Keystone's Morning Wake-Up 3/27/13; Cyprus; Italy

Wild moves in the note and bond markets this morning. The troubled European nations such as Greece, Portugal, Spain and Italy all show rising yields, Spain is now over 5% and Greece over 12%.  Conversely, money is seeking the safer haven countries with the greatest portion going to Germany, U.K. and the U.S. Germany 10-year yield dropped to 1.29% this morning. The U.S. 10-year Treasury dropped to 1.85% now at 1.86%, a big move from yesterday. The Cyprus bank capital controls may last for years. That is a good news bad news scenario; ....the good new is that your money is safe and you can withdrawal it. Whew, that was a close one. The bad news is that you are only allowed to withdrawal one hundred bucks per day so by 2015 you will be able to get your money back.

President Obama signs the Continuing Resolution (CR) as expected so the goverment does not have to worry about a shutdown until September. However, the Debt Ceiling Limit is now drawing closer again; that can was kicked to May, now only one month away. There are two days remaining in the month and quarter.  Trader's may be in a selling mood since the quarter was record-setting for bulls. The full moon occurred a couple hours ago helping yesterday's bullishness. Markets are typically bullish going into a holiday weekend but the S&P futures are down seven right now with the falling yields. The euro fell through 1.28 a couple hours ago.

The Italy drama is returning to the front stage again. Bersani says a government may not be formed and new elections would be required. He also says you must be 'insane' to run Italy. These comments started rolling the ball down hill about two or three hours ago. The markets were flat to slightly positive until this news. Italy is a major too-big-to-fail nation so going without a government for a couple more months, as their debt hits records day after day, is not good news. The Mortgage Applications are up so that produces five down weeks out of the last seven. Fed heads are out in force today speaking. Oil Inventories are at 10:30 AM.  Crude oil drops back under 96. Several earnings reports are of interest today; FIVE and PVH will affect the retail sector, PAYX indicates payrolls and UNF is a uniform indicator.

Volatility remains key. The bulls are on easy street with the VIX well under 14.70. Bears cannot cause damage until VIX 14.70 occurs.  SOX 422 is another bull-bear line with bulls handily above.  The commodities, GTX, are important and may provide some additional bull strength if GTX moves higher. For the SPX today, starting at 1564, one point away from the all-time closing high at 1565.15 (the all-time intraday high is 1576.09), the bulls simply needed any hint of green futures to propel markets higher, however, the S&P futures are now down -8. The bears need to push under 1552 to accelerate the downside. A move through 1553-1563 is sideways action today. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours and days ahead so watch for a potential bearish cross on this indicator this morning. The importance of VIX 14.70 cannot be understated. Even if the broad indexes would plummet lower after the open, if the VIX does not go above 14.70, the bears got nothing.