Keystone's Morning Wake-Up 3/18/13

Markets are settling-in as the morning progresses. S&P's -13.30. Dow -79.  Nasdaq -21. Euro 1.2945.  The 10-year yield is 1.94%. Copper continues to puke. The ECB is wiping its hands of the mess saying that they did not support the Cyprus depositor confiscation for those with funds under 130K. Let the finger-pointing begin.  HSBC Bank cuts 10,000 jobs; that will leave a mark. The banks and insurance companies continue to cut workers since the end of 2012. Russia says it will reconsider its role in Cyprus. Every Euro decision creates chain reactions and unintended consequences. As the ole saying goes, "...when a butterfly flaps its wings...."

Markets may languish for a couple days since the Cyprus vote will now not occur until tomorrow evening. This may coincide with the U.S. stock market in the Tuesday afternoon session but there is no scheduling in place as yet. The FOMC drama is Wednesday afternoon.  Volatility will tell the story today. If the markets sell off at the opening bell, and the VIX moves above 15.15, the bears will cause serious market selling and Keybot the Quant will likely flip long.  If the markets sell off but the VIX remains under 15.15, the bears will run out of gas and the bulls will recover. The trading week may need to play out through Wednesday before the winner can be identified. Watch the 8 and 34 MA cross on the SPX 30-minute chart which should turn bearish (8 under 34) at the opening bell. The SPX may target the strong 1548 support at the open. The housing sector is important this week since everyone believes the housing recovery is full steam ahead with no problemmo. This creates support under the markets. If the Housing Starts and/or LEN and KBH earnings disappoint this week, equities markets would lose the housing tail wind. The average new house requires about 400 pounds of copper and the average auto about 40 pounds. These are the two largest consumers of copper. This morning, copper is not impressed with the housing or automobile sectors.

Note Added 3/18/13 at 9:00 AM:  S&P's -12.25.  Dow -71.  Nasdaq -21.  The SPX likely targeting the strong 1548 support at the bell.