.S. markets are closed on Good Friday. The CR resolution deadline is Wednesday, 3/27/13.  The Sequester cuts continue. A full moon occurs on Wednesday (markets are typically bullish through a full moon). Window dressing may appear next week which typically helps to buoy the markets. When a month is solidly up weakness tends to appear towards the end of the month. So the cross-currents continue, one indicator says up and another says down, just like today, the markets go up, but yields stay down, showing money preferring stocks and bonds. Usually, the bond market is correct. The EOM and EOQ1 occurs on Thursday 3/28/13. Palm Sunday is this weekend and Passover is Tuesday, 3/26/13. Easter is Sunday 3/31/13, the last day of the month of March, about one week from now.