Keystone's Morning Wake-Up 4/11/13

The Jobless Claims drop dramatically, reversing the dramatic up move last week, no great shakes.  The futures remain flat moving into the opening bell. Natty Gas Inventories are at 10:30 AM followed by the 30-Year Bond Auction where the 3% level will be watched closely.  JBHT will provide insight into the trucking sector and PIR into retail and the housing recovery. The SPX is at new all-time highs. Watch the new all-time high at 1589.07 and the new all-time closing high at 1587.73 today. Keystone is surprised at the print but many things are surprising these days. As this morning's yen chart shows, the BOJ is the main driver of the SPX these days with the ebbs and flows of the yen directly working inverse to the U.S. broad markets. The retail sector, RTH, is up an obscene 5% this week, while stores remain challenged on many fronts.

The FOMC Minutes debacle yesterday illustrates how the banks rule the markets and that the individual investor is at a disadvantage. The Fed provided the early release of the minutes to all the major banks on Tuesday so they could act on the information. Articles are already in conflict as to when each party received the information. The Fed says 2 PM EST Tuesday, however, other information says that the early release occurred more towards lunch time. We will never know since it is already being swept under the rug.  The knowledge was useful to the banks since it shows no great change in Fed policy. Knowing that, while at the same time the BOJ is running the printing presses full steam, results in higher market moves, and the banks were on board from noon Tuesday, enjoying the entire ride higher. Pundits and analysts are quick to comment that the early release had no effect but they all have a vested interest in saying that since they feed at the bank's trough. As George Carlin the comedian quipped years ago, "it's a big club, and you ain't in it."

MSFT is downgraded by GS as a result of weak global PC sales, the weakest Q1 ever. Plain and simple, if companies are not hiring new workers, there is no demand for computers. YUM, a bellwether for China, says sales are weaker than expected. The weak economic news has no effect on markets since the BOJ actions to weaken the yen, as well as the Fed's easy money and the money fleeing Europe, are the market drivers. Markets tend to move flat after large up, or down, days, and with JPM and WFC earnings hitting tomorrow morning, less than 24 hours away, the markets may adopt a wait and see mode today. The charts this morning clearly show the price action at the highest levels above the 200-day MA's for this entire rally since last Fall. This is over extended behavior and a reversion to the mean will occur.

Volatility is key today. The VIX is parked on key support at 12.36. The bulls need to break down through 12.30-ish and under 12 to perform a jig of joy since markets will print further new highs. The market bears need to hold the VIX 12.30 support. VIX 14.40 is needed to bring on strong market selling but this remains two points above current levels. For the SPX today, the bulls only need one point higher, to push up through 1589, and an upside acceleration of a few additional handles will result. The bears will focus on maintaining the VIX 12.30 support. A move through SPX 1570-1588 is sideways action today.  Many traders will likely focus on The Masters golf tournament that begins today. What a treat it would be to see Rory and Tiger play in the last group on Sunday afternoon? Good luck to all the golfers. Keystone typically spends more time in the woods than on the fairway as he attempts a round of golf. As the saying goes, 'golf is simply a good walk spoiled'.

Note Added 10:28 AM: The fight occurs with volatility as the VIX moves across 12.26. The move down in the VIX creates the market buoyancy. Ditto the movement in the FXY which is inverse to the markets; FXY moving higher will bring the broad indexes lower, a move lower in the FXY sends markets higher. The bulls push up through SPX 1589 so new all-time highs are printing currently above 1592.

Note Added 11:26 AM:  VIX 12.24.  Bears are trying to hold back the drop in volatility. TRIN 0.90. FXY is drifting lower after the open now down at 98.37. The tech leadership yesterday fades today with the broad markets, including small caps, up 0.5%, but the Nasdaq is up 0.2%, no doubt due to the weak global PC shipments. In addition, Barclay's downgrades semiconductors, which helped create the push higher in the broad indexes yesterday. Traders ignore all bad news and remain complacent and worry-free since the Fed and BOJ are supplying the crack cocaine. SOX is up today albeit a smidge at +0.1% to 437.88 far above the danger line at 425.10. The SPX prints a new all-time high at 1596.96 only three points from 1600. TRIN stuck at 0.90.