Keystone's Morning Wake-Up 3/19/13; Housing Starts; FOMC Two-Day Meeting Begins; Cyprus Drama

The Cyprus drama is ongoing with a vote expected today at noon time. If the depositor confiscation, or minor changes to the plan, cannot be approved, then the vote will likely be delayed and the markets will not be happy. Cyprus needs a bailout otherwise it defaults and no one really knows what will happen at that point, but it will not be good. To help the bulls and calm the markets, Cyprus needs to approve the plan today. Cyprus banks and markets remain closed and this is detrimental each hour it continues. European auto data continues to weaken. The most important data release occurs in one hour with the Housing Starts at 8:30 AM.

The two-day FOMC meeting begins but the real fireworks do not occur until tomorrow afternoon. CTAS earnings will be interesting to see if uniforms are in demand, or not, which is a great economic indicator. LULU is hit 8% on a line of yoga pants that are too sheer and see-thru and require recall, however, the men are not complaining at the misstep. Volatility jumped about 18% yesterday with the VIX at 13.36. The market bears need to see VIX 14.95 to signal an accelerated move lower for the equity markets.  Bulls are happy and remain in extended control as long as VIX stays under 14.95. Copper weakness is key and that requires watching today. The semiconductors, another key market bellwether, SOX, is at 428. The markets will sell off significantly if the SOX 421 level is lost. If either the VIX moves above 14.95, or the SOX moves below 421, Keybot the Quant will likely flip short.

For the SPX today beginning at 1552, the bulls need to touch 1561 and the upside will accelerate with the bulls taking out the all-time closing high at 1565 in quick order. The market bears need to push the SPX under 1545 which will accelerate the downside. A move through 1546-1560 is sideways action. Watch the 8/34 MA cross on the SPX 30-minute chart which currently shows the 8 under the 34 projecting bearish markets for the hours and days ahead. SPX S/R is 1565.15 (all-time closing high), 1563.62 (last week's high), 1563, 1561, 1557, 1556, 1553, 1552, 1551, 1548, 1547, 1543 and then a drop to 1531. Analysts are tripping over themselves to raise estimates on the indexes for year-end, even bearish analysts are now bullish.  The bullish side of the boat is in full party mode with the Fed pouring booze in the punch bowl each day. The tape is jumpy. Today is an important and critical day for markets.

The Housing Starts will set the market tone. A number above 900K will make the market bulls happy; bears are happy under 900K. Last month (February release) was 890K disappointing the markets. Interestingly, all the recent revisions for prior months are down so watch to see if that occurs again, or not. The January number was 954K the first print above 900K since the housing bubble popped, so the 900K level is important. Ditto the one million level if the housing recovery continues.

Note Added 3/19/13 at 8:42 AM:  Housing Starts are 917K with a revision to last week to 910K (was 890K). So the string of downward revisions was broken with the upward revision but the headline 917K does not appear to be boosting markets. S&P futures were up about 4 before the news and remain up 4. The 917K is only a hair over the psychological 900K level so it appears that traders were far more optimistic perhaps expecting between 950K and one million starts, after all, spring is here which should be the busiest time. So the most important data release is a dud. Copper remains weak. Traders must be far more focused on Cyprus and the vote that is scheduled to occur in about three hours. S&P's +3.  Dow + 18.  Nas +8. The 10-year yield is 1.94%.The euro is 1.2941 under the 1.30 level.