Keystone's Midday Market Action 3/7/13; Stress Tests

Wordsmith Draghi dances a fine line, playing down the Italy mess. He repeats the rules of OMT that a nation requesting aid must live by new rules, which in essence means they must give up sovereignty. This is why Spain drags its feet so far. Draghi creates the vibe that he is not yet interested in a rate cut so the euro pops above 1.31, jumping one percent from this morning's 1.30.  The euro has taken quite a tumble, from 1.37 to 1.30 during February so a relief bounce is not unreasonable.  Thus, euro up = dollar down = copper up = commodities up = stocks up = Treasury yields up. The VIX is 13.28 maintaining the 13.00-13.50 posture favoring the bulls well under the 15.50 bull-bear line.  Markets are buoyant today. Financials are receiving positive attention due to the stress test results on tap, mentioned in this morning's note, and will make for an interesting AH's this evening. AAPL teased the 420-425 support and may be recovering as the day moves along. LL is puking nicely.

Note Added 3/7/13 at 12:30 PM:  WTIC crude oil moved back above 91.  The 10-year yield is 1.98%. The euro is flat 1.3105.  SPX is battling the important 1545 continuing along a sideways path. The negative divergence on the hourly and minute charts not taking effect as yet. The VIX drops to 13.08 creating bull fuel. TRIN is 0.72, the bulls are relentless with day after day of sub 1.00 numbers; very uncharacteristic for the TRIN. The bulls will rule today with a 0.72 TRIN. The expectation is that the TRIN will rise and print a day or two above 1.00 to drain off the uber bullish energy.

Note Added 3/7/13 at 3:05 PM: Slight weakness in the SPX appears but the bears have no oomph with a TRIN at 0.73. VIX is 13.10 helping add bull fuel as well.  The hourly and minute charts continue to want to see downside ahead due to the negative divergence but the bulls keep pushing for SPX 1545.

Note Added 3/7/13 at 3:41 PM: Keystone bot ERY opening up a new long position which is a dangerous and highly speculative triple X inverse ETF which shorts the energy sector. Also wanted to short HYG but the broker could not provide shares.

Note Added 3/7/13 at 3:56 PM:  TRIN is 0.81 moving up a bit but remains plenty bullish. Four days in a row of low TRIN's. This would be expected to reverse tomorrow but obviously the Monthly Jobs Report will have a lot to do with the direction. Bank stress test results are after the bell so watch how financials react.  VIX is 13.07 drifting lower today but not to any great extent.